By Reporter
NBC News
updated 8/23/2004 3:53:00 PM ET 2004-08-23T19:53:00

The "Happiest Place on Earth" might not be so happy about a proposal to build a Las Vegas-style mega-resort just a few miles from where Mickey and Minnie Mouse call home.

The proposal to build an off-reservation Indian gaming casino a short distance from Disneyland has ruffled feathers in the Southern California town of Garden Grove after news emerged that council members had met with casino developer Steve Wynn about the possibility.

“There are a lot of moral reasons to oppose the plan. A lot of churches have already spoken to me,” said Garden Grove Mayor Bruce Broadwater, who is opposed to the idea.

“Everything I hear is that Disneyland is opposed to it, and I believe they have a lot more clout than the city of Garden Grove.”

The controversy highlighted the state's growing dependency on gambling revenues and what is seen by critics as a disturbing push into residential areas.

Until recently, gambling was an activity that usually meant a trip to Reno or to Las Vegas in neighboring Nevada.

But as Garden Grove debated the issue, Gov. Arnold Schwarzenegger separately reached compacts with five tribes to continue or expand gaming California. Final approval rests with the legislature and the U.S. Department of the Interior.

The compact that has garnered the most attention is with the Lytton Band of Pomo Indians in the Northern California town of San Pablo. The original agreement allowed for up to 5,000 slot machines, which would make the casino one of the largest in the United States.

But final agreement is uncertain after the deal was harshly criticized. Sen. Diane Feinstein said the agreement would "compromise a community" so as the state could garner 25 percent of the casino revenues.

“Californians are going to have to come to grips with the impact of the tremendous growth of gambling in the state,” Feinstein said.

The city of San Pablo is located in the heavily populated East Bay, just 30 minutes from San Francisco.

As a result of the numerous broadsides, the Lytton Indians have offered to reduce the number of slot machines by half to 2,500. It is expected that the tribe will maintain its commitment to give 25 percent of revenue to the state.

It's not yet clear whether the Indians new offer will quiet criticism of the compacts, which must be approved by California's legislature by Aug. 31.

Working with lemons
Yet, Schwarzenegger's aides say the governor is not at fault. “The governor does not savor gambling,” said Daniel Kolkey, his lead negotiator for tribal gaming.

“We believe the governor had a lemon and made it into lemonade,” referring to the compact with the Lytton Indians.

Under federal law Schwarzenegger is required to negotiate in good faith with tribes that have land that qualifies for gaming under the Indian Gaming and Regulation Act (IGRA).

In the deal with the Lytton Band of Pomo Indians, California will get 25 percent of winnings from slot machines and card games, which had been estimated at $152 million. With concessions to downsize the casino, that amount will be considerably smaller.

Like the state, local towns like San Pablo and Garden Grove stand to raise large amounts of revenue from allowing casinos to operate, without having to raise taxes.

The struggling city of San Pablo, for instance, has a budget of $12.5 million, 20 percent of which comes from existing gambling revenue. Under the expansion, the city expects to get well over $5 million of additional revenue, almost half of its budget.

“This would mean 1,500-2,000 unionized jobs in a community where the median income is lowest in the bay area, and a third lower than the national average,” said Brock Arner, the San Pablo City manager.

“I see young ethnic families buying homes, and living the American dream. The casino provides better jobs and the revenues necessary to provide for those children.”

Choosy Garden Grove
While city finances in Garden Grove are not quite as dire, it has looked at many proposals over the past few years in an attempt to cash in on its proximity to Disneyland. One unusual plan came from the Jordanian government to build a museum dedicated to late King Hussein.

“The idea was that a casino would be part of a larger development,” said Deputy City Manager Les Jones. He added that the concept is to “bring visitors who want to stay for a week rather than having visitors who stay for a day and leave.”

Public discussion will commence this week about the proposed casino in the form of a council meeting in the Southern California city.

Council members were more or less forced to hold a public hearing after it came out in the media that council members themselves had met in secret with Steve Wynn.

Mark Leyes, a councilman from Garden Grove who refused to sign the confidentiality agreement when he met with Wynn, conceded that income from a casino would mean a “significant increase” in revenue. But Leyes added that the costs were high in terms of problems for the city, ranging from increased traffic and sewage, all the way up to gambling addiction.

“We spent million of dollars cleaning up Harbor Boulevard, cleaning up the prostitution,” said Broadwater who has been the mayor of Garden Grove for the past 10 years, and has seen the stretch of area where the proposed casino would be built improve over the years.  “I don’t want to go anywhere near backwards on it.”

Adam Lesser is an editor on the NBC News Assignment Desk.

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