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Duluth sues Fond du Lac band over casino payments

The city of Duluth filed suit in federal court Tuesday asking that the Fond du Lac Band of Lake Superior Chippewa be forced to resume sharing its casino revenues with the city.

In early August, band Chairwoman Karen Diver sent a letter to the city saying the band would stop sharing slot machine revenues from the Fond-du-Luth Casino, saying the contract between the two sides in the 1980s and renegotiated in the 1990s was entered into "under erroneous understandings that the city's consent was necessary to the creation of reservation land within the city."

The letter also states that the city has received more than $80 million over the past 25 years and in return "has provided no consideration or compensable services beyond those municipal services which are legally obligatory."

The city claims the band cannot break the contract and must continue payments, said Bob Maki, a private attorney who represents the city on the case and who previously represented the city in deals with the band.

After the band receives the complaint and a judge orders a subpoena, Maki said the band will have 20 days to respond. He said he didn't expect a judge's decision to come for "at least two months."

The band has given the city 19 percent of its gross revenues from slot machines, which the city puts into its Community Investment Trust Fund. The fund mostly is used to repair and rebuild city streets, though the city also has drawn on it to pay down retiree health-care debt and build or rehabilitate low-income housing. This year the city was to receive about $6.6 million to be added to a pot that has grown to about $60 million.

Earlier this year, Duluth Mayor Don Ness announced a plan for the city to use those reserves to pay down existing street debt while using new money coming in from the casino to pay for up to 100 miles of road repair in the next five years.

The pool of money is continuously cited by bond rating agencies as one of the main reasons for giving the city a high credit rating, which provides low interest rates when the city borrows money.

By law, the city had to send a letter to the band demanding it restart payments and wait 30 days before it could seek the injunction. Diver had said she would not comply with the city's request.

Diver again said Tuesday night that the band would not change its position and will file its response in federal court. She said the band has had no communication with the city, other than the letter demanding payment sent by Maki.

The contract between the band and the city was to be renegotiated beginning next year. Asked if that will still happen, Diver said "that remains to be seen," and said that will be determined by the "the outcome of any litigation."