Seneca Nation

Niagara Falls Struggling To Budget Without Casino Revenue

From the Morning Memo:

The economic strain caused by an ongoing dispute between the Seneca Nation and the Cuomo administration over casino revenues continues in Niagara Falls.

City Council members met last night, and are looking for savings in hopes of limiting property and business tax hikes in the mayor’s proposed budget.

In all, the council members found roughly $1 million worth of savings. Still, members approved a resolution that would pave the way for the city to override the state-mandated 2 percent property tax cap.

Lawmakers plan to meet again today, but say there is little left to change.

“We’re pinching pennies trying to make things happen,” Chairman Charles Walker, a Democrat, said. “It’s been a very difficult budget.”

Of the municipalities that receive part of the Seneca casino’s slot revenue, Niagara Falls gets the largest share at roughly $20 million a year.

While the Nation has expressed willingness to negotiate individually with the city, it said its obligation to the state has run its course, and the matter is currently moving to arbitration.

Outgoing Democratic Councilwoman Kristen Grandinetti said her colleagues were ill-prepared to deal with the impact, adding: “This is the sloppiest budget process I have witnessed in eight years.”

Grandinetti, in particular, expressed disappointment with the council’s decision to cut four more police officer positions. Walker said the city won’t engage in layoffs, and instead won’t replace some retiring officers.

“We decided to cut those positions in hopes of getting through this year, and hopefully the casino revenue and things come back into play and we’re on more solid ground next year, where perhaps we can put those positions back into the budget,” he said.

Council members also acknowledged that part of the current strain is their own doing because they relied too heavily on casino revenues to cover up past budget shortfalls.

“I understand that there have been things that could’ve been done differently in the past, but we need to move forward right now and we need to be more thoughtful,” Walker said.

Walker said if the state and the Senecas don’t resolve the dispute before next year’s budget, things could get even worse. He said the city can make some changes before then, although they may not be popular with taxpayers.

That includes reassessing the property values, an undertaking that has been neglected in the past.

Seneca Nation and New York State Select Arbitrators For Casino Dispute

Two members of the arbitration panel tasked with resolving a dispute about casino payments between the Seneca Nation and New York State are now in place. Both sides have selected their arbitrator as part of the process spelled out in a 2002 Compact.

University of New Mexico law professor Kevin Washburn will be the designated representative for the Nation. According to his biography, Washburn has previously served as a federal prosecutor and general counsel of the National Indian Gaming Commission, before entering the academia.

He is a citizen of the Chickasaw Nation of Oklahoma. Washburn also was appointed Barack Obama as the Assistant Secretary of Indian Affairs for the United States Department of Interior, a position he held from October 2012 until December 2015.

“Mr. Washburn is a leading authority in the area of Indian Law and policy, and we are confident in his service as a member of the arbitration panel,” Seneca Nation President Todd Gates said. “He brings a deep understanding of the federal framework that governs all Native gaming compacts, compact obligations, and how state governments should interact with Native nations.”

The governor’s office meanwhile, said it informed the American Arbitration Association of its selection of Henry Gutman on Monday. Gutman is a retired partner from Simpson, Thatcher and Bartlett LLP, an international firm with American offices in New York City, Houston and Washington, D.C.

He also served as the state’s representative in 2013, the last time the two parties sought arbitration. According to the state, Gutman has “tried and argued appeals in a wide range of complex, high-profile intellectual property cases” and served as lead counsel for companies like Intel, Cisco and Verizon, to name just a few.

The Senecas ceased paying a portion of their slot revenues to the state, arguing their 14-year obligation under the Compact was fulfilled. The state argues the obligation continued when the agreement automatically renewed last year.

Gutman and Washington will be responsible for choosing a third arbitrator. Gates said getting the panel in place is a step toward resolution for which the Seneca Nation is ready.

Seneca Nation Files Official Response To NY Demand For Arbitration

The Seneca Nation has filed its official response with the American Arbitration to New York State’s arbitration demand concerning an ongoing dispute over casino revenue sharing. In the papers, attorneys for the Senecas argue the issue is cut and dry.

They reject the state’s assertion that continued payments of a portion of slot revenues were implied when the compact between the two parties automatically renewed last year. In fact they said, a payment schedule on a sliding scale was clearly defined as “three finite” periods, the last of which specifically ended at Year 14 of the agreement.

“The Seneca Nation has faithfully honored the agreement we negotiated and signed in good faith in 2002,” Seneca Nation President Todd Gates said. “New York State has a documented history of Compact violations, despite collecting more than $1.4 billion from us over the past 14 years. Now, the state is trying to create a reality that does not exist. You can’t change the rules 15 years into a 21-year agreement. Enough with the political posturing and insults. Honor the agreement, just as the Seneca Nation has done.”

The Senecas also squarely rejected New York’s claim that ending revenue sharing while continuing to give the nation exclusive gaming rights in the western part of the state made no “commercial sense.” They argued the payments they’ve already made would average more than $66 million per year over the 21-year lifespan of the compact.

The Nation said in many years the state received nearly 50 percent of its net revenue. Attorneys said the more than $1.4 billion the state has collected makes the revenue-sharing payments “among the very highest in the country in both absolute and percentage terms.”

The filing also references an issue many observers believe is central to the dispute. In arguing their exclusivity rights are highly limited, the Nation referenced Video Lottery Terminal (VLT) facilities, often referred to as racinos, which operate in the heart of the exclusivity zone, as well as full scale non-Seneca casinos at the edge of the zone, specifically the new Del Lago casino near Rochester.

“The state’s position is unchanged,” Rich Azzopardi, a spokesperson for the governor, said. “The Senecas have an obligation to pay in exchange for exclusivity and they breached their obligation, they breached the compact.”

Finally, the Senecas said the state’s assertion that they’ve refused to meet on reasonable terms was “demonstrably inaccurate.” They attached numerous letters to the governor’s office they say prove Gates was willing to meet in good faith.

In late-August, it was Gov. Andrew Cuomo, D-NY, who closed the door on a face-to-face meeting. He said counsel had advised him not to meet until an Erie County District Attorney’s Office investigation into whether the Nation eavesdropped on a state gaming official concluded.

Within the next 30 days, both sides will choose one arbitrator. Those arbitrators will choose a third to round out the panel.

The Nation objected to the state’s request for the panel to convene in New York City, arguing Western New York would be a better location.

9-21-2017 Seneca Nation Answer by Ryan Whalen on Scribd

DiNapoli Audit Details Niagara Falls Financial Woes

The Office of the State Comptroller projects the city of Niagara Falls will deplete its available fund balance by the end of this year and will face a $12 million budget gap in 2019. According to a recent audit, released Friday but forwarded to the press Tuesday, the city has been using its fund balance and revenue from the Seneca Niagara Casino to balance its finances.

The Seneca funding source has currently run dry, with the Nation disputing whether its still required to pay a portion of its slot revenues under a compact with the state. The review assumed no additional revenue would be received although the state has begun an arbitration process.

“In our prior audit, we recommended the Mayor and Council develop realistic budgets and adopt a multiyear financial plan. Our prior audit also discussed the use of casino revenue to balance the budget. However, the City did not maintain a multiyear financial plan and has continued to rely on unreliable revenues and one-time funding sources,” OSC wrote.

The city council is responsible for initiating a corrective action plan. The comptroller’s recommendations include adopting a realistic budget funded by recurring revenues, and rebuilding the fund balance.

Niagara Falls Mayor Paul Dyster, D, responded to the audit, saying he agreed that the city has room for improvement with regards to creation and implementation of its annual budget. He said the administration however, has already started reducing its reliance on casino revenue and does not anticipate any after 2023, the year the current compact between the Seneca Nation and the state concludes.

Dyster also expressed disappointment that a draft of the audit was “made public” prior to the official release Friday.

Niagara Falls Audit by Ryan Whalen on Scribd

New York and Senecas Both Sound Ready for Arbitration

Last week, New York state filed papers to begin the arbitration process in a dispute with the Seneca Nation over casino revenues. Gov. Andrew Cuomo said that what’s called for in the compact between the two parties, so the state moved quickly.

“I want a speedy resolution,” Cuomo said. “I’m very much a get-it-done kind of person. Figure it out. Fix it. Move on. I’m accustomed to disputes all across the state on every level so my goal is to figure it out and get everything moving again.”

The Nation has said it hoped to settle differences outside arbitration, and has repeatedly called for a face-to-face meeting between Cuomo and Seneca President Todd Gates. Most recently, the governor said that face-to-face wouldn’t be appropriate because there’s an ongoing investigation into whether the Seneca Gaming Authority eavesdropped on a state gaming official. But he also insisted there have been plenty of conversations already.

“I’ve had conversations with them personally,” Cuomo said. “We’ve had conversations lawyer to layer, staff to staff, friend to friend. I’ve spoken to the leader. We see no desire on their part to live up to the agreement.”

Although the Senecas said the contract no longer requires them to pay the state at all for exclusivity rights, the governor told reporters today in Niagara Falls he believes the end goal is to modify the agreement. Cuomo said he has confidence arbitration will end in the state’s favor.

“I think the contract is clear,” he said. “Our attorneys think the contract is clear and I think the Senecas want to reduce the payments, which I understand. People don’t like to pay. I get it but we have an agreement.”

In a statement, Gates criticized the governor for escalating rhetoric in the media, but also expressed confidence in arbitration. The Senecas had 14 days from last Thursday to respond to the state.

“The Seneca Nation will continue to take the high ground, not only because we have the facts on our side but also because it’s the right thing to do,” Gates said. “Ignoring the facts and running from the facts do not change the facts. The Seneca Nation has complied with the Compact. New York State has not. We are ready for arbitration.”

Buffalo, Niagara Falls and Salamanca all get a portion of the revenues paid to the state because the casinos are located within the city lines. Niagara Falls, which receives the largest share, presents its budget on October 1.

“Obviously it creates a major hardship (not to have the casino revenue,” said Niagara Falls Mayor Paul Dyster.

The mayor said while he’s pleased the arbitration process has begun, he’s still hopeful the issues can be resolved prior to a panel decision. In the meantime, he wouldn’t say whether the city would plan on receiving casino revenues for the next fiscal year.

“We have to walk a fine line here because we want to budget only revenues that we realistically expect to obtain during the year in question and we assert, as does the state of New York, our right to receive our legitimate share of the Seneca revenues,” he said.

When asked if the state could help cover a shortfall until the issues with the Nation are resolved, Dyster said he expects to explain the situation to the Cuomo administration.

New York Files Arbitration Papers In Seneca Casino Dispute

New York State has officially filed its Demand for Arbitration regarding a dispute with the Seneca Nation of Indians. Attorneys submitted the papers Thursday.

The Senecas since 2002 have paid a portion of their slot machine revenue to the state in exchange for exclusivity rights. Earlier this year, they announced the compact only required them to make payments for the first 14 years, the last of which, a roughly $30 million payment made at the end of March.

In the filings, the state argued both parties had until August 11, 2016 to object to renewal of the compact. When neither side provided written notice, it automatically renewed for an additional seven years.

New York said that means all terms of the deal, not just the exclusivity rights.

“The Nation’s contention that it can unilaterally end paying the State Contribution while continuing to enjoy the benefits of the Compact has no basis in the Compact, law or logic,” attorneys wrote in the summary of claims.

The state said over the first 14 years the payments have amounted to more than $1.4 billion, some of which has been given to Buffalo, Niagara Falls and Salamanca, where the Seneca casinos are located. The payments were made on a sliding scale with the Nation obligated to pay less at the beginning, but 25 percent of the slot revenue for the past seven years.

“The parties’ assumption that higher payments would continue to be paid during the latter years of the Compact applies following renewal when casino revenue will presumptively continue at the high level before renewal,” New York argued.

The state said because it filed a notice of claim on July 14, and the nation refused to meet on reasonable terms within 30 days, it can proceed directly to arbitration. Under the rules, both parties would pick an arbitrator and those arbitrators would select a third. The state has requested the arbitration take place in New York City.

Seneca spokesperson Phil Pantano said it was not the Nation’s preference to go before an arbitration panel and the president was open to dialogue with the governor. However, he said, the Senecas will commit to defending their interpretation of the compact and believe it will be validated.

“A review of the State’s Arbitration Demand, released to the media, is telling,” Pantano wrote. “The state cannot point to any language, nor provide any history that supports their interpretation of the revenue sharing provisions.  That is because the Compact language clearly spells out a 14-year obligation, which the Seneca Nation has fulfilled.

He said, considering the governor has repeatedly refused to meet, the Nation is not surprised the state is moving toward arbitration. The governor has said it would not be appropriate to meet because their is an ongoing Erie County District Attorney’s investigation involving allegations the Seneca Gaming Authority eavesdropped on state gaming officials. The Nation’s attorney said there was no wrongdoing.

Demand for Arbitration by Ryan Whalen on Scribd

Cuomo Discusses Possible New Casino In Niagara Falls

Gov. Andrew Cuomo, D-NY, fanned the flames of a dispute between his office and the Seneca Nation of Indians, personally confirming Tuesday the administration will explore the possibility of permitting another casino in the Buffalo-Niagara Falls region. Cuomo said he has no doubt the state would get bids from companies across the world.

“A casino franchise is very valuable as we know. We have companies that spent hundreds of millions of dollars in the past couple of years, competing for a casino franchise license, so this is a valuable commodity,” he told reporters in the Rochester-area.

The state currently has a deal with the Senecas that gives them exclusive casino operating rights across a 16-county region in the Western part of the state. The governor said when the casino stopped paying a portion of its slot revenue to the state this summer, it violated that deal.

“We’ve gone through this with them before. It’s not the first time they’ve stopped paying but if you don’t pay you’re not going to get an exclusive franchise,” Cuomo said.

The Senecas maintain there was a 14-year payment obligation in the compact which they fulfilled at the end of March. It said the rest of the terms of the deal remain in effect until 2023 though.

Seneca President Todd Gates also said, in threatening a new casino, the governor was showed a disregard for the 4,000 people the Nation employs in Western New York. Cuomo didn’t appear concerned.

“Look, we could potentially create more jobs with a different operator,” he said.

The governor also reaffirmed that he would not meet with Gates until a pending investigation into whether the Seneca Gaming Authority eavesdropped on state gaming officials concluded. The Senecas said a meeting was supposed to happen while the governor was in town Tuesday.

Erie County DA Investigating Allegations Seneca Nation ‘Eavesdropped’ On State Gaming Officials

The Erie County District Attorney’s Office confirmed Monday afternoon it is investigating allegations made by the New York State Gaming Commission that its employees were eavesdropped on by the Seneca Gaming Authority. A source close to the investigation said gaming officials found a listening device last year in a casino space that was leased to state officials.

Sources said the investigation has been going on for “some time” but one of them indicated it is intensifying now. The Seneca Nation said it would not comment on the probe at this time.

All of this is coming out now as the state and the Nation continue to disagree over casino payments. The Senecas believe they’re no longer required to pay the state a portion of their slot machine revenues.

The two sides have been discussing a face-to-face meeting between the Nation president and the governor for several months, but have not yet connected. A Cuomo administration official confirmed Monday a report that the state would consider permitting a non-Seneca casino in Niagara Falls if the payments do not resume.

The Senecas did have a response to that development, saying while their payment obligation has ended under the current compact, it remains in effect until 2023.

“The Governor has had five months to meet with President Gates, five months to articulate his position to President Gates, and five months to engage in productive dialogue with President Gates. Instead, he has routinely chosen media statements and attacks. Without even taking the time to sit down with President Gates, the Governor has instead hurled insults at the Seneca Nation and canceled a scheduled meeting,” Seneca spokesman Phil Pantano said.

Cuomo is scheduled to be in Grand Island on Tuesday morning. Pantano said, for the state, threats seem to win out over productive dialogue.