City of Duluth sues Fond du Lac Band to halt downtown gaming expansion

The city of Duluth has filed a lawsuit against the Fond du Lac Band of Lake Superior Chippewa claiming the band breached its contract with the city by attempting to expand its gaming activities downtown without obtaining city approval.

The band is seeking federal authority to stretch the boundaries of its downtown reservation to include the former Carter Hotel, which neighbors the Fond-du-Luth Casino on Second Avenue East. The now-vacant hotel already is under tribal ownership.

In 1986 the city and band entered into a series of agreements approved by the Secretary of the Interior. Among the purposes of the contracts was to create an economic development entity known as the Duluth-Fond du Lac Economic Development Commission and to develop a gaming facility on casino property.

The city contends that under the 1986 commission agreement it has sole discretion to disapprove the creation of additional “Indian country” and that the Fond du Lac band shall not create any additional Indian country unless the city approves it.

In the agreement, the city said it shall approve the creation of additional Indian country whenever the mayor and City Council determine that such additional land is essential to the activities of the commission and would not be detrimental to the city.

On Dec. 18, the city received a letter from the U.S. Department of the Interior notifying it that the band had filed an application to place additional land in Duluth into trust. The city said this letter was the first notice it received of the band’s application.

The lawsuit claims that the band has never sought the approval of the city to create additional Indian country in Duluth. The city has filed its opposition to the application with the U.S. Department of the Interior.

“We see this as a very simple matter,” Deputy City Attorney Alison Lutterman said Friday. “The administration is disappointed in its ability to sit down and talk about global issues with the band. It’s disappointing that the band went forward with this trust application without complying with what it agreed to do in its contracts with the city, and they’ve left us no choice.”

Tribal Chairwoman Karen Diver said the band doesn’t believe it needs city approval for the expansion and said it was inaccurate to say the band has been unwilling to discuss the issue.

“The mayor and I did sit down,” she said. “The reservation business committee, who I represent, authorized me to sit down with the mayor and talk about a global settlement. The band made offers of what we could do that would be consistent with federal law … and those offers were rejected by the city. The city’s latest offers to meet were under the guise of the Duluth-Fond du Lac Economic Development Commission, which was set up in the 1986 agreements, but clearly the notice of violation (filed in July by the National Indian Gaming Commission) says that the city is to have no controlling interest in the band’s business affairs.”

The city has also filed a motion for temporary injunction seeking that the band withdraw its pending application to place land in trust to enable it to expand to the former Carter Hotel.

In that motion, the city states that it did not enter into the 1986 agreements with the band, spend $2.5 million on a parking facility that benefits the casino, invest in a skywalk system, plan for the expansion of the system, and purchase the Temple Opera Building and Norshor Theatre for the purpose of losing the ability to exercise government authority over an important part of Duluth. The city said it entered into the agreements to provide for the economic development of the city.

In the lawsuit’s boilerplate language, the city is asking for more than $50,000 in damages, but said its loss cannot be calculated.

“Trying to put a dollar amount on what our damages are by losing our governmental authority over land in the city of Duluth is very difficult,” Lutterman said. “For example, the parcel is located in a part of town that is commercial and could be redeveloped for restaurants or other entertainment. Of course, the city has a hotel restaurant tax so who knows beyond property taxes what the city’s revenue would be based on its taxing authority.”

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