Your Questions Answered - General Council Meeting of September 5, 2009

1. Why did we choose the figure of $3.5 million dollars for the line of credit (LOC)?  Who would be responsible for the oversight and transactions from it? What is the interest rate?  What is a waiver of sovereign immunity?

The figure is based upon several factors, including but not limited to the cost of the new parking lot, accounting system and surveillance system, the roof redesign/moving of the AC units from the top of the casino.  Those are the most pressing needs and are a part of the “growing pains” that we expected from the beginning.  Our casino is successful, and it will continue to require maintenance and upgrades as time passes as one would expect.  The other benefit of the LOC is the flexibility of having cash available for any emergency needs for the casino and to bridge any grant awards from award to funding for economic development.

The LOC works like this – the money is available at the bank for the tribe to “draw down” as needed for projects.  The LOC is “interest only” paid the first year payments, but we can pay the balance due at any time without penalty.   After one year, the amounts utilized will be converted to a more traditional type loan payment with interest and principal. 

Sovereignty is an important issue to the tribe.  As a federally-recognized Indian tribe, the Delaware Nation has sovereignty over its affairs.  It cannot be sued by a bank unless it gives a right to do so.  The Bank will protect its money it is loaning to us by asking us to execute a “limited waiver of sovereign immunity” so if we don’t repay the loan, they can sue us in federal court.  This is what was done with the initial loan to build the casino.  The Executive Committee has no right to do this on its own under our Constitution, which is why we are bringing this issue to the General Council.  Only the General Council can vote to grant a limited waiver.

2. Why is the NIGC making new regulations that affect our Casino and its accounting system?  Where did we get the figure of a $1 million dollars or more to replace our accounting system?

The National Indian Gaming Commission (NIGC) is the federal body of authority that promulgates regulations for gaming.  In order to run an Indian casino, tribes must meet these regulations, called MICS, or Minimum Internal Control Standards.  These standards are supposed to protect Indian tribes from organized crime and other criminals from infiltrating Indian gaming.  From time to time, the NIGC will set forth new MICS that the tribes must follow.

How does a proposed regulation become part of the MICS?  First, the NIGC drafts a proposed regulation.  The law requires that the regulation be discussed in government-to-government consultation with Indian tribes.  Then, it is revised if the federal government feels such is necessary before it becomes an enforceable regulation.  The time period for enforcing the regulation is written into each particular regulation.  When the MICS are published as a Final Rule, then they are immediately applicable unless otherwise stated in the regulation.

The regulation concerning the accounting system is one that will add 13 additional accounting procedures per day.  Currently, from the gaming industry's investigations, it appears that there is one company that holds the patent for this technology and one additional company who has licensed that information.  Our General Manager Michael McLane has spoken with our current accounting program company, who would have to buy the license for this.  To put this into perspective, one small “cash in/cash out” portion of our accounting program cost the tribe $800,000.00 for licensing this more than 3 years ago.  To add these new features will cost at least $1M as per our vendor’s estimate.

3. How much is currently owed on the casino?  Isn’t the casino already the collateral for the construction loan?  If we are late on one payment will the casino be automatically controlled by the bank?

We are actually ahead of schedule on repayment which is why the tribe has such good credit with Bank of Oklahoma.  The casino’s accounts and fixtures – not the land upon which it sits – are the collateral for the original loan.  This line of credit will have the same collateral.   Even in these times, the Bank is confident in our ability to pay the money back or they would not be lending us the money.  Further, missing one payment will not put the bank in control of the casino.  The tribe must always be in control of the casino’s operations regardless of any issues with the bank, and there have never been any issues with the bank.  The most the bank can do is to enforce the loan in court, but it cannot control our casino under any circumstances.

4. The original letter stated that due to the design of the casino roof & air conditioners being located on the top is creating leaks into the casino and the machines.  Is not the contractor liable for any type of design default to be held accountable for the workmanship of their design? Will the roof re-design and parking lot projects be open to bidding?

We are definitely exploring this issue from the aspect that the contractor or architect may be liable for a faulty design.  However, this will likely involve a lawsuit that will not be resolved quickly.  We will need to get the roof fixed and pursue these companies separately.  We do not have time to adopt a “wait and see” approach on the casino and not fix the roof.  We are hoping a redesign will not be necessary and that we can simply find an alternative solution.  Michael McLane will be on hand at the meeting to answer questions about that issue since he is the General Manager.  Any repairs to the casino and a redo of the parking lot will be open to bidding.