New casino a reality for Churchrock

By Kathy Helms
Diné Bureau

WINDOW ROCK — Break out the ceremonial shovel, it’s casino groundbreaking time!

The Budget and Finance Committee gave its final seal of approval Tuesday to a $35 million loan agreement between the Navajo Nation, using the Land Acquisition Trust Fund, and the Navajo Nation Gaming Enterprise. The committee was the final authority needed for approval.

In presenting the loan agreement to B&F, Chairman LoRenzo Bates said the agreement is to use $35 million of the $57.6 million in the Land Acquisition Trust Fund. “At the end of seven years it will be paid back at 11 percent,” he said.

Navajo Nation Council Delegate Leonard Tsosie, who has questioned used of the Land Acquisition money, said he found the development “quite interesting.”

“Nobody ever thought that we would be using Land Acquisition money for casino building. We all know that casino buildings are not land. The Gaming Office and the Gaming Enterprise need to realize the seriousness of all this.

“I’m real troubled on the steps being taken by our high-level officers just to push gaming. We should do it wisely and we should do it correctly so that then there’s an element of trust in what we’re doing — by the Navajo people, by the bank, and by the United States government,” Tsosie said.

The Navajo Nation’s first casino, to be located in Churchrock, was expected to open July 4. However, given the delays to arrange financing, the completion date is now set for Oct. 15.

The loan agreement doesn’t mean that the Nation is going to write out a check for $35 million and hand it over to the Gaming Enterprise. Because the Land Acquisition money is tied up in stocks and bonds, there is a drawdown schedule, according to Bates.

“The drawdowns are limited to $2.5 million, with the exception of the first drawdown. We’re not pulling down the $35 million all at one time. We don’t want to lose any gains that may come about by leaving it where it needs to be. If we pull it down, we lose. That’s why the schedule of drawdowns is as is.”

Navajo Nation Controller Mark Grant said his office, in conjunction with the Department of Justice, external counsel and Legislative Counsel Frank Seanez all put in a substantial amount of time to make sure they have a good contract.

“I feel that it’s fair to both the borrower and the lender, which is the Nation. I think it’s going to be very beneficial for the Nation from our development perspective, as well as the employment perspective.

“Basically, we’re going to be advancing money to the Gaming Enterprise and they’re going to start construction. By June 30 we should know the full cost of construction. By Oct. 15, we should be finished with the drawdown and we should have the grand opening, hopefully on Oct. 15. That’s the point when the drawdown stops, according to this document,” he said.

Interest payments won’t start until January the following year. The Navajo Gaming Enterprise will pay interest-only for one year, and then start picking up principal and interest, Grant said.

“The plan is to get another loan from an external bank to pay off this Land Acquisition loan. The benefit of that is that it will give us access to more money through an external bank. It will also free up the $35 million that we are using here to use on other casino projects, or other projects in general,” he said.

Gaming Enterprise CEO Robert Winter said that when his office first received the loan document, it was not structured in a way that concedes fast-track construction, “so we had to do a lot of discussion on molding this document to what we call fast-track construction concepts.”

Fast-track is done in multiple bid fashion, he said. “One of the requirements in fast-track construction is you have to pre-order and put deposits down. In this particular case, we’re going to have to put a deposit down on the stress membrane right away. ... If we’re going to begin to do this work in the next two to three weeks, we need to start to order things.”

Besides the incremental drawdowns, there are a number of safeguards in place to ensure the Navajo people’s money is protected. “It’s going to be fast-tracked but in doing so, the gaming operation puts out requests for bids, then the controller’s office looks at it and says its good to go,” Bates said.

“This money in the Land Acquisition fund is the people’s money, and we have to protect it just as if we were loaning it to somebody else,” he said. “We are required to protect that money and ensure that it’s paid back in the manner that it needs to be.”

Grant expressed his thanks to all involved for their hard work. The next step is to have Navajo Nation President Joe Shirley Jr. and Winter sign the document, he said, “then get a drawdown schedule from Bob and start disbursing it. We could have a groundbreaking any time.”

George Hardeen, spokesman for the President’s Office, said, “It’s a step forward in the right direction. There’s agreement and hopefully we will get back on track and keep Bob Winter and Eddie Lockett busy.” Lockett is director of the Gaming Regulatory Office.

Winter expected a general contractor to be recommended at a board meeting Tuesday night. “This is a very good day for the Navajo Nation,” he said.