Tag Archives: Indian Country

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Laws of the land: Navigating development in Indian Country

Gerrit Steenblik, Polsinelli

Gerrit Steenblik, Polsinelli

Anyone who has tried to develop on one of the 22 federally recognized Indian tribes’ land in Arizona has probably encountered the patchwork of land ownership that can sometimes make it difficult to build. Land on reservations can be owned by the tribe, held in trust and owned by an individual (both allotted property and non). Recently, Polsinelli’s Gerrit Steenblik and Anne Kleindienst shared that to negotiate a 55-year land lease for the development of the Noah Webster school on the Salt River Pima-Maricopa Indian Community, they had to work with many departments of the Salt River Pima-Maricopa Indian Community, including the general counsel’s office, the economic development division, the treasurer’s office, the education administration and the community’s public relations office, as well as the Bureau of Indian Affairs and the allotted land owners.

Each tribe functions as a sovereign nation and provides a variety of governmental services to tribal members.

Roxann Gallagher, Sacks Tierney

Roxann Gallagher, Sacks Tierney

“Because few tribes tax their members, many tribes engage in commercial activities to generate sufficient revenue to provide these services,” says Roxann Gallagher, attorney at Sacks Tierney. “As a result, we have traditionally seen a mix of bonds, either tax-exempt or taxable, issued to acquire, construct or improve both governmental and commercial facilities.”

With the introduction of the American Recovery and Reinvestment Act of 2009, came $2B meant to broaden the reach of tax-exempt funding for commercial development. A significant portion of that $2B volume cap for tribal economic development bonds are still available.

Native American communities can issue tax-exempt bonds to finance construction projects that will benefit their own community, such as government and community buildings. Various departments also offer federal grants to fund schools, pre-school programs, health care, and infrastructure, including water systems and roads in Indian country.

“Keys to success [with regards to building in Indian country] included the personal relationships, long-range planning to avoid last-minute glitches and the fact that the new Noah Webster School responded to a genuine need of the community, leading to a win-win result,” says Steenblik, who was the borrower’s counsel for the Noah Webster School being constructed on the Salt River Pima-Maricopa Indian Community. The construction of the new Noah Webster Schools-Pima project within the Salt River Pima-Maricopa Indian Community is being funded by a tax-exempt bond issued by the Industrial Development Authority of Pima County that is only available to tax exempt, nonprofit and non-Indian owned business.

“Construction financing undertaken by a tribal government or tribal governmental entity has many of the same challenges as any other governmental financing in terms of timing, structure, respect for political processes, and adherence to regulatory requirements,” says Gallagher. “Most notably, however, there are some additional legal and business issues that must be considered if certain tribal real property or restricted revenues are intended as security for the indebtedness. For instance, there are federal restrictions on the alienation of tribal property, potentially complicated title issues, and limitations on recourse against some potential sources of repayment.”

Ed Rubacha, Jennings, Haug & Cunningham

Ed Rubacha, Jennings, Haug & Cunningham

Though Jennings, Haug & Cunningham’s Ed Rubacha says it’s unlikely for tribal communities to resist payment by declaring sovereign immunity after a project is completed, the disputes of the Hualapai Skywalk and Ranch can make some developers nervous. Granted, if it’s a large project, Rubacha says, with a well-known tribe it may be smart to ask for a waive of immunity. A recent example being the Navajo Nation waiving its right to declare immunity on a $500M purchase of a coal mine being purchased by the Navajo Transitional Energy Company.

In the early 2000’s, the Navajo Nation decided to build its first casino in Arizona. It wouldn’t break ground until 2011 or open until May 2013. Twin Arrows employs 1,300 people and will make $45M a year. Instead of enlisting the help of a commercial bank, developers worked with the Navajo government to secure adequate funding.

“In 2009-10, the capital market was really soft,” says Navajo Nation Gaming Enterprise Chief Executive Darrick Wachtman. “Wall Street wasn’t lending to the casino startups. There was no activity. It was a good opportunity for the nation to get good returns. The interest rate was higher than market. It’s dependent on the cash-flow leverage.”

As for developers, Gallagher reports positive feedback: “Sacks Tierney’s clients have found that successful tribal finance transactions are akin to hitting a perfect golf shot in that the result is well worth the effort.”

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AAED to Host Symposium on Conducting Business in Indian Country

 

The Arizona Association for Economic Development (AAED) will host a symposium, “Rising to New Heights: How to do Business in Indian Country,” Tuesday, Oct. 2, from 8 a.m. to 1:30 p.m. at the Phoenix Country Club,  2901 N. Seventh St.

Luncheon keynote speaker will be Jonodev Chaudhuri, counselor to the assistant secretary – Indian Affairs, U.S. Dept. of the Interior, who will address “Emerging Opportunities for Business Collaboration” between the federal government and tribal businesses and will highlight examples of successful partnerships among government and business partners.

The morning keynote speaker will be Diane Humetewa, special advisor to ASU President Michael Crow, special counsel, general counsel’s office & professor of practice, college of law.

A session titled “The University of Arizona and Arizona’s Native Nations: Providing Access to Opportunities,” is also scheduled. Presenters will be Maryilyn Robinson, associate director, Drachman Institute, office of the vice president for research, and Claudia E. Nelson, director, Native Peoples Technical Assistance Office

A mid-morning panel discussion on “Building Communities” will also be part of the programming. Panelists will be Vice Chairman Shan Lewis of the Fort Mojave Indian Tribe, Eddie Calnimptewa, project director, Moenkopi Development Corp., Hopi Tribe, and Levi Esquerra, program director at the Center for American Indian Economic Development at Northern Arizona University.

The cost is $65 for members, $75 for non-members and $90 for late registrants. Registration deadline is Friday, Sept. 28. Lunch is included. Please request vegetarian meal in advance. Call AAED with questions at 602-240-AAED (2233), or visit the AAED website, www.aaed.com.

AAED was originally founded in 1974 as the Arizona Association for Industrial Development (AAID). The organization, which was dedicated to expanding the industrial and economic base of Arizona, changed to its current name in 1991 to better reflect its broader mission.