Measuring Graton Resort’s ‘huge trickle-down effect’ on North Bay economy

The new $175 million addition to the Graton Casino includes a 200-room hotel.

CYNTHIA SWEENEY,

The Federated Indians of Graton Rancheria have completed an expansion to their casino and entertainment magnet in Rohnert Park to add a six-story, 200-room hotel, and brings the cost of the resort to nearly $1 billion.

That investment stands to deal a wide hand of residual benefits to the surrounding North Bay community in the form of revenue, jobs and environmental improvements. The $175 million, 342,000-square-foot expansion is in addition to the existing $800 million casino, restaurant and entertainment venue that opened in November 2013.

About 100 California companies contributed to building the hotel, employing about 1,000 in the trades. The entertainment complex itself now employs 2,000.

“The (economic) impact depends on where the workers live, but generally they support the operations of a local business that attracts tourists and also spends on suppliers,” said Robert Eyler, chief economist for the Marin Economic Forum. “The workers also shop at local stores, eat at local restaurants, and likely engage in some personal services purchases locally before or after work, and pay rents and mortgages. The idea is there is a boost to business incomes locally, which helps them support or hire more workers, all that generates more tax revenues.”

Employees of the casino receive free meals, and those working 20 or more hours receive full benefits.

“If we believe in the dignity of our team members and community, we must walk our talk,” said Greg Sarris, tribal chair of Federated Indians of Graton Rancheria, owner of the resort. He said the workforce is diverse.

The treatment employees get at the casino has also caused other local hospitality facilities to raise their employee wages.

“There is a huge trickle-down effect,” Sarris said.

Now that the resort is a destination point, it will be looking to attract more international business, said Joe Hasson, vice president and resort general manager. The resort intends to continue its concierge service for guests to experience amenities in the North Bay area and partnership with a handful of local wineries offering rate reductions.

The expansion added guest rooms that range in size from 500 to 2,600 square feet, a 10,000-square-foot spa and a resort-like outdoor pool area.

The resort also plans to partner with neighboring hotels to provide lodging for large conventions in its new 20,000 square feet of flexible meeting space, which has a capacity for 1,700 people.

For the city of Rohnert Park itself, the casino is a mixed blessing.

“Will the casino convention space supplant some of the meetings held at the (nearby) DoubleTree, in which case, it will hurt revenue?” said City Manager Darrin Jenkins. “Or will it bring bigger conventions split between the two properties, thus increasing the frequency of meetings at the DoubleTree and raising revenues? It’s too soon to say.”

The resort has an agreement with the city to pay $8.3 million per year to offset impacts, almost half of which goes to cover public safety. The city also uses a portion of the funds to mitigate the loss of local taxes from the property the casino occupies, which other businesses would have to pay, Jenkins said.

“The casino occupies a portion of our sphere of influence, where our General Plan called for commercial development. Our General Plan financial analysis counted on this revenue to balance the service needs of residential development on the east side of Rohnert Park,” Jenkins said. “Because the reservation is not subject to local taxes, the city has lost property tax and sales tax on that property and will continue to do so forever. This lost revenue is a real impact of the casino.”

The city also will receive no transient occupancy taxes, or TOTs, from the new hotel. However, the resort has an agreement with the county to pay $700,000 annually in lieu of the TOT tax.

The last time resort earnings were reported was the first quarter of 2014. Station Casinos, the Las Vegas-based company that manages the casino, said at that time, Graton generated $101 million in revenue. The casino subsequently refinanced their loan, and with no outstanding public debt thereafter, any revenue is proprietary to the tribe.

“For those curious (about current revenue), just look at the $175 million addition we’ve built on the success of the existing casino,” Hasson said.

Sonoma County as a whole stands to gain in other ways. With the completion of the expansion, the tribe itself is focusing on its bigger mission.

“It has been the dream of the Federated Indians of Graton Rancheria to create something that was needed and that we could be proud of, that would help the tribe take care of its citizens and push forward the tribe’s environmental and social mission,” said Sarris.

Now that the third and final phase of the project is complete, the tribe is turning its focus on its environmental and social mission.

“Watch the larger agenda,” Sarris said.

The tribe now has a compact with the state’s governor and gaming commission to pay a share of revenue until the current debt is paid off, which should take a few years. Afterwards, that share will go to Sonoma County for care and restoration of parks and for organic farms for the long term, Sarris said.

During the last election, the tribe contributed $200,000 to support Measure J on the Sonoma County ballot, to protect and preserve regional parks.

The tribe also will continue to be vocal on social issues, supporting Latino voter registration, diversity in the resort workplace and local candidates who support the tribe’s viewpoint, Sarris said.

Cynthia Sweeney covers health care, hospitality, residential real estate, education, employment and business insurance. Reach her at Cynthia.Sweeney@busjrnl.com or call 707-521-4259.