Understanding Tribal Differences Needed for Successful Development

For many reasons, developing a project on reservation land is different than it is elsewhere.

When non-Native American developers consider land deals, decisions for the best use of the land are routinely determined by the use that offers the best financial return. When Native Americans consider a lease, investment or land use decision, they typically view it as interconnected with life that has physical, economic, social and spiritual implications, and all of these impacts must be carefully weighed.

This interconnectedness, known as “seven-generation thinking” is how Native American people are taught to think about their long-term sustainability —about making decisions that ensure that their land, air, and water can support all forms of life for seven generations to come. While each American Indian tribe is unique, most tribal people believe there is a responsibility to be considered in balance the with the economic opportunity.

While this is a sacred philosophy for most Native people, most non-Native businesses are not prepared to evaluate decisions from this multifaceted perspective. Generally, more thought, deliberate discussion and due diligence are required to close a deal with a tribal government or Native American business than for a business transaction off reservation.

Not surprisingly, many non-Native American businesspeople may misinterpret this extended decision-making period as inefficiency. For Native Americans, however, this is essential to developing a truly viable seven-generation economy.

The use of tribal land is further complicated by its legal status. Title to tribal lands is held in trust by the federal government. Trust status gives tribal governments the ability to exercise sovereign authority within their boundaries and are not generally subject to state laws. However, trust status also creates limitations on the use of these lands, and most actions affecting the land must comply with federal law.

Another factor complicating the development process is how the land is held in trust. Tribal land can be held either wholly by the tribal community or through a combination of tribal jurisdiction and individual tribal landowners that received a land allotment. When allotted land is involved, even a 10-acre parcel can mean 200-300 individuals need to approve a development deal, adding to the complexity of the development process.

Another Native American tradition that makes doing business different on tribal land is that most tribal communities are communal, and decisions are made with the consensus of the membership, often after long and deliberate discussions. The effort to reach consensus requires that a tribal government reach out to tribe members and bring them into the decision-making process.

This is very different from how decisions are made by city councils, where municipal and county governments decide the land use after listening to planners, lawyers or lobbyists. If residents object, they have to find their own way into the decision-making process.

In addition to the philosophical and land ownership issues, tribes vary widely in their development experience and sophistication. Some have a design review process and standards in place that allows them to move a project through the necessary steps with efficiency. Others lack appropriate tax and zoning codes necessary to facilitate smooth development of any commercial project.

Also, many tribes lack the capital to provide needed infrastructure, such as water, power, and sewage. Consequently, developers may need to include the cost of infrastructure build-out in their cost analysis. The Ak-Chin Indian Community’s industrial park is one of the exceptions. Santa Cruz Commerce Center, which has all of its infrastructure in place, is the only Arizona Native American tribal location to be Gold Certified as a shovel-ready site by the Arizona Commerce Authority.

While doing business on tribal land may be different, successful projects can generate rewards both on and off the reservation in job creation, reduced poverty, and shared resources. Understanding the differences goes a long way in creating success.

The advantages of locating a commercial building on Native American land

When looking for new sites, food processing facilities typically want to be in operation in 6-12 months. To reduce the time involved, companies often limit their search to sites with existing buildings that can be retrofitted, but may be less than ideal in the long-term.

Concentrating a site search only on conventional locations may lead companies to overlook the truly unique advantages offered by Native American reservations. Many federally-recognized tribes can offer unparalleled tax advantages, incentives, and project fast-tracking abilities that most states, counties and municipalities simply cannot. Any hesitancy may come from a lack of understanding of how reservations work. Still, not all tribes operate the same way or offer the same infrastructure.

If considering a Native American location for a supply-oriented food processing facility, one consideration is the availability of the commodities used in the manufacturing process. Locating near the type of crop or supply chain production used in manufacturing can significantly lower your procurement costs. In addition, in areas where there are other agricultural endeavors, there is often ready workforce availability and training resources already in place.

If your food processing business is demand-oriented, a location near consumers helps to mitigate the costs of transportation and distribution. In this case, you will want to look for reservations that are not too isolated and that have ready access to transportation corridors.

Ever-changing food industry trends can be a more determinant factor than even access to raw materials or consumers. This can mean securing a flexible site that can quickly adapt to changes in design to accommodate new regulation; new food safety issues; implementing automation; and achieving greater energy efficiency. Most Native American communities will not have an existing building to occupy. However, if the reservation has an in-house development and approval process to speed projects to market, even a build-to-suit facility can be completed in a short timeframe.

According to Billy Hickman, Vice President of Operations of Hickman’s Family Farms and a Santa Cruz Commerce Center tenant since 2003, this is what attracted their enterprise to the Ak-Chin Indian Community’s industrial park. “Their ability to craft a customized lease allowed us to amortize construction costs over the length of a long-term lease and have a facility built to our specifications in just 10 months,” said Hickman. “We’ve been able to expand two more times since our initial construction, too.”

Finding a tribe with the same industry or cultural focus can also lead to some creative synergy. “When we needed to find a solution for dealing with our chicken waste, we were able to create a reciprocal agreement with the tribe, ” said Hickman. “Now we provide it to Ak-Chin Farms as fertilizer for growing the crops we need to feed our flocks.”

Other areas of concern for food processors are water availability and utility costs. While Arizona tribes just like all cities and counties must be prudent in their water usage, some tribes have settled their water rights, which has guaranteed their allocation, while some have yet to do so. In addition, if a tribe owns its own utilities, costs can be significantly lower than off-reservation locations.

Given the location characteristics that are important for food manufacturing firms and what Native American reservations can offer, there is good reason not to limit your search to conventional choices. In any case, how fast you could potentially grow by expanding your location options is certainly food for thought.