End of the line
Tale of a cardroom and Las Vegas casino reveal your tax dollars at work
What’s missing in the polished wood, Corinthian-columned opulence of the California state Senate chambers is a sign with large block letters that says: “Your Tax Dollars At Work.”
Like the ones for highway projects. Such a sign would be valuable—and instructive—for both observers and participants in the “legislative process.”
It’s quiet now in the Senate and the Assembly chambers. The “process” has worked all its magic for the year, and the Legislature has adjourned. But not before passing hundreds and hundreds of bills, most of which will be signed into law by Gov. Jerry Brown between now and his mid-October deadline to act.
Last week, however, the upper house was a hive of frenetic activity as the state’s 40 senators—each representing 931,000 Californians—condemned, defended, amended and OK’d statutory changes from stalking to solar panels for the poor.
Were California’s tax dollars being spent wisely?
Public monies have been pissed away on far more flagrant boondoggles, for sure. But based on what issues revved their engines, senators didn’t exactly demonstrate a fixation on the public good.
Perhaps at some other time during the Senate’s deliberations the foreclosed, the famished, the disenfranchised, the medically fragile, the aged and the disabled were the focus. But during one 90-minute, late-afternoon period toward the session’s close, the topic generating the most excitement was preventing a privately owned company from being forced into a “fire sale” of one of $2 billion profit-making ventures—one here and one in Nevada.
The Silver State property owned by this company is the acreage upon which the Sahara Hotel and Casino in Las Vegas is being rebuilt for $415 million. Here in the Golden State, the company owns the 240-acre Hollywood Park racetrack, which it bought seven years ago for $260 million.
Horses stop running this year at the venerable track, and next year, mixed-use development begins of what’s probably the largest contiguous chunk of land in metropolitan Los Angeles.
The company is San Francisco-based Stonebridge Capital Group. Real estate is its game. Of the client money Stonebridge invests, $2.6 billion comes from public-pension funds. Stonebridge’s 30 employee-owners profit when the assets managed by the firm, $6.4 billion currently, increase in value.
What Stonebridge wanted—and eventually got—is an exemption that allows it to continue to operate a card club, also located at Hollywood Park. In return, Stonebridge agrees that within three years after the new Sahara Hotel opens, it will divest itself of one of the two properties.
Completion of the hotel is supposed to be in the fall of 2014. So, Stonebridge can sit pat until late 2017. Plenty of time for the value of Hollywood Park to increase as development begins. And plenty of time for the value of the Sahara to climb as credit-card carrying guests flock to its casino, four nightclubs and 1,600 rooms.
This, says Stonebridge, is a modest measure. In contrast to its failed attempt last year to secure an in-perpetuity exemption without shedding any of its assets. Now it’s willing to sell one of its cash cows after feverishly yanking its swollen udders for three years.
But, hey, Stonebridge and its lobbyists are just trying to secure the best win they can. It’s the job of the state Senate—and the Assembly—to scrutinize what Stonebridge wants and decide whether it’s good for California.
Opponents and supporters claimed it’s about jobs. Other card clubs in the vicinity said they would shed jobs if Hollywood Park received the exemption. Supporters said without the exemption, Hollywood Park’s card club would close, erasing 20 percent of the city of Inglewood’s budget.
After 30 minutes of jawing, the Senate decided the bill benefits 38 million Californians and sent it to Gov. Brown. If he signs it, California bestows a handsome profit on Stonebridge and its clients, 80 percent of which are pension funds in this case.
Your tax dollars at work.