Off the Reservation, Onto the Dealer’s Lot

By Danny Hakim, New York Times
May 14, 2002

ARTHAGE, Miss. — Frontier Ford, a nondescript dealership with a few rows of cars lined up in its lot in this small central Mississippi town, does not look like much of a competitive threat.

“I don’t see how a little dealership in Carthage, where we have two red lights, can cause this much fuss,” Butch Smith, the general manager, said while his salesmen leaned on cars, awaiting customers.

Earlier this year, the Mississippi Band of Choctaw Indians, whose reservation is centered 25 miles east of Carthage, bought Frontier, provoking an uproar among the state’s dealers. The dealers worry that the Choctaw tribe, because of its tax status, will undercut rivals on prices, even though it has promised not to do so.

That the tribe is considered an adversary worthy of concern is evidence of its stunning turnaround from economic basket case to local juggernaut. In the 1970’s, the jobless rate among the Choctaws was more than 50 percent, and college degrees were rare. Today, unemployment has fallen to 4 percent; with ventures all over Mississippi and even in Mexico ranging from a greeting card plant to an automotive dashboard instrument company, the tribe is one of the state’s five largest employers and has become one of the most successful Native American tribes in the country. Of its 8,900 members, more than 400 are in college.

So, as enterprises like casino gambling have transformed the economic power of tribes, Indians have become respected, even feared, business rivals.

“When a tribe starts to have economic power,” said Jacqueline Johnson, the executive director of the National Congress of American Indians, a Washington advocacy group, “we have other kinds of obstacles.”

When tribes buy land off their reservations, they can apply to turn it into, in effect, a mini-reservation. Since tribes are exempt from federal, state and local taxes, this can provide a significant business advantage. In Texas, a California tribe, the Rumsey Band of Wintun Indians, also bought a Ford dealership this year, but dealers there see that tribe as less of a threat because an out-of-state tribe cannot buy land and convert it into reservation territory.

The Mississippi Choctaws have promised the state attorney general that they will pay all sales and property taxes. Besides, car buyers who are not Indians have to pay sales taxes anyway when they register their vehicles with the state and get license plates. But dealers say the tribe’s promises can be broken. The dealers want the state’s motor vehicle commission to rescind the tribe’s license to operate the dealership and grant one that is conditional on the tribe’s waiving all tribal rights.

“If things get slow, they might stop charging sales taxes,” said Matt Gregory, co-owner of Triple M Motors, a General Motors dealership separated from Frontier by a Pizza Hut and a farm bureau office. “If they would just come in on the same playing field as everybody else, it would be fine.”

One group dedicated to fighting the economic incursion of tribes nationally — the Coalition Against Sales and Excise Tax Evasion — consists of trade groups representing operators of truck stops, convenience stores and gas stations, which often compete against Indian-owned businesses. “It’s been a very uphill battle,” said Holly Tuminello, a spokeswoman for the coalition. “Tribes are a very powerful and well-moneyed lobbying force.”

In the case of the Choctaws, the Mississippi Automobile Dealers’ Association is leading the push to curb the tribe’s tax advantages. It recently brought in former Senator Slade Gorton, Republican of Washington, to testify before the motor vehicle commission. Mr. Gorton has been a longtime nemesis of tribes, and his electoral defeat in 2000 was brought about in part by the first concerted fund-raising effort by Indian groups against a national politician.

The dealers have also sued for access to the tribe’s financial records, a case now before the state Supreme Court. Kevin Watson, a lawyer for the dealers, said, “If they’re going to get in the free enterprise system and compete with every other business in the country, they ought to play by the same rules.”

He added: “Where does it stop? Today it’s a car dealership, tomorrow a bank, the next day an insurance company.”

Choctaw officials have insisted that the playing field will be level. “We’ve been accused of being the next Wal-Mart, that we’re going to buy 50 dealerships,” said James W. Clancy, the tribe’s attorney general. He said the purchase of the car dealership was part of the tribe’s effort to become self-sufficient. With some 600 Ford vehicles used for official business on tribal lands, one intent is to use Frontier to buy, sell and service those cars.

He called the dealers’ move part of “a concerted effort to eventually tax tribes in this country.”

The dealers also say the tribe will have an edge because it pays no income taxes; the tribe says it uses those savings to pay for schools, police and fire departments.

Neither the Mississippi sale nor the one in Texas was part of the Ford Motor Company’s effort to increase the number of minority-owned dealerships. As happens when any dealership changes hands, however, the company had to sign off on it.

“We granted them a franchise because they met all the requirements,” Ken Zino, a Ford spokesman, said of the Choctaws.

As for the tribe’s further plans beyond reservation land, Phillip Martin, the longtime chief, said, “This is a free country, and anybody can go into any business that they want to, as long as they’re legitimate.”

It is not the dealers’ job, he said, “to make sure the tribe doesn’t get off the reservation.”

The dispute does not fit a stereotypical image of red man versus white man. For example, Mr. Clancy, the tribe’s attorney general, is white, and more than 60 percent of the tribe’s workers are non-Indians. None of the 40 people employed at the dealership are Choctaws.

In January, the motor vehicle commission denied the Choctaws a license to operate Frontier, but relented in February and issued one. Now it is considering revoking the license. A final decision could come on May 15.

Mike Moore, a Democrat who is the state’s attorney general, says his office will no longer represent the motor vehicle commission in the matter. In a sharply worded letter, he said the commission had overstepped its authority and had no cause to consider revoking the Choctaws’ license. He added that the commission was trying to “fabricate a case against the tribe.”

The chairman of the Mississippi State Tax Commission, Ed Buelow Jr., said the tribe had always been fair in how it handled taxes. “I don’t see what the fuss is, frankly,” he said.

Jim Moors, the director of franchising and state law for the National Automobile Dealers Association, who attended one meeting of the state motor vehicle commission, said: “The main issue is what are the rules? Is there a level playing field among dealers?” He added that “we’re getting a lot of questions” from dealers around the country.

Most Choctaws were evicted from Mississippi in 1831, forced to take the Trail of Tears into the Oklahoma Territories. But some stayed behind, living a hardscrabble existence that continued into the 1970’s. Rae Nell Vaughn, the chief justice of the tribal court, said she lived with her grandparents, who were sharecroppers.

“They lived in a frame house with a fireplace for heat and outdoor plumbing,” she said. “The memories my children will have of their grandmother, my mother, is being in a modern house with a nice car.”

Mr. Martin, 76, the tribe’s chief since 1979, is credited with the turnaround — an unusual one, since it predates the rise of tribal casinos after the federal Indian Gaming Regulatory Act of 1988. After returning from the Air Force in the 1950’s, he recognized that the impoverished band of sharecroppers faced an uncertain future. “The thought occurred to me: Why not bring industry to the reservation?” he said.

He lobbied for government grants and gradually developed an industrial park. Today it has numerous enterprises, from its Silver Star Resort and Casino in Choctaw, Miss., to a factory that makes cards for American Greetings to a satellite-imaging lab. There are so many well-paying jobs that the tribe’s first business venture, the car dashboard instrument maker, was moved to Mexico for its cheaper labor market.

Though the tribe gets tens of millions of dollars a year in federal grants, that is less than half the income it needs, a spokeswoman said. But the casino is lucrative enough, the chief said, that each member gets an annual payout of about $1,000, which would be higher if so much was not invested in scholarship programs and new ventures, like a water park.

The tribe’s transformation can be seen in the neighborhoods around the casino, where government-issue cinder-block houses have given way to nicer suburban homes and even a trendy development, River Oaks.

“We’re uptown now,” said Creda Stewart, the tribe’s public relations director, who is half Cherokee. “We get our lattes at the Coffee Bean.”

With success comes some downside. One local businessman, who insisted that his name not be used, said there was some bitterness among locals, though it was not deep seated.

“I don’t know whether you’d call it resentment,” he said, “or envy.”

Ed Kossman Jr., a car dealer in Cleveland, Miss., and one of the state motor vehicle commissioners, said, “I admire their entrepreneurial spirit,” but added that tribal tax protections were now outdated, having been set up in a different era.

“Today, they are becoming more affluent and they are doing business away from the reservation,” he said. “As times change, sometimes things need to be revisited.”

Ms. Johnson, of the National Congress of American Indians, said, “As long as we’re poor, impoverished, lack health care facilities and have the worst education system in the country, as long as that’s the case, we don’t hear from anyone.

“The fact is, these tribes are sovereign nations, and they have the right to determine their tax structures,” she said.

Dealers Fight Tribe’s Ford Franchise

By Mary Connelly, Automotive News
April 22, 2002

Choctaws’ tax edge is unfair, group says

Dealers in Mississippi are trying to block a Native American tribe from operating a dealership unless it agrees to pay the same taxes as other dealers.

As a sovereign nation, the Mississippi Band of Choctaw Indians can avoid various state, local and federal taxes. The dispute has national implications, dealers say, because tribes could buy dealerships in many states, just as they have acquired gambling casinos.

“We have an obligation to all auto dealers in the United States to stop this before it gets into Wisconsin, Illinois, New Mexico and any other state where there are Indian reservations which are financially capable of doing this,” said Bert Allen, owner of Bert Allen Pontiac-GMC in Gulfport, Miss.

On May 15, the Mississippi Motor Vehicle Commission is expected either to rescind the Choctaw’s license to operate Frontier Ford-Lincoln-Mercury, allow it to stand or impose conditions on the tribe, said Bryant Rogers, a lawyer representing the Choctaws.

The band was granted the license in February for the dealership in Carthage, Miss. Last week, the Mississippi Motor Vehicle Commission held a hearing on the license after receiving a complaint signed by 160 of the 200 dealers in the Mississippi Automobile Dealers Association.

Ford Motor has not granted the Choctaw tribe Ford, Lincoln and Mercury franchises but has begun the franchise process and expects to do so, said Ford spokesman Ken Zino.

“New-car dealers do not object to the Mississippi Band of Choctaw Indians being in the new-car business in our state,” said Bill Lehman, president of the Mississippi Automobile Dealers Association.

“The entire issue is about a level playing field.

“The Choctaw Indians are a sovereign nation. They have been granted privileges by the federal government that do not exist and are not available to other dealers in the state.”

Key issue: ‘In-trust’ status

A key issue is the tribe’s right to petition the U.S. Bureau of Indian Affairs to grant “in-trust land status” for the dealership property. Under federal law, such property is treated as reservation land and is not subject to state jurisdiction, Rogers said.

If the dealership were granted this status, Frontier Ford-Lincoln-Mercury would not be required to charge customers Mississippi’s 5 percent sales tax on new vehicles and 7 percent tax on parts and service, Lehman said.

Frontier Ford-Lincoln-Mercury would have a competitive advantage and force local dealers out of business, he said.

But Rogers said the tribe has agreed to pay property, state and county taxes. Indian tribes are not subject to federal income taxes, and the Mississippi Motor Vehicle Commission has no authority to intervene, he said.

No plans – now

Rogers said the tribe has no plan to seek in-trust land status for the dealership but will not rule out the option.

“We haven’t agreed we are not going to do it,” he said. “But we have no plans to make it part of the reservation. The tribe has built its business on honoring its commitments, and they intend to do that here. But there is nothing we can do to control a future (tribal) legislative body.

“If we changed our mind, and the tribe decided we wanted to put it in trust, we recognize it would be legitimate for the (Mississippi Motor Vehicle) Commission to reassess the license.”

The Mississippi Band of Choctaw Indians owns 13 businesses with an annual payroll of more than $123 million, according to the tribe’s Web site. For example, the band operates Chahta Enterprise, which reports $80 million in annual revenue from the manufacture of automotive and other wiring harnesses.

The reservation of the 8,000-member band is in Neshoba County, about 35 miles from Frontier Ford-Lincoln-Mercury.

The dealers are asking the commission to either revoke the dealership license or issue it to the Choctaws “conditioned on an absolute, unconditional and irrevocable waiver of sovereign immunity as to all federal and state laws,” said Kevin Watson, a lawyer representing the 160 objecting dealers.

“We are taking it under advisement,” said Buster Davis, chairman of the Mississippi Motor Vehicle Commission.

“We will look at the information and go from there.”

Mississippi Choctaws Enter Auto Business

The Associated Press
February 21, 2002

JACKSON, Miss. (AP) — Add auto sales to the growing number of businesses run by the Mississippi Band of Choctaw Indians.

The Mississippi Motor Vehicle Commission has approved a license that apparently makes the Philadelphia-based Mississippi Choctaws the nation’s first American Indian tribe to own a new car dealership.

The commission voted 3-2 on Wednesday to allow the Choctaws to operate Frontier Ford in Carthage — a move that some new car dealers say will jeopardize their livelihood because the Choctaws will not have to pay the state a 5 percent car tax.

“Plain and simple, the band of Choctaw Indians is a sovereign nation, and they don’t have to pay any federal income tax, they don’t have to pay any state income tax, they don’t have to pay any ad valorem taxes,” said Bill Lehman, president of the Mississippi Automobile Dealers Association.

Choctaw officials said they will collect tax on vehicles sold, as they do on room rentals at the Silver Star Hotel and Casino in Neshoba County, and use that money to finance their tribal government.

Choctaw Chief Phillip Martin was not immediately available Thursday to comment.

At Wednesday’s meeting, there was practically no discussion as Peter Cleveland, an assistant attorney general assigned to the commission, passed members a letter from Attorney General Mike Moore.

Moore wrote that the Choctaws met all requirements and should receive a positive vote unless there were factors not yet revealed. Moore also noted that the commission had never before denied an applicant.

Commissioner N.L. Carson Sr. of Carthage, who voted to approve the license, said the Choctaws deserve to become competitors in the auto sales industry.

“It’s been troublesome,” Carson said. “But these people have done more for Leake County than anyone else I know. Leake County welcomes them in fact, and the city of Carthage welcomes them.”

Carson was joined by Henry Ware Jr. of Southaven and Bernie O’Sullivan of Biloxi.

Ed Kossman Jr. of Cleveland and Bob Mixon of Hattiesburg said their votes against the license were an effort to maintain “a level playing field” for dealers who can’t compete financially with the tax exempt status of American Indian tribes.

Martin has established an array of manufacturing, retail and tourism enterprises since becoming chief more than 20 years ago — reducing tribal unemployment from around 75 percent to less than 4 percent.

Jobs are so plentiful that 60 percent of the more than 7,000 people on the tribe’s payroll are non-Indian.

In November, the tribe opened the Choctaw Hospitality Institute and Choctaw Geo Imaging Enterprise, both of which operate on the 2,000-acre reservation near Philadelphia.

Citizens Discuss Defense Against Casino Many Tishomingo County Residents Opposed to Legalized Gambling

By Jane Clark-Summers, Daily Journal
May 21, 2001

IUKA — An estimated 600 to 700 people met Sunday to discuss concerns about legalized gambling.

Rumors have circulated for the past several weeks that the Jena (La.) band of Choctaws is trying to buy 100-120 acres of land in Tishomingo County along U.S. 72 East near the Alabama state line. Such a move would have to be approved by the U.S. Department of Interior, Bureau of Indian Affairs; Chief Phillip Martin, head of the Mississippi Band of Choctaw Indians and Gov. Ronnie Musgrove. Opponents of legalized gambling have said that they have been assured that Martin and Musgrove will not give their approval.

The meeting, held at the Tishomingo County High School gymnasium, was sponsored by the Concerned Citizens Against Legalized Gambling in Tishomingo County (CCALG) and the Christian Action Commission of Jackson.

Guest speakers from across the state, including a Native American pastor, shared information about the effects of gambling on communities.

The Rev. Dwain Whitehurst, a Methodist minister from Iuka, was one of many pastors attending the meeting.

He said Calvin Gibson, a Choctaw Indian pastor, spoke to the group about the results of gambling in his community of Philadelphia. Gibson said while gambling has provided some economic benefits, it also has increased addiction, alcoholism and alcohol use among minors, Whitehurst said. “He (Gibson) said he didn’t think Chief Martin would let the casino come in,” Whitehurst said.

Randy Sharp with the American Family Association said his agency is willing to work with the Tishomingo County citizens to keep the casino out, Whitehurst said. “He (Sharp) said Gov. Musgrove has said he is opposed to gambling and a casino locating in Tishomingo County,” Whitehurst said.

Iuka mayor-elect Jackie Bryant also spoke out against the possible location of a casino in the area, Whitehurst said.

The CCALG committee is geared up to continue the fight against the threat of legalized gambling, Whitehurst said.