Question & Answers

When did the Tribe begin talks with Lansing for a casino?
This project has been in the works for over a year. When we began talking with the City of Lansing about this opportunity, both of us signed a confidentiality agreement. This was in the best interest of the Tribe and the City in order to protect the project.

How much money does the Tribe currently have into the project?
Right now, the Sault Tribe does not have any money into the project. The developer, Lansing Future, has a pre-development budget of $5 million and a temporary casino budget of $5 million, none of which is the Tribe’s money.

How much will the Sault Tribe spend on the project?
The developer will cover all upfront costs. The specific details are contained in a Turnkey Development Agreement entered into by the Sault Tribe and the developer. In general, the developer has agreed to provide funds for all costs and predevelopment expenses. This includes any legal fees incurred by the Tribe, as well as the costs associated with establishing our legal right to conduct gaming and constructing and opening the temporary casino. Assuming we are successful in establishing our legal right to conduct gaming, the developer will then assist the Tribe in obtaining the necessary financing for the permanent casino.

So, the Tribe will never put any money into this project?
No. In order to put the land into trust which will qualify it for gaming, the Tribe must purchase the land with interest out of the Self Sufficiency Fund as stated in the Lands Claim Settlement Act. The first parcel of land we need to purchase will be $280,000. Prior to signing on the transfer of land, funds will be secured in order to provide our elders with their annual check in the amount that it would be if that money had not been used. There is a second parcel of land that will need to be purchased after the land is taken into trust, and that purchase price will be $960,000.

How is this project different that Greektown Casino?
This project is far different. This casino, unlike Greektown, will be operated just like our five Kewadin Casinos up North. We will be regulated by the National Indian Gaming Commission, not the Michigan Gaming Control Board. We will not pay the high taxes the Detroit casinos pay. Greektown at times paid nearly 30% in taxes to the city and state. Now they pay 20.2%. Greektown casino also had to pay an annual $8 million regulatory fee to the Michigan Gaming Control Board. We will not have these payments in Lansing and we will have far less debt than Greektown did. The situation is different, the partners are different, and the regulation is different.

What will the Tribe pay to this developer?
The Tribe will pay a developer fee of 14% of operating profit (after payment of expenses, but before debt) for seven years. After seven years of operation, we will not owe the developer anything. We are estimating our operating profit to be $150 million per year, based on revenues of $275 million. In addition, the Tribe would be responsible to repay the developer up to $10 million in initial legal and start-up costs but only if the project is successful. We would not be where we are today with out the developer putting his money into this project.

When do you expect to break ground on construction?
By early summer, we expect to complete our purchase of the initial parcel and submit our application to the federal government (U.S. Department of the Interior) to place the land into trust. Because the Tribe’s Land Claim Settlement Act gives us the absolute right to this process, we expect a prompt and favorable determination. We recognize, however, that legal challenges are likely to occur that may slow the approval process. Groundbreaking will occur, and construction will commence, once we have those approvals.

Who else is helping to fund the project, what is their financial contribution, and what do they own?
Other than Lansing Future, no party is providing funding for the project. The casino will be 100% owned by the Sault Tribe. Lansing Future will not own any portion of the casino. Under its agreement with the Tribe, Lansing Future will recover its initial costs only if the project is successful. Assuming the project is successful, Lansing Future will then also receive a fee paid for a limited period of time as a percentage of operating profits and paid only after expenses of the casino have been satisfied. When the Tribe is ready to construct the permanent casino the developer will help the tribe to secure financing, probably through an investment bank or similar investor that specializes in funding these types of large projects. This institutional investor will serve strictly as a lender and will not be an owner.

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15 Comments

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15 responses to “Question & Answers

  1. Craig H.

    We are still in an economic slump, why would you even consider taking 1.24 million Tribal dollars to buy land that you may or may not be able to have taken into trust? What happens if you purchase the land and this whole deal falls apart? Do you really think you’re going to able to re-coup the money spent on the property?

    All of the figures on this site are based on your best case scenario projections, what happens if your projections are off? What happens if the economy in Michigan doesn’t rebound as quickly as you project?

    Why does the Tribe feel the need to risk our money on another possible disaster? Why not work on maximizing your profit at the casino’s we currently own? The mortar is barely dry on the St. Ignace facility, why keep our money in the bank for now?

    • Hi Craig,

      I understand your concerns. Let me try to address each of them.

      The developer will cover all upfront costs. The specific details are contained in a Turnkey Development Agreement entered into by the Sault Tribe and the developer. In general, the developer has agreed to provide funds for all costs and predevelopment expenses. This includes any legal fees incurred by the Tribe, as well as the costs associated with establishing our legal right to conduct gaming and constructing and opening the temporary casino. Assuming we are successful in establishing our legal right to conduct gaming, the developer will then assist the Tribe in obtaining the necessary financing for the permanent casino.

      The first parcel of land we need to purchase will be $280,000. If the Department of Interior does not approve our request to take the land into trust, the City of Lansing will buy back the land. So, we will not be out any money if the project is not successful.

      Actually, the projections on this site are very conservative and based off our knowledge of the gaming market. We truly feel it is a worth while project that is in the best interest of the tribe to be a part of. Our Northern Casinos are performing well, but they are not able to sustain the services our membership needs. We have had to make cuts over the past years, as I’m sure you are aware of. This extra revenue stream will help us make improvements at our five northern properties and provide more services for the membership. In addition, 10% of the annual income the Tribe receives from the project will go directly into the Tribe’s Self Sufficiency Fund. This fund supports programs and services that benefit elders and provides resources to explore future economic development opportunities. Another 3% of the annual revenues will be distributed among and deposited in the following funds: the Elder Health Self-Sufficiency Fund, the Elder Employment Self-Sufficiency Fund, the Funeral Assistance Self-Sufficiency fund, and the Education Assistance Self-Sufficiency Fund. Another 2% of the annual income to the Tribe from this project will be deposited into a fund to establish a college scholarship program for tribal members regardless of blood quantum, similar to what the City of Lansing is doing with their 2%.

      This casino, unlike Greektown, will be operated just like our five Kewadin Casinos up North. We will be regulated by the National Indian Gaming Commission, not the Michigan Gaming Control Board. We will not pay the high taxes the Detroit casinos pay. Greektown at times paid nearly 30% in taxes to the city and state. Now they pay 20.2%. Greektown casino also had to pay an annual $8 million regulatory fee to the Michigan Gaming Control Board. We will not have these payments in Lansing and we will have far less debt than Greektown did. The situation is different, the partners are different, and the regulation is different.

      I hope this answers your questions! If not, please let me know.

  2. John Kerr

    Are the Greeks involved in any way? Are any former tribal chairpersons be put in a posistion of management with a seperate employment/contract agreement? Who is the developer and at what cost do they charge/ How much is their cut of the proposed Casino. Is any portion of the Casion going to be owned by a third party on a percentage basis. Thanking You in Advance, I am Sincerely, John Kerr

    • Hello John,

      The developer is Lansing Future, LLC. You can find their biography in this blog. The Tribe will pay a developer fee of 14% of operating profit (after payment of expenses, but before debt) for seven years. After seven years of operation, we will not owe the developer anything. We are estimating our operating profit to be $150 million per year, based on revenues of $275 million. In addition, the Tribe would be responsible to repay the developer up to $10 million in initial legal and start-up costs but only if the project is successful. We would not be where we are today with out the developer putting his money into this project.

      We will use our current staff as much as possible to start the casino (meaning MIS, purchasing, marketing etc). At this time, no former board or chairpersons are expected to be hired for the project.

      The casino will be 100% owned by the Sault Tribe, just like our five northern casinos.

      Thank you!

  3. William Forrest Baker

    Please explain how this investment company can get back and estimated $ 240,000,000.00 at 14% of
    $ 150,000,000.00 for 7 years.

    • Hello!

      I am not sure where the $240 Million you reference comes from. It sounds like you may be confused about how the different pieces of the project fit together.

      The developer has committed up to $10 Million for the upfront costs. This includes $5 Million for the pre-development costs which include getting the land into trust and defending legal challenges and a second $5 Million to construct a temporary casino on the smaller parcel. If we are successful, and only if we are successful, these funds will be repaid and the developer will receive his fee of 14% for seven years.

      If we are successful in establishing our legal right, the developer is also obligated to assist us in finding appropriate financing to build the permanent casino. We expect that cost to be around $135 Million plus another $45 Million for slot machines and other eqipment and furnishings. These funds would be obtained by the Tribe from an outside investment bank or similar source, secured by the assets of the project. We expect to pay this loan off over a seven year period so that we own the facility free and clear at the end. While the developer is required to assist us in finding that financing, we expect it to come from an independent outside bank or investment firm, not from the developer.

      The parking structures are being financed by the developer and/or by the city. The Tribe will not own these and will not be responsible for constructing them.

      • William Baker

        Thank You, for setting me stright.
        The letter I recieved fron the tribe is why I’m confused about how the different pieces of the project fit together.
        I heard the chairman at a board meetin in the Soo say the Tribe will not have to put any money in this progect, except the $1, what ever out of the elders fund for the land, and at the end of 7 years the enterprise would be paid off, and the Tribe would be sole owners.

      • No problem. Let us know if you have any other questions!

  4. Kevin L.

    I think to get the membership on board with this you are going to have to be a bit more transparent and honest on this casino than you were with Greek Town. People want to know who the tribe is working with, what we are paying them, why they are being used over other resources/companies, and what the tribe is doing to ensure we don’t get hosed like we did with Greek Town (that was a major embarrassment).
    So until you do that, you are going to have a great deal of push back. Especially when you keep cutting elders benefits, hardly put any significant money towards the education of our youth, and continue to make cuts year after year.
    You are also entering a saturated market. 60 miles north is Soaring Eagle, 50 miles south is Fire Keepers, Detroit is only 65 miles away with Casinos, and there are talks of other tribes opening up gaming within 100 miles of Lansing.
    I also would like to see the tribe begin to diversify its investments into something other than gaming, which is short lived. Of all the things we could invest in right now, this seems more risky than most options.
    But the bottom line is that you will not get the membership supporting this except through transparency. Lots of people got rich last go around, but few of them were tribal members. We don’t want to see a repeat of Greek Town.

    • Kevin,

      You make some great points, and we are being completely up front. You’ll find information in this blog about the developers, exactly what we are investing, what the developers are investing, what they will receive in return if and when the facility is up and running, and what we are projecting the tribe to receive.

      We agree, we need to do something to increase the revenue flow so we can bring back services we had to cut from membership and employees. Our northern Kewadin Casinos are performing, but not enough to sustain a growing membership.

      This project is far from what Greektown was – as you’ll see in our Q&A page. And yes, we are looking into different projects outside of gaming, that will benefit the tribe.

      Thank you for your comments!

      • Kevin L.

        Who are the actually living breathing people behind Lansing Futures, LLC? This is not stated or clarified anywhere above. All that is clear above is that we are about to pay out over seven years roughly $157,000,000.00 to this LLC. So what is the exact amount of their investment to obtain said return?

        Also, if we are using this LLC to secure future financing for the permanent Casino, what do they stand to make off of that relationship?

        In addition, can you please clarify in detail what the yearly revenue estimates posted above were based on.
        You mentioned in your response that the tribe is looking into other projects outside of gaming. What are the other venues outside of gaming being considered by the tribe? And how soon will these projects be up and running?
        Lastly, based on what you stated above, 14% of annual revenues from this project will go to the LLC, 10% of the annual income the Tribe receives from the project will go directly into the Tribe’s Self Sufficiency Fund. This fund supports programs and services that benefit elders and provides resources to explore future economic development opportunities. Another 3% of the annual revenues will be distributed to the Elder Health Self-Sufficiency Fund, the Elder Employment Self-Sufficiency Fund, the Funeral Assistance Self-Sufficiency fund, and the Education Assistance Self-Sufficiency Fund. Another 2% of the annual income to the Tribe from this project will be deposited into a fund to establish a college scholarship program for tribal members regardless of blood quantum, similar to what the City of Lansing is doing with their 2%.
        So that totals 29% of annual income ($79,750,000.00) the tribe is projecting to receive from this project. Where will the remainder of that projected annual income go (roughly 71% or $195,250,000.00)?

  5. Craig H.

    Are Tribe members going to get a chance to vote on this proposal, or is this already a done deal?

    If making money is the objective, why not look into maximizing profits through effecient operation at the Casino’s we already own? After visiting all of our Casino’s, I can assure there are many ways to improve the profit margins of existing facilities.

    • Craig,

      Tribal members will not vote on this unless there is a referendum on the resolution.

      Our Kewadin properties are performing very well, and they have done many things internally to maximize profits. The revenue they bring to the tribe has remained constant and we depend on it. We need a larger revenue stream, however, to support additional tribal services that are needed by membership. That’s where the Lansing Casino comes in.

      Thank you.

  6. Here is the information on who is behind the Lansing Futures, LLC since no one seems to know – http://www.mlive.com/lansing-news/index.ssf/2012/02/lansing_casino_developers_reve.html

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