PREPARED BY: MATT RODRIGUEZ DATE OF MEETING: 04/20/26
SUBJECT:
TITLE
CONSIDER AUTHORIZATION TO RATIFY LETTER FROM SAN PABLO MAYOR PABON-ALVARADO TRANSMITTED ON APRIL 7, 2026, TO STATE OF CALIFORNIA GOVERNOR NEWSOM'S OFFICE IN RESPONSE TO REQUEST FOR INFORMATION - PROPOSED VALLEJO CASINO PROJECT & POTENTIAL ECONOMIC IMPACTS ON EXISTING GAMING ACTIVITIES TO LYTTON RANCHERIA AND CITY OF SAN PABLO PARTNERSHIP
CEQA: This proposed action is not a project as defined by CEQA.
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt by Minute Action;
Body
Compliance statements
FY 2025-27 Council Priority Workplan Compliance Statement
Under Major Police Area: Focus on Economic Development and Fiscal Diversification is an adopted policy contained in the FY 2025-27 City of San Pablo Council Priority Workplan, effective April 7, 2025.
BACKGROUND
On April 2, 2026, the City of San Pablo was requested by the Lytton Rancheria of California (Lytton Tribe), owner and operator of San Pablo Lytton Casino, to submit a letter to the Governor’s Office outlining the anticipated impacts of the proposed Class III casino project by the Scotts Valley Band of Pomo Indians (Scotts Valley Band) in Vallejo, CA. This correspondence was requested prior to the State of California resuming state compact negotiations with the Scotts Valley Band, following the Federal Department of the Interior (DOI) reconsideration process which concludes in July 2026.
City’s Letter to Governor
The City’s letter, reviewed by the Casino Ad-Hoc Subcommittee consisting of Mayor Pabon-Alvarado and Vice Mayor Rita Xavier on April 6, 2026, was officially transmitted by Mayor Pabon-Alvarado on behalf of the City Council on April 7, 2026 (See Attachment).
A summary of the attached letter indicates that the City is deeply concerned about a Class-III level casino project near the City of San Pablo and San Pablo Lytton Casino, and the economic impacts associated with its development and operation on the City’s General Fund (GF) budget which funds critical local programs and services.
Further, San Pablo relies significantly on annual casino revenue generated by the San Pablo Lytton Casino for its annual GF budget. According to an Economic Impact Study conducted by the Department of Interior and Bureau of Indian Affairs (DOI/BIA) in 2024 and cited in the letter, “65% of the budget of the City of San Pablo comes from Lytton’s casino operating revenue.” Due to this substantial reliance, any notable decline in annual Casino income would have an immediate impact on the city’s capacity to fund essential services for its residents, including but not limited to: police services, emergency medical services, building life and safety services, capital infrastructure maintenance, youth, recreation and senior services, etc.
According to the 2024 Economic Impact Study, the new Vallejo Class-III Level casino project would likely pull customers away from the San Pablo Lytton Casino causing “an estimated 21.1% decline in revenue.” The study even describes this as a “sharp, negative impact.” For a small city like San Pablo, already described in the study as “an economically depressed community”, losing that much funding annually would be significantly devastating and would drain the City’s operating financial reserves and threaten essential City services.
Additionally, the letter also explains that San Pablo and the Lytton Tribe have worked extensively in partnership for decades through a 1999 Municipal Service Agreement that helps fund local municipal services to the San Pablo community as noted above. There is no other revenue source that could replace annual casino funding if it were diminished or lost entirely to the City of San Pablo. On top of that, the San Pablo Lytton Casino is already in the middle of an expansion project which the City has been permitting under assumption that no competing Casino would open just 19 miles away in Vallejo, CA. The 2024 Federal study mistakenly assumed Lytton Tribe had no expansion plans which the City and Lytton Rancheria argue unfairly distorted the Federal DOI/BIA review process.
Given these risks, the Mayor requests that the Governor’s Office carefully consider San Pablo’s circumstances when evaluating approval of a future Class III gaming compact for the proposed Scotts Valley casino project. The letter underscores that this issue extends beyond competition between native gaming casinos; it concerns safeguarding a small community whose essential public services and financial stability rely on the ongoing success of the San Pablo Lytton Casino. In conclusion, the City advises that introducing a new Class III casino project could create substantial fiscal challenges for San Pablo, potentially affecting critical programs and services for its residents in an economically disadvantaged community.
City Manager Recommendation
The City Manager recommends that the City Council formally ratify the transmittal of the letter on April 7, 2026 to the Governor’s Office via minute action vote this evening.
FISCAL IMPACT
None associated with this item
ATTACHMENTS
Att A - Letter Transmitted on 04/07/26 to Governor’s Office re: Response to Request For Information - Proposed Vallejo Casino Project & Potential Economic Impacts on Existing Gaming Activities to Lytton Rancheria and City of San Pablo partnership