Development association is a good avenue for investments

The late John “Roddy” Sunchild, former chairman of the Chippewa Cree Tribe in Montana and a founding member of the National Tribal Development Association, had a dream that one day tribes would not only produce the goods and services consumed in Indian country, but would also distribute goods and services through Indian country distribution centers.

Notable Indian leaders, such as current NTDA President Henry Cagey from Lummi, believed that the economic health of Indian country would be strengthened by Indian tribes and Alaska Native corporations buying from Indian country manufacturing or distribution centers. They understood that the flow of cash away from Indian and Alaska Native communities without turning it over several times simply enriched the border towns and the companies doing business on the reservations and with Native corporations while providing no sustainable economic base for Indian country.

They also knew that virtually every tribe or Native business entity, be it a casino, hotel, gas station, manufacturing facility or service industry, has a policy, if not a law, that requires Indian and Native preference in contracting, the so-called “Indian preference” and/or “buy Indian” rule. These leaders also knew that tribal law and policy with regard to “buy Indian” was not being enforced by tribes and was being ignored by management at reservation-based businesses and even by tribal and federal governmental managers.

The tribes now have a $23 billion dollar gaming and entertainment industry going into the 21st century, combined with the tremendous success of the Alaska Native corporations built around savvy management and so-called Small Business Administration 8(a) minority contracting preferences. Unfortunately, only those tribes in populated areas have been able to really cash in on Indian gaming and the success of the Alaska corporations has not been replicated with tribes in the lower 48 states, with the exception of some notable tribal 8(a) successes.

The American media treats this success like some sort of scandal that must be remedied. Hispanic and black 8(a) firms have lobbied Congress to take away or restrict Native corporations’ 8(a) eligibility. Indian gaming has come under similar attack in the press and in Washington. Recent lobbying scandals and influence-buying by non-Indian lobbyists have allowed the American press to portray Indian gaming success as corrupting and driven by greed. The gaming tribes and the Alaska corporations can deflect that criticism and solidify political protection of their industries by spreading the wealth to other tribes in a fashion that makes good business sense as well as good public relations sense.

NTDA understands the need to spread the benefits of these successes to Indian country and lobbied the National Indian Gaming Association to have its member tribes endorse a resolution setting a 10 percent goal for Indian gaming industry purchases from Indian country sources. The NIGA tribes passed this measure, with some tribal leaders asking that the percentage be set higher. Although NIGA has shown by this vote that it is willing to spread the wealth to economically depressed areas of Indian country (if it makes good business sense to do so), the bigger issue is: How do we get to that goal?

Some tribes, such as Mohegan, Shakopee and Morongo, are working with other tribal projects, as are some of the Alaska corporations that have entered into “mentoring” of other tribal ventures in the lower 48 states. However, the efforts need to be systematically coordinated, publicized and tracked if the gaming tribes and the Alaska corporations are to get credit for their efforts in the press and in the halls of Congress. Political protection would be based on spreading the wealth to the poorer tribes and not on lavish fees to lobbyists and political campaigns.

NTDA, recognizing that there was a need for a model for Indian country investments by gaming tribes and Native corporations, developed the “Join the Circle: 21st Century Economic Warriors” model for joint ventures between gaming tribes, Native corporations, private corporations and tribes in economically depressed areas. These incentives may include new market tax credits, Indian and Indian spouse employee tax credits, accelerated depreciation, SBA 8(a) preferences for government contracts, infrastructure grants or low-cost guaranteed loans with interest subsidies from the BIA and certain other incentives under the new Energy Act and other statutes. States may even offer incentives for certain industries and for infrastructure development. Other federal agencies, such as the Department of Housing and Urban Development and IHS, may also offer assistance for community development.

The NTDA model offers a way for the gaming tribes and Native corporations to partner with less fortunate tribes and private industry to produce and/or distribute goods and services in and through Indian country. The model includes the adoption of model tribal business codes to enhance the tribal business atmosphere and make it a more familiar landscape to the business community. NTDA, through a grant from the BIA office of Economic Development, has embarked on a project to train tribal governments and tribal courts in the worthiness of adopting commercial codes that will attract businesses to a tribal business environment.

The NTDA “Join the Circle” model can also address charitable giving geared toward providing seed money for tribally based economic development. Another facet is the creation of Native/tribal investment pools that will allow tribes, Native corporations or Indian entrepreneurs to maintain a 51 percent minority equity position in ventures for purposes of 8(a), while encouraging partnering with non-Native businesses that have the expertise and track record for success in a particular field.

Another facet is a non-Native investment fund that can access and “strip” certain tax credits as cited above and the model can accommodate private investors’ desire for an “exit strategy” within a reasonable time period, leaving the business in the full ownership of the tribe or Native investors. These investment pools will also allow the tribes and Native corporations to purchase controlling ownership in businesses currently supplying the gaming industry and tribal governmental needs as well as federal procurement or to develop “distribution centers” in Indian country. The NTDA model includes the utilization of existing and potential free trade zone or foreign trade zones in Indian country as well as HUD zone and enterprise zone designations.

I recently spoke at the Reservation Economic Summit 2006 awards luncheon about the need for the Indian gaming industry and Native corporations to embark on a systematic effort to “buy Indian.” I estimated that the 10 percent goal set by NIGA amounts to $1.6 billion, based on an estimate of $16 billion a year in purchasing. I estimated that Indian, Native and tribally owned businesses constitute less than 1 percent of the purchase sources for the Indian gaming industry and the Native corporations.

As I stated there, I believe that has to change. If it does not change, we will be throwing away the second biggest economic infusion in the history of Indian affairs. Non-Indian corporations are getting wealthy from our industrial and government purchasing. We should be encouraging these companies to partner with tribes and Native and Indian-owned businesses if they want to continue to benefit from our success. Wealthy tribes and Native corporations should be buying into these non-Indian companies and, where it makes good business sense, moving production, assembly and/or distribution to Indian country.

At the recent National Congress of American Indians legislative summit, NCAI, NIGA and NTDA joined with the National Center for American Indian Enterprise Development and the National Indian Business Association to develop a memorandum of agreement to implement the “Join the Circle” concept.

As I told my good friend Ernie Stevens, NIGA president, at RES 2006, “We’ll get there someday; we will get there.”

Harold Monteau is a partner in the Indian law firm of Monteau & Peebles, LLP, a majority Indian-owned firm with offices in Montana, California, Nebraska, South Dakota and Washington, D.C. He can be reached at www.ndnlaw.com.