Video (36:22) : Karen Diver, chairwoman of the Fond du Lac Band of Lake Superior Chippewa, says that the extra revenue has allowed them to increase services for citizens.

Karen Diver sighed as she passed the squat, white barracks-style houses built on the Fond du Lac Band of Lake Superior Chippewa Reservation decades ago. She took a right and parked her minivan before two new housing complexes.

These buildings, tall and richly hued, earned a smile.

As chairwoman of the Fond du Lac band, Diver wrangled 15 funding sources to get them built. Gambling revenue from the band’s two casinos was key, she said.

Walking around the reservation, west of Cloquet, Minn., Diver pointed out what casino revenues have meant to residents. Their own police, tribal court, clinic, school and scholarship program. In short, she said, “self-sufficiency.”

That, she said, is why the band has refused to give up a protracted legal fight with Duluth over whether the city should get a slice of the Fond-du-Luth Casino’s gambling revenue as outlined in long-standing agreements. An offshoot of the dispute will play out this week before the Minnesota Supreme Court.

Karen Diver, the first chairwoman in the history of the Fond du Lac Band of Lake Superior Chippewa, in the tribe’s Black Bear Casino.

Fond du Lac leaders “hoped that people would understand us looking out for our community with our own revenue,” she said recently, in an office lined with birch bark art and photos of her sitting beside President Obama.

The band’s controversial 2009 decision to stop paying the city has pitted Diver against Duluth’s popular mayor, Don Ness. To passersby who yell at her on Duluth’s streets, Diver vigorously breaks down the band’s decision to stop paying the city — citing federal law between folksy jabs and muttered asides.

“This notion of a partnership is a fallacy,” she said. “We just plain paid them, sent them checks. That’s not a partnership. That’s alimony.”

As the case grew, another leader might have taken a step back, said Chuck Walt, Fond du Lac’s executive director of tribal programs. “She has not wavered — despite a lot of pressure to do just that.”

As the band’s first chairwoman, Diver is part of an ascendence of women — many of them highly educated — to top leadership positions within Minnesota’s Ojibwe communities, said Anton Treuer, a professor at Bemidji State University. More than half of the state’s Ojibwe officials are now women, he said. “The ceilings have been punched through by strong native leaders.”

Diver, who was first elected in 2007, thinks the trend is more important for future generations than an indication of changed priorities to tribal policy now. It “really opens up the possibility for young girls and women to find role models within their own communities,” she said.

‘Never any question’

Diver was just 15 years old, a sophomore at a Catholic school in Cleveland, when she had her daughter, Rochelle. She moved to Minnesota for college with just a few hundred dollars in her purse and a 3-year-old daughter on her hip.

Yet her parents didn’t worry.

“When she left with that little girl — everybody crying and waving — we knew that she would do it,” her mother Faye Diver said. “There was never any question.”

Because her parents were from Fond du Lac, moving made it easier for Diver to access tribal funds for college. Her folks “never owned a home or a new car, but they put all four of their children through 12 years of private school,” Diver said. “So I knew education was important.”

It took three buses to get from her apartment to day care to the University of Minnesota-Duluth. She studied economics, becoming the first Indian woman to graduate from the campus’ business school. She later earned a master’s degree at Harvard University.

“Being a young, single parent, being Indian — she had some odds against her, no doubt about that,” said Rick Smith, Diver’s classmate who now directs UMD’s American Indian Learning Resource Center. But she was determined to get her degree. “Nothing was going to stop her.”

Diver’s friends often call her determined. Tenacious. Resolute. But in a stage whisper, she admitted to being just plain “stubborn.” Then she laughed.

An early education

Diver speaks about the complex relationship between the band and Duluth with an expertise that shows she’s been immersed in it for decades.

Straight out of college, she became the sole staffer for the Fond-du-Luth Casino’s economic development commission, a half-band, half-city group that distributed part of the casino’s profits.

“Talk about being thrown in the deep end,” she said. “Half your bosses hate the other half, and they were all suing each other back then.”

The 1984 agreements that established the first urban tribal casino in the country “were my bible, the whole context of my work,” she said. In 1994, revised agreements outlined the city’s 19 percent share of gross revenues.

The city and the band interpret each document differently. The two sides even disagree on whether the band needed the city’s approval to build Fond-du-Luth, which has earned the tribe close to $200 million since 1994.

City: “That was groundbreaking at the time,” Ness said. “And it could have only happened with the enthusiastic support of the city of Duluth.”

Band: Duluth’s public support was nice, but not necessary, said Diver. “The best the city did was not object to us being there.”

In 2009, the tribe stopped paying the city its cut, which was then about $6 million a year and $75 million since 1994. The city sued.

While the dispute wound through federal court, the band asked the National Indian Gaming Commission to review the agreement. The agency found that it violated the Indian Gaming Regulatory Act, which requires tribes to have “sole proprietary interest” for tribal casinos.

Earlier this year, an appeals court ruled for the Fond du Lac band — agreeing that it does not have to pay Duluth going forward. But last month, a judge ruled that the tribe owes the city at least $10.4 million in back payments.

Ness said that he knew Diver from her days running the YWCA of Duluth, attended her inauguration as chairwoman and “felt really good” about what they might accomplish together. Thus, what came next was “extremely disappointing and disheartening.”

This week’s arguments before the Minnesota Supreme Court involve Fond du Lac’s effort to put property it purchased next to the downtown Duluth casino into trust, making it reservation land exempt from local property taxes.

A question of legacy

A flat-screen in the elegant, wood-clad lobby of the reservation’s Tribal Center rotates faded photos of past Fond du Lac chairmen and tribal councils. Soon, some history will accompany their mugs.

Diver knows that when she’s “just some former elected leader,” people will mention the Fond-du-Luth dispute. But she hopes that isn’t her only legacy.

Perhaps because of her own history, Diver is “a scrapper,” Walt said. She scouts funding for housings projects for veterans, elders and those who need extra support. She led Fond du Lac through the recession, adding support services and avoiding layoffs, he said.

Last week, she was appointed to a White House Task Force on combating and responding to climate change. Diver is one of just two tribal leaders and the only Minnesotan in the group.

But some band members have criticized Diver’s style. Michelle DeBolt, 45, who has lived on the reservation since she was a kid, called Diver’s leadership “secretive.”

“That’s a lot of what our culture is — you gather, you talk about important things,” DeBolt said. “Since she’s been our leader, that’s been lost.”

In particular, Diver shared too little information with band members about the tribal council’s decision on Fond-du-Luth, said DeBolt. “It hurt relations between the band and surrounding communities.”

Diver is “philosophical” about the criticism. “I can handle the people in Duluth perhaps not understanding or appreciating what the band’s doing to defend itself,” Diver said. “But I took an oath to the people of Fond du Lac. I certainly hope for their understanding.”

Jenna Ross • 612-673-7168