Casino developer may have mislead Schwarzenegger's negotiator to get approvals for twin casinos

Dan Kolkey may have been duped by Barwest's half-truths and illusions but this should take all that mystery and confusion away

From the very beginning, Barwest LLC demanded secretness and exclusivity. A city employ explained that prior to June 2003, there had been 15 months of top-secret negotiations and that he, a city employee, had signed a confidentiality agreement with the Detroit developer. And when they could no longer moved foward in secret, Barwest demanded and got an Exclusive Negotiating Agreement (ENA) with the City of Barstow (June 2, 2003). There is not one reference in that exclusive agreement to the Los Coyotes Band of Indians nor in the "rationale" provided to the Barstow City Council at the time they were to consider approval of the agreement. That ENA between the Detroit Developer and the City of Barstow was extended in September 2003 and again March 1, 2004 without reference to the Los Coyotes Tribe.

In March 2004, a Desert Dispatch columnist reported that Barwest Principal Michael J. Malik and his attorney Lance Boldrey had threatened to walk away from Barstow if the City engaged in discussions with any other prospective tribes or partners. Overtime you can see a pattern of threats and heavy handed leverage.

By June 2004, pressure was building on the City Council to resist yet a third extension of the Barwest ENA and other sideshows were secretly playing out behind the scenes but wouldn't be disclosed for almost a year:

(1) in March 2004 Governor Schwarzenegger had informed Barwest, Los Coyotes Leaders and Mayor Lawrence Dale that he would not approve a Los Coyotes project;

(2) An original introduction to Big Lagoon Rancheria Chairman Virgil Moorehead in April/May 2004 was not productive;

(3) Los Coyotes leaders were becoming increasingly disenchanted with Barwest; and in fact, would formally split with Barwest a month or two later (August 2004); and

(4) Mayor Dale was facing re-election.

Fearing their original 2-3 year capital "investment" might be flushed away, Barwest conjured up a little scheme that:

(a) guaranteed Barwest exclusive casino development rights to Barstow, regardless of tribe, via a Disposition and Development Agreement (DDA) between Barwest and the City; and

(b) invoked the Governor's name and manufactured a "do or die" sense of urgency in order to convince a majority on the City Council to approve, what amounted to a bogus Municipal Services Agreement (MSA) with the Los Coyotes Tribe for a project Barwest and the Mayor knew was already "Dead on Arrival."

It wasn't a binding contract they sought with the MSA but simply a placeholder for Barwest and a barrier of entry into the Barstow market for anyone else over the following nine months. Barwest and local politicians needed to buy some time: Barwest needed time to regroup after the Governor rejected their plans for Los Coyotes and after Los Coyotes rejected Barwest as its business partner; and local politicians were looking to get through their re-election campaign with little noise and controversy. [Officials seek to dispel rumors; Desert Dispatch 10.02.04]

Understand, Barwest presently controls at least 100 acres in Barstow, maybe more (at one time Barwest's officials indicated hoped to acquire 200+ acres). Barwest has access to thousands of acres of BLM land directly adjacent to its 100+ acres. Neither tribe owns or controls any land in Barstow today (that's the purpose of the federal fee to trust process). The original Los Coyotes casino project approved by the Barstow City Council expressly limited the tribe to a 20 acre development. But now, the project has more than doubled: there are two casinos (twin full-service spa casino resorts) to be developed on almost 50 acres (250% larger); with nearly three times the number of the slot machines and gaming tables originally anticipated in the Los Coyotes proposal. Sound like someone hit a jackpot?

With this in mind, read the following post which substitutes Barwest's name for Los Coyotes name where it would be factually correct to get a true picture of who's pushing things in Barstow.

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The following dialogue between Senators and Daniel Kolkey, Governor Schwarzenegger's former lead gaming compact negotiator is excerpted from transcripts of a March 28, 2006 Senate Governmental Organization Committee hearing, Sacramento, Calif.

SENATOR FLOREZ: So, Los Coyotes without Big Lagoon wouldn’t be a valid use of State policy then?

MR. KOLKEY: No.

SENATOR FLOREZ: So, there lies one issue. So, you have Big Lagoon that normally wouldn’t be eligible is eligible now—excuse me, Los Coyotes—because of Big Lagoon. Is that correct?

MR. KOLKEY: The project is eligible under the Governor’s policy because it facilitates Big Lagoon’s relocation.

SENATOR FLOREZ: So, in essence, what came first then—Big Lagoon or Los Coyotes? Why would Los Coyotes even be on the topic if the Governor’s policy itself wouldn’t allow for that?

MR. KOLKEY: Well, number one, the only way for us to facilitate the relocation of Big Lagoon was to find a site in Barstow. Barstow & BARWEST had already identified this site near outlet malls as part of its plan for renovation of the city. And they had an exclusive agreement with Los Coyotes BARWEST. So, the only way that we could facilitate the Big Lagoon relocation was through the site identified by the City of Barstow with Los Coyotes BARWEST. And these were the facts that the State was dealing with then. Let me just say that having gotten Los Coyotes’ BARWEST's agreement to do this, we felt it was a matter of, really, honor and fair dealing that we stick with Los Coyotes BARWEST throughout this. In other words, they BARWEST facilitated this relocation. As a matter of honor and fair dealing, we were going to stick with BARWEST, Los Coyotes and Big Lagoon as a unified project and not try and find, if we could, some other site in Barstow. This was the site that Barstow had picked. Los Coyotes BARWEST facilitated it, and this accomplished, through a relocation and consolidation, really, of two casino projects, the Governor’s policy of avoiding the environmental impact on the coast. [BARWEST is rewarded with two casinos for taking the Big Lagoon problem off Kolkey's lap.]

SENATOR FLOREZ: Okay. Senator Battin?

SENATOR JIM BATTIN: Mr. Kolkey, I have a couple of questions I don’t understand. So, the City of Barstow got to decide where California was going to allow a casino project?

MR. KOLKEY: No—I wouldn’t put it that way. What we have here is we wanted to relocate the casino project that Big Lagoon had on the coast.

SENATOR BATTIN: But through Los Coyotes’ BARWEST's agreement with Barstow, that somehow became an exclusive. You could not have put Big Lagoon there without Los Coyotes?

MR. KOLKEY: We would have needed a site, and one of the things that the Governor’s proclamation has made clear is that in relocating any tribal casino under the Section 20 authority, is we want support by the local jurisdiction and the local community. We’re not going to relocate a casino against the wishes of the local jurisdiction or the local community. And so, if the local jurisdiction says, Here’s where we would like to have a casino, then we’re going to accommodate that local jurisdiction. We’re not going to force something on the local jurisdiction, so we were going to do it where Barstow wanted to do it.

SENATOR BATTIN: So, if I understood a recent news article that I just read, is that the City of Barstow has actually not. . . . the city council could not take a position on the referendum that is in front of the city right now; whether or not they support having the casino there.

MR. KOLKEY: Well, that local initiative is actually quite different from support of the Big Lagoon-Los Coyotes unified casino project. That is a local initiative that seeks support of casinos in Barstow but at a different site and not the site at the outlet malls that the City of Barstow had identified.

SENATOR BATTIN: The city council of Barstow, then, has passed and made a deal with Los Coyotes BARWEST?

MR. KOLKEY: The City of Barstow has a . . .

SENATOR BATTIN: Exclusive, you said.

MR. KOLKEY: They had at the time we were negotiating an exclusive agreement [with BARWEST not Los Coyotes as Kolkey suggests over and over]. This was in 2004. They had an exclusive agreement with Los Coyotes BARWEST. They also have an MOU MSA with Los Coyotes ...

[Yes, there had been an MSA for a project that had already been aborted long before the Barstow City Council awarded the agreement - in March 2004 the Governor had rejected that proposal. Barwest and Mayor Dale failed to reveal they were no longer pregnant with the Los Coyotes Casino when they asked the City Council to seal the deal with an MSA they knew would not ever be valid. Then weeks before the November 2004 election it was discovered Mayor Dale had never executed the bogus agreement.

It wasn't until almost a year later when Barwest announced it would give birth to twin Casino resorts that the players confessed what had gone on behind the scenes the year before].

click for: complete transcripts