COQUILLE INDIAN TRIBE

3050 Tremont Street North Bend, OR 97459
Phone: (541) 756-0904 Fax: (541) 756-0847
www.coquilletribe.org

March 24, 2018

SENT VIA EMAIL ONLY

Vannice Doulou
National Indian Gaming Commission

Vannice_Doulou@nigc.gov

RE: 2018 Consultation Items
“Management” and “Sole Proprietary Interest”

Dear Ms. Doulou:

Dai’sla! I am the Chairperson of the Coquille Indian Tribe. I am sending you this
correspondence in response to the NIGC’s 2018 tribal consultation letter. That letter references
proposed regulatory changes that would cause real problems throughout Indian country.

The changes of concern are the proposed revisions to the definitions of “Management” (proposed
as 25 CFR Part 502.25) and “Sole Proprietary Interest” (proposed as an addition to the
Compliance and Enforcement regulations at 25 CFR Part 573). I would like to individually

address each of these proposed revisions.

1. “Management”

a. The proposed definition states:
2. Management includes but is not limited to, planning, organizing

directing, coordinating or controlling:
RK

(k) the supervision of construction or improvements.

(Emphasis added).

This definition would present significant real-world problems for tribes that rely
on lending to financing the construction or improvement of their gaming

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operations. It is common practice for construction project lenders to have
controls on the disbursement of funds to ensure that construction is proceeding
according to plans and that construction loan funds are properly applied. The
definition of “management” should exclude these common construction loan
practices.

The proposed language also should include language that clearly authorizes
lenders to enforce their rights under loan agreements if those rights do not
otherwise constitute management activities.

2. “Sole Proprietary Interest”

The proposed definition of “Sole Proprietary Interest” raises a few issues:

a.

First, under subsection “a)”, the proposed regulation authorizes the NIGC to find
a violation of the Sole Proprietary Interest standard based on only a single listed
factor. However, it appears that some of these factors, alone, should not warrant
such a finding.

Moreover, this language provides little predictability or guidance for tribes and
lenders trying to negotiate a good faith transaction with affordable capital. Are
all factors weighted equally? What facts would change the Chairperson’s opinion
to rely on one factor versus all of them? The answers to these questions are
unclear and could have a substantial chilling effect on financing opportunities for
tribes. .

Second, under (a)(7)(a), a proposed factor indicating a Sole Proprietary Interest
violation is described as, “the provision of Tribal rights to the third party,
including, but not limited to: *** , the third party’s access to records or financial
information regarding the gaming operation or part thereof;”

Lenders very frequently require tribal gaming borrowers to provided financial
data related to gaming operations ~ this is basic due diligence that lenders always
require. By making such a contractual provision a factor in this section, you will
substantially raise the real or perceived costs of capital access and/or scare away
lenders from gaming transactions throughout Indian country. Moreover, many
financial institutions are required by law to report certain loan related information.
This factor should either be eliminated or significantly amended.

Finally, at a)(7)(c), a grant of a security interest in the gaming operation could be
considered a factor in determining whether or not a tribe has a Sole Proprietary
Interest. But it is extremely common for tribes to grant lenders security interests
in multiple aspects of gaming operations. These security interests include things
like: accounts, revenue, and equipment. By keeping this proposed rule as written
the NIGC will surely scare multiple credible lenders away from Indian country

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gaming projects and raise the cost of capital for those lenders that choose to
remain in that space.

Thank you for the opportunity to submit comments on these proposed regulatory changes. If you
have any questions regarding this matter, please contact me at (541) 756-0904.

Sincerely,

I< ( A.
Brenda Meade, Chairperson !
Coquille Indian Tribe

Ce: Lael Echo-Hawk
Scott Crowell
Brett Kenney

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