The Tulalips’ rapid rise took a lot more than luck

TULALIP — Less than a decade ago, the area now called Quil Ceda Village was a drab stretch of I-5 north of Everett lined with grass and some scrub trees.

The only business in the area, which for decades had been set aside for a future business center by elders of the Tulalip Tribes, was a site leased by the Boeing Co. to test jet engines.

Today, the area is home to a Wal-Mart superstore, a Home Depot and Seattle Premium Outlets, an open-air mall with more than 500,000 square feet of retail space. A number of other businesses have long-term leases on the Tulalip Indian Reservation.

Then there are the tribal enterprises: a second, upscale gambling casino; a bingo hall; and a 2,300-seat amphitheater. Recently, the tribes held a grand opening celebration for a $130 million, 12-story luxury hotel.

Since 2001, the Tulalips have quickly turned the grass and trees into a major business center called Quil Ceda Village. In 2007, businesses there reported $303 million in taxable sales, producing $25.8 million in sales taxes for state and local governments, according to the state Department of Revenue.

It’s also become an economic juggernaut, sparking expansion outside the reservation in an area where most residents previously had to drive to Everett or Seattle to find work.

“What I see as the big bonus is it’s putting jobs north of Everett,” said Donna Thompson, a labor economist who studies Snohomish County for the state Employment Security Department. “People need jobs closer to home so they don’t have to commute south every morning.”

The village provides nearly 4,000 jobs. Many aren’t high-paying, Thompson noted.

Located roughly between 88th and 116th streets NE, the village is just getting started. John McCoy, a tribal member who manages the village, said only 500 of its 2,000 acres are in use.

He’s quick to credit the tribes’ business success to good decisions by its leaders. “In the late ’40s and ’50s, they knew there would be some sort of business activity in the northeast corner of the reservation,” he said. “And they knew it had to be diverse.”

In addition to foresight, McCoy noted that the Tulalips, a group of tribes on the reservation, were fortunate to have prime real estate along the freeway. “Location, location, location,” he said, invoking the old joke about the top three rules of real estate.

But the Tulalips’ good fortune has come from more than being at the right place.

Observers near and far say the success has come from an odd mixture of a relentless resolve to do business, a willingness to set aside old rivalries to foster a spirit of collaboration, and cultural beliefs that insist decisions be made for “the children who have not yet been born.”

Tulalip Inc.

McCoy likes to talk about the contributions of others, and many have stepped forward. Steve Gobin, for example, is a former fisherman turned health-center director turned assistant manager of the village who most recently was project director for the new hotel. Glen Gobin, chairman of the village council, is also a former fisherman with a trucking and excavating business who has served on the tribal council and also on the planning and gaming commissions.

If the area that might be called Tulalip Inc. has a de facto CEO, there’s no doubt it’s McCoy.

In 1988, Congress approved the Indian Gaming Regulatory Act, which was intended to help lead tribes out of perpetual poverty with a steady stream of income. Not long after, McCoy was recruited by Tulalip leader Stan Jones to come home and help lead that economic effort.

McCoy left a management job in Washington, D.C., with Unisys Corp., a technology consulting firm. Before that, he had spent 20 years in the Air Force, developing an affinity for the crewcut he still wears.

McCoy helped develop Quil Ceda Village, which is more than just a spot on the map. It’s a federal municipal corporation, just like the other Washington, where McCoy used to work.

In the entire United States, no other tribe has such a thing — essentially a separate division of tribal government that’s devoted to doing business. In 2003, the tribe was honored for the idea by the Harvard Project on American Indian Economic Development, part of the John F. Kennedy School of Government.

“For much of the 20th century, the Tulalip Tribes had great difficulty developing a robust tribal economy despite their proximity to Seattle and their reservation’s location on the extremely busy I-5 corridor,” the award notes. “As the first tribal city of its kind, Quil Ceda Village is a path-breaking model of tribal economic development.”

Harvard went on to call the village “remarkably successful in creating an environment that is attractive to do business.” The reason, it noted, was that businesses no longer had to deal with a tribal bureaucracy but could instead deal with a group that makes decisions quickly and backs them up.

The village has helped the Tulalips get access to financial capital, improve planning, attract corporations and others to locate on the reservation, and keep cultural issues from getting in the way. All those issues are common barriers to development on reservations, according to a study edited by Stephen Cornell, co-director of the Harvard project, and Joseph Kalt for the American Indian Studies Center at the University of California, Los Angeles.

“The number-one problem for tribal enterprises is separating politics from day-to-day business affairs,” they wrote.

Jonathan Taylor, whose Florida-based Taylor Group helps tribes do strategic planning, has worked with the Tulalips and other Washington tribes.

“There’s no question they have burgeoned economically,” he said of the Tulalips. “They have a lot of business achievements.”

Taylor said others have used their gambling proceeds to develop shopping centers, but operations as diverse as the village are uncommon. He said having an appointed council to make business decisions sets the Tulalips apart.

“The evidence is very clear that the capital markets like this,” he said.

For evidence, you don’t have to go any farther than Wells Fargo bank, which issued a $200 million loan for the $130 million hotel and for a tribal administration building and a museum now under way.

Taylor said the village structure has been a boon and so has economic and population growth in the region. But he stressed that the tribal members have made good decisions, starting off with attracting Wal-Mart, Home Depot and other major companies.

“With Quil Ceda Village, they have brought in companies with strong brands,” he said. “The tribes are just leasing space; they are not operating the businesses. They don’t have to worry about what kinds of jeans are in fashion or what tools will be selling at Home Depot. I think that’s a shrewd move.”

Another good decision was the luxury hotel and spa, he said.

“If you just have slot machines and a building, your geographic base is just the distance between you and the next slot-machine-in-a-box facility,” Taylor said. “If you create entertainment and other activities, you benefit by having a place for people to come for a weekend rather than just visit for the night. They’re extending their reach.”

Just a couple of hours by car from Vancouver, B.C., the village has been a mecca for Canadians, especially since the loonie reached parity with the U.S. dollar and shoppers and gamblers began coming south by the busload.

The Tulalips are now in the enviable position of searching for projects they can build and operate themselves, Tulalip Tribes Chairman Mel Sheldon said. “We’re doing our analysis on what kind of debt load we can carry comfortably.”

Doing business together

In addition to the village, the Tulalips have another first in Indian country. The Greater Marysville Tulalip Chamber of Commerce is the only chamber in the U.S. forged as a joint venture between a city and a sovereign nation.

Caldie Rogers, the chamber president, said the partnership was made in 1996. “They had no money at the time,” she said. “It wasn’t about money. It was a strategic partnership.”

These days, the tribal government does have money and it spends some on the chamber. The chamber office and a large visitor center operated by volunteers are in Quil Ceda Village. Monthly chamber meetings are held in the tribal casino.

“It makes our (membership) dues dirt cheap,” Rogers said.

She remembers the days of bad blood between the Tulalips and some business owners. Today, they work together on projects, forming understanding and a spirit of cooperation that never existed before, she noted.

As an example, she mentioned a project to support Naval Station Everett in which chamber members are urged to hire Navy spouses. That’s important because the spouses often find it hard to get good jobs because employers expect they will soon leave for a new duty station. The tribes quickly chose to give the spouses of active members of the military three preference points when they apply for a job, Rogers said.

“We push each other,” she said. “Whatever project we’re working on, neither side would have gone as far without the other. It’s all about partnerships.”

Dennis Kendall is the mayor of Marysville. He’s new to government, but he remembers the days when the city and the tribal government were at odds. “I think there was some bitterness from old rivals,” he said.

Kendall said he’s a businessman, not a politician. He retired as vice president of sales and marketing for Crown Photo.

“My feeling is that competition breeds business and that there’s always a niche for somebody,” he said. “If you can’t compete with them, you complement them.”

He said that the outlet mall has upscale shops that his community would never attract. Ditto for the luxury hotel.

But he said the Holiday Inn Express that opened recently in Marysville — across the freeway from Quil Ceda Village — has been running at 95 percent occupancy “since day one” and that two other hotel operators are seeking city approval.

“The new hotel brings people to town,” he said. “If there’s a convention, we’re going to complement them by having our own hotels.”

Marysville, Kendall noted, can get business attracted by the village. “They don’t sell their land, they lease,” he said. “If somebody wants to own their property, they send them over here. If they want to lease, we send them there.”

McCoy said the village has had its fill of big-box stores.

“Because of our location, we can be selective in what we bring in here,” McCoy said. “We turned down Costco, Target and Best Buy because they would have eaten up all of our traffic capacity.”

Marysville recently landed Lakewood Crossing, a major new shopping center in an area just north of the reservation. Its major tenants: Costco, Target and Best Buy.

“We’re both going the same direction,” Kendall said.

McCoy, also a state representative, has teamed with the city to push for road improvements and other projects that can help both communities.

“The way money is tighter, we have to have a partnership to get things done,” Kendall said.

Sheldon agreed.

“The need to work together has been there for years and now we’re doing it,” he said.

One area where McCoy has yet to see success has been in convincing the Legislature to recognize Quil Ceda Village as a city, which would allow it to keep a percentage of its sales tax revenues. Sales taxes collected in a city are divided up between the city and the county, with the city receiving 85 percent and the county 15 percent. As Quil Ceda Village does not have city status, 100 percent of the sales tax revenue goes to the county.

McCoy says recognizing Quil Ceda as a city is only right, since the village supplied the land and spent the money to build the village infrastructure used by the retailers. His first attempt in the Legislature fell flat. The second try won strong approval in the House but failed in the Senate with opposition from Snohomish County.

Had the measure been approved, the county would have to give up 85 percent of the tax money it receives from the village. That would have been $2.58 million in 2007.

The Tulalips haven’t given up. McCoy plans to keep trying to convince his colleagues to agree with him.

“They could sue the state, but they haven’t played that card,” Rogers said.

McCoy said he prefers collaboration.

“We’re neighbors and we should work together,” he said.

Planning for the future

It’s no surprise that the Tulalip Tribes have been planning for a business center for decades.

“The idea is to plan for the children who are not born yet,” Sheldon said. “Our elders saw that the opportunity would be there later. The leadership today is always looking down the road, down the road, down the road.”

After years of waiting, the Tulalips have moved quickly to develop a business center, especially one not dependent on gambling. McCoy doesn’t trust it as a reliable source of revenue over the long term.

Taylor said he’s not alone.

“It’s a common belief in many areas that this (gambling activity) could be short-lived,” Taylor said. “They think that Congress could restrain Indian gaming or that it could loosen the rules for other (nontribal) gaming.”

McCoy said the federal government has been trying to cut back on tribal support and has done a good job. “In 1994, 90 percent of our budget came from federal grants,” he said. “Today it’s only 8 percent.”

Unlike some tribes, the Tulalips haven’t handed over checks to members, deciding instead to pay to send kids to college and to provide a computer for every home. And it’s been cautious about government spending, deciding instead to pump much of its money into expanding the village.

Tribal officials won’t say what the organization makes, but the tribal newspaper See-Yaht-Sub estimated the tribal net income at $102 million in 2005.

McCoy, Sheldon and others see the jobs the Tulalips are creating as a way to secure a stable future for its members.

“People say, ‘You guys are just developers now,’ ” McCoy said. “We’re developing our own land. We are mindful of what we are doing.”

He’s not certain of what will come next, but McCoy talks of developing some light manufacturing jobs, perhaps something in the biotech industry. The village is considering some office complexes and more restaurants.

“We’re looking at what fits best so that we can maximize our land base,” he said. “We want a diverse economic base that will provide jobs that our members can train for and apply for.”

McCoy is worried about opening a luxury hotel during a down economy, but that hasn’t stopped him from planning down the road for the second one.

“It may be my parting job,” said McCoy, who turns 65 this year. “Or it could be a job for my grandson.”

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