Saginaw Chippewa Indian Tribe contributions crucial for local programs

BAYANET is partially funded by the Saginaw Chippewa Indian Tribe using 2 percent of its casino gaming profits -- a practice done to support the community surrounding Soaring Eagle Casino. Without these contributions, vital community programs like the narcotics enforcement team would cease to exist.

For the last 20 years, the Saginaw Chippewa Indian Tribe has distributed nearly $130 million in grants to Isabella and Arenac counties, all for local governments and public schools. The last Isabella County payout was more than $2 million. In November, the Tribe will grant gaming profits to municipalities within their sphere of influence.

Twice yearly, casino profits pay for road repairs, public safety equipment and afterschool programs. The deal is admittedly useful for communities neighboring Native American-owned casinos, but carries a financial risk if programs become dependent on the 2 percent.

“Two percent (allocations) are based on profitability,” said Frank Cloutier, spokesperson for the Saginaw Chippewa Indian Tribe. “If we find ourselves in our reality no longer enjoying profitability, they won’t be enjoying 2 percent. I certainly hope (communities) aren’t reliant on 2 percent (allocations) — I don’t think the word ‘reliant’ was ever used in our conversations (with cities we support).”

At least three Mount Pleasant programs rely on 2 percent grants, said City Manager Nancy Ridley, including Isabella County’s arm of BAYANET. A fourth program for traffic enforcement went belly-up because funding the program was no longer a priority for Tribal leaders.

The same goes for some road projects, especially as Lansing lawmakers hit another impasse funding repairs. For students who commute, a Tribe-supported project could be the difference between a smooth ride to campus or a busted tire before a big exam.

Despite decades of financial support from the Tribe, there could come a day when Soaring Eagle profits decrease and payments to Isabella County end, defunding a number of vital projects in the process.

Betting it all on gaming

At the heart of any conversation on 2 percent funding — what it is and how long it will last — is the history of Native American gaming.

Indian Gaming was approved in 1988, when national tribes ushered in the Indian Gaming Regulatory Act, according to the National Indian Gaming Commission. This IGRA framework set the stage for Native American casinos in Michigan.

Before building Soaring Eagle in 1994, the Tribe signed a separate agreement with five Michigan tribes and Gov. John Engler. Negotiations required payments to the state — initially set at 8 percent of casino profits after expenses.

Negotiations ended, but Engler upped the ante, asking for 10 percent. The Tribe countered, offering 8 percent to the state, and sending 2 percent to local governments. Giving away a portion of the profits could display the Tribe's commitment to good will, said Cloutier, who once chaired the Tribe’s Gaming Commission.

It was also good business. Engler’s agreement with the Tribe ended in 1996 after the state allowed gaming in Detroit. A lawsuit ensued over the exclusivity of Native casinos, and the Tribe stopped payments to the state.

The Tribe kept paying out 2 percent to local entities. Between 1994 and 1997, Soaring Eagle made an estimated profit of $641.7 million. That meant $12.8 million in contributions to Isabella County in those early years.

“The Tribe must succeed, and what is good for the many is good for the Tribe,” Cloutier said. “But this is our money that we’re giving away, and we feel strongly that there should be some tribal input.”

The 2 percent process

Fast-forward 20 years, and the Tribe has developed a strict rubric to determine what can and cannot receive funding.

At 5 p.m. on March 31 and Sept. 30 of each year, Tribal Operations will receive nearly 500 paper and electronically filed requests from cities in Isabella and Arenac counties, each of them vying for a piece of Soaring Eagle gaming profits.

In his office, Cloutier holds a bulky, 4-inch three ring binder stuffed with 2014 funding requests. It is one of five volumes for 2014. The number of biannual requests is overwhelming, and members of the Tribal Council will spend more than a month reviewing each request.

First, the Tribal Council narrows the list according to priorities. The Tribe also considers city priorities as listed on the request. If the Tribe can afford it, about 60 percent of them will actually go through.

“Not everyone gets everything,” Cloutier said. “We don’t disallow, and it’s not that we deny, we just don’t approve (some projects).”

The Tribe prioritizes road funding and public safety, and later public education. It will pay for things like a new fire truck, Cloutier said, but not a new fireman’s salary. Still, a majority goes to governments for roads.

“Originally, we were trying to figure out a plan to alleviate some of the impact of what our growth and development was going to be,” he said. “We knew bringing an additional 20,000 people into the community a day was going to be hard on our roads. Hard on our bridges; hard on ambulances and fire trucks and first responders.”

If a request is not approved, it was most likely outside the scope set by the Tribal Council. A tip from Cloutier: Don’t take it personally, and keep applying.

“Eventually, someone will pick your apple,” he said.

Surviving in a shrinking market

With two lucrative casino operations in their business portfolio, the Saginaw Chippewa Indian Tribe is in a position to dole out large sums of money to whomever they see fit — but first they must earn a profit.

During the past few years, Soaring Eagle and Saganing Eagles Landing in Standish brought in a combined annual profit of about $164 million a year. While Soaring Eagle is its main source of income, the Tribe receives at least one third of its revenue from Saganing Eagles Landing.

The economic downturn in 2009 left the Tribe concerned about keeping a business centered on disposable income. As the economy recovered, Cloutier said Soaring Eagle maintained its headcount. The clientele may have changed — patrons bring $50 to play instead of $100 — but the customer base stayed loyal.

The 2 percent payouts still hover near $2 million per year, and overall profit remains steady. There just isn’t any new room for growth, Cloutier said, boxing the Tribe into the Central Michigan market.

In the past few years, other Michigan tribes made bold moves to claim what little is left of the statewide Native American gaming market. In 1994, the Tribe enjoyed nearly 90 percent of the state’s casino business. Today, it attracts just 17 percent.

Each of the five original tribes had at least one casino operation. Today, there are 12 federally-recognized tribes in Michigan and 25 casino operations.

“The Sioux tribe wants to put one in Lansing, and now Little River wants one near Muskegon,” Cloutier said. “We’re at a saturation point, and a saturated market can become unstable. This is not new business. It's not new employment. This is a transference of wealth.”

If the wells run dry

Ranking members of the Saginaw Chippewa Indian Tribe know the success of community investment programs hinge on casino revenues – and so do the managers of Mount Pleasant and Union Township.

"We've been fortunate to have a number of projects funded by 2 percent, projects we wouldn't have been able to do or would have taken longer to do without it," Ridley said. "Each year we worry about that. That's what happens when you become dependent on (2 percent) funding."

Mount Pleasant applies during each 2 percent cycle to prop up three of its most vital community programs. These programs include PEAK Community Learning Centers, the Youth and Community Services unit of the Mount Pleasant Police Department, and the BAYANET task force.

The Tribe has recognized these programs as beneficial, Ridley said. BAYANET serves a need because of the Tribe's strong stance on drug enforcement. The Youth and Community unit helps pay to have police officers in schools, another priority.

Finally, the PEAK program enriches children's education, a point Cloutier personally applauds.

"At the end of the day it’s about education," he said. "Every dollar we have, we try to give at least 35 percent of 2 percent to education."

For Ridley, the money is more than beneficial — it's kept PEAK alive for years.

"In 2009, PEAK was externally funded by almost 60 percent, the other 40 percent was from user fees" she said. "Last year, that ratio finally flipped."

The reality of losing a program because of its dependence on 2 percent gaming profits is palpable. A defunct Mount Pleasant program centered on traffic enforcement relied almost completely on 2 percent funding. When the Tribe chose other funding priorities, the traffic unit disbanded.

To make sure another program doesn't flounder, Ridley worked to diversify revenue sources for community programs, adjusting fee structures along the way to make them sustainable.

Union Township officials said they hardly consider themselves dependent. They do, however, acknowledge the overall impact of 2 percent, especially on local road projects.

"We've received close to $1.2 million from 2009 on," said Union Township Manager Brian Smith. "About $1.14 of that went to roads. We know there are other municipalities going after the same pot of money. We feel fortunate to have it, but more importantly to have a relationship with the Tribe."

Regaining lost ground

With their partnerships intact, and a customer base that keeps coming back, Cloutier and the Tribe are looking forward. The Tribe is planning on building new developments, including a 150-room hotel with 800 new games. That's an opportunity to offer 200 more jobs.

"Things are turning around," Cloutier said. "Numbers are up and we’re seeing the uptick. There’s enough market out there to grow with the healing economy, but to what point? We’re nowhere near new gaming business. We’re just regaining some of the ground we’ve lost within our market share."

Like Mount Pleasant, the Tribe accepts that it too needs to find new revenue. Concerts at Soaring Eagle are boosting their profit margins, as are events in the casino hotel. Overall, the Tribe realizes that going all in on casinos could be a gamble against its best interest.

"The (casino) bubble burst a long time ago," Cloutier said. "Now it's just day-to-day business. We have to be looking at trends, interests and how people are spending ancillary dollars. If mudbogging becomes really popular, then we'll have to make a mud hole.

"We have rentals, agriculture and we lease properties. We realize now that it's not just about gaming."