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$145M Bond Issue Finances Indian Casino

INDIO, CA-Officials believe it's the first time an Indian tribe has financed a venture via tax-exempt bonds, comparable to municipal finance. The California Statewide CDA arranges the bond issue with Merrill Lynch as the underwriter.

By Bob Howard | Updated on July 07, 2003

INDIO, CA-In what tribal leaders are calling “a landmark tribal business advance,” the Cabazon Band of Mission Indians has issued $145 million in tax-exempt bonds to finance development of its previously announced new convention center and resort hotel.

The Cabazon band says the $145-million bond issue, arranged through the California Statewide Communities Development Authority, is believed to be the first transaction of its kind in the US that will employ tax-exempt bonds issued by an Indian tribe to build a commercial project. The tribe issued the bonds through the East Valley Tourist Development Authority, an entity formed by the Cabazon Band to oversee economic development activities, explains Nancy Tarascio, spokeswoman for the East Valley Tourist Development Authority. The bonds were underwritten by Merrill Lynch, with Wall Street investment houses participating in the bond sale, including Allstate, Deutsche Asset Management, Eton Vance, Oppenheimer and Citibank.

The bonds will fund the East Valley authority’s master development plan for the Coachella Entertainment District, which will include a 250-room resort hotel and restaurant as well as a 97,000-sf convention center for the Eastern Coachella Valley. The resort and convention center are slated to open on New Year’s Eve 2004 and are expected to employ 330 workers.

“This is really a groundbreaking event for the tribe,” Tarascio tells GlobeSt.com. “It is completely new to issue a bond for a tribe as if it were a municipality, and this also reaffirms the concept of the tribe as a sovereign nation.”

The resort and convention center will add to the list of businesses operated by the Cabazon Band, which already operates the Fantasy Springs Casino in Indio and other ventures. The tribe is expanding the casino in a project that is separate from the resort and convention center development. In the case of the casino, the Cabazon band is financing the development with private funds, borrowing $23 million from banks to finance the casino expansion.

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