A $54 million USDA loan to the Mohegans?
By David Collins
Publication: The Day
Published 06/02/2010 12:00
It turns out that, for the purpose of funneling $54 million in federal stimulus money to the sovereign Mohegan Indians, you have to first define the tribe's reservation, which, on a slow day attracts tens of thousands of people, arriving on the tribe's own interstate highway connection, as a rural area.
That's right, it's the U.S. Department of Agriculture, through its rural development program, that has agreed to lend the tribe the money to finish its stalled community center project.
"Through our programs, we touch rural America in many ways," the USDA says on its website about the rural development program.
In this case, the USDA is touching rural America by helping to develop, among other things, new executive offices for a tribal government that manages one of the world's largest casinos.
This is not a Tea Party fantasy. It's really true. The USDA announced the $54 million in loans to the Mohegans, money from the American Recovery and Reinvestment Act, in a press release last week.
Since then, no one has had a lot to say about the loans.
A Mohegan spokesman said the tribe does not want to comment until a briefing for tribal members, which is scheduled for next week.
The tribal spokesman did say, however, that the project will create construction jobs, not permanent new tribal jobs, as suggested in the USDA press release.
"Once completed, the new center will provide essential government services and create an estimated 1,279 jobs for this rural community," the press release said.
Not true, apparently.
A brief statement from Sen. Chris Dodd, issued when I asked his office for a comment on the loans, also made mention of the new jobs.
"These critical loans will fund the creation of nearly 1,300 jobs for residents of eastern Connecticut," Dodd's statement said.
The office of U.S. Rep. Joe Courtney also responded to questions about the loans with a statement.
It said the congressman first learned about the loans when the USDA made its announcement last Thursday.
"The Mohegan project was one of 145 projects in 37 states supported by the USDA's rural development program," the Courtney statement said. "In the case of the Mohegan Tribe, they applied for the loan as an eligible tribal entity and USDA selected theirs and other projects out of a host of competing applications."
Sen. Joe Lieberman's office did not respond at all.
The loans are strange on a lot of levels, even if you could get over the notion of a rural casino with a glass-walled 39-story hotel tower.
I could understand federal assistance to impoverished tribes in remote areas, where unemployment, inadequate health care and limited education opportunities are chronic problems.
But why should taxpayers subsidize a tribe in the Northeast that is so wealthy that it pays its members a per capita stipend, dividends from its successful gambling franchise.
I did ask a USDA spokesman to explain how the Mohegans qualified for a program meant to support rural areas, and she said Montville, with a population of 18,546 in the 2000 census, falls under the department's defining threshold of 20,000 people for a rural community.
The town's own website, though, currently lists its population at 20,003, not quite so rural.
The interest rate on the Mohegan loans is "market" rate, according to the USDA, currently 4.125 percent. The term is 30 years and the loans will be secured by general obligation bonds issued by the tribe.
So there are good things to say about the assistance, too.
The government might end up making money on the loans and they will at least, in the short term, help create construction jobs.
The loans also benefit one of eastern Connecticut's largest employers at a time when it is coping with harsh recessionary and competitive pressures.
The bad labeling here reminds me of the consequences of Chris Dodd's "VIP" mortgage loans for his home refinancing, which contributed to his political downfall.
It turns out the actual rate and terms of the senator's mortgage loans weren't all that preferential.
It's how they were characterized by the lender that got him into trouble.
This is the opinion of David Collins