INVESTMENTS & ENTERPRISES
RINCON BAND ECONOMIC DIVERSIFICATION
The Rincon Reservation was created in 1875 by President Ulysses Grant for the Rincon Band of Luiseño Indians which was recognized by the United States Government as a sovereign government. This comes in part from the fact that long before the Europeans arrived, the ancestors of the Rincon people governed themselves as a sovereign people, creating social, political, spiritual, economic, and agricultural systems.
Today, as it did then, sovereignty comes with obligations and responsibilities to govern and provide for the Rincon tribal members. When the people were placed on the reservation, they were deprived of the vast majority of their ancestral territory and natural resources, and the Rincon Band was forced to rely on the federal government for financial support to fulfill these obligations and responsibilities. Support from the federal government was meager at best, and progress on the reservation, when it existed at all, was slow.
That began to change in 2002 when the tribe entered into the casino gaming industry and built its casino and hotel. With revenues from the casino, the tribal government was able to begin providing for the people by offering basic services such as health care, law enforcement, fire protection, and infrastructure improvements.
LONG TERM INVESTMENT STRATEGY
Soon after the tribal government began to invest in services for the community, tribal leadership decided that while the band had the means and the opportunity because of proceeds from casino gaming, it would be prudent to begin sowing other fields for future harvest. Thus, the Tribal Investment Committee was created. Comprised of tribal members with education and experience in the field of business and finance, the committee was tasked with creating a long-term investment portfolio that would be left untouched and allowed to grow. The goal was to generate sufficient income from earnings, dividends, and interest, to fund the operation of the tribal government. As previously mentioned, this function is currently funded with revenues from the casino, but since no one can guarantee that Indian gaming will still exist in its current form 20 to 30 years from now, the tribe felt it wise to have a contingency plan.
ON-RESERVATION AND OFF-RESERVATION INVESTMENT
As time progressed, and the Rincon gaming enterprise continued to grow and prosper, the tribe decided that in addition to the original long-term investment strategy, it wanted to further diversify its economic base. Consequently, two economic development corporations were created for the specific purpose of generating new sources of tribal revenues, not related to gaming. One was given the mission of generating on-reservation projects, and the other off-reservation projects. The on-reservation corporation was named Rincon Economic Development Corporation (REDCO), and the off-reservation corporation was named First Nations Economic Development Corporation (FNEDCO).
Following the lead of many other gaming tribes across the nation, and adhering to the adage of “not keeping all your eggs in one basket,” the Rincon diversification strategy has begun to expand and diversify the tribe’s assets in a number of areas.
RINCON ECONOMIC DEVELOPMENT CORPORATION (REDCO)
REDCO’s first project was a travel plaza, which would not only complement the hotel and casino, but also serve the local community, providing jobs and services. Containing a gas station, convenience store, sandwich shop, and car wash, the Rincon Travel Plaza, was opened in 2012, and serves hotel and casino employees and guests, local residents, along with travelers driving through the reservation.
In the process of developing the Travel Plaza, REDCO obtained the first 7-Eleven franchise ever to be located on an Indian reservation, as well as successfully negotiating a supply agreement with the west coast supplier of Shell Gasoline. This made it possible for the tribe to open a Shell-branded gas station, offering top quality fuel, both gas and diesel.Additional space in the Travel Plaza was leased to a Subway Sandwich franchisee, bringing a trio of nationally recognized brand name enterprises to the reservation. The venture has been a great
success. In its first year of operation, the 7-Eleven store had the distinction of being fifth in sales volume in the 90 plus store-market area.
REDCO also invested in a Micro Brewery, which is located on the Westside of Harrah's Southern California Resort. SR76 Beerworks is the first brewery of its type in Southern California owned by a Native American Indian tribe. Our brewery and the brews we craft are inspired by how our people would travel between coastal and inland camps along the San Luis Rey River—a path which would later become the highway known as SR-76. You can visit www.sr76beerworks.com for additional details.
The REDCO board is currently composed of all Rincon Band Members. Board of Directors include Shalome Briggs, Gordon Calac, Ruth-Ann Thorne, Raymond Rodriguez, Frank Mazzetti, and Jim Murguia.
FIRST NATIONS ECONOMIC DEVELOPMENT CORPORATION (FNEDCO)
FIRST NATIONS CAPITAL PARTNERS, LLC (FNCP)
The other investment entity, FNEDCO, holds the tribe’s interest in First Nations Capital Partners, a private equity fund. First Nations Capital Partners, LLC (FNCP) is the first inter-tribally controlled private equity firm in the United States. Further, it is the first and only fund of its kind to bring together two sovereign Indian nations and a prestigious financial institution. In addition to the Rincon Band of Luiseño Indians, FNCP’s other principal investors include the Colusa Indian Community Council, and Wells Fargo Bank, each of which committed $5 million to the fund. FNCP’s mission is to acquire or provide capital for growing profitable companies in traditional industries in the 11- Western states. FNCP provides active management of its portfolio companies, transforming the businesses from reasonably successful entrepreneurial-based companies to professionally managed and operated companies with increased revenues, profits and value.
FNCP currently owns the controlling interest in a plastic card manufacturing company located in Southern California and a cordage and rope manufacturing company located in Washington State.
The FNEDCO Board and Investment Committee are composed of all Rincon Band Members. The board currently includes Gordon Calac, Shalome Briggs, Jim Murguia, and Steve Stallings.
In summary, the Rincon Band’s approach to economic development is four pronged: Harrah’s Resort of Southern California, a gaming/hospitality related enterprise, which is the major economic driver; the long-term investment portfolio, which is invested in traditional financial markets; REDCO’s creation of on-reservation business enterprises; and FNEDCO’s ownership of off-reservation businesses.
The Rincon Tribal Council is committed to ensuring the vitality and sustainability of the Rincon tribal government, through an aggressive economic development policy and program of investing off and on the Rincon Reservation. By wisely investing and utilizing the band’s resources, the tribe is pursuing a vision to become economically diversified and financially independent so that it may provide for its people and fulfill its obligations and responsibilities as a sovereign nation for future generations.
Tribal Governments make Major Contributions to California and San Diego Economy
California Indian gaming governments infused $7. 8 billion into the state’s 2014 economy, of which $2.9 billion represents earnings of casino employees, holding 63,000 jobs statewide, according to the 2016 California Tribal Gaming Impact Study, a bi-annual fiscal and social impact analysis prepared by Beacon Economics, and released by the California Indian Nations Gaming Association (CNIGA).
Statewide Casino Benefits: The report showed that tribal government gaming in 2014 continued to have significant impact on employment and local businesses and economies, surpassing jobs in the state’s pharma and manufacturing Industries. According to the Beacon analysis, California tribal government casinos spent $3.9 billion on gaming operations, and expenses, such as purchase of goods and services, (or approximately $4.0 billion in 2016 dollars).
Statewide Non-Gaming Benefits Increase: Contributions of non-gaming revenues and taxes to local economies have also grown as tribal governments invest casino profits into tribal government employment, services, economic diversification, and infrastructure needed to provide for members and reservations. In addition, many tribal investments in health, police, and fire safety are available to off reservation neighbors.
Non-gaming operations in California generated an estimated $3.3 billion in economic output, supporting over an additional 24,000 jobs statewide.
Labor Market Growth: Year after year, tribal gaming and non-gaming economic investments have added to California’s labor market. For example, the 2012 economic impact report had tribal gaming operations supporting approximately 56,100 jobs statewide. In 2014, that number rose to 63,400 jobs. In 2012, California’s tribal nongaming operations had approximately 14,800 employees; in 2014, employment grew to 21,300.
“Tribal gaming facilities often have a greater financial impact on our local neighboring communities. Across the state, 90 percent of tribal government employees are not-tribal members. Most of these facilities are in rural, remote, and economically depressed areas. The casinos are often some of the biggest employers, service providers and entertainment outlets in their regions,” reported Steve Stallings, chairman of CNIGA and member of the Rincon tribal council.
“In addition, the salaries and benefits provided by CNIGA member tribes exceed market wages for the same labor pool in the state,” he added.
Statewide Tax Benefits: Tribal gaming and non-gaming operations serve an important role in state and local tax revenue. In 2014, tribal gaming generated $392.4 million in state and local tax revenues, while tribal non-gaming operations paid $80.3 million in state in local taxes. Employees and recipients of gaming expenditures collectively and individually contributed millions of dollars each year to local sales, property, and income tax revenues in California.
Sharing the Benefits: The report noted that charitable contributions from gaming tribes and their casinos underwrote an estimated 542 jobs statewide and an estimated $137.9 million in philanthropic donations.
Stallings, praised the tribes for participating in the Beacon survey and analysis. “In the local communities where Indian casinos exist the public is supportive because of the integrity with which the tribes operate our casinos, work with local governments, and share the benefits of our enterprises with our neighbors. As a result, the Beacon Report is valuable because it gives the tribes and all Californians an overall picture of our very impressive industry and its collective impact on the state economy.”
Regional Benefits Southern California: In 2014, Tribal casinos in Southern California generated an estimated $4.4 billion in economic output. Of that total, $2.1 billion came from secondary economic effects. Of the $4.4 billion in total economic output generated, $2.8 billion represented value added to the economy of Southern California, while casinos in Southern California generated $1.8 billion in total labor income in the region.
Regional Benefits Northern California: Casinos in Northern California generated an estimated $3.2 billion in economic output, of which $1.5 billion represented secondary economic effects. Of the $3.2 billion in economic output these casinos generated, $2.0 billion represented value added to the Northern California region, while $1.4 billion represented wages and earnings for Northern California workers.
Meanwhile At Home In San Diego: Tribes Keep Promises, Earn High Ratings From Neighbors And Government Officials, And Underscore Statewide Statistics With Strong Employee Numbers And Expansion.
“The tribes made promises to California voters that we would use gaming revenues to become economically self-sufficient, create jobs, take our people off welfare, build modern governments that are responsible, and establish ourselves as good neighbors,” stated Bo Mazzetti, chairman of the Rincon Band of Luiseño Indians.
“This year’s 2014 Beacon Report shows that we have not only kept our promises, but exceeded them by becoming one of the state’s major employers and important economic and government partners in our local regions.”
In 2011, The Rincon government took an economic leap of faith, betting $160 million that the stalled U.S. economy would recover and with it bring a healthy surge of growth in California’s hospitality market. The band believed it was time to diversify the experience at Harrah’s Valley Center, investing in a second tower of guest rooms, conference and entertainment center, outdoor pool and water play features and nine new dinning and beverage specialty venues.
On April 2014, the tribe completed the second phase of the expansion and opened the new property with a name change to Harrah’s Resort So Cal. Rincon was the first tribe to begin to shape the future of tribal government gaming by expanding into the resort and food and beverage market, and the early decision to diversify has paid off. So did the 2013- $4.3-million investment the band made in construction of the Travel Plaza, featuring the only 7-Eleven franchise owned by a tribe, a Subway restaurant and Shell vehicle service station.
The 2012-2014-Harrah’s Resort remodel and new construction created 1,500 new jobs, $99.9 million in new income for San Diego workers, $104 million in goods and purchases, and $11.5 million in new state and federal taxes.
During the year 2013, the resort and casino employed 1,520 annually, with a payroll including wages and benefits of $56.9 million. The tribe’s enterprises played a significant role in underwriting local businesses and kick starting the region’s economy with expenditures of $77.5 million for goods and services. Accounting for the ripple effect, Harrah’s expenditures flowing into the local and state economy were $254 million with tax contributions of $7.8 million.
The year 2016 was also very good for California tribal enterprises. The Rincon Band has contributed to increases in North County jobs, tourism, entertainment, business, and meeting markets, and supported large and small business through purchases of goods and services. Harrah’s Resort payroll grew to 1,670 team members and a payroll of $68 million. Purchases grew to $96.1million; taxes were $8 million.
During 2016, Rincon saw growth in all areas. The government payroll was $8.3 million, and infrastructure investments were $ $1.7 million. The tribal-owned Travel Plaza and 7-Eleven franchise has consistently ranked fifth among the regions’ nine 7-Eleven stores in the region. In addition to being the first tribe to diversify its economic base with a 7-Eleven franchise, the band also joined the microbrewery explosion, opening SR76Beerworks. The new microbrewery represents another first -- the first microbrewery owned by an American Indian tribe in Southern California. Opening December 2016, the brewery is named after the state highway, running parallel to the San Luis Rey River, which was once home to Luiseño tribal villages. The trails created by the Luiseño villagers would eventually become the path of State Route 76, and now, great brewery suds named after travel destinations along the highway.
Other investments include partnering with unique and successful specialty small businesses, through Rincon’s First Nations Capital Partners-(FNCP)
To support a tribal economic diversification strategy, the Rincon Band assisted in developing FNCP, a private equity fund organized in a partnership with the Colusa Indian Community and Wells Fargo Bank. The band shares results with the other partners. The portfolio now includes four robust companies manufacturing diverse products. Able Card Company is a manufacturer of plastic cards for many applications like gift cards, casino cards, hotel room keys, and ATM cards. Everson Cordage Works manufactures high quality twisted twines and ropes for fishing, industrial, and commercial uses. Plastics Research Corporation manufactures large, special purpose, lightweight, and cost effective shipping and storage containers for military and commercial customers. Advance Adapters designs, engineers, and manufactures Powertrain and Four Wheel Drive after-market products.
According to Stallings, and Tribal Treasurer Jim Murguia, this strategy has multiple benefits: It creates revenue for the tribe, is insured through a credible financial institution, and supports the growth of small to medium- size businesses with an infusion of capital.
“There are many solid, sustainable, growth oriented, businesses that get overlooked because they may lack glamour, but which are the type of products and businesses that are the foundation of the American economy,” noted Stallings.
Adhering to an established policy of sharing financial resources with neighbors through a program of philanthropic giving, the Rincon Band annually supports more than 250 non-profits and public programs annually, and takes pride in the tribal services such as the fire department, paramedic, and ambulance services that not only service the reservation but respond to calls from the neighboring communities. Every day, every minute the availability of these services are saving lives and improving public safety in the county’s rural-inland neighborhoods.