Placer County 2008-2009 Grand Jury Final Report

Public Agency: The governing body of any public agency must respond within ninety (90) days. The response must be addressed to the Presiding Judge of the Superior Court.

Elective Office or Agency Head: All elected officers or heads of agencies who are required to respond must do so within sixty (60) days, to the Presiding Judge of the Superior Court, with an information copy provided to the Board of Supervisors. Respondents must provide two originals of their responses, one to the Presiding Judge of the Placer County Superior Court and one to the Placer County Grand Jury at the addresses listed below. When responding to more than one report, respondents must respond to each report separately.  The Honorable Alan V. Pineschi  Placer County Grand Jury Presiding Judge of the Superior Court 11490 C Avenue County of Placer Auburn, CA 95603 P.O. Box 619072 Roseville, CA 95661 xi Placer County 2008– 2009 Grand Jury www.PlacerGrandJury.org CALIFORNIA PENAL CODE SECTION 933.05 a) For purposes of subdivision (b) of Section 933, as to each Grand Jury finding, the responding person or entity shall indicate one of the following: i. The Respondent agrees with the finding. ii. The Respondent disagrees wholly or partially with the finding, in which case the response shall specify the portion of the finding that is disputed and shall include an explanation of the reasons therefore. b) For purposes of subdivision (b) of Section 933, as to each Grand Jury finding, the responding person or entity shall indicate one of the following actions: i. The recommendation has been implemented, with a summary regarding the implemented action. ii. The recommendation has not yet been implemented, but will be implemented in the future, with a time frame for implementations. iii. The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study, and a time frame for the matter to be prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body of the public agency when applicable. This time frame shall not exceed six months from the date of publication of the Grand Jury report. iv. The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefore. c) However, if a finding or recommendation of the Grand Jury addresses budgetary or personnel matters of a County agency or department headed by an elected officer, both the agency or department head and the Board of Supervisors shall respond if requested by the Grand Jury, but the response of the Board of Supervisors shall address only those budgetary or personnel matters over which it has some decision-making authority. The response of the elected agency or department head shall address all aspects of the findings or recommendations affecting his or her agency or department. xii Final Report 2008–2009 Grand Jury d) A Grand Jury may request a subject person or entity to come before the Grand Jury for the purpose of reading and discussing the findings of the Grand Jury report that relates to that person or entity in order to verify the accuracy of the findings prior to their release. e) During an investigation, the Grand Jury shall meet with the subject of that investigation regarding that investigation, unless the court, either on its own determination or upon request of the foreperson of the Grand Jury, determines that such a meeting would be detrimental. A Grand Jury shall provide to the affected agency a copy of the portion of the Grand Jury report relating to that person or entity two (2) working days prior to its public release and after the approval of the Presiding Judge. No officer, agency, department, or governing body of a public agency shall disclose any contents of the report prior to the public release of the Final Report. California Penal Code Section 933.05 xiii Placer County 2008–2009 Grand Jury www.PlacerGrandJury.org HISTORY AND FUNCTIONS OF THE GRAND JURY HISTORY Juries stem from the eleventh century. In 1215, the concept of a jury had become a pledge expressed in the Magna Carta, that no free man would be “imprisoned or dispossessed or exiled or in any way destroyed . . . except by the lawful judgment of his peers . . .” In 1635, the Massachusetts Bay Colony impaneled the first grand jury to consider cases of murder, robbery and wife-beating. The U.S. Constitution’s Fifth Amendment and the California Constitution call for grand juries. Grand Juries were established throughout California during the early years of statehood. As constituted today, criminal and civil grand juries are a part of the judicial branch of government, arms of the court system. The criminal grand jury may conduct hearings to determine whether there is sufficient evidence to bring an indictment charging a person with a criminal offense. However, the district attorney usually empanels a separate jury drawn from the petit (regular trial) jury pool to bring criminal indictments. Civil and criminal grand juries have the power to subpoena. FUNCTIONS The grand jury is an investigatory body created for the protection of society and the enforcement of the law. The grand jury in California is unusual because its duty includes investigation of county government as provided by statutes passed in 1880.Only a few other states require grand jury investigation beyond alleged misconduct of public officials. Although the jury responsibilities are many and diverse, the three predominant functions include:  Civil Watchdog Responsibilities - This is the major function of present day California grand jurors and considerable effort is devoted to these responsibilities. The xiv Final Report 2008–2009 Grand Jury grand jury may examine all aspects of county and city government and special districts to ensure they are serving the best interests of Placer County residents. The grand jury reviews and evaluates procedures, methods and systems used by county government for efficiency and economy. The grand jury is also authorized to:  Inspect and audit books, records and financial expenditures to ensure that public funds are properly accounted for and legally spent.  Inspect financial records of special districts in Placer County.  Inquire into the conditions of jails and detention centers.  Inquire into charges of willful misconduct in office by public officials or government, district or agency employees. Most grand jury “watchdog” findings are contained in reports describing problems they discover and their subsequent recommendations for solutions. To accomplish the county watchdog functions, the grand jury normally establishes several committees. During its term, the grand jury issues final reports on government operations in Placer County. After a final report is published, the official or governing body of an agency or government covered in the report must respond to the grand jury within a given period of time, as prescribed by California law. Officials must respond within 60 days; governments or agencies must respond within 90 days. The following year’s grand jury publishes the responses to the final report.  Citizen Complaints - As part of the civil function, the grand jury receives complaints from residents alleging official mistreatment, suspicious conduct, or governmental inefficiencies. The grand jury investigates reports from residents for their validity. All such requests are kept confidential until a final report is published. In fact, the complainant is not told whether or not the grand jury will investigate a complaint until the report is issued.  Criminal Investigations – Upon occasion, the district attorney asks the grand jury to hold hearings to determine whether evidence presented by the district attorney is sufficient to indict an individual, who would then stand trial in court. A minimum of 12 grand jurors must vote for an indictment in any criminal proceeding. History and Functions of the Grand Jury xv Final Report 2008–2009 Grand Jury QUALIFICATIONS Prospective grand jurors must possess the following qualifications (Penal Code Section 893):  Be at least 18 years old.  Be a resident of California and Placer County for at least one year immediately prior to selection.  Be in possession of his or her natural facilities, of ordinary intelligence, of sound judgment and fair character.  Possess sufficient knowledge of the English language to communicate both orally and in writing. A person is NOT competent to act as a grand juror if any of the following apply:  The person is serving as a trial juror in any California court.  The person has been discharged as a grand juror in any California court within one year of the beginning date of service, July 1.  The person has been convicted of malfeasance in office or any felony or other high crime.  The person is serving as an elected public official. Desirable qualifications for a grand juror include the following:  Be in good health.  Be open-minded with concern for the views of others.  Have the ability to work with others.  Have genuine interest in community affairs.  Have investigative skills and an ability to write reports.  Have modest computer and Internet communication skills. SELECTION In the spring of each year the presiding Judge selects residents at random from the list of applicants. Applicants should expect that a criminal records check will be conducted. Applications are reviewed and an interview is scheduled with the presiding Judge, the foreperson of the outgoing grand jury, and perhaps the presiding Judge’s assistant. After the interview process, prospective applicants are requested to appear for the final selection, held in a Placer County Superior Court courtroom. At this time, with outgoing grand jurors in attendance, 19 names are drawn randomly by the court clerk. Another History and Functions of the Grand Jury xvi Final Report 2008–2009 Grand Jury 12 names are drawn and ranked to form a list of alternate jurors. The new 19 grand jury members are sworn in and given a description of their duties and responsibilities by the Presiding Superior Court Judge. The jurors begin a one- year term on July 1. COMMITMENT Persons selected for grand jury service can expect to serve 25 to 30 hours per month for a period of one year, July 1 through June 30. REMUNERATION Grand jurors receive a nominal payment for meetings they attend, and they are reimbursed for mileage to attend meetings, training, and possibly other minor expenses. ORIENTATION New jurors are encouraged to attend an orientation program about grand jury functions, and on county, city and special district governments. WHY BECOME A GRAND JUROR? Those who volunteer and are accepted for grand jury service should feel privileged to be selected. They enter this service with interest and curiosity to learn more about the administration and operation of Placer County government. Serving as a grand juror requires many hours and serious effort, and reflects a generous commitment to public service. REPORTS OF THE GRAND JURY The Placer County Courts maintains web pages for the Grand Jury on the Placer Courts website. Past and present final reports, and responses to those final reports, may be found on the Placer County Superior Court website: http://www.PlacerGrandJury.org History and Functions of the Grand Jury xvii HOW TO APPLY FOR OR CONTACT THE GRAND JURY Placer County residents are encouraged to volunteer for Grand Jury service. This may be done by visiting the Grand Jury website listed below and filling out the Application for Service. Residents of Placer County are encouraged to write or contact the Placer County Grand Jury in one of the following ways:  C Avenue Auburn, CA 95603  Grand Jury website: http://www.PlacerGrandJury.org  Grand Jury e-mail address: [email protected]  Telephone: 530-886-5200 Fax number: 530-886-5201 xviii REQUEST FOR GRAND JURY ACTION FORM INSTRUCTIONS I. Submit a Grand Jury Citizen Complaint Form only after you have tried all other options to correct a problem or concern and they have proved unsuccessful. II. Instructions for preparing the Citizen Complaint Form: a. The complaint is against: 1) Include the name of the individual(s) or organization(s) the complaint is against. 2) Check for correct spellings of names and organizations. 3) If the complaint is against an individual within an organization, include the individual’s title or position on the organization. 4) Provide the individual’s or organization’s physical address (not a P.O.Box), city and zip code. 5) Provide the telephone number of the individual(s) or organization(s) cited, including the area code. b. My complaint against the above-named person or agency is: 1) Describe the problem in your own words. Be as concise as possible. Provide dates, times, and names of individuals involved. 2) Cite specific instances rather than broad generalizations. 3) Attach any available photographs, correspondence or documentation that supports your complaint. 4) If more room is required, attach extra sheets and include their number on the last line of the first sheet, e.g., “three (3) additional sheets are attached.” c. Complainant: 1) Include your name, street address, city, zip code, telephone number and area code. 2) Your name will be held in strictest confidence. All grand jury documents are secret and cannot be subpoenaed in court or revealed to the public. Mail this complaint form to the address shown on the front. xix Final Report 2008–2009 Grand Jury Please sign your complaint. You may file an anonymous complaint if you wish; however, the grand jury is less likely to investigate anonymous complaints because they will not be able to contact you for clarification and follow-up. The jury is also less likely to get to the truth of the matter if it does choose to investigate. III. The grand jury will respond to your complaint and acknowledge its receipt. The grand jury may contact you directly during its inquiries. Request for Grand Jury Action Form Instructions xx REQUEST FOR GRAND JURY ACTION Placer County Grand Jury DeWitt Center 11490 C Avenue, Auburn, CA 95603 Notice: This form and any supplemental material will be treated confidentially. The Grand Jury is prohibited by law from disclosing any aspect of an inquiry prior to issuing a final report. For various reasons the Grand Jury cannot investigate all requests for action, therefore you may wish to pursue other avenues. Your Name Your Mailing Address City Zip Code Home Telephone Work Telephone PERSON / AGENCY YOU ARE REPORTING Name Address City Zip Code Telephone Please use space on back of form for a brief narrative of key events. Attach any correspondence or documents about the subject. LIST OTHER OFFICIALS / AGENCIES YOU HAVE CONTACTED ABOUT THIS SUBJECT Official / Agency Address Approximate date of contact PAST OR PENDING LAWSUITS Explain what you know of past or pending lawsuits related to this matter Your Signature: Date: Please mail completed form to the Placer County Grand Jury Foreperson at the above address. For Official Use Only. Do not write in the space below. Number: Date Received: Date Considered: Disposition: xxi REQUEST FOR GRAND JURY ACTION, CONTINUED NARRATIVE OF KEY EVENTS (Please include dates and names of persons / agencies involved) xxii 1 Program Assessment Blue Bag Recycling Placer County 2008–2009 Grand Jury www.PlacerGrandJury.org BLUE BAG RECYCLING PROGRAM ASSESSMENT Photo by Win Gredvig Final Report 2008–2009 Grand Jury BLUE BAG RECYCLING PROGRAM ASSESSMENT Summary Four jurisdictions in Placer County utilize a voluntary Blue Bag Recycling Program. These are the cities of Auburn and Lincoln, the Town of Loomis, and unincorporated areas of Placer County. Residents and businesses place clean and dry recyclables in blue bags that are commingled with regular trash and transported to the Western Placer Waste Management Authority’s Materials Recovery Facility for processing at a later date. The 2008–2009 Grand Jury agrees with last year’s Jury in its recommendation that all Blue Bag Programs be eliminated. Because of the responses received from the cities of Lincoln and Auburn, this Grand Jury reinvestigated the program and determined the residents’ time, effort and expense were of marginal value to any of the jurisdictions’ recycling programs while additional costs were incurred in processing intact bags. Background The 2007–2008 Grand Jury, in response to questions from residents concerning the effectiveness of the Western Placer County recycling program, conducted an investigation of the Western Placer Waste Management Authority’s (WPWMA) Materials Recovery Facility (MRF, pronounced “Murf”) in January 2008. That Grand Jury found the MRF to be well managed and using state-of-the-industry equipment and technology. The recyclable materials commingled with the other trash and garbage were easily and efficiently sorted, collected and packaged for sale. The California Integrated Waste Management Act of 1989 (AB 939) mandated that 25% of refuse be recoverable by 1995 and 50% by 2000. Soon after, some Placer County jurisdictions started Blue Bag Programs that allowed citizens to voluntarily place clean recyclable items in blue plastic bags that were commingled with trash container contents. The bags were pulled off the sorting lines at the MRF and saved for later processing. Blue Bag Recycling Program Assessment 2 Final Report 2008–2009 Grand Jury The 2007–2008 Grand Jury found the Blue Bag Program contributing marginally, if at all, to the overall recycling program. Because the MRF processes all commingled refuse so efficiently, that Grand Jury recommended the jurisdictions eliminate the Blue Bag Programs. Opposition responses from the cities of Auburn and Lincoln caused the 2008–2009 Grand Jury to reopen the investigation into the viability of the Blue Bag Programs. Investigation Methods On October 17, 2008, Jurors met at the MRF, listened to a presentation by Eric Oddo, WPWMA Senior Civil Engineer, asked questions and completed a tour of the entire facility. It began on the receiving floor where the trucks dumped the loads, then proceeded up to the next level where the receivables were sorted and recyclables collected. The tour ended where the refuse materials had been collected and readied for the landfill and recyclables compressed and packaged for sale. Jurors returned to the MRF in December to specifically follow the blue bags’ path from the receiving floor and along the sorting line conveyor belts. Jim Durfee, Executive Director of WPWMA, and Jim Estep, Lincoln City Manager, were interviewed in January 2009. Mr. Estep was accompanied by staff members, John Pedri and Steve Ambrose. Jurors asked about Blue Bag Program costs and its contribution to the recyclable recovery efforts. Facts In their written responses to last year’s Grand Jury report, the cities of Lincoln and Auburn disagreed with the 2007–2008 Grand Jury’s recommendation to eliminate the Blue Bag Programs. Lincoln administrators stated the program elimination would require a substitution, such as a third can for recyclables, to meet its goals. Auburn’s Mayor, Keith Nesbitt, stated, “The blue bag is a valuable educational tool that allows our citizens to participate in the recycling process at their home which naturally increases their awareness of waste issues.” Jim Durfee indicated, in his written response, that the WPWMA would maintain a neutral position and process blue bags as long as jurisdictions elected to continue their programs. In a January 2009 Grand Jury interview, Lincoln officials maintained the Blue Bag Program’s elimination would require it to be replaced with an alternative program. Blue Bag Recycling Program Assessment 3 Final Report 2008–2009 Grand Jury The WPWMA’s addition of the MRF in the 1990’s and its updating with the latest equipment and technology available in mid 2000’s has increased its recycling capability and efficiency. The present processing system is effective and nearly all recyclables commingled with regular trash can be retrieved. Within Western Placer County there are four jurisdictions presently implementing voluntary Blue Bag Programs. The programs began in the early 1990’s prior to the modernization of the MRF, when resident participation was needed to separate recyclables from other trash. All four jurisdictions require recyclable items placed in the bags to be clean and dry, including various paper products, plastic/glass bottles and aluminum/tin cans. The MRF processes the refuse collected from all of Placer County west of the City of Colfax. The Town of Loomis, City of Auburn and unincorporated areas of Placer County utilize the Auburn Placer Disposal Service (APDS) to pick up and transport refuse. The City of Lincoln collects its own trash and delivers it to the MRF. The Town of Loomis and City of Auburn provide residents blue bags at no charge and APDS delivers them. Lincoln residents are provided free bags, costing the City $26,000 per year. Blue bags must be picked up at City Hall. Unincorporated area residents of Western Placer County must purchase blue bags at grocery stores. The filled bags are expected to be placed inside the container. Otherwise, the APDS driver will exit the cab to retrieve blue bags placed alongside a full container. The City of Lincoln requires filled blue bags to be placed inside the garbage container. Blue bags comprise only a very small percentage of the total volume of processed refuse at the MRF. A large portion of the blue bags do not make it to the sorting lines in a retrievable condition. They are often ripped open by the sheer weight of the contents, items in the bag, sharp objects, compaction in the truck, etc. The bags provided to the residents for no charge tend to be made of thinner plastic than the purchased types and are torn open very easily. The blue bags themselves are presently not recyclable and are sent to the landfill. Jurors observed the blue bags in various conditions when they started the path from the receiving floor to the sorting lines. Employees may retrieve an intact or partially damaged blue bag containing recyclables at any point after it reaches a sorting line belt Blue Bag Recycling Program Assessment 5 Final Report 2008–2009 Grand Jury Although they said they had not determined the requirements of the California Integrated Waste Management Board (CIWMB), the officials again mentioned a third can program as a replacement or the possibility of using a facility other than the existing MRF. Mr. Durfee testified to this Grand Jury that the benefits of the Blue Bag Programs are marginally positive and are cost neutral to Placer County. The participating jurisdictions and the public bear the costs. As he stated previously, the WPWMA maintains a neutral position and will process blue bags as long as programs exist. The CIWMB recently approved the 2006 Diversion Rates and Lincoln achieved 60% by implementing 35 programs. In comparison, Rocklin achieved 58% implementing 31 programs and does not have a Blue Bag Program. There are 63 potential diversion programs listed by CIWMB. All jurisdictions in Placer County exceeded the State- mandated 50% Diversion Rate except the Town of Loomis. It received a board approved good faith effort of 48%. Roseville and Rocklin, the two largest cities in Placer County, do not have Blue Bag or any other curbside sorting programs. Green waste is placed in a separate container. The MRF in Placer County is classified as a “dirty MRF” waste processing facility and accepts refuse as a mixed solid stream. This type of treatment technology accepts waste and recyclable materials mixed together. All the garbage comes into the facility and a combination of mechanical methods, including shakers, screens, magnets, etc., is used to sort and collect materials. In addition, workers manually sort and collect recyclables from the trash as it moves along on the conveyor belt lines. Separation occurs within the plant rather than at the source or curbside. After all the recyclables are collected, the remaining waste material is transported to the landfill for disposal. At the curbside or other collection point, a commingled refuse container is dumped into a collection truck, hauled to the MRF and the contents dumped onto the receiving floor. When blue bags reach the sorting lines, employees are instructed to retrieve the blue bags and drop them in a separate bin. At a later time, after sufficient numbers of bags have been accumulated, the filled bins are returned to the receiving floor and the bags are run through the same process as regular trash. The employees tear open the bags and shake the contents out onto the belts. The belt speed is reduced to a very slow pace so all recyclables can be retrieved. Blue Bag Recycling Program Assessment 4 Final Report 2008–2009 Grand Jury and before it drops off the end of the line. In general, the bags can be categorized in the following ways:  Bags are not retrievable and are treated as regular garbage:  Bags are badly damaged with no contents.  Bags are damaged and all contents fall out when grabbed by a sorter.  Bags are partially intact and all contents may be dislodged with a little shaking.  Bags are retrievable and saved for sorting at a later date:  Bags are damaged but some or all the contents remain after it is grabbed.  Bags are not damaged at all. Jurors had been told that all retrievable bags would be removed from the belts, saved and processed later. However, Jurors observed that some retrievable bags passed every worker on the line, dropped off the end of the belt and the unrecovered recyclables went to the landfill. One benefit resulting from the programs served by APDS is that bags are allowed to be placed alongside a full trash container, making space available inside for additional trash. Findings 1. The MRF, with its updated equipment and use of technology, is a very well managed and efficient recycling facility. Its recyclable recovery program is improved marginally, if at all, by the Blue Bag Programs.

Since the MRF is classified as “dirty”, any handling of separated recyclables, such as filled blue bags, adds to processing costs. Jurors found the blue bags added to the total cost of recycling programs in at least three ways. a) The bags cost the residents money either directly by purchase or indirectly through town or city purchase. b) Extra time and labor are required to retrieve bags placed alongside full containers. c) Extra time and labor are required to process saved bag contents at a later time. Blue Bag Recycling Program Assessment 6 Final Report 2008–2009 Grand Jury 4. One negative aspect to eliminating the Blue Bag Program is that in some jurisdictions residents will lose the benefit of placing blue bags next to the full container. The extra space can save residents money by allowing more trash to be disposed of without paying for an additional container.

The Colfax District's ownership of the Indian Cemetery exposes the District to potential liability issues.

Especially because the documentation involved in refinancing a bond issue does not normally disclose explicitly the details about the bond proceeds and what is done with the money, refinancings present a high potential for abuse. This can include cash being taken out of the transaction without being authorized, excessive fees Refinancing School District Bonds 67 Final Report 2008–2009 Grand Jury being charged for issuance, taxpayer savings being much less than expected when the effort was approved, etc.

No timely, reliable State oversight exists for the refinancing process. School boards generally accept the recommendations of district personnel, and these are generally guided significantly by the investment bankers and bond counsels whose opinions can be, by their nature, self-serving.

Existing State law does not require the office of the Treasurer to be involved early in the process of issuing GO bonds, or to be involved at all in bond refinancings. However, the Treasurer can provide valuable services to school districts regarding their proposed bond issues. The Treasurer’s office can offer an impartial viewpoint on alternatives and provide access to others in the financial community with different points of view. The Treasurer can help structure the many variables of a bond offering to be in the best interests of the district. The Treasurer can help evaluate the fee structure to ensure issuance costs are not excessive, and can help make sure that the terms of the proposed issue are well understood and do not include cash out provisions or other inappropriate features. A school district and its property taxpayers would benefit from taking advantage of the Treasurer’s knowledge, experience and capabilities. In the absence of any State statutes that require this communication to take place, this arrangement may best be established by mutually voluntary agreement.

The currently outstanding GO bonds in Placer County school districts represent a significant potential opportunity for taxpayers to benefit from refinancing those bonds when market conditions permit.

While the presence of the Casino has provided local jobs to the economy, it has also created additional costs to local government. These areas of actual or potential costs include law enforcement, fire protection, emergency medical services, water, sewer, roads and bridges, traffic, pollution, addiction management and other human services. Thunder Valley Casino: Mitigating Costs to Local Governments 34 Final Report 2008–2009 Grand Jury Now that the Casino has been in operation for several years, the Grand Jury decided to look at the extent to which those additional costs were being identified and mitigated, and what processes were in place to deal with those costs as they changed over time. The Jury felt that Placer County taxpayers should understand how the presence of the Casino is affecting their local governments financially. The Casino’s presence in the County results in many complex economic and social impacts. Some jobs and businesses are created or helped while others are damaged as a result of the Casino’s operation. Some people are strongly opposed to gambling of any type and object to its presence in the County. Others welcome the increased entertainment and dining opportunities it provides. Some individuals and families are hurt by problem gambling or by crimes that have some association with the Casino. Other people – some members of the tribe as well as others – benefit financially as a direct or indirect result of the Casino’s presence. Attempting to identify these and other effects accurately is extremely difficult and often subjective. Quantifying the financial impacts on individuals and on society as a whole is even more problematic. Complicating the societal effects still further is the current political reality of Indian gaming in general, and the UAIC specifically. Federal legislation authorized the operation of tribal casinos and has given tribes sovereign nation status. For Placer County, this has resulted in the existence of a very large business operation in the County that operates without much transparency. The UAIC is also attempting to exercise an increasingly large amount of political influence to advance and protect its interests. While understandable from a business perspective, this has caused some people to wonder if the UAIC always acts like a good neighbor. The Casino is a fact of County life and appears to be here for the foreseeable future. Identifying its impacts on society with any reasonable amount of accuracy and completeness is a complex task probably best suited to academics and other professionals. Accordingly, the Grand Jury limited the focus of this review to considering whether or not Casino-related costs to local governments were being properly identified and compensated. Investigation Methods The Grand Jury sent letters to the County Executive Officer and the City Managers of the cities of Lincoln, Rocklin and Roseville asking for a wide range of information and documentation relating to their costs from the Casino and the mitigation of those costs. Thunder Valley Casino: Mitigating Costs to Local Governments 35 Final Report 2008–2009 Grand Jury Responses were received from all parties and all the material provided was reviewed in detail. The City Managers for Rocklin and Roseville testified to the Jury to expand on several portions of their responses. The County participates with the Tribe and others in two gaming-related committees: the Tribal County Advisory Committee and the Placer County Indian Gaming Local Community Benefit Committee. Letters were sent to the offices of the County Executive and the Board of Supervisors asking for meeting minutes, copies of relevant reports, and other pertinent information about the operations of those committees. The designated County contacts for these committees provided testimony to the Jury about specific pieces of this information. California Government Code Sections 12710–12718 deal with the establishment and operations of a Local Community Benefit Committee in each county in which Indian gaming is conducted, including procedures for distributing grants to local government agencies impacted by gaming. The Jury reviewed those Government Code Sections and the manner in which they have been implemented in Placer County. Jurors also reviewed the California State Auditor’s report, published in July 2007, on the Indian Gaming Special Distribution Fund that was set up by this Government Code. This was a statewide audit with Placer being one of six counties selected to receive a more detailed review. The Jury used this report both for general knowledge about the grant creation process and the results of the audit as it pertained to grants awarded in Placer County. The Jury reviewed archived newspaper articles to better understand the history of Thunder Valley Casino and related issues in Placer County. We obtained information about the amount paid by the Tribe to the County from the offices of the Auditor- Controller and the County Executive Officer. The Jury made no independent attempt to identify or quantify any specific costs to governments resulting from the Casino. We relied on officials from the County and its cities to provide any cost estimates and to give their evaluations of the degree to which those costs have been mitigated. The Jury also did not attempt to determine any costs or benefits to individuals, businesses or non-government agencies that may result from the presence of the Casino in the County. Thunder Valley Casino: Mitigating Costs to Local Governments 36 Final Report 2008–2009 Grand Jury Facts A Brief History of the Casino In 1991, the United Auburn Indian Community was organized by remnants of two Native American bands, the Maidu and Miwok, which had been living on land near Auburn provided to them by the federal government in 1917. Federal recognition was restored to the Tribe in 1994 through legislation, along with the right to procure other land for a reservation in Placer County. As has been done many times elsewhere in the country, the Tribe decided to build a casino to provide revenue for its members. They chose Station Casinos Inc., a Nevada- based casino management company, to select the land for the Tribe, help develop plans for the Casino and operate the casino during the first seven years after opening. An agreement with the State was signed in 1999 that allowed the Tribe to operate the planned Casino. After first exploring a site near Penryn for the Casino and being met with strong local opposition, the Tribe settled on a site in the Sunset Industrial Park on County land near Lincoln. A Memorandum of Understanding (MOU) was negotiated between the Tribe and Placer County and signed in January 2000. Through this MOU, three parcels were placed in trust for the Tribe, including a large parcel to be used for the Casino and gaming-related activities. The MOU also describes commitments made by the Tribe for payments and other actions to mitigate a variety of costs that the operation of the Casino would create for the County and local communities. The cities of Rocklin and Roseville, along with a group called Citizens for Safer Communities, filed a lawsuit in April 2002 seeking to stop the casino. Their primary claim was that the federal government did not fully take into account any adverse effects of the casino on the surrounding communities. In September 2002, a federal court dismissed the case. The cities appealed, but the United States Court of Appeals for the District of Columbia Circuit upheld the dismissal in a ruling November 14, 2003. The Tribe had earlier made several offers to the cities of Rocklin and Roseville to contribute to the cities and community organizations as a way to mitigate any adverse impacts from the casino if the cities would drop the suit. But the cities refused to accept the offers. After the final ruling on the appeal upheld the dismissal of the suit, the Tribe’s Thunder Valley Casino: Mitigating Costs to Local Governments 37 Final Report 2008–2009 Grand Jury attorney was quoted as saying that the Tribe was not likely to repeat those offers to the cities that had challenged the casino in court. Thunder Valley Casino opened for business in June 2003 as one of the largest casinos in the State. In June 2007, the Tribe announced plans for a $1 billion expansion that includes a 23-floor hotel, a performing arts theater and a convention center. Construction was well underway when the Tribe halted work in November 2008 to reevaluate the project in light of uncertainties surrounding the difficult economic conditions at the time. In February 2009, the Tribe announced that the expansion would restart in April, but would be scaled back in several areas, including reducing the hotel from 23 floors to 15. Placer County The MOU between the County and the Tribe has been amended once, in July 2003, primarily to expand the level of fire and emergency services to the Casino property. The current agreement as amended includes the following:  defraying all of the costs of adding five deputy positions and a patrol vehicle in the Sheriff’s department  building a fire station on the Casino’s land and paying the County an amount to compensate for three-person staffing of the station 24 hours per day  constructing or improving certain roads impacted by the Casino  improving infrastructure for water and sewer services to be obtained from the City of Lincoln  contributing to organizations dealing with Photo by Win Gredvig problem gambling  contributing to the newly-established Placer Legacy, a program created to protect open space in Placer County  reimbursing the County and local districts for any revenue lost from the removal of the trust lands from tax rolls, including in lieu payments for property tax, sales tax and transient occupancy tax (commonly called the “hotel tax”)  making a commitment to adhere to the use of Uniform Building Codes for any structure constructed on the trust lands and to comply with County general and community plans. T hunder Valley Casino: Mitigating Costs to Local Governments 38 Final Report 2008–2009 Grand Jury The MOU allows for future amendments, provides for an annual inflation-based adjustment on many of the specified amounts, and allows for adjustment of compensation for actual costs incurred by the County. During the fiscal year of July 1, 2007, through June 30, 2008, the Tribe paid the County approximately $12 million as a direct result of the MOU. Over $5.5 million was for ongoing services. This should approximate the amount that will be paid in the current fiscal year. Payments in future years can be expected to be higher still due to the in lieu hotel taxes that will be paid once the new hotel at the Casino begins operation. Here are the MOU-related payments made by the UAIC to the County in the 2007–2008 year: Purpose Amount Sheriff’s Services $1,194,568 Fire/Emergency Services 1,348,080 Sales Tax In Lieu 400,448 Property Tax In Lieu 2,454,798 Placer Legacy Program (received 7/2/08) 125,000 Subtotal $5,522,894 Public Works Department (expansion project) 6,527,935 Total $12,050,829 In his written response to the Grand Jury, the County Executive Officer, Thomas Miller, said that in his judgment the costs to the County resulting from the Casino are being adequately mitigated. Mr. Miller stated the “financial impact of the Casino [on the County] has been mostly revenue neutral, with some areas trending positive. The Tribe pays for identified cost impacts per the MOU. The Tribe has also made various voluntary contributions to charitable causes in the County.” He also cited the positive impact that Casino customers have on local businesses. While the Casino’s expansion project could present some issues in the future, he said the County will monitor that project and adjust as needed. Tribal County Advisory Committee The County MOU calls for the establishment of a permanent nine-person Tribal County Advisory Committee. It is comprised of two representatives from the County Board of Supervisors, one from the Sheriff’s department, one from a community organization addressing the local impacts of gambling, and five representatives from the Tribe. The Thunder Valley Casino: Mitigating Costs to Local Governments 39 Final Report 2008–2009 Grand Jury Advisory Committee is designed to deal with questions related to implementation of the MOU and concerns about any matter within the scope of the agreement. The Grand Jury determined that this committee meets only twice a year rather than quarterly as is called for by the MOU and appears to be casually managed with few significant issues discussed. This initially concerned the Jury. However, in practice, questions or issues dealing with subjects relating to the MOU have been dealt with routinely outside of this committee. Issues have not been saved for future meetings. This committee has served largely as a means of periodic formal communication between the Tribe and County about projects of mutual interest. Normally, no significant actions have been taken during committee meetings. City of Lincoln In July 2008, the City of Lincoln and the Tribe signed an agreement designed to mitigate costs to the City resulting from operations of the Casino, including specifically the expected costs resulting from the planned Casino expansion. Among other elements, the MOU calls for:  improvements to water and sewer service for the Casino  $2 million as a contribution by the Tribe toward the cost of the Ferrari Ranch Road and Highway 65 interchange  a contribution toward the cost of widening the Twelve Bridges interchange and bridge over Highway 65  a contribution to the cost of widening Fiddyment Road  annual payments for fire protection and law enforcement services  annual contributions to City-sponsored youth recreational activities  a contribution to the Western Placer Education Foundation Outdoor Learning Environmental Project for the education of youth regarding Native American culture  annual contributions to the Lincoln library for the development and expansion of a Native American book collection  an annual contribution to the City of Lincoln for economic development in the City. The City of Lincoln has tracked certain law enforcement costs to the City linked to the Casino. Police incidents over a nearly two year period were documented along with the staff time required to investigate them, write reports, testify, etc. The City Manager of Lincoln, Jim Estep, acknowledges that not all costs have been identified or quantified. Still, he believes that the current MOU “provides for sufficient funding to the City to Thunder Valley Casino: Mitigating Costs to Local Governments 40 Final Report 2008–2009 Grand Jury cover all financial impacts on the community as a result of the Casino.” When the Casino expansion is completed and is put into use, the expansion may have a possible impact on local fire services. Other than that, the Lincoln City Manager anticipates no further issues relating to the Casino. City of Roseville The City of Roseville has no formal agreement with the Tribe. While the City has documented some Casino-related incidents handled by the police department and looked at statistical and anecdotal information, it has not quantified actual costs of the Casino to the City. The City Manager, Craig Robinson, believes that those costs exist. On the other hand, he said that the City has received three grants from the Indian Gaming Special Distribution Fund (see next page) that were intended to help mitigate costs to the police department. Mr. Robinson stated that the Casino has made two “generous” contributions to community agencies unrelated to any mitigation of Casino cost impacts. Mr. Robinson additionally testified that on balance, there has been no significant net impact to Roseville as a result of the Casino. Discussions have begun between Roseville fire and police department staffs and Thunder Valley staff to begin the creation of a written agreement dealing with emergency response. These were prompted by the emergence of plans for expansion of the Casino. The intent is to provide for compensation in cases where Roseville personnel respond to an emergency at the Casino. The City Manager feels confident such an agreement can be worked out. City of Rocklin The City of Rocklin also has no agreement with the Tribe. The City Manager, Carlos Urrutia, stated, “the City of Rocklin has not tried to quantify the actual or potential service costs resulting from [the Casino]”. However, Mr. Urrutia stated that there has been a net increase in costs. He feels these would be difficult to quantify. Negotiations with the Tribe had been underway several years ago. When Rocklin opposed the Casino and joined in the lawsuit to prevent it, those negotiations ceased and have never been restarted. The City Manager was uncertain what the response would be from the Tribe if Rocklin were to seek a cost-mitigation agreement. However, Mr. Urrutia stated that the City enjoys a “cooperative relationship with the tribe and has not ruled out the possibility that, in the future, some sort of an agreement may be reached.” Thunder Valley Casino: Mitigating Costs to Local Governments 41 Final Report 2008–2009 Grand Jury Rocklin has received some grants from the Indian Gaming Special Distribution Fund (see next page) dealing with public safety. The Tribe has also provided money for improvements to public infrastructure that benefit the City, and has contributed money to charitable organizations not related to Casino cost mitigation. Placer County Indian Gaming Local Community Benefit Committee California Government Code Sections 12710–12718 calls for the creation of a seven- person Indian Gaming Local Community Benefit Committee (LCBC) in Placer County. It is currently comprised of two members of the Board of Supervisors; one person each from the cities of Lincoln, Rocklin and Roseville, and two representatives from the Tribe. The primary purpose of the LCBC is to establish and implement policies and procedures dealing with grants to be made from the State Indian Gaming Special Distribution Fund. Money in this fund is a percentage of gross revenues certain tribes earn from gaming operations. (These are tribes with which the State had entered into compacts in 1999.) The UAIC is not one of those tribes. Therefore, no money goes into this fund as a result of gaming in Placer County. However, all counties in the State in which Indian gaming is conducted may receive portions of the fund each year. The money allocated to counties from the fund (less an allowed 2% deduction by each county for administrative costs) is to be awarded by the LCBC in grants that will help mitigate the cost impacts of tribal gaming. Actual amounts available for grants vary from year to year. The amounts of money available to the County through this fund can be significant. The first year Placer County had money available from the Fund to distribute for grants was 2004. Annual amounts beginning then were: 2004 $332,426.40 2005 $383,346.76 2006 $765,127.93 2007 $326,729.11 2008 Zero For reasons that are unclear to the Grand Jury, but apparently are linked to chronic shortfalls in a different fund (the Indian Gaming Revenue Sharing Trust Fund) that takes priority over the Special Distribution Fund, no money was allocated for grants to be made in 2008. However, notification has been received that approximately $290,000 will be available for Placer County in 2009. It is important to understand that the availability Thunder Valley Casino: Mitigating Costs to Local Governments 42 Final Report 2008–2009 Grand Jury of money for grants is not guaranteed each year. Recipients cannot count on this source as a remedy for Casino-related costs. Also, the state legislation creating the LCBC and the Special Distribution Fund contains a sunset clause (Section 12718) calling for it to expire on January 1, 2010. This could be extended, and has already been done at least once. This feature reinforces the lack of permanence of the grants. In the fall of each year, the County receives a letter from the State Controller’s office providing the amounts to be available for grants the following year. The Placer County LCBC normally receives grant applications in March and makes the final allocations by April or May. Grants are available only to local governmental agencies, not private organizations. Government Code Section 12715(g) defines the priorities for the receipt of grant money. The list begins with law enforcement, fire services, emergency medical services and environmental impacts. All grants must be for a purpose that mitigates in some way the impact of casino gaming. A report must be provided to the State by October 1 of each year giving high-level details of the grants that have been made by each county’s committee. The Jury examined reports of grant decisions made by the committee in 2007. Some examples of grants awarded in 2007 are:  $55,000 to the County Health and Human Services Children’s System of Care program to help prevent addictive behaviors  $35,500 to the County Sheriff for a Stolen Property Tracking System  $100,000 to the City of Rocklin Police Department to help with start-up expenses relating to a regional Vehicle Theft Task Force  $35,000 to the Placer County District Attorney to help offset criminal prosecution expenses related to crimes from the Casino. An audit is performed by the State every three years. The most recent audit was published in July 2007. Among other areas of focus, the audit evaluated the use of the grants and the processes in place in six counties for the 2006 grant awards. Placer County was selected to be one of the six. The audit found that “none of the six counties consistently used the grant funds solely for projects that mitigate the impacts of casinos.” In Placer County, the audit determined that two grants totaling $127,885 did not address a casino impact. The Grand Jury did not examine those grants or pursue the validity of those findings. However, in September 2008, the legislature approved AB Thunder Valley Casino: Mitigating Costs to Local Governments 43 Final Report 2008–2009 Grand Jury 158 that added language to the Government Code saying that grants can be used only to mitigate impacts from casinos. Once the October reports were made to the State, no further action was taken by the LCBC to verify that the money was spent as the committee intended. The LCBC had not set up a procedure to enable it to determine, for example, if an agency had spent only part of the grant money on an approved project and the rest elsewhere, or had not spent the grant on the project at all. The desirability of instituting such verification steps was brought up in at least two LCBC meetings, but no action was taken to put those into effect. The County contact for this committee confirmed that no such procedures exist. Findings 1. The County and the City of Lincoln have worked proactively with the Tribe to create MOUs that mitigate costs to those governments resulting from the operation of the Casino.