10 things to ask before starting a business on tribal land
In order to assess whether or not your business or development project is a good fit for a tribal location, here are 10 key questions to ask the tribal representative:
- What cultural traditions and values are important to your tribe as it relates to economic development?
Most tribes will entertain projects that align with their customs and principles, and affords them the greatest opportunity for self-sufficiency. Reservations are not dumping grounds for projects that would not be approved in neighboring cities or counties. In addition, while some tribes may focus on developing entertainment venues, others will look for greater diversification. Ask what business enterprises would be compatible with their Community.
- How is your reservation property held in trust? Do you have allotted lands or does your reservation belong to the tribe as a whole?
Some tribes have allotted lands, which means you could have many owners who have to sign-off on a lease before development can proceed, which can add time and cost. On other tribal lands, the land is wholly owned by the tribe. However, even those with allotted lands can already have an agreement with individual owners that will allow the tribe to negotiate leasing opportunities on their behalf.
- What is your lease process? Who oversees leases and handles approvals?
In some cases, the first point of contact could be an economic development group, industrial park board or leasing manager; sometimes it is handled through a department like Planning or Education; and other times, the Council must be contacted directly. A few tribes have created an approval process that is similar to any municipality, taking a project submittal through legal, financing, planning & zoning and finally through the Tribal Council for final approval.
- How long does the process typically take?
On average, most tribes will say lessees should add at least 20% more time for consensus-building and approvals. Smaller tribes with solid government leadership can usually be more nimble and quick to respond.
- How long are your leases?
A maximum 99 year land lease is offered by some tribes while others do recurring 25-year term leases. Depending on the benefit to the local economy, customized lease terms can be negotiated.
- What is the BIA’s involvement in lease approvals?
Under the HEARTH act, tribes were given the ability to control their own leases as long as they applied and were approved by the Bureau of Indian Affairs (BIA). The Ak-Chin Indian Community, for example, was the first Arizona tribe to do so.
- What financing options are available for new construction or tenant improvements on existing buildings?
A tribe may have the financial ability to wrap capital costs and TIs into a long-term lease. This means you could put your initial capital into operations rather than tying it up in land purchases and development.
- What taxes and/or exemptions apply to my business on your Reservation?
There is no uniform tax code among tribes, but tribes have the ability to create their own tax policies and levy their own taxes on certain activities. Depending on the nature of your business, you may qualify for certain exemptions, so it’s best to consult your tax advisor and work with the tribe’s financing department.
- Do you own your own utilities? If so, what are their rates?
To make sure you are comparing apples to apples, be sure to ask for a utility analysis to compare rates with other area utilities. Though the base rate may look comparable, on-reservation utilities may not include certain taxes and adders, which can add up to substantial savings. This is true for Ak-Chin Energy Services, according to Beth Mundell, owner of Fyrestorm Cheer and a Santa Cruz Commerce Center tenant since 2013. “We LOVE Ak-Chin Energy Services for keeping our rates so low!” she said. “It really makes a big difference in our operating expense.”
- How are disputes handled?
Tribes can offer a limited waiver of sovereign immunity, so that disputes can be handled by arbitration rather than in a tribal court.
Understanding the right questions to ask is critical to any successful site selection process and given the right environment, a Native American location might be the best answer.