Seneca Nation

Moody’s: Seneca Arbitration Decision ‘Credit Positive’ For WNY Cities

From the Morning Memo:

Moody’s Investors Services said last week’s resolution in an arbitration between the state and the Seneca of Nation of Indians will have a positive financial impact on three Western New York cities.

The arbitration panel ruled the Senecas must continue to pay the state a percentage of the nation’s slot machine revenues, as well as nearly two years of back payments. Buffalo, Niagara Falls and Salamanca will all receive funding they have been due but were not receiving while this battle was being waged.

Of the three cities, Niagara Falls was in the worst financial shape, with a negative rating from Moody’s. While, the rating service’s declaration of “credit positive” does not automatically mean there will be an imminent credit rating or outlook change, it is a recognition of a significant event for the city.

“In particular, the ruling will greatly improve the financial position of the City of Niagara Falls (Baa3 negative), which relies heavily on Seneca Nation revenue-sharing funds to support operations,” the report reads.

Moody’s noted Salamanca also relies heavily on the funding, but was in a better financial position than Niagara Falls at the outset of this prolonged fight. The service pointed out that only some of the lost casino revenue could be made up from a property tax increase, so cuts would’ve been needed had the arbitration not ended up the way it did.

“Had the Seneca Nation won the arbitration and refused to make payments to these cities going forward, both cities would have faced significant financial uncertainty,” Moody’s said.

The report said even though the amount of money Buffalo received was small compared to the city’s total budget, it had still “struggled to maintain balanced operations, and any loss of recurring revenue can be difficult to absorb.”

Falls Leaders Happy About Casino Money, But Want To Be Careful Spending It

From the Morning Memo:

Leaders of the cash-strapped city of Niagara Falls welcomed the news that an arbitration panel had ruled in favor of the state in a long-running dispute with the Seneca Nation of Indians over casino payments.

The Senecas hadn’t paid the state a portion of casino slot machine revenues for the better part of the last year. Among the three cities where the tribal casinos are located, the Falls is supposed to get the largest portion of that funding.

Without it, the city faced a major budget gap this year, and the state had even promised to provide an additional $12 million to cover it. Mayor Paul Dyster said that backup plan does not appear to be needed now, so long as the Nation makes overdue payments in a timely fashion.

The mayor said it was a good day, but cautioned the city has to become less reliant on casino funds with the current deal between the state and the Senecas running out at the end of 2023.

“We’re trying to deliver services and keep taxes down, and that’s a trade-off the administration and city council have to work out year by year in the budget process,” he said.

City Council Member Chris Voccio said by 2020, none of the Seneca money, which has been roughly $20 millionin recent years, should be part of the budget. Rather, he believes it should be invested in infrastructure and economic development – as many leaders argue was its originally intended purpose.

“If you drive down Pine Avenue, where we are now, or you drive up Niagara Street or drive up Main Street, and you look around, it’s hard to imagine that the city, over the last 15 years has received $250 million,” he said.

While it’s unclear at this point exactly how much Niagara Falls will get, the mayor said he’s expecting a lot of the money will move quickly from the coffers. Other stakeholders like Destination Niagara USA, the local tourism agency, are owed a portion of the funds once the city gets them.

Governor Cautions Municipalities Not To Count On Seneca Casino Money For Budgets

A dispute over casino revenue sharing between New York State and the Seneca Nation of Indians is now in the hands of an arbitration panel.

Earlier this month both sides appeared in front of the three-member panel in New York City. Gov. Andrew Cuomo said all arguments have been submitted on paper, as well.

“We’re waiting for an arbitrators decision and the sooner the better,” he said.

The conflict has been ongoing for nearly two years, with the Seneca Nation arguing the obligation to give the state a portion of slot machine profits has been fulfilled.

“It is very, very important that the Senecas restart their payments. Local governments are depending on that. That was the essence of the bargain that we reached initially. I believe they wrongfully stopped the payments. They believe they have a legal claim,” Cuomo said.

A portion of the money goes to the three cities where the casinos are: Niagara Falls, Buffalo and Salamanca. The loss in revenue has caused budget issues for all three municipalities.

“The municipalities, I believe should be prudent, and wait for the situation to be settled before they count on money. Don’t count your chickens before their hatched. Don’t count your revenue until you know you’re going to receive it,” Cuomo said.

The timeline for a resolution is unclear at this point.

Will Seneca Nation Casinos Take Sports Bets Soon?

When it comes to potential sports gambling operations in its three Western New York casinos, the Seneca Nation of Indians is playing its cards close to the vest. Monday’s Supreme Court ruling effectively legalized sportsbooks at a federal level, leaving the regulation up to states.

The Nation, however, is sovereign and like most gaming issues in New York State, there appears to be some disagreement about what it is allowed to do in its casinos. The Senecas have not said they are moving forward with a sportsbook, but in a short statement said they will take a close look at the ruling and the possibility of creating another amenity for guests.

“We closely monitor all developments in the gaming industry that could potentially impact the experiences that we are able to offer to our millions of visitors,” a spokesperson said.

The New York State Gaming Commission also continues to review the decision. There is already a law in the books allowing only the state’s casinos to accept wagers on sporting events, only after they are granted a license by the gaming commission.

A spokesperson for the commission had “no comment” about whether the law would apply to New York’s Indian casinos as well. The Oneida Nation in Central New York seemed to indicate it was cleared to move forward under the terms of its compact.

Niagara Falls Assemblyman Angelo Morinello, R, said at least with the Seneca Compact, there is no mention of sports gambling. He believed it would need to be negotiated between the Nation and the state before Seneca casinos could move forward.

“This would be additional gambling revenue that there’s no authorization or rules or direction as to whether or not either the City of Niagara Falls or the State of New York is entitled to a percentage,” he said.

The Senecas and the state are also in the middle of a stalled arbitration process to decide a dispute over slot machine revenue. While sports betting is not a part of that arbitration, there is a chance it could be used as a bargaining chip to renegotiate the compact instead.

“It would seem that it could be but on that, it’s a legal issue and I’m not going to speculate at this time because the arbitration process is moving forward slowly but it is on the compact itself,” Morinello said.

The assemblyman said he is not sure what New York could do to stop the Nation if it started operating a sportsbook but he believes the federal government could get involved. In the meantime, he is not particularly concerned about the state falling behind in terms of gaming competition and believes the Legislature should take its time addressing the new developments.

Seneca Nation Files Lawsuit Over Long-Running Thruway Dispute

The Seneca Nation of Indians has filed a lawsuit in federal court connected to a long-standing dispute with New York State about a portion of the State Thruway which runs through the Nation’s Cattaraugus Reservation. The roughly three miles of road is part of the Thruway that runs between Buffalo and the northern Pennsylvania border.

The Senecas are seeking an injunction which would require the state to obtain a proper authority and pay for the land’s use moving forward. It would also either prohibit the Thruway Authority from collecting tolls for that stretch of road or require the comptroller to hold future tolls collected in an escrow account for the Nation until a valid easement is obtained.

According to court documents, the state obtained an easement to build the stretch in 1954 for a one time payment of $75,000, plus smaller payments to displaced members occupying the land. The Senecas contend they were coerced or threatened into the agreement but furthermore, the state never received necessary approval from the federal Department of Interior.

The Nation states that since at least 1993, they have openly denied the validity of the easement. The Nation initially brought a lawsuit against the state in 1999 but said it was ultimately rejected by a federal court because a state under the Constitution couldn’t legally be sued.

This time, the Senecas are specifically naming the governor, attorney general, the DOT commissioner and the Thruway Authority, all of whom they say have authority as individuals or as an entity to obtain a valid easement. It also names the comptroller in order to require him to establish the escrow account, should the state continue to collect the tolls.

The Seneca Nation and New York State have been on shaky terms lately, currently in the middle of an arbitration process regarding casino revenue sharing. A spokesperson for the Nation says the two disputes are not connected.

The owner of the Big Indian Smoke Shop on the Cattaraugus Reservation also appears to be building his own off ramp on that Thruway stretch but the Senecas say that is an individual effort which they are not involved in either.

“We can’t comment on pending litigation but it’s well established that the Seneca Nation granted an easement for the Thruway in 1954. We have defended that position in the past and will continue to do so going forward,” a spokesperson for the Thruway Authority said in a statement.

Seneca Nation Thruway Complaint by Ryan Whalen on Scribd

Still No Third Arbitrator In Seneca Dispute

From the Morning Memo:

Last fall, the state and the Seneca Nation began to move toward arbitration to settle an ongoing dispute over casino revenue sharing. By November, both sides had picked their arbitrators, and those two people were, in turn, responsible for selecting the third member of the panel.

More than five months later, LG Kathy Hochul says that decision has stalled the process completely.

“There has been a dispute over the third individual selected,” she said. “We’ll get there, but the easiest solution to the problem is for the Senecas to continue to make the payments we think they’re legally required to make.”

The Senecas have not made a payment to the state since early last year, arguing their obligation under a 2002 compact had been fulfilled. The state argues the payment structure automatically renewed as part of the Nations’ continued right to gaming exclusivity in the Western New York region.

“We can feel the impact of this,” Hochul said. “It should not have gone on this far. But the compact calls on arbitration as the vehicle to resolve this, so I can’t comment any further, as that’s a form of litigation.”

The LG acknowledged the three cities – Buffalo, Salamanca and Niagara Falls – that rely on the casino money, are sorely feeling its lack. Niagara Falls receives the largest sum, and is currently struggling to balance its budget and provide services like paving roads and filling potholes.

Ahen asked what she’d say to Niagara Falls Mayor Paul Dyster and his beleaguered constituents, Hochul argued that the Nation, not the city or the state, is at fault.

“We understand your frustration, she said. “We’d like the Senecas to keep up their end of the commitment that they are continuing to generate huge sums of revenues due to the exclusivity agreement they were afforded. It’s our expectation, that they’d just recognize their obligation but we’ll continue the arbitration process and it’ll be resolved.”

The Senecas have offered to negotiate directly with the cities, but so far Dyster and the other mayors have rejected the offer, letting the dispute play out at the state level.

Del Lago Asks State To Sweeten The Pot

From the Morning Memo:

The financially struggling del Lago Casino in the Finger Lakes region has asked state legislative leaders and the governor’s office for assistance. While the casino has not said specifically what it is asking for it would appear to be seeking a lower tax rate in the face of lower-than-expected revenues.

Del Lago spokesman Steven Greenberg said the casino has a competitive disadvantage due to changes in circumstance with casinos operated by the Seneca Nation that didn’t exist when the state first awarded its gaming license. The Nation last year argued that its obligation to New York expired, and it stopped paying a portion of slot revenues. That dispute is currently in arbitration.

“The Seneca Nation stopped making payments to both New York State and to the local governments last year” Greenberg said. “What are they doing with that newfound windfall? Using more than $50 million to provide additional promotions and incentives – particularly in the Rochester area – to lure customers from del Lago. And it’s working. Del Lago can compete on an even playing field but not one that’s tipped so heavily toward the Senecas.”

The Senecas, responding to the accusations, said del Lago is wholly responsible for its failure to meet its own projections. Spokesman Phil Pantano said the casino had unrealistic expectations from the get go when it applied for its license.

“Despite various concerns that were raised, the project was approved by the state,” Pantano said. “Del Lago’s estimates were that they were going to take significant market share from both the Seneca Nation’s operations in Western New York and from the Oneida operations in Central New York. On top of that, their projections also called for significant new outside revenue.”

“Which of those promises did they fail to live up to? The numbers don’t lie. The projections haven’t materialized, falling short by some 44 percent, and now, del Lago is turning to the State to fund their failure to meet their own goals.”

Del Lago opened roughly a year ago. In February, Moody’s downgraded the casino’s long-term outlook from stable to negative.

According the the Democrat and Chronicle, state Senate Majority Leader John Flanagan said providing assistance to casinos is part of the budget negotiations. But members of his own conference – most notably, Sen. Joe Griffo – are pushing back on any idea of a bailout.

Also, Western New York Republican Ray Walter tweeted that no tax dollars should be directed to del Lago or any other “Cuomo Casino no matter how much they’ve paid off Cuomo and the Legislative Leaders.”

Niagara Falls Feels Strain Of Dispute Between Senecas And State

From the Morning Memo:

In his annual State of the City address, Niagara Falls Mayor Paul Dyster told citizens he was hoping for the best, but preparing for the worst, regarding the ongoing arbitration between the state and the Seneca Nation about whether the Nation should still be sharing a portion of its casino revenues.

He said he still expects the arbitration to favor the state in the end, but remains unsure if the city will get its share, around $20 million annually, during the 2019 fiscal year.

“Our hope and our expectation is that when the arbitration ends, the Senecas are going to have to pay,” Dyster said. “But even if that happens, we want to be sure that we end up with a relationship with the Senecas going forward that’s not based on animosity, but instead is based on cooperation.”

In the meantime, the worst-case scenario is pretty bad. The city is staring down a $12 million dollar deficit, which is making it extremely difficult to even maintain the current level of services, let alone try to expand them.

The mayor said the state has no legal obligation to provide the city with funding unless it is paid by the Senecas. Given that the arbitration is between the state and the Nation, not Niagara Falls, reporters pressed Dyster about whether New York has a moral obligation to help out the Cataract City in the interim.

“I want to make clear that we haven’t made any requests to the state for some sort of emergency bailout,” he responded. “We’re not at that point. We’re in an arbitration process that we expect to win, and we hope that the arbitration is going to be settled in a timely way.”

The Senecas have also said they’d be open to negotiating payments with the individual cities where their casinos are located. Niagara Falls City Councilman Bill Kennedy said this is an emergency, and Dyster should find away to deal with it as soon as possible.

“The mayor needs to step up and talk to the people, the powers that be, Kennedy said. “The Seneca leaders, Governor Cuomo, talk to them. We have to have the testicular fortitude to be able to, you know, hey this is happening. We shouldn’t be in a deficit. We really shouldn’t be but we are so help us.”

Dyster said he has tried to avoid doing anything that undermines that state’s position in arbitration by giving the appearance it is already pursuing a “Plan B.”

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.