Greektown's Bankruptcy Haunts Tribe

Greektown Casino's failure haunts Chippewa Indians
Jaclyn Trop / The Detroit News
The reservation of the Sault Ste. Marie Tribe of Chippewa Indians, 60 miles north of the Mackinac Bridge, has come a long way from the dirt roads and tarpaper shacks tribal elders recall.

The tribe has generated enough wealth through its Kewadin Casinos gaming empire and gained enough state and federal aid during the past 25 years to modernize the buildings and most of the homes on its 40-acre reservation. This helps them blend into the surrounding city.


But dreams of self-sufficiency were dashed when the tribe bet on its most ambitious gambling venture — the construction and management of Greektown Casino Hotel in Detroit — only to lose it in bankruptcy in June.

The failure of the casino still stings, said Joanne Carr, a secretary in the tribe's administrative building, as she dabbed her eyes with a tissue.

When the tribe struggled to pay its construction bills and escalating attorney fees, it had to make cuts elsewhere, she said.

"People who worked here for 10 years or more were being let go," Carr said. "It was a nightmare. It just seemed to be loaded on everybody."

Coupled with the tough recession, the loss of Greektown Casino struck a blow to the tribe's plans for supporting its 30,000-member community, especially its growing number of elders and children. The tribe is dealing with the financial reverberations from the casino's failure and trying to diversify into other businesses to solidify its future.

"That casino was our children's future," said tribal board member Deb Pine.

The tribe originally projected the casino would generate $50 million annually, enough to meet the growing health and housing demands of its elders. The population of elders — those 60 and older — is expected to double in the next seven years.

Instead, the tribe had to use its own money to plug losses in the gaming hall until it finally was forced to declare bankruptcy in May 2008. Tribal board members estimate the tribe spent $100 million to $200 million of its own money.

Instead of adding more doctors and dentists to its overburdened health system, the tribe had to cut jobs on the reservation and in its remaining casinos, where revenues declined 6.5 percent last year.

The consequences rippled through the reservation. The tribal government missed out on federal grant money because it couldn't match the funds, said board member Keith Massaway. It also had to borrow money at a higher cost to make payroll.

"There is a lot of bitterness," said the tribe's chairman, Joe McCoy, who took office months after the casino declared bankruptcy. "The casino was our main focus for the last two years."

The tribe receives state and federal money, including $4.8 million in American Recovery and Reinvestment Act funds to make housing upgrades. But maintaining its community health and educational programs with tribal money has been a challenge.

The tribe will never know what it truly lost when the court ordered Greektown's ownership transferred to several East Coast hedge funds, said spokeswoman Michelle Bouschor.

"The revenue stream could have helped many programs, but because it is not there, we don't know what it could be," Bouschor said.

Members like 59-year-old George Eicher, who will become a tribal elder upon his next birthday, are worried that elder benefits — including an annual check, meal programs and extra health services — will be cut.

"The tribe didn't play their cards right, so to speak," Eicher said.

Improving quality of life
Now, the tribe sees the future lies beyond gaming. It is diversifying its holdings, investing in its five remaining casinos in the Upper Peninsula as well as non-gaming related businesses. Those include gas stations and retail outlets such as its Northern Hospitality furniture store and services such as its industrial carpet cleaning business.

Shunk Road, the reservation's main street, tells the story of the tribe's quest for a better life. The street used to be wetlands and dirt paths marked with potholes, said Martin Reinhardt, an assistant professor at Northern Michigan University's Center for Native American Studies and a member of the tribe.

Now the road boasts the tribe's first casino and entertainment complex and a modern recreation center with two Olympic- and National Hockey League-size ice arenas. Many houses have been renovated, though a handful of shacks remain.

When the tribe members opened Michigan's first Native American-owned casino 25 years ago, its goal was to provide for themselves and create jobs without relying upon the state or federal government. Close to a dozen federally recognized tribes in the Great Lakes State followed the Sault tribe's lead and opened gambling halls on their own reservations.

The tribe's five-casino Kewadin chain is one of the U.P.'s largest employers. The reservation has a Blue Ribbon school — recognized by the federal government for high or improving performance, especially among disadvantaged students — with laptops for every child beginning in second grade.

The tribe also has a health center that provides the most comprehensive services in the U.P. and draws non-members from surrounding counties for medical and dental care and services from tobacco cessation programs to HIV testing, which are in short supply off the reservation.

"Gaming has certainly elevated us from the fringes of society to being a major employer," Reinhardt said.

But he added: "Casinos are a mixed blessing."

'A golden opportunity'
Sensing opportunity to expand, the tribe began petitioning in the mid-1990s to open a casino on non-tribal lands in Detroit. In 1996, Michigan voters approved Proposal E, which created permits for three downtown casinos. MotorCity Casino Hotel and MGM Grand Detroit received the other two licenses.

"When we got licensed down there, it was a golden opportunity," McCoy said. "It was the right thing to do, and it was the future."

The casino did well for its first few years, but the venture crumbled beneath the demands of the city's development agreement, which stipulated that Greektown must include amenities such as a theater, 400-room hotel and parking garage.

Construction began at the height of the recession, making it difficult to get capital and sending loan costs skyrocketing, Massaway said.

Meanwhile, the casino was taxed at 24 percent, five points higher than MGM Grand and MotorCity because it hadn't yet fulfilled the development agreement.

"If we didn't have to open a hotel and a parking garage, we would still own it," Massaway said. "We signed development agreements that had unrealistic goals.

"Though the bankruptcy settlement erased the tribe's casino debt, it remains a huge blow to their pride, said Carr, the administrative secretary.

"We trusted that we were on the same playing field as MotorCity and MGM, but we found out we weren't," Carr said.

Today, the tribe is trying to move forward after "an expensive lesson learned," McCoy said. The future of the Sault Ste. Marie Tribe of Chippewa Indians now lies in picking up the cards, he said, and rebuilding its assets.