Sunday, July 17, 2016

Will a casino in Elk Grove boost area home values? Don't bet on it.

The intrepid vision of a brand new casino and entertainment complex in Elk Grove came one step closer to reality recently, as the Wilton Rancheria’s comprehensive plan was presented during a special town hall-style meeting July 6.

But while a $400 million new casino may sound like a dream to those who want flashy entertainment and modernization in Sacramento’s backyard, there is growing concern it could end up being a nightmare for homeowners, who may see their property values decline.

That was the conclusion of several studies that measured the effect of casinos on local economies, and specifically residential housing prices.

But there are great hopes that the ambitious Wilton Rancheria project, slated for a 35.9-acre lot at Highway 99 and Kammerer Road, will do just the opposite, by providing hundreds or even thousands of jobs and boost the local tax base. They’re definitely aiming for a Vegas-like state of the art entertainment complex, as the plans laid out July 6 included a facility with 2,000 slot machines, 84 gaming tables, a 12-story hotel with 302 rooms, fitness club, luxury spa, outdoor pool, a 30,000-square-foot convention space/banquet area, and plenty of upscale restaurants. There is even talk of an outdoor concert amphitheater and plenty of retail shops being added to the plans.

No matter how high the hopes of Elk Grove residents, there is evidence to the contrary – that in the long term, the presence of a casino hurts communities, and property values.

One of the most conclusive studies was based on data collected by the National Association of Realtors in a 2015 report. Their conclusion? The presence of a casino has an "unambiguously negative” impact on local property values. In fact, neighborhoods within 10 miles of a casino register higher rates of home foreclosures and other community erosion.

Part of the blame is due to the shifting face of gambling in the United States. Instead of luxury, free spending meccas like Las Vegas, the modern gaming industry relies on a far different demographic. Instead of high rollers and weekend warriors, casinos actually garner a significant amount of business (losses) from a small portion of returning customers, who are, unfortunately, trending older and poorer than ever before.

In fact, the fastest growing demographic of “problem gamblers” is older women who are on low fixed incomes. Far from our perception of the tuxedo and cocktail dress crowd, low-income workers and retirees provide the vast majority of customers for the modern casino industry. A Canadian study found that 75% of casino customers who play only occasionally provide only 4% of casino revenues. And further studies estimate that 40 to 60% of casino revenues are earned from problem gamblers.

These same studies point to a clear effect on their surrounding communities, furthering income inequality and bringing higher rates of crime, economic distress, alcohol and drug dependency, domestic violence, and yes, a general decrease in home prices.

But Wilton Rancheria Tribal Chair Raymond “Chuckie” Hitchcock addressed those concerns in the July 6 meeting, sharing his vision for a more sophisticated, well-planned casino that will levy those issues.

Hitchcock spoke about positive impact of jobs in Elk Grove, with the project expecting to bring in 1,500 – 2,000 construction jobs during the two-year build out, and then an additional 1,750 – 2,000 workers.
 “It’s going to bring many jobs to our tribal members,” said Hitchcock. “It’s going to bring jobs to Elk Grove residents, south Sacramento residents and to other outlying businesses, as well.”

As for crime, Hitchcock believes there is a plan to thwart ay increases due to the presence of the casino. “This is going to be a very high profile place,” said Hitchcock. “We’re going to have high-tech surveillance, we’re going to have tribal-trained law enforcement officials that have law enforcement experience and a military background. They’re going to work cohesively with the city of Elk Grove Police Department to make sure that patrons are safe.”

Hitchcock even addressed the concern of increased traffic congestion, explaining that casino business usually runs busiest on nights and weekends – not peak commute hours.

While those talking points are well-thought and probably well-intentioned, we can’t help but look to gambling hotbeds like Atlantic City that are virtually ghost towns and near-slums now, and the fact that nationally, casino revenues have been down an average of 7.5% per annum since 2014.

Hitchcock and advocates for the Wilton Rancheria project say that a presence of high-end retail shops, restaurants, concerts, etc. will offset that, but studies show that regular casino patrons spend only paltry sums at neighboring businesses, shops, and restaurants. Surely, Elk Grove can’t rely on hopes of out-of-town visitors or significant tourism for an influx into the local economy.

Apparently, not everyone is caught up in the excitement of a new casino in Elk Grove, as an anonymous party is flooding the city with fliers that criticize Elk Grove Mayor Gray Davis for unilaterally supporting the tribe’s plan, as well as voicing opposition against the casino.

But Davis, in attendance at the July 6 meeting and at one point asked where he stands on the issue, responded diplomatically.

“At this point, I’m not taking a position,” said Davis. “I’m here to listen like you all.” Hopefully, he will listen to the right people – and studies – that show the short burst of prosperity new casinos bring are usually met with prolonged community decline – and dropping home values.


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