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Harboring a Land Bonanza 

Do union members know their boss stands to benefit from turning their pension fund investment into a gambling casino?

Wednesday, Feb 14 2007
San Francisco Plumbers union boss Larry Mazzola's quest to turn a concert venue into an Indian gambling casino hit a significant roadblock last week as supervisors in Lake County unanimously adopted a resolution opposing the idea.

"I packed that hall," said Supervisor Rob Brown, sponsor of the resolution, referring to the 150 or so locals who showed up in support of the resolution.

The measure "demonstrates there's a lack of local governmental support for that to be a casino site," added Cheryl Schmit, director of Stand Up for California, an anti-casino group. "That would make it difficult to get gubernatorial concurrence for a casino."

The setback could be as much personal as professional for Mazzola. Lake County property records show Mazzola and his wife own 228 acres near Konocti Harbor Resort. A 56-acre parcel and a 13-acre parcel owned by a trust that Mazzola and his wife control form a continuous piece of land adjoining the Konocti Harbor Resort land. A parcel held under the name Vera Mazzola also adjoins the resort. The Mazzolas own 160 acres of hilly grassland a mile or so to the west of the resort. These properties could become much more valuable if ever absorbed into the pseudo-Indian reservation established as part of Mazzola's proposed gambling deal.

Mazzola, a well-known and powerful Democrat, has been working to arrange a gambling pact between an unnamed group of Indians, a Las Vegas casino company, and a real estate investment firm run by powerful lobbyist Darius Anderson. The idea is to make a profitable gambling casino out of now money-losing Konocti Harbor Resort, a concert venue 2 1/2 hours north of here owned by Plumbers and Pipefitters Union Local 38, which Mazzola runs.

The backing by Anderson, widely considered an important California rainmaker, seemed to have given the gambling scheme real heft. In this vein Mazzola told his union's members last month that a deal might get preliminary approval as soon as Feb. 16. Mazzola, who sits as head of the San Francisco Labor Council and president of the S.F. Airport Commission, didn't return a voice mail message requesting comment.

But Gov. Arnold Schwarzenegger has stated he views skeptically any Indian gaming deal on land not part of an already existing Indian reservation, especially if local area residents oppose a casino project.

And Democratic members of Congress, whose help might be necessary to bring a gambling deal to fruition, have now made ethical propriety a priority. And forcing a gambling deal upon an unwilling Lake County for the benefit of a San Francisco Democratic power broker doesn't fit most people's idea of good ethics.

For the sake of these politicos' own integrity, and for north state residents who'd rather not see Mazzola's and his union's property turned into a gambling, condominium, tract-home complex, we can hope Lake County's wishes carry the day.

While a Lake County Indian gambling deal might theoretically benefit Mazzola, the real estate investor, it would be a certain boon to Mazzola, the troubled union boss.

As reported in this column earlier, a Konocti Harbor Resort gambling deal might stop federal attorneys from pursuing allegations that Mazzola helped improperly divert $36 million from employee benefit trust funds of the union. He used the money to support the money-losing Konocti Harbor Resort, according to a 2004 Labor Department lawsuit.

If Mazzola can somehow get the Konocti land recognized as an Indian reservation with a casino on it, it might be possible to sell the resort at a high enough price to repay the union benefit trusts, possibly satisfying Labor Department demands.

According to an appraisal report by HVS International, which was submitted to the U.S. Department of Labor attorney who is handling the funds diversion lawsuit against Mazzola, the resort land's value would increase from $8.5 million to $11 million if it became possible to build an Indian casino on the site.

And there's the rub — obtaining such approval means jumping through myriad regulatory hoops.

Such a deal might be made possible if the Bureau of Indian Affairs were to issue a decision allowing an Indian tribe to turn the Konocti site into federally recognized tribal homelands.

But such a fix might also require the cooperation of a person in Congress such as Barbara Boxer, Nancy Pelosi, or George Miller, a type of favor-dealing the Democratic Party has promised to banish from Washington.

I called each of these politicians' offices, and learned of no such legislation in the works.

"Since the Abramoff scandal, politicians don't want to give the impression they're caving to lobbyists and interests like this," said Lake County Supervisor Brown. "With our Board saying, my God, we don't want this, it makes it hard for them to go against the governor's proclamation of not building casinos without community support."

Mazzola, however, apparently believes a gambling deal involving Darius Anderson's Kenwood Investments is imminent.

On Jan. 22 Mazzola wrote a letter to union members aimed at responding to my Jan. 17 column, "Let the Gaming Begin," in which I outlined the politically linked gambling proposal, its relationship to the Labor Department lawsuit, and how such a deal might require significant influence trading in Washington.

Mazzola refers to the column as a "fantasy concocted in the mind of the writer," and said he had asked his attorney to review the article.

Then Mazzola continued his letter by confirming my description of the situation, which said Mazzola had joined with a powerful lobbyist to create a politically leveraged Indian gambling deal designed to extract Larry Mazzola from his legal troubles.

"A meeting is scheduled for February 16th in San Francisco with the representatives of the DOL, the court appointed mediator, and will be attended by an employer Trustee and myself, representing the Trustees, along with our attorneys and real estate investment counselors. We hope to conclude the mediation and settlement process at that time," Mazzola wrote.

"The highest and best use of the Konocti properties would be a combination of the Indian Gaming Resort, Concert Venue, and a Residential Development of Homes and Condominiums. When the Indian gambling is in full operation, our pension fund will be guaranteed an excellent return on its investment," Mazzola's letter added.

Mazzola also sent union members a letter from his attorney, James Baker, stating that, while my column didn't run afoul of libel law, I did fail to include a summarized version of a recent filing requesting that a judge throw out the Labor Department case against Mazzola.

Labor Department attorneys argued convincingly that the request for dismissal was based on a laughable misrepresentation of facts, and on the absurd assertion that Mazzola believed it was legal to use union benefit trusts as a slush fund to keep afloat a money-losing resort.

Left unmentioned in Mazzola's letter to union members: the 228 acres he and his wife own near Konocti.

But it's possible for the land to become germane to Mazzola's proposed gambling deal, if not immediately, then in the future. Even if the Indian gambling deal under consideration didn't include Mazzola's land initially, it might be possible for the tribe fronting the deal to annex land next door to the proposed Indian reservation. And once U.S. land is part of a federally recognized Indian reservation, it's not subject to local county zoning.

An attorney for Mazzola recently requested that 56 acres of the union leader's own land near Konocti be re-zoned from its current status as "suburban reserve," which allows one house for every five acres, to commercial, a designation that allows far higher density development.

If Mazzola succeeds in pushing through his proposed gambling deal, "they could sell [Mazzola's family-owned land] and a tribe could take it into trust as 'contiguous' land and expand their gaming operation," said Schmit.

There's a precedent for such a move. Gov. Schwarzenegger last year negotiated a new gambling deal with the Sycuan Band of the Kumeyaay Nation near San Diego allowing the tribe to expand its reservation land to 1,600 acres nearby the current casino operation.

If Mazzola were to manage a similar feat involving Konocti Harbor Resort in the face of overwhelming opposition from local politicians, he'd earn my respect as one of the greatest union hustlers of all time.

I finally got a chance last week to catch up with Frank "Sandy" Tatum, the former U.S. Golf Association president, after having written a column about a proposal he's involved in to privatize four of the city-owned golf courses.

In the Feb. 7 column "Par for the Course," I noted that in October Tatum set up a nonprofit corporation called the "San Francisco Nonprofit Golf Foundation." The corporation then paid for a $100,000 economic study on what to do about the $1.5 million that public golf courses drain each year from the city budget. Two months later, an outfit called the National Golf Foundation produced a report recommending the city hand over the Fleming, Harding, Sharp, and Lincoln golf courses to — guess who — the very same private corporation Tatum set up in October to fund the study. Coincidence?

Tatum said he'd been traveling when I tried to reach him last week. I told him I had wanted to talk with him about a column that ended up saying it looked like the fix was in for his corporation to take over the golf courses from day one.

"I'm sorry that impression got created, but it's dead wrong," Tatum said.

The corporation, Tatum noted, has as its board of directors himself and former City Attorney Louise Renne. [For background on Renne see this space from Dec. 22, 2004: "The High Life: Breathing in Sleaziness at the Rarified and Urbane Levels of San Francisco Political Life."]

It was "not set up to receive these courses. It was set up for the basic purpose of paying for this report. If the report identified it as a resource, fair enough," Tatum said.

"Identified as a resource" is an understatement: Most of the 172-page report is devoted to explaining why it's a good idea for the corporation Tatum created and controls to take ownership of our golf courses.

So whose idea was it to ask the NGF to study the privatization idea?

"Somebody in Recreation and Park. Wherever it came from, the idea was, we needed an analysis done, and the National Golf Foundation had the resources, and they ought to be used," Tatum said.

So you're sure you don't remember whose idea it was?

"I don't remember who they were. There were communications, Matt. I'll leave it at that."

Missing from the "Par for the Course" column was information about who, precisely, paid to have the study done. This detail, which neither the Rec & Park Department nor the NGF said they knew, seemed important because a private corporation that's secretive about its financing arrangements is probably a corporation we don't want taking control of huge swaths of city property.

"I raised the money from several individuals. I'm in a position to tell you, but I don't believe it would be appropriate," Tatum said.

So there you have it, Park commissioners and S.F. supervisors. You now have all the information you need to evaluate Tatum's privatization proposal.

Now, reject it out of hand.

About The Author

Matt Smith


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