Gluvin, with a contact generating $6 to $8 million a year, a proactive annual review has some merit.  If Duluth had top-flight legal counsel and knew they're in danger of not being compliant they may have had a chance to renegotiate a valid agreement for less money.  They were caught completely off-guard.  Everyone's a genius in hindsight though.  

What's most astounding is Mayor Ness' complete lack of understanding of the legal decision.  Read in the Star Tribune that he stated all the other compacts with the Bands nationwide are in jeopardy as a result of the Duluth ruling.  The statement would be funny if it wasn't so sad and frighteningly stupid.

Fon du Lac's endgame is maximizing profits and revenue by expanding and upgrading the Duluth casino.  The Band has won every recent Court battle convincingly and Duluth has no leverage in the negotiations.  It's business as usual and Mayor Ness may want to change his attitude toward the Band and view the downtown Casino as an asset, tourist draw and major employer.

Ramos & Gluvin, Gross revenue and profits are confused here.  The deal cut was to pay the City nineteen percent of the casino's 'gross revenues' as rent.  Gross Revenues from Video Games of Chance is defined as total revenues minus pay-outs to players.  Thus the Band has to pay its 250 employees, utilities, slot machines and all other expenses from it's remaining share of the Gross revenue.

Mayor Ness, as mentioned earlier have the utmost respect for the impressive work you've done.  On this issue still having difficulty understanding your position.

Dan Browning's Star Tribune article read 'Ness said the 8th Circuit's ruling should concern more than 200 other local governments in the country that have similar contracts with tribes.'

In the Notice of Violation (NOV) Chairwoman Stevens rejected the Duluth's claim that payments to the City are legally comparable to payments tribes make to states in tribal-state compacts.  'The City's comparison of the 1994 Agreements with tribal-state compacts is misplaced and unpersuasive. Under IGRA, tribal-state compacts are fundamentally different than the agreements at issue here.'

Tribes are permitted to trade revenue for something of tangible value, normally an exclusive zone to run a gambling business without commercial competition.  

This case has substantially different fact situation.  The NIGC held that the $75 million paid in rent over the life of the agreement had no 'rational relationship' to actual services provided. In order to be legitimate, payments to another governmental entity need to be of  'tangible economic benefit justifying a share of gaming revenue.' The contract absurdly was structured as 'rent' on a building that that City did not even own.  

After a couple of years of litigation expectations are the leaders have a crystal clear understanding of why Duluth's agreement is invalid and many other agreements nationwide are in full force and effect.  Disagree wholeheartedly with the contention that the other agreements with will vanish overnight.  They were carefully constructed by legal teams with a thorough understanding of Indian Gaming law.  Duluth spent a considerable sum litigating and lost every single issue thus far.  The tendency to hire Duluth law firms and rely on the City Attorney's office may not be the wisest course of action when litigating in a highly specialized area.

Dorkus, the points you make were litigated for the past 2 years and the Court ruled in the Tribe's favor on every count.  

Duluth's downfall began when a federal agency, the National Indian Gaming Commission (NIGC), was tasked with interpreting and enforcing a statute enacted by Congress (the Indian Gaming Regulatory Act (IGRA)).    

NIGC reviewed Duluth's Agreement and the main issue boiled down to the 'sole proprietary interest' requirement.  When NIGC was first formed, there was limited time spent scrutinizing agreements.  As the Commission evolved and personnel changed they definined the vague 'sole proprietary interest' language.  There are case law and administrative rulings which examines three criteria to determine if the gaming agreements are valid: 1) the term of the relationship; 2) the amount of revenue paid to the third party; and 3) the right of control provided to the third party over the gaming activity.  NIGC stated that since their inception, neither the NIGC Chair nor the Commission had approved any agreement, management or otherwise, under terms similar to the agreements to the Duluth case.  Read the Notice of Violation (NOV) issued by the NIGC and it's apparent this Agreement had zero chance of surviving.

The Band successfully argued that not only is it paying rent on a parcel it owns but that the rental payment far exceeds rental rates in Duluth and the casino does not receive services  from the City above the services received by any other commercial businesses. Additionally, the Band highlighted the long term of the agreement (1 25 year term, 1 25 year renewal), the fact that rent is paid before expenses are paid, and that the City offered no meaningful services in exchange for the rent. Finally, the Band pointed out that the City holds veto authority over any amendments to the gaming ordinance that applied to the casino.

According to the Court, the City's condemnation of the land, construction of a parking garage, and support of the trust acquisition all occurred well before the 1994 Agreements. Such actions by the City are not continuing and do not amount to quantifiable  'services' bearing a rational relationship to the $75 million dollars provided by the Tribe over the past 13 years.  In another case on point, Vinton, Louisiana offered free land in exchange for revenue sharing and Indian Affairs ruled the intangible value of the State's support for the Band's application to take land in trust is not the type of quantifiable economic benefit that would justify their approval of the revenue-sharing payments.

Note the City assumed no financial or other risk in the development of the casino.  If Duluth had provided financing and assumed risk the original Agreement had some chance of surviving for less money and at a shorter duration.   

The City's reliance on the exclusivity granted under the 1994 Agreements was noted as particularly dubious. The 250 mile area of exclusivity could not prevent another Indian tribe or a non-Indian entity from operating gaming because the City's jurisdiction does not extend beyond the City's limits. A city cannot step into a state's shoes for purposes of a compact, as it simply lacks the authority to do so.   A Minnesota compact followed which essentially provided no revenue sharing to the State.

In sum, Duluth suffered a crushing defeat.  The perplexing part is going forward Duluth may be able to negotiate for fire, ambulance, service, etc.  This will result in a paltry 6 figure yearly sum paid by the Band.  There's a misguided belief that the Band morally owes Duluth but the Court has ruled overwhelmingly in their favor.  With the fiduciary responsibility of Chairman Diver she'll rightfully take care of her own Band and further the NIGC won't approve paying Duluth much more than a pittance.  Duluth taxpayers will absorb a $6 million a year deficit and hopefully the City wakes up from their stupor and faces reality.

Gluvin - thanks for the comment.  Allow me to clarify a few issues.  The NIGC sent a violation notice to Fon du Lac which stated the Duluth Agreement was illegal.  Fon du Lac was forbidden from making additional payments to the City or be subjected to heavy fines or closure.  The City of Duluth initiated a lawsuit and the contract was incompatible with federal law.  This doesn't appear 'greedy' but simply following the mandate of the NIGC and the court system. 

Contracts are continually subject to review.  The Band mentioned the contract lawsuit between the City of Duluth and the Retirees is very similar to this case.  The City disputed language in the retirees' contract that had been interpreted a certain way for many years.  The Courts reviewed the language and agreed with the City's construction.  One could argue the City reneged or the language was misconstrued for many years to the benefit of the retirees and the wrong was corrected.  Same outcome here, a long-standing contract was reviewed by the Court and deemed illegal.

As far as the 'risky' development deal, the City gave up a condemned building in a blighted part of town and received $75 million.  The Feds would argue Duluth didn't have the authority or ability to approve the tribe's application for placing the land in trust, and therefore did not give anything tangible to the Band. Thus, the assistance was an illusory or symbolic benefit. Also, the City didn't provide financing making the upside potential much greater than any potential downside. 

The comment 'hopefully the City wakes up from their stupor and faces reality' was directed at the Duluth City government.  After 2 years the Administration indicated the deal was nixed because of a political appointment and all revenue sharing agreements across the country were similarly situated.  Even with the utmost respect I have for Mayor Ness this position can't be reconciled with the facts of this case.  Duluth's revenue sharing is dramatically different than compacts with states that offer gaming exclusivity or other deals in which risky financing mechanisms are in place to protect the investors.   Gaming in one of the most highly regulated areas (concern about organized crime, money laundering, etc.).  Spend a few minutes on the NIGC website will shed a lot of light on what conforms and what doesn't conform to the IGRA.  Chairperson Diver astutely indicated in the interview there appears to be a 'gross misunderstanding' of Indian Law and the regulations on the part of the Administration.  

With respect to recommending hiring a large national law firm - if one were to get divorced one would hire a family law lawyer, if one were charged with a crime, one would hire a criminal attorney.  In this case, over $100+ million was at stake if one believed the next 25 years of a contract was in jeopardy.  With stakes this large, it would behoove one to hire a large law firm with specialists in this area rather than stick with the good ol' boy network mentality.  The large firms have the crucial experience & resources, know the area intimately, are familiar with the precedents, can size up the case and provide invaluable guidance moving forward.   They may provide a percentage chance of prevailing.  What I recall is the local firm collected over $1 million in fees and felt they had a good case.  There's no intent to assail local counsel, if they were a large firm with substantial resources and foremost authorities in Indian Law they'd be a good choice.  Don't believe that was the case here unfortunately.

Mayor Ness was kind enough to respond in the Perfect Duluth Day comments and indicated that last year in DC he spoke to Senate committee staff and asked them why our contract was being cancelled and not any of the other contracts across the nation.  This was a question much better addressed to the Duluth legal team.  Which brings us back again to your comment 'you refer to lawyers in Minnesota as incompetent'.  Believe the Duluth firm negotiated the first Agreement between the City and Band and we know how that turned out.  If Duluth enlisted a large law national firm specialist in Indian Law say from the Twin Cities (for example Dorsey and Whitney) the outcome and litigation expense and understanding of this area of the law may have been dramatically different.  The facts weren't on Duluth's side so they were not going to prevail in Court but at least they'd know that upfront.  A firm like Dorsey may be in a better position to size up the case quickly and their advice as experts carries a lot of weight with the Mayor and City Council.  In any case, the Mayor and Council could have leveraged their experience to help guide the negotiations and educate themselves in this complex area.  Clearly that didn't happen very well -     Duluth wasted over a million dollars in attorney fees and we're still subjected to blaming a political appointee for this debacle - uggh.  Time to recognize the gravy train is over, accept the circumstances and move on.