Let the Games Begin; Cayugas Catch Catskill Casino?

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Tribe signs comprehensive MOU with Albany

If all goes as planned, June 10 could end up becoming an anniversary of
sorts for the Cayuga Nation. On that day, the nation and the state of New
York announced the signing of a memorandum of understanding (MOU) that
would, in exchange for settlement of long-running land claim litigation,
allow the tribe to open the first of three Catskill casinos authorized back
in late 2001.

"The Cayuga Nation is gratified that 24 years of litigation is drawing to a
successful conclusion," said Timothy Twoguns, Cayuga Nation representative,
in a press release. "This settlement will enable the Cayuga people to
establish itself in its traditional lands, which it lost more than 200
years ago. It will also provide us with damages for our long displacement,
and financial security. We look forward to establishing excellent relations
with our neighbors."

The terms of the MOU are comprehensive, covering a wide range of issues
outstanding between tribe and state, as well as addressing several concerns
held by counties and municipalities within the 64,0000-acre land claim
area.

For the nation, the Catskill casino is of course the highlight of the deal.
While the Cayugas operate a pair of gas-convenience stores and recently
opened a Class II gaming hall, it is the $500-million Class III facility in
Sullivan County that holds great economic promise. Located some 90 miles
from metropolitan New York City, such a casino could eventually rival
Connecticut's two Indian casinos, Mohegan Sun and Foxwoods, in terms of
patronage and financial take.

The nation also receives 14 annual payments of just under $17,708,000 each,
representing Federal Judge Neal S. McCurn's 2001 damage award in the land
claim case. The tribe will presumably use such funds to re-establish for
itself a land base.

A downside for the nation is the fact that land acquisition within the
claim area, a horseshoe-shaped tract of land around the northern end of
Cayuga Lake, is limited to less than one-sixth of the total 64,000-acre
territory. The concession by the nation was likely meant to appease local
governments, who have protested vociferously over the potential loss of
property tax revenue. The MOU further addresses that concern with
provisions to compensate Cayuga and Seneca counties.

Another Cayuga concession involves its Class II gaming hall in Union
Springs, which is to be shut down within two years of the Class III
facility's opening, unless local officials agree to keep it open.

Most important for Albany are three factors, the first being that the
Cayugas will not proceed with an appeal on the land claim award of $247
million. While the state had protested the amount as too high, the nation
sought well over $1 billion on appeal. With that appeal dropped, the state
is able to finally shake the land-claim monkey from its back.

Secondly, with the Catskill casino, Albany gets both a steady revenue
stream and an economic engine to hopefully boost a region of the state long
moribund economically. Area political leaders and residents have repeatedly
expressed frustration at the minimal progress to date in getting the
region's three authorized casinos up and running.

A third critical gain for the state is an agreement for a tax parity
compact. Still to be negotiated, such a deal compels Cayuga-owned
businesses to collect a nation tax, which it keeps, at a rate comparable to
state taxes collected on similar transactions at non-Indian businesses.
This "evens the playing field" with non-Indian businesses who collect the
full complement of state taxes on their sales.

"Our agreement would also establish price parity between Cayuga and
non-Cayuga vendors, which clearly shows that we can achieve parity with the
Indian nations in a spirit of cooperation, not confrontation," said Gov.
Pataki.

Note that Pataki said "price parity" while the terms of the MOU, as
outlined in the Governor's June 10 press release, specifically say "tax
parity." The two concepts are not interchangeable; price parity assumes a
voluntary increase in price charged by Indian merchants. Price parity
provisions in a comprehensive agreement Pataki forged last year with
leaders of the St. Regis Mohawk Tribe likely contributed to the tribal
government's being voted out of office shortly thereafter, effectively
nullifying the deal.

While some likely consider this an infringement upon Cayuga sovereignty,
the nation itself recognized the propriety of achieving tax parity as a
necessary part of doing business in the state. Last October, the nation
made public an offer to negotiate tax parity with the state. The fact that
the state accepted the offer is recognition of Cayuga Nation sovereignty.

The proposed Sullivan County casino has received preliminary BIA approval.
A gaming compact must still be negotiated, land must still be taken into
trust and a host of other issues need resolution before gaming can begin.

WHITHER THE SENECA-CAYUGA?

Noticeably absent from mention in the MOU is the Seneca-Cayuga Tribe of
Oklahoma, also a winning party in the land claim case. Seneca-Cayuga
leaders were reported in various media to have said that any settlement
deal involving the land claim must gain their approval to be valid.

On June 11, the Rochester Democrat & Chronicle reported that a deal may be
in the offing to allow the Seneca-Cayugas, along with developer Thomas C.
Wilmot, to open a casino and hotel in downtown Rochester. Details of the
plan, as well as of any type of settlement agreement with the Oklahoma
tribe remain unclear. Judge McCurn, who presided in the land claim case, is
also contemplating a ruling on the ability of the Seneca-Cayugas to
exercise sovereignty within the claim area.

Several Rochester officials, including Mayor William A. Johnson, virulently
oppose a casino in the city.