Two Sonoma County, Calif., Indian tribes that own casinos are diversifying into the wine business after buying hundreds of acres of vineyards in Alexander Valley.
In separate purchases, the Dry Creek Rancheria and the Lytton Rancheria are spending more than $37 million to acquire vineyards north of Healdsburg in one of the most prestigious growing regions in Wine Country.
The Dry Creek Band of Pomo is spending $24 million for 310 acres next to their River Rock Casino, including a 110-acre vineyard that borders the Russian River.
And last week, the Lytton Pomos finalized their $13.3 million purchase of almost 270 acres from Jordan Winery.
"Hopefully this year we will be able to bottle and next year sell," said Harvey Hopkins, chairman of the Dry Creek Rancheria, who envisions an initial limited release under the tribe's label while continuing to sell grapes to other wineries.
"This is economic development in a way other tribes should consider," he said.
They've even dubbed their new vineyard "Bellacana," a combination that mixes the Italian word for lovely and the Pomo word for river.
Other California tribes active in gambling also are venturing into the wine business, including the Yocha Dehe Wintuns, who have the Cache Creek Casino in Yolo County. They own vineyards and introduced their Seka Hill Wines in 2011.
The Santa Ynes Band of Chumash Indians, which operates a casino in Santa Barbara County, also have vineyards.
"A number of tribes have bottled wine. I don't know if they have as many acres as we do," Hopkins said.
A spokesman for the the Lytton Rancheria, which owns the San Pablo Casino in the East Bay, said the tribe is still exploring the development and management possibilities for the vineyards it bought off Alexander Valley Road.
The vineyards are close to the tribe's historic rancheria, which was dissolved decades ago by the federal government before the tribe won recognition again.
"It's not something we're looking at other than as a vineyard," Larry Stidham, general counsel for the Lytton Rancheria, said of the tribe's purchase of acreage off Lytton Springs Road and Hassett Lane.
He said the parcels contain mostly cabernet, with some merlot and chardonnay grapes, but some of the land is fallow and the tribe is looking at the possibility of planting more grapes to increase profitability.
Stidham said the tribe could bottle its own brand of wine or sell the grapes in bulk.
He said the tribe paid "close to the going rate" for the acreage.
But for the Dry Creek Band of Pomos, the amount was much higher than the usual price for producing vineyard property.
"It was expensive," acknowledged Hopkins, adding tribes with casinos know they are going to have to pay a premium because they are seen as having deep pockets.
"Everyone in Indian Country knows if you're going to buy land around you, get ready to spend some money," he said.
Currently in Alexander Valley, vineyard land goes for $70,000 to $80,000 an acre, said Allan Hemphill, a real estate agent and consultant who specializes in winery and vineyard properties.
The Dry Creek tribe paid close to $80,000 an acre in its $24 million purchase from longtime owners Larry and Candy Cadd and their relatives, the Proschold family. But more than half of the 310-acre transaction involved land that is not in grapes.
"It is bottom land. It's probably not as premium as hillside," said Harry Bosworth, a lifelong Geyserville resident and owner of an old-style hardware and clothing store.
"That ought to be almost a legitimate business," Bosworth said of the tribe's foray into the wine industry.
The Dry Creek tribe also wanted to use some of the property it acquired to build an emergency fire road to the casino as stipulated to in its agreement with the county.
Hopkins said that without the newly acquired land, the tribe would have had to build a much steeper and expensive emergency road with continuous switchbacks and retaining walls. Such a road might have cost as much as $18 million, he said. Now it's estimated to cost about $6 million.
The tribe's 75-acre rancheria was created almost a century ago. But its relationship with its neighbors and the county has been rocky at times, especially when its tent-like casino sprang up seemingly overnight in 2002.
Residents were upset about the impact the increased traffic would have on their bucolic valley.
The neighboring property owners, the Cadds, were especially galled that casino traffic was passing through their land on a road easement they granted the tribe decades before to make the rancheria more accessible to school buses.
But for the past several years, they tried to reach a deal with the tribe to sell most of their property, including the vineyards.
Larry Cadd declined to comment this week about the sale.
Hopkins said the tribe wasn't thrilled with the asking price for the property but figured "if we don't take it, someone else will."
He said the planned expansion of River Rock Casino with a permanent structure and hotel that was shelved by the slow economy remains on hold.
"We haven't looked at it for quite a while," he said. "We have no plan to go forward with the construction of that."
The vineyard property, he noted, is under a Williamson Act contract, which provides a tax break for keeping it in agricultural use.
Hopkins said the tribe has no plans to seek to put the property into the rancheria's federal trust status, which would remove it from state and local land-use regulations.
The tribe, which has about 1,000 members, is growing and he acknowledged that might conceivably change in 10 to 20 years if, for example, there is need to provide more housing for members.
"It's expensive to remove (from the Williamson Act). The best way is to farm it," he said. "It's in agricultural land, in Alexander Valley. That makes it kind of special."
And he said the better use now "is to make a bottle of wine that's appreciated."
News Researcher Janet Balicki contributed to this story.
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