PRESCOTT, Ariz. (CN) – The manager of the Grand Canyon Skywalk claims the Hualapai Tribe is planning to take control of the remote tourist attraction through eminent domain to avoid paying him millions of dollars in management fees.
David Jin, whose company Grand Canyon Skywalk Development LLC conceived of and built the horseshoe-shaped, glass walkway that juts out over the western Grand Canyon 4,000 feet above the Colorado River, says the Hualapai Tribal Council will vote soon to condemn the attraction, though it lacks the legal power to do so and the money to pay for it.
“The Tribal Council intends to pass an ordinance in the immediate future allowing the tribe to exercise its purported eminent-domain power to take certain contractual rights from plaintiff, who is a non-Indian,” according to the federal complaint.
“The Tribe does not possess the civil regulatory or civil adjudicatory jurisdiction to exercise eminent-domain power over non-Indians such as plaintiff. Further, even if the council had the authority to affect the purported ‘condemnation,’ the tribe that they represent does not have the financial ability to pay just compensation for the taking. Council defendants, who intend to vote to pass the ordinance, are therefore acting outside the scope of their authority as members of the council.”
Jin adds: “Although the precise justification for defendants’ planned taking is not yet clear, GCSD is informed and believes that the ‘condemnation’ is designed to avoid paying past-due and future manager’s fees and other compensation to GCSD, and to allow the tribe to place an artificially low value on GCSD’s contract rights, based on inaccurate revenue and profit information.”
A tribal spokesman called the lawsuit against 11 council members and administrators a “public relations effort,” and said that the tribe is “exploring its options.”
“The [Hualapai are] not getting the amenities that they were promised,” tribal spokesman Dave Cieslak said in an interview with Courthouse News.
Jin partnered with the Hualapai tribe in 2003 to build the $25 million tourist attraction on the Hualapai Reservation in northwestern Arizona. Jin and the tribe agreed that he would finance and manage the Skywalk as part of a revenue-sharing agreement with a company chartered by the tribe called Sa Nyu Wa, according to the complaint.
Problems with the agreement began to surface soon after the Skywalk opened in 2007, Jin says.
“A fraudulent scheme was uncovered in which employees of a tribally chartered corporate entity owned by the tribe, Grand Canyon Resorts Corporation, were embezzling and absconding with revenue from Skywalk ticket sales,” according to the complaint. “Revenue records that purported to relate to ticket sales did not correspond to the actual number of tickets presented to GCSD. Moreover, funds were being transferred to and from other entities owned by the tribe without any authorization by GCSD as manager.”
Jin says that Sa Nyu Wa has never distributed the profits from the attraction equally, and that “during 2008 and 2009, no distributions were made by SNW to GCSD for its contractually required manager’s fees.”
The tribal corporation has refused to allow Jin to look at the books, and has refused to enter arbitration, he says. The parties have operated under a trust agreement with U.S. Bank since 2010, the complaint states.
Cieslak said Jin failed to complete work promised under the 2003 agreement. He said that visitors to the Skywalk use portable toilets instead of bathrooms, and called some of the buildings near the attraction “uninhabitable.”
The tribe wants Jin to “uphold his end of the bargain,” Cieslak said.
Jin says in his complaint that the tribal corporation is trying to prevent his employees from reaching the Skywalk, which is about 120 miles east of Las Vegas and 253 miles northwest of Phoenix over some rough dirt roads.
“SNW’s interference with manager’s contractual rights includes, but is not limited to, undermining and thwarting manager’s ability to transport and deliver employees needed to operate the Skywalk and related facilities, and denying transportation access for employees to travel to and from the Skywalk,” the complaint states. “SNW has also interfered with the advertising and promotion of the Skywalk and the completion of the Skywalk support building.”
The revenue and profits from the attraction appear to be substantial.
The long-term value of the Skywalk is “far in excess of $100 million,” Jin says in his complaint.
“With minimal internal controls finally established under the trust agreement, the first credible partial-year revenues have been in excess of $20 million, with cash flows exceeding $5 million, even in the midst of a recession and with fuel prices rising,” the complaint states.
Jin seeks declaratory and injunctive relief to stop the Tribal Council from using eminent domain to take control of the Skywalk.
Nevada-based Grand Canyon Skywalk Development is represented by Pamela Overton with Greenberg Traurig in Phoenix.