The Prior Lake City Council is appealing to the U.S. Bureau of Indian Affairs in a land dispute that has divided local officials and may sour the city’s relationship with the Shakopee Mdewakanton Sioux Community (SMSC).

The Shakopee tribe, which owns and operates Mystic Lake Casino Hotel and other area businesses, has been buying land and putting it into trust — a federal designation that allows it to keep the land forever, tax-free.

The City Council is trying to stop that from happening, arguing that it would take land off local tax rolls and derail the city’s long-term development plans.

The tribe has two parcels — 468 acres total — for which it’s submitted trust applications to the Bureau of Indian Affairs (BIA). The tribe owns nearly 2,000 acres in Prior Lake, about half of which are already in trust.

“Land for residential uses and economic development is essential for the SMSC to meet its responsibilities to its tribal members,” the tribe said in a recent statement. “Land in trust status provides the best protection that the SMSC’s lands will be available for these essential purposes for generations to come.”

Prior Lake City Council Member Monique Morton said she’s concerned that the tribe’s plans will impede Prior Lake’s ability to grow — specifically, into an orderly annexation area where the city already has built millions of dollars in infrastructure.

“It puts a bit of a cramp in our ability to effectively manage our resources and be able to plan effectively,” she said.

The council sent a letter to the BIA last week outlining concerns about one parcel, and it may hire an attorney to represent the city’s interests as the other parcel — which affects the annexation area — moves through the trust process.

“We felt that this was one way to keep our foot in the door on the issues but not wave the red flag in front of the SMSC,” Mayor Ken Hedberg said at a Dec. 14 meeting.

The city’s opposition is unlikely to stop approval of the tribe’s application. An outside attorney told Prior Lake officials that there’s “zero chance” the letter will have an effect, Hedberg said at the meeting.

As part of the application process, the tribe will provide the BIA with a response to the city’s letter, a tribe spokeswoman said in an e-mail.

In an interview, Hedberg said he doesn’t think the council should be opposing trust applications. He’s worried it could make the tribe less interested in cooperating with the city. “There have been a couple of little decisions that make me a little bit worried that they’re heading in that direction already,” he said.

City Administrator Frank Boyles outlined similar concerns in an Oct. 19 letter to Hedberg and Council Member Rick Keeney, who’ve been assigned to represent the council in land trust discussions.

In addition to receiving hundreds of thousands of dollars annually in tribal grants and “local government aid,” Prior Lake buys water from the tribe, and the two entities have considered building a joint water treatment plant, with the tribe shouldering the cost.

The tribe has budgeted for local government aid for 2016, but the way it’s awarded may change, Boyles said in the letter. The city also is awaiting the results of a tribal election that could change how the tribe approaches its relationships with surrounding communities, he said.

“I don’t know if you two want to devote any more time to fleshing this out,” Boyles wrote. “But I wanted to share it with the two of you just the same as I believe these are quite significant and potentially long-lived repercussions.”