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Tribe wins fight over casino project

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After a long and bitter legal battle, Sonoma developer and lobbyist Darius Anderson has lost his bid to collect more than $40 million from the Federated Indians of Graton Rancheria for services his company asserts it provided starting 15 years ago when the tribe had just begun its efforts to buy land for a casino in Sonoma County.

A three-member arbitration panel in San Francisco denied Anderson’s claims that his company was owed a percentage of net gaming revenues, according to the panel’s 53-page decision filed earlier this year in San Francisco Superior Court.

The arbitrators — a private panel of retired judges assembled to settle the dispute out of court — agreed with the tribe’s allegations that Anderson’s company failed to provide the services it promised. They ordered a real estate partnership owned by Anderson, Kenwood Investments No. 2, to pay $725,000 to the Federated Indians of Graton Rancheria for the tribe’s legal fees and other costs, an award affirmed June 1 in San Francisco Superior Court.

Anderson, a principal of Sonoma Media Investments, which owns The Press Democrat, declined to comment because ofdue to a confidentiality agreement. A representative of the Federated Indians of Graton Rancheria said the tribe had no comment.

Their business relationship began in 2002 and ended around 2005, nearly eight years before the tribe would open the doors of Graton Resort & Casino on the western outskirts of Rohnert Park.

The payment dispute centered around whether Kenwood Investments fulfilled the services outlined in a 2003 consulting agreement between the parties, which involved helping the tribe acquire land, open a casino and manage public relations surrounding the project. The legal battle didn’t begin until 2014 after it became clear the tribe wasn’t going to make payments based on gaming revenues outlined in the contract to Kenwood Investments because it contended the company hadn’t fulfilled its promises.

The arbitrators determined Kenwood Investment’s performance was “inadequate.” Both sides agreed Kenwood Investments “was not involved in the major milestones of transferring the tribal land into trust, obtaining a gaming compact, or developing the casino,” according to their decision.

In 2002, the tribe had just gained recognition from the federal government and its constitution was approved by the Secretary of the Interior, according to public records. The tribe had no land, and its council sought out Kenwood Investments to help it find property in Sonoma or Marin counties that could be acquired for tribal lands for economic development, court documents show.

The tribe agreed to pay Kenwood Investments 4 percent of net gaming revenues for the first seven years of a casino’s operation, terms later negotiated down to 2.5 percent of net gaming revenues when Kenwood Investments didn’t help the tribe meet a self-imposed deadline to acquire a gaming compact with the state, according to the documents.

In court filings, lawyers representing Anderson and his company argued the tribe was ultimately successful in opening its Rohnert Park casino as a result of due to the early assistance provided by Kenwood Investments, including helping the tribe acquire the rights to buy land in the southeast corner of Sonoma County and find an operator to run its casino. Kenwood sought $43 million from the tribe in its breach of contract complaint, according to a document filed by arbitrators.

The tribe blamed Kenwood Investments for a storm of public opposition that erupted as soon as it announced plans to build a casino on land near Sears Point, a 1,736-acre property near Highway 37 and Lakeville Highway. It said the company didn’t tell the tribe “the site was part of 50,000 acres of tidal wetlands that conservationists had been trying to protect and restore since the 1970s,” according to court filings.

Kenwood Investments argued the Highway 37 property proved to be a beneficial investment because it prevented a rival tribe, the Hopland Band of Pomo Indians, from acquiring the land. The company also asserted the land later helped the tribe acquire permissions needed to run a casino in Rohnert Park through compromises with state and local government officials that involved donating portions of the property to the public and to the nonprofit Sonoma Land Trust, according to a cross complaint filed by Kenwood Investments in San Francisco Superior Court in 2014.

But the tribe also claimed Kenwood Investments failed to help the tribe negotiate the best deal with a casino operator, instead pushing the tribe into an agreement with Las Vegas-based Station Casinos Inc. without the benefit of reviewing other options in order to negotiate. The arbitration panel concluded Anderson did not fully disclose his existing relationship with Station Casinos, which was a client of his lobbying firm, and did not provide the tribe with information from a competing operator that could have allowed the tribe to negotiate a better deal, documents show.

The tribe and Kenwood Investments agreed the company did fulfill some of the service it promised during the three-year business relationship, the arbitration members stated in their award findings. Kenwood Investments helped the tribe create a public opinion campaign to support a casino in Sonoma County and helped the tribe battle campaigns to recall Rohnert Park City Council members who backed the casino project, among other services, according to court filings.

According to the documents, Kenwood was paid $750,000 for its services securing the Highway 37 property, which more than covered the $100,000 it paid to secure the option to buy the land, as well as $510,000 in compensation for its consulting services.