All in: How the $510 million ilani casino will change the region's economy

The Cowlitz tribe's massive ilani casino project will forever change the rural towns that surround it. Meanwhile, Oregon's casinos and lottery revenues are preparing to weather a storm.  

Ilani casino opens to crowds, traffic

Ahead of ilani’s April 24 opening, the casino in Ridgefield, Washington has already attracted lots of interest. KGW looked into what the casino operation will actually include, where the money will go, and what it might mean for nearby residents, competing gaming organizations and other Native American tribes. We will be checking back later this year to see what the early impacts have been.

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Drivers entering Ridgefield, Washington are greeted by a sign that boasts that it’s the “birthplace of U-Haul.” It’s fitting, as U-Haul trailers can be seen dotting newly constructed neighborhoods, with townhomes and single-family residences squished side-by-side. The concentric circles of developments ripple like water into the former farm plots they occupy, butting against cow pastures in what was once a quiet town 45 minutes from Portland.

The growth is partly spurred by another construction project – a $510 million hulking casino complex off Interstate 5. The ilani casino is owned by the Cowlitz tribe, once a landless and federally unrecognized tribe that is the new beneficiary of 152 acres just outside the Ridgefield city limits. The casino is also a stone’s throw from the tiny town of La Center and the cluster of casino cardrooms there.

The ilani casino, backed by the powerhouse Connecticut-based Mohegan tribe, is set to open in April 24. With it comes an influx of jobs and revenue, a new start for the struggling Cowlitz tribe, and stiff competition for the small casinos and restaurants that once fit snugly into the rural community.  Ilani, with its 2,500 slot machines, 15 restaurants, 1,200 jobs, 3,000 parking spots and expected 4 ½ million annual visitors is going to be a churning economic beast that local residents are cautiously watching, knowing for better or worse, the region will never be the same.

A casino project two decades in the making

For the Cowlitz tribe, the ilani (pronounced ay-lah-nay) casino is anticipated to usher in a new era of prosperity for a Native American community that has struggled more than many others.

What was once a dominion of more than 2 million acres dwindled to nothing in the late 1800s, when the Cowlitz were forcibly removed after they refused to sign a treaty with the federal government that would have stripped the tribe’s rights to their traditional homeland, according to tribal chairman Bill Iyall.

“We fought for more than 160 years for a reservation,” he said.

Now, the 4,100 members of the Cowlitz tribe are scattered across southwest Washington and many live in poverty, with high unemployment rates and limited access to healthcare.

But federal recognition in 2000 paved the way for change. Potential investors – including now-President Donald Trump – approached the Cowlitz to finance the project. The tribe ultimately chose the Mohegan tribe, which owns the behemoth Mohegan Sun casino and resort in Connecticut and the Mohegan Sun Pocono casino in Pennsylvania. The partnership was cemented in 2004 and now, 13 years later, the project is finally ready for its debut.

“We have more than a $510 million investment,” said Kara Fox-LaRose, a Mohegan tribal member and former lawyer who is managing the ilani project. “This is hopefully phase one of more opportunity for the tribe in the future.”

The casino sits in the middle of the 152-acre parcel the Cowlitz were granted to start their reservation. Swooping, shiny entrances lead patrons into restaurants, event spaces and at the center, a massive gaming hub bigger than anything else in Oregon or Washington.

The décor and name, which means “sing” in Cowlitz, honor the tribe that has its headquarters 24 miles northwest in Longview.

Four of the 15 restaurants have been revealed – diners will have options including sushi, seafood, a cocktail lounge and a steak house from basketball player Michael Jordan’s upscale chain of restaurants. A convention center that holds 2,500 people for concerts is opening in the fall. Future plans tentatively include a hotel, poker rooms, and moving the Cowlitz tribe’s government buildings to the land.

Ilani is expected to attract, on average, more than 12,000 people a day. More people are expected to patronize the casino every day than the entire populations of La Center and Ridgefield, combined. 

Ilani reshaping economy in Ridgefield, La Center

New casino blamed for card room closure

Although ilani hasn’t opened yet, it’s already boosting the local economy. Ilani has hired more than 1,000 people to work at the casino, and 2,100 construction workers to build it. Fox La-Rose said most of the employees on the $45 million annual payroll are local residents.

Local takeout restaurants and gas stations are hustling to keep up with the new clientele.

Ilani is funding a new $100 million interchange off I-5 to allow for easier access on and off the highway. A new water and sewer system is being installed just for the casino. Ilani has also pledged to donate money to the local community, but at a far lower rate than other nearby casinos.

Ilani will give 2 percent of its net revenue annually to Clark County, Fox-LaRose said. How and where those funds will be specifically distributed has not been set. Ilani is forming an advisory committee to determine the distribution, and no money will be donated until a year of operation is complete.

Spirit Mountain Casino on the Grand Ronde reservation in Polk County donates three times what ilani has pledged, giving 6 percent of its net revenue annually to local nonprofits. Last year, that was about $3.7 million. Seven Feathers Casino in Roseburg also donates 6 percent of its proceeds.

As revenue projections haven’t been set, it’s unknown how much money ilani could give to the local economy. If ilani brings in the same amount that Spirit Mountain currently does, that would be about $1 million a year.

As much as ilani promises to give to the local economy, both La Center and Ridgefield anticipate some negative impact on their bottom lines. And one town has a lot more to lose.

La Center

In La Center, just over a mile from ilani, visitors are welcomed by a colorful array of small casinos. More than the blink-and-you’ll-miss-it main street, the casinos are the center of town.

Those casinos finance the bulk of La Center’s operations. They give 10 percent of their gross revenue to the town, an average of $3.1 million a year. That’s about 75 percent of the city’s budget.

They also bring tourists from the Portland metro area to the otherwise sleepy hamlet. Cardrooms are routinely filled with people playing poker, blackjack and baccarat.

 “You come in the evenings and this place is packed. Especially on buffet night – it’s shoulder to shoulder,” said Christina, an employee at the Palace Casino.

But ilani is already changing that. Several employees have left the Palace for ilani jobs. Christina applied for a job at ilani, attracted by the promise of health benefits, but didn’t make the cut.

At Last Frontier Casino, employees say a third of the staff has been hired by ilani. At the New Phoenix, the hit was too much. The casino closed in late March. A fourth casino called Chips closed in 2014.

“The impacts from the ilani were absolutely the reason for the New Phoenix closure,” said John Bockmier, spokesman for the La Center cardrooms.

Bockmier said the cardrooms don’t know how much of a hit they should expect, since ilani hasn’t opened yet. But it’s already gutted their staff, and hiring new casino employees isn’t easy in a rural area.

“It’s very difficult to find that skilled labor in the community we’re in,” he said.   

The city is working to cut its budget and Bockmier said there have been talks of reducing the casinos’ tax burden as well. 

Many La Center residents are hesitant about more than the financial impact.

Matt and Beth Doucey have lived in La Center for decades. They say they love the small town atmosphere.

“Strong family ties and quiet country living,” Matt Doucey said. “All of a sudden you’ve got this mega-casino and we don’t need all this commercialization. We moved out here because we didn’t want to live in Vancouver.”

But others in La Center are looking forward to ilani and the influx of visitors it’s expected to bring.

“The amount of people it’s going to bring to the area – as far as the type of businesses I have – I think it’s going to benefit them,” said Anthony Sharrah, owner of the Trellis gift shop and the Fourth Street Bar. 

He hopes that once ilani opens, he will have enough business to add a lunch service.

“Everybody who lives here works someplace else, so we don’t have a lunch crowd. You have a handful of housewives who maybe don’t work,” he said. “It will be nice to have some other sort of revenue stream for our residents.”

Ridgefield

It’s a different story in Ridgefield, Washington, where the ilani casino isn’t directly competing with any of the town’s businesses.

Ridgefield is already undergoing rapid growth. The town has tripled in size in the past decade and it’s prepared to keep growing.

 “When I became mayor 10 years ago we were at 2,900 people. Now we’re at 7,500,” said Ridgefield Mayor Ron Onslow. “It’s growing very fast. Last year we had 350 new homes built and they were all sold before they were finished. This year we expect at least that many, maybe more. We have land, we have great schools. People like our little downtown.” 

Schools could see a lot more students, as ilani is within the Ridgefield school district. Onslow is also concerned about how the expected influx of traffic will impact infrastructure, and how the casino’s sheer daily population could strain city resources.

“They are going to be like a small city,” he said. “They need a police force, fire, sewer, water. I’ve asked that they be a good neighbor.”

Onslow said ilani has agreed to help facilitate the transition, but they have not provided many specifics yet as opening day nears.

He also worries about how ilani’s 15 new restaurants will impact the town’s small crop of downtown eateries, but Ridgefield’s restaurant owners are more excited than nervous.   

“For me? I don’t mind,” said Roberto, owner of the El Rancho Viejo Mexican restaurant. “I don’t like casinos but I like business. More people, I like it.” 

Doris Gasca, who works at nearby Vinnie’s Pizza, said business spiked recently. 

“They order a lot of pizzas from us – the contractors, the electricians. We love it,” she said.

Other Ridgefield residents can’t wait to have a casino in their backyard. Best friends Charlotte and Janet get together with a group of women at the Ridgefield library every week to knit and gossip. Unlike some of their fellow knitters who detest gambling and worry about increased crime, Janet and Charlotte say they can’t wait for the casino to open.

“It’s not like I have a gambling problem but I enjoy it,” Charlotte said. “It’s a pleasure for us.”

The pair frequently visits Lucky Eagle casino in Rochester, Wash. to play the slots. With 2,500 new slot machines now a 10-minute drive away, they said they’ll be patronizing ilani from opening day.

 “You bet! We’ll probably be first in line,” Janet said.

Economic prosperity for Cowlitz not a sure bet

Although ilani projects 4 ½ million visitors a year, there’s no guarantee that the Cowlitz tribe will make enough money to pay back the $510 million they owe.

The project was financed by private investors, bank financing and the Mohegan tribe. The Cowlitz have seven years to pay that back, with interest.

This is a big financial move for the tribe, which owns two health clinics in Southwest Washington but no other businesses.

“We are shouldering a lot of debt, however, we look forward to being self-sufficient,” Chairman Bill Iyall said.

Casino gaming is declining in Oregon and the U.S. overall. At its height just before the recession, Americans were spending about 0.7 percent of their income on casino games. In Oregon, that was about 0.65 percent. Now, it’s closer to 0.6 percent in the U.S. and just under 0.5 percent in Oregon. So far, the economic rebound hasn’t launched casino gaming back to where it was before the recession.

 

 

 

A cautionary tale of casino competition also follows the ilani backers.

When Mohegan Sun first opened in Connecticut the nearby Foxwoods casino took a big financial hit, ultimately deferring payments on $1.7 billion in debt. 

The Mohegan tribe didn’t emerge unscathed. It currently owes $1.8 billion, according to recent SEC filings. That’s up from $1.6 billion in 2010.

A public relations firm representing ilani says although the Mohegans are in debt, the company’s strong balance sheet shows its financial strength.

The legality of the casino has also been questioned by the La Center cardrooms and competing Oregon casinos, with allegations that the Cowlitz practiced “reservation shopping” - selectively chose land far from its current headquarters because of its proximity to a major freeway.

“Nothing could be further from the truth,” Iyall said. “This land is and has always been the Cowlitz people’s aboriginal land.”

The fight went all the way to the Supreme Court but on Tuesday was dismissed, knocking down the last hurdle for ilani before opening day.  

Oregon tribe, state braces for ilani impact

The Cowlitz tribe hopes ilani will bring economic stability to its people. Eighty-five miles southwest, Spirit Mountain Casino has done just that for the Grand Ronde tribe.

But ilani threatens the Grand Ronde’s livelihood. Spirit Mountain Casino was the closest casino to Portland at 61 miles away. When ilani opens, just 25 miles from Portland, Spirit Mountain could lose more than $100 million -- one-third of its revenue.

“Obviously it’s a severe hit,” said Justin Martin, a lobbyist and member of the Grand Ronde tribe. “While we’ve had some economic success, by no means have cleared all the hurdles to provide essential services to tribal members. Our drug and alcohol percentages are still two times the state level. [Graduation rates] are still below state level. It will take a couple generations to remedy. Which is why a loss like this hits us very, very hard.”

Spirit Mountain just invested $13 million in upgrades, which the tribe hopes will entice more Oregon gamblers to head south instead of north.

The Grand Ronde also recently purchased the old greyhound racing track in Wood Village. Development plans have not been solidified but the tribe is considering casino gaming, which could bring even more competition in the metro area and drain funds from both ilani and the Grand Ronde tribe.

The state of Oregon stands to lose as much as the Grand Ronde. According to the most recent economic revenue forecast, Oregon could lose $110 million a year in video lottery sales. 

A bulk of that loss will come from North Portland bars. From St. Johns to Parkrose, the state estimates bars could see a 40 to 50 percent cut in video lottery business.

 

 

 

That loss means many beloved Oregon programs could take a big hit. Of the 1.3 billion in lottery funds expected over the next biennium, 18 percent go to education and 15 percent go to parks. The outdoor school education fund, veterans services fund and debt service also get big chunks of lottery money.

Even though big financial losses are expected, at this point the forecast is theoretical. As ilani gets ready to open its doors after more than a decade in the making, Oregon and Southwest Washington residents will have to watch as the biggest casino project to hit the Northwest makes its impact felt.

Published April 4, 2017

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