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Designation may allow Fond-du-Luth Casino's downtown footprint to grow

Pedestrians walk by the Carter Hotel just up North Second Avenue East from Fond-du-Luth Casino. (file photo / News Tribune)

The downtown footprint of the Fond-du-Luth Casino could be poised to grow.

The Bureau of Indian Affairs recently issued a notice of its decision to place the Carter Hotel property, 17-27 N. Second Ave. E., in trust for the Fond du Lac Band of Lake Superior Chippewa.

Band Chairman Wally Dupuis said the new designation bestows the same status to the hotel property that has allowed the casino to operate a gaming establishment in the heart of Duluth for years. But he stopped short of revealing any specific plans.

City leaders have long opposed the expansion of sovereign "Indian country" holdings in downtown Duluth, but to date, those efforts to block the band have proven unsuccessful. Placing the property "in trust" for the band removes it from local property tax rolls and exempts it from much local regulation.

The band purchased the Carter Hotel in December 2010, and one year later sought to lump the property in with its neighboring the casino parcel.

The city of Duluth sued, claiming the band had no authority to enlarge its sovereign land holdings in the downtown without the consent and support of local officials.

But in December 2014, U.S. District Court Judge Susan Richard Nelson dismissed the city's lawsuit, clearing the way for a decision by the Bureau of Indian Affairs and the Department of the Interior.

The city has until the end of this week to appeal the determination that the Carter Hotel property should be placed "in trust" for the band. If it files no appeal with the Midwest Regional Director of the BIA by April 30, the decision will become final.

Duluth Mayor Emily Larson would not comment on the city's intentions in regard to a potential appeal, citing the sensitivity of the situation.

"We are in communication with the Fond du Lac Band. The Carter Hotel is part of this communication, and we are aware of the Friday appeal date," she said.

"I understand this is an important issue and relationship, and am investing time and energy accordingly. I won't speak more broadly at this time," Larson said.

As for the prospect of a resolution, Ferdinand Martineau, the band's secretary/treasurer, confirmed there has been some back and forth with the city but said, "There's been no real serious talk about it."

Relations between the band and the city have been strained in the wake of a 2009 decision to break off a casino revenue-sharing agreement that had provided the city with about $6 million annually. The National Indian Gaming Commission subsequently ruled the revenue-sharing arrangement inappropriate and ordered the band to make no further payments to the city.

The events touched off a series of lawsuits that ended mostly in the band's favor.

When asked to comment on the band's plans for the Carter Hotel property Tuesday, Dupuis replied: "I'm not prepared to talk about that at all."

In response to the same question, Martineau said: "We've had some discussion, but I'm really not at liberty to say what that's all about."

Martineau did confirm, however, that the band still intends to tear down the former Carter Hotel building, which has fallen into serious disrepair and sustained significant water damage due to a failing roof.

"That's probably one of the first things we will do once it's put into trust," he said.

Earlier, the city had enlisted the Minnesota State Historic Preservation Office's help in seeking to save the building, which is located within the Duluth Commercial Historic District, an area listed in the National Register of Historic Places.

However, the designation alone isn't sufficient to defend the structure, built in 1929, from the wrecking ball, said Sarah Beimers, SHPO's manager of government programs and compliance.

"So it's part of the district, but that doesn't protect anything from being demolished. It makes the federal agency go through the process of determining whether there are alternatives," she said.

The parties went through that process, and it yielded a memo of agreement signed in 2014, that provides a path for the Carter Hotel to be torn down, as long as certain site stipulations are met.