Governments nervous over projects on Indian land

Wednesday, Oct. 22, 2003 | 9:49 a.m.

CARSON CITY -- An American Indian official in Northern Nevada says he's surprised at the controversy surrounding the lease of land by the Reno-Sparks Indian Colony to a new Mercedes-Benz car dealership coming into the south part of Reno.

Chuck Rosenow, economic development director for the colony, said Tuesday there was a lot of misinformation being spread about the project and about the potential loss of tax revenue to the state and local governments.

But some state officials fear this could be the first of many businesses that would set up shop on Indian-owned land and would thereby send sales tax collections to the tribe, rather than the state and local governments.

The Northern Nevada Indian colony owns 14.5 acres and has leased 4.5 acres, located about eight miles south of downtown Reno on U.S. 395, to the auto dealership based in Sacramento.

Rosenow said the dealership, owned by George Grinzewitsch, is putting up a building worth more than $3 million and expects to open in December. The car dealer will pay property tax on the building to the local governments and the state. But he will not pay property taxes on the land because that is held in trust by the federal government for the benefit of the tribe, Rosenow said.

The tribe will impose its own sales tax of 7.375 percent on the sale of the vehicles. The money will be kept by the tribe for health, welfare, law enforcement and other programs for the estimated 11,000 Indians in Washoe County.

Rosenow would not say how much the dealership agreed to pay for the land, and he said only that it was a "long-term lease."

But Sen. Randolph Townsend, R-Reno, said the lease is for 65 years.

He also said the new dealer "would like to couple with other luxury car dealers and pursue a luxury car mall." Rosenow acknowledged that the tribe hopes to attract other companies to locate on the land.

Townsend said if the dealership opens before the next Legislature, it might be "grandfathered in" before any law could be enacted regarding tax collections in arrangements such as the Mercedes-Benz one.

The state and local governments impose sales taxes, but under the law if a tribe levies the same rate on Indian land, then the collections stay with the tribes.

Rosenow estimated the tribe will collect a little less than $750,000 a year in sales tax, but Townsend estimated the yield would be $200,000 a month. And Michael Pennington, an official of the Reno-Sparks Chamber of Commerce, suggested the loss to Nevada would be around $4 million a year.

Townsend said most of the people who would buy vehicles at this business are still sending their children to Nevada schools and using the highways and other services. Yet their tax dollars won't be going to the state to help pay for those services.

The Reno-Sparks Chamber of Commerce has been meeting with Reno city officials on the issue. There's a fear by some that this could entice other businesses to locate on tribal land, not just in Washoe County but across the state.

In Clark County, the Las Vegas Paiute Tribe has land in downtown Las Vegas and also has land along U.S. 95 near Mount Charleston. The Moapa Paiutes have land about 55 miles northeast of Las Vegas, off Interstate 15.

Tribal officials in Clark County have no plans to bring nontribal commercial ventures to their land, their lawyer said Tuesday.

The Northern Nevada Indian colony has been busy in California trying to attract other companies to come to Nevada to locate on Indian land, he said. He said tribal representatives met Mercedes officials at a conference two years ago in Las Vegas and the negotiations started.

Townsend said the benefits to the dealer could be a lower rent or lease and the possibility of not paying any property tax. But Rosenow said the rent is at the market price and Mercedes Benz will pay the property tax on its building.

The Reno-Sparks dealership development comes at a time when Nevada, and Washoe County in particular, faces a threat from Indian casinos in California. Officials in the Reno-Sparks area are worried that the new tribe casinos in the neighboring state will siphon off business. That would lead to less tax revenue for Reno-Sparks.

Rosenow said tribes in other states have a monopoly on gambling that is not enjoyed in Nevada. He said the tribes in this state could not compete with the major casinos.

So, he said, they are trying to find other ways to make money. The policy of the federal government, Rosenow said, is to make Indians self-sufficient.

"We're a little perplexed by this" flap that has been raised over the car dealership, said Rosenow. There is no Mercedes-Benz dealership in Reno now but there is a service center. That service center will move to the dealership location after construction of the dealership is finished.

The financing for the $3 million building comes from Germany and sales tax is being paid on that construction material, officials said.

The land was purchased by the tribe and had been classified agriculture property, which meant it had a low property tax bill before the tribe purchased it.

By bringing in the auto dealer, the tax value will increase because the building will be subject to the ad-valorem tax, Rosenow said.

Mercedes-Benz chose this site because of its location near the freeway and the growing development in the area, Rosenow said.

There has been some suggestion that a special session of the Legislature might be called to change the tax law. But Townsend said it was too early to talk about that. He said there may be a chance to negotiate a settlement of this issue.

A spokesman for Attorney General Brian Sandoval said the office expects a request for a legal opinion on questions about whether the car dealership will be paying sales taxes to the tribe or the state.

Senate Majority Leader Bill Raggio, R-Reno, said he had a legal opinion from Legislative Counsel Brenda Erdoes that the dealership will not pay the sales tax to the state but the collections will go to the tribe.

But Erdoes said she was not sure if the property tax would be charged for the dealership.