Granholm Cuts New Deal on Port Huron Casino

I read this just after I assign my students a project to assess the Port Huron deal….

From the Port Huron Times Herald:

Gambling on Port Huron
Granholm’s support improves the odds for a riverfront casino

The long-stalled effort to open an Indian-owned casino in Port Huron has received a major boost from Michigan’s governor, who has thrown her support behind the project.

In exchange for her endorsement, Gov. Jennifer Granholm modified the state’s 5½-year-old agreement with an Upper Peninsula tribe.

The new deal would increase the state’s share of gaming revenues by as much as $30 million a year. It also opens the door for building the casino at Desmond Landing rather than at the Thomas Edison Inn.

“I strongly encourage you to support this legislation,” the governor wrote in a letter to Rep. Nick Rahall, D-W.Va., and Rep. Don Young, R-Alaska, the leaders of the House Committee on Natural Resources.The committee has scheduled a Feb. 6 hearing on H.R. 2176, a bill introduced eight months ago by Rep. Bart Stupak, D-Menominee. The measure would pave the way for a Port Huron casino by providing congressional approval of a land-settlement deal originally made in August 2002 by former Gov. John Engler and the Bay Mills Indian Community of Chippewa County, which is in Stupak’s district.

Jeff Parker, the president of the tribe’s executive council, said the agreement he and Granholm quietly signed on Nov. 13 was a crucial step.

“It’s very important to have her support,” he said.

Leaders back casino

Significantly, the governor’s endorsement means the proposed casino has the backing of the political leaders who represent Port Huron in Lansing and Washington.Along with Granholm, a Democrat, and Engler, a Republican, the proposal has been endorsed by Michigan’s two senators, Democrats Carl Levin and Debbie Stabenow. Rep. Candice Miller, R-Harrison Township, whose district includes the city, co-sponsored Stupak’s bill, as did Rep. Patrick Kennedy, D-R.I., co-chairman of the Congressional Native American Caucus.

The casino also has the backing of the local legislative delegation, the Port Huron City Council and the St. Clair County Board of Commissioners. City voters gave their blessing in a 2001 referendum.

A final step – congressional and presidential approval of the land settlement – has proven elusive. Several bills have gone nowhere. There have been hearings in both the Senate and the House, but the issue has yet to come up for a vote before a congressional committee.

Hearing set for Feb. 6

That could change next month when the House Natural Resources Committee is scheduled to debate Stupak’s bill.Allyson Groff, the committee’s communications director, said a specific date has not been finalized, but Larry Rosenthal of Ietan Consulting said the hearing will be Feb. 6.

Rosenthal, a former aide to Rep. Dale Kildee, D-Flint, is a lobbyist for the Saginaw Chippewa, whose casino in Mount Pleasant is Michigan’s largest. The tribe is a vigorous opponent of the Port Huron proposal.

Rosenthal described the land-settlement deal as a ruse meant to circumvent a 15-year-old compact between Michigan’s federally recognized tribes, which agreed they would not engage in off-reservation gaming unless all 12 tribes agreed. At least nine of the 12 tribes oppose the Port Huron proposal.

The Saginaw tribe includes descendants of the Blackwater River band, which had a 1,287-acre reservation from 1807 to 1836 in the frontier settlement that would become Port Huron.

“Those are the ancestral lands where the Saginaw Chippewa lived and died,” Rosenthal said. “This is a scurrilous attempt to undermine the Michigan gaming compact and to undermine the Indian Gaming Regulatory Act.”

MGM, Detroit oppose deal

Along with the Saginaw Chippewa, other powerful foes of the Port Huron proposal include gaming giant MGM Mirage, which operates a casino in Detroit, and the political delegations of both Detroit and Nevada.Detroit Mayor Kwame Kilpatrick said his city’s three casinos have created nearly 10,000 jobs.

“These jobs meet the original goal that the people of the state of Michigan endorsed (in 1994) when the casinos were approved – economic self-sufficiency for Detroit,” the mayor wrote in a letter to the congressional committee. “Any expansion of off-reservation gaming will not only compromise the economic strides that we’ve made, but will also contradict the will and intent of Michigan voters.”

The mayor reportedly will be the first witness called at the Feb. 6 hearing, although Groff said she could not confirm that.

Two months ago, the 48-member House Natural Resources Committee was scheduled to debate and vote on casino proposals for Port Huron and Romulus. At the last moment, those votes were delayed, reportedly at the request of Rep. Carolyn Cheeks Kilpatrick, D-Detroit.

She is the mayor’s mother and chairwoman of the influential Congressional Black Caucus. MGM Mirage is one of her most generous campaign supporters.

‘Fair playing field’

Proponents describe the casino as a life buoy for Port Huron, which has experienced double-digit unemployment for several years. The city is one of the most economically depressed communities in Michigan, the state with the nation’s highest jobless rate.Port Huron also is the only community on the U.S.-Canadian border where a casino exists on the Canadian side without competition on the American shore.

In fact, there are two casinos across the St. Clair River. The Point Edward Charity Casino sits directly across from the Edison Inn, while Hiawatha Slots is part of a harness-racing complex in Sarnia.

The two Canadian casinos are operated by the Ontario Lottery and Gaming Commission, which last week shared quarterly payments of $451,282 with Point Edward and $390,840 with Sarnia. The two communities have split about $40 million in gaming revenues in the past eight years.

“Our studies show that about 77% of that is American money,” said Richard Cummings, president of the Michigan Machinists and a founding member of the Thomas Edison Casino Advisory Committee. “All we’re asking for is a chance to compete on a fair playing field.”

State’s share rises

In a letter to the congressional committee, Granholm described the Port Huron casino as “a win-win for everyone involved.”Elaborating on that point, she added: “Approval of this settlement will resolve outstanding land claims potentially affecting 200 families in the eastern Upper Peninsula, provide thousands of new jobs in the struggling border community of Port Huron, provide revenue sources to assist the Bay Mills Indian Community in its efforts to become economically self-sufficient and provide much-needed funds to state and local governments.”

Liz Boyd, the governor’s press secretary, said Granholm would not have endorsed a Port Huron casino without the modifications to the 2002 agreement.

The new deal raises the state’s share of so-called “net win” revenues from a flat 8% to a sliding scale of 9% to 13%, depending on how much business the casino does. “Net win” refers to the amount the casino takes in from slot machines and other electronic games, minus the amount paid out in winnings.

If the casino opens, the governor said her cash-strapped state would see its share of annual revenues increase by $20 million to $30 million, depending on how successful the facility is.

Local share is 2%

Boyd said payments also would be more stable than under the Engler deal, which subjected the state’s share to possible termination if new gaming was allowed elsewhere. The agreement also provides the state with a share of revenues from Bay Mills’ two existing casinos in Brimley, a resort town on Lake Superior.Bay Mills also would be required to pay 2% of its net win to local governments. The tribe also could be asked to make other concessions.

St. Clair County’s administrator, Shaun Groden, and Port Huron’s city manager, Karl Tomion, said they are awaiting congressional action before negotiating with Bay Mills.

Both men have argued that congressional approval of a casino would be one way to offset the damage that seems inevitable if Homeland Security levels dozens of Port Huron homes and businesses to expand the border-inspection plaza.

Boyd said local governments have the option of creating a revenue-sharing board to receive and disburse casino funds, which are intended in part to compensate for lost property taxes.

Dispute dates to 1850s

The land-settlement deal resolves a dispute that dates to the 1850s, when Michigan Gov. Kinsley Bingham promised the Chippewas a 110-acre parcel on the St. Mary River. Despite that pledge, the property was seized by local officials for back taxes and sold off.Today, dozens of families own property at Charlotte Beach, the disputed parcel. Under the terms of the settlement, the Indians are to surrender their claims to the 110 acres, giving clear title to the current property owners.

In exchange, the Chippewas are to receive reservations – land that will be held in trust for them by the Interior Department – in southeastern Michigan.

A complicating factor is that the Bay Mills band split from Michigan’s largest tribe, the Sault Chippewa, in the late 1940s. Both tribes have claims to Charlotte Beach, and both agreed to settlements in exchange for casinos hundreds of miles from their reservations.

The Sault’s deal with Engler, which also has been restructured by Granholm, allows the tribe to open a casino at one of three locations – Romulus, Flint or in Monroe County south of the River Raisin. The Sault’s preference is a site near Metro Airport in Romulus.

2nd site is option

Under the 2002 deal, Bay Mills could build its casino only at the Thomas Edison Inn, a 12½-acre parcel adjacent to the Blue Water Bridge.The new deal gives the tribe an alternative site – a 19.6-acre parcel at Desmond Landing. It amounts to about one-third of the acreage put together in the past decade by philanthropist James Acheson, who owns a mile of waterfront property on the St. Clair River between the mouth of the Black River and the Seaway Terminal

Casino developer Mike Malik said the Edison Inn remains the preferred site. He said he has an option to buy the inn and has made payments for several months to help keep its doors open.

“I have a considerable investment in the Edison Inn,” he said.

Malik said Bay Mills asked the governor for an alternative site because of concerns that Homeland Security might oppose the construction of a high-rise hotel beside the bridge, one of the busiest crossings on the Canadian border.

A proposed $433 million expansion of the border-inspection plaza is expected to come up for final approval later this year. If the project goes forward as expected, it would mean five years of construction near the Edison Inn.

“We all have questions about what the federal government intends to do,” Malik said.

‘Nice, safe, fun city’

Malik is a Detroit native whose family moved to Clay Township when he was a youngster. He is a former Algonac city councilman and a business partner of billionaire Marian Ilitch, who owns the MotorCity Casino in Detroit. Her family holdings also include the Detroit Tigers, the Red Wings and Little Caesar’s Pizza.Ilitch supports the Port Huron casino but has said she is playing no role in its development.

If the casino opens, Malik stands to receive 30% of its revenues for seven years through a management contract with Bay Mills. In part, the money would reimburse him for start-up costs as well as the millions he already has invested in lobbying, legal, architectural and other expenses.

“Our biggest job is to get it up and running, and to pay the debts,” Malik said. “I see Port Huron as a tourist destination, a great place to come for two or three hours to see the river and the boats. This is a nice, safe, fun city.”

Doug Austin, executive vice president of Acheson Ventures, said negotiations with Bay Mills and Malik are ongoing.

“We still have questions,” he said. “Nothing is resolved.”

He said a promenade will be built from the Military Street drawbridge to the Seaway Terminal, a distance of more than a mile, to guarantee public access to the waterfront.

Austin also said any proceeds Acheson receives from the casino “will be pumped back into the community. … The money will be used to pursue what our original stakeholders, the people who live on the south side (of the Black River), told us they wanted.”