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Judge sides with city in casino spat

A federal court judge has ruled that the Fond du Lac Band of Lake Superior Chippewa must resume sharing its slot-machine revenue with the city of Duluth and provide back payments to the city.

A federal court judge has ruled that the Fond du Lac Band of Lake Superior Chippewa must resume sharing its slot-machine revenue with the city of Duluth and provide back payments to the city.

Last year the band stopped sharing the revenue it generates through the Fond-du-Luth Casino and later demanded the city pay back the $75 million it has given the city over the past 25 years, claiming that the agreement the two sides entered into was made "under erroneous understandings."

The city sued, saying the band violated a contract signed in 1994.

In her decision, issued Wednesday, U.S. District Judge Ann Montgomery wrote that the band did not prove that the 1994 agreements were invalid, meaning the band must continue the payments until April 2011, when a new agreement must be in place.

Duluth Mayor Don Ness estimated that the band owes the city about $4 million in back payments. It also means the city won't have to repay $75 million to the band, which could have bankrupted the city.

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The city generally uses the casino revenue for street repair. The money also has contributed to a high bond rating for the city, despite its budget woes over the years.

Karen Diver, chairwoman of the Fond du Lac Band of Lake Superior Chippewa, said she and her staff will review the band's options and didn't rule out an appeal. The band's lawsuit claimed that Fond du Lac and the city of Duluth believed wrongly in 1994 that the band needed city approval to establish Indian land within city limits.

"This is just the first step," Diver said of Montgomery's ruling. "It could be a lengthy process, depending on what the band chooses for its next step."

Under the 1994 agreements, the two sides were to begin negotiating at the start of 2010 to have another 25-year revenue-sharing deal in place by April 2011. If the two sides don't agree to the terms of that deal by June 30 of this year, they must meet with a mediator. In December the city made a request to the band to begin negotiations, but "they did not accept our offer," Ness said.

Ness linked the judge's ruling to other city news this week: plans to buy the NorShor and Temple Opera buildings in the eastern downtown district known as Old Downtown.

"Old Downtown has tremendous potential," he said. "I look forward to working with the band to make sure they can take full advantage of the success of that area. ... With potential investments in skywalks, the NorShor Theatre and other exciting private developments in the area, the Fond-du-Luth Casino could thrive."

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