A much wiser and more knowledgeble voice schools me on Reservation land

Your blog post yesterday about Fond du Lac is based on quite a bit of misinformation. If I may, I’d like to provide some information that might hopefully help clear things up.

The feds aren’t “allowing” the tribe to buy anything. The tribe is free to buy any property it wants to, just like anyone else. Case in point, they had already purchased the Carter Hotel quite some time ago without any approval required from anybody. They purchased the Sears building that now houses the casino in the same way. (A common misconception is that the city was involved with that sale, but it wasn’t. That was a private sale.)

In most cases, such off-reservation acquisitions are “fee land” (i.e., the tribe is the owner and they pay taxes on it). Fond du Lac owns fee land scattered throughout the region (much of it is actually undeveloped land that they purchased to preserve habitat). What the feds did, first with the Sears building and now with the Carter Hotel, was place the land into tribal trust. Fee-to-trust transfers are done at the sole discretion of the Department of the Interior. So, you’re correct when you say the city wasn’t engaging in charity by “letting” the tribe open a casino—but only because the city had absolutely no authority in the matter. City officials get very testy when this is pointed out, but it’s nonetheless true. I got confirmation of it straight from the Department of the Interior: Local governments, including Duluth, have never had any say whatsoever in tribal trust decisions.

On its face, that might not seem fair, but there are two important points to understanding what tribal trust is all about:
(1) Tribes don’t own trust land, including their reservation land. The federal government owns it and holds it in trust on behalf of the tribe. This is why tribes don’t pay taxes on trust land—because it’s owned by the feds, not by the tribe.

(2) Fee-to-trust transfers are mostly used

to reclaim reservation land that was lost due to allotment. In the 19th century, reservation land was divvied up, resulting in multiple fractional owners and a massive loss of land within reservation boundaries. So tribes, including Fond du Lac, are essentially buying back land that was originally part of their own reservation in the first place. Then they can apply to put it into tribal trust and make it a part of the reservation again (which are two separate processes—not the same thing).

So, your fear that the tribe is going to wage some kind of economic war on the rest of us is….well, it’s preposterous. The fee-to-trust transfer of Fond-du-Luth was, and still is, highly unusual. It was done solely because high stakes gambling is illegal in Minnesota. By transferring the casino’s land into tribal trust, it came under Fond du Lac’s jurisdiction. The legal explanation of this gets complicated, but, in short, Indian tribes in states that adopted Public Law 280—and Minnesota is one of those states—have jurisdiction over civil regulatory matters on tribal trust land. In other words, because gambling itself is not illegal in Minnesota (we have charitable gambling, bingo, the state lottery, etc.) therefore, gambling is a civil regulatory matter. This allowed Fond-du-Luth to operate a high stakes casino, even though the state regulates gambling differently. It’s the same reason smoking is allowed in the casino. Smoking is also not illegal; it’s a civil regulatory matter, so the tribe can decide whether to allow it on tribal trust land, even though the state regulates smoking differently.

The Carter Hotel was pretty much a shoo-in to gain a fee-to-trust transfer because it’s going to be part of the same casino that’s already on adjacent tribal trust land. But there’s no “economic war”—there isn’t even the possibility of one. Most off-reservation land purchased by the tribe is fee land. (It’s also incorrect that the casino and Carter Hotel are on “sovereign reservation land.” They’re both on tribal trust land, but neither is a part of the reservation. The tribe’s regulatory authority on trust land is a part of sovereignty, but only one small part.) The tribe could buy up half of downtown if they wanted to—and then they’d pay taxes on it, just like any other business owner.

It’s true that Fond-du-Luth is not subject to property taxes—because that land is owned by the federal government. However, it’s grossly unfair to grouse about that. Fond du Lac was paying $6 million a year in “rent” to the city under the ’94 agreement. Show me one business in downtown Duluth that’s paying $6 million a year in property taxes. I’d say the Indians have paid their fair share and then some! Most Indian casinos have a fee-for-service arrangement with local government (which is really what should have happened with Fond-du-Luth from Day One), but point being, none of these casinos are merrily skating along tax-free. Their in-lieu-of-tax arrangements are just more complicated.

Part of what makes these misconceptions so hurtful and offensive is it treats Fond du Lac like they’re invaders—-as though Indians are going to come pouring out of the casino like Greeks into Troy. We don’t treat any other business like this. We rolled out the red carpet for Maurices. We rerouted the streets for Essentia. We gave most of Canal Park tax incremental financing—which really IS not paying taxes, at least for a few decades. Any business we can manage to attract here gets the royal treatment from City Hall, from the Chamber of Commerce, from the Greater Downtown Council. Is it any wonder that threatening to cut off Fond-du-Luth’s water and street access felt more than a little racist? Even the Carter Hotel is a dump and an eyesore—but as soon as the Indians wanted it, we started acting like it was the Champs-Élysées.

This whole paradigm positions Fond du Lac as outsiders and potential enemies, poised to take something that’s rightfully ours, rather than all of us as part of the same community. They’re one of the largest employers in the region. I admit I’m not a fan of gambling and I don’t partake, but casino jobs are good jobs that pay well. Fond-du-Luth is an attraction that brings people into Old Downtown where they spend money that benefits everybody. The tribe partners with surrounding governments on infrastructure, on environmental preservation, on education and children’s activities. There is no “war” going on here, and there isn’t even the possibility of one—not even if Fond du Lac wanted a war, which they clearly don’t.

Whew! This got really wordy, so if you’ve made it this far, thank you 🙂 I really respect you, and I just hope that you’ll reconsider your position on this.

After reading this I am still concerned about the method by which the Feds buy up land. It may at the present be so unusual that it will not pose a threat to our Downtown. But the Feds do not pay taxes on the land. I can still imagine the deep pockets of the Fon du Lac band funding more tourism sites in the area of their Reservation. Should that happen, however unlikely that might be, it could pose a threat.

The writer is absolutely right. We give away lots of taxable land through TIFs just like some given to buyers of our old school properties. Another person emailing me noted that the half million we made by selling Old Firehall Number 1 (kitty corner to Old Central along 3rd St and First Ave E) was put into a TIF and generates no taxes. There are justifications for this in the long run but I remember my old friend Senator, Jim Gustafson, fulminating about how many such TIFs were being offered up to developers. We are all too often put into bidding wars with other municipalities to give out tax incentives to Developers.

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