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Meeting the Economic Development Challenge in Indian Country: How Streamlined Regulations Can Boost Growth

Native American communities have taken great strides in developing their economies and raising the quality of life on tribal lands.
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Native American communities have taken great strides in developing their economies and raising the quality of life on tribal lands. However, as President Obama noted during his historic visit to Indian Country in June 2014, there are still wide disparities between Native Americans and the overall U.S. population.

On June 25, 2014, William “Mike” Lettig, Executive Vice President and National Executive of KeyBank’s Native American Financial Services segment, had the privilege to testify at a U.S. Senate Committee on Indian Affairs Hearing on the role that investment plays in encouraging economic development in Indian Country. KeyBank has helped raise more than $3 billion in capital for Indian Country in the past 5 years and is on track to assist in raising more than $1 billion in 2014 alone making Key a formidable expert on Indian Country investment matters.

In his testimony, Lettig delivered a very clear message to the U.S. Senate Committee: Tribes have access to resources and assets that – if fully developed – could significantly enhance the well-being of their communities. Unfortunately, economic progress is often blocked by burdensome regulatory barriers. Reducing the review process and creating more autonomy for tribes to attract business, investors and developers is imperative to helping Indian Country communities thrive.

The Economic Development Need in Indian Country

While incomes for Native Americans living on reservations have nearly doubled since 1970, their earnings are only a fraction of the U.S. average. In several states, less than 50 percent of working-age Native Americans on or near tribal lands are working. In addition, progress is uneven: Some tribes are experiencing economic gains in recent years while many others face overwhelming hardships.

Poverty on reservations from 2006-2010 was 30 percent compared with 14 percent nationally, and some of the worst poverty rates in the nation are in Indian Country communities, as Lettig noted in his remarks. Native American communities face significant challenges in developing a workforce able to meet the needs of business. Indian Country lags the rest of the country by significant margins in high school graduation rates and attainment of technical and college degrees.

Streamlined Regulations + Tribal Independence = Economic Sustainability

In his testimony, Lettig underscored that the private sector still has doubts about Indian Country as an investment opportunity. Government regulatory obstacles contribute to this uncertainty and present significant challenges to economic development in Native America. For example, all new infrastructure construction on tribal lands requires rights-of-way approval – a time-consuming and ponderous process – and tribes must gain Department of Interior (DOI) approval before any public-private partnership initiatives move forward.

Economic development on tribal lands can involve multiple agencies, including not only the DOI but Housing and Urban Development, the Small Business Administration, the Department of Agriculture, the Department of Energy and the Indian Health Service, to name just a few. Astonishingly, there is no single coordinator for economic activity at the federal government.

Regulatory Simplification Initiatives – Progress is on the Way

On June 16, 2014, Secretary of the Interior Sally Jewell emphasized the need for reducing the regulatory burden on Indian Country and moving toward greater tribal independence. To that end, the administration has designed a package of regulatory initiatives with the goal of greater tribal self-governance and autonomy. The most significant initiatives include:

—Facilitating Indian Country infrastructure development The Bureau of Indian Affairs (BIA) is proposing streamlined rules for right-of-way approvals on Native American land and provide tribal leaders, private companies, utility firms and energy developers greater certainty when designing or implementing infrastructure projects.

—Removing barriers to land development through increased tribal self-governance The BIA will ramp up training on the Helping Expedite & Advance Responsible Tribal Homeownership (HEARTH) Act. The HEARTH Act provides tribes the opportunity to establish and enforce their own land leasing regulations in order to expedite the process for long-term leasing of tribal trust lands.

—Supporting new markets for Native American and Alaska Native small businesses. The DOI will seek to increase federal procurement opportunities under the Buy Indian Act and raise BIA procurement purchases from Native American-owned small businesses.

—Making federal data and resources for tribal economic development easier to find and use. The federal government will partner with tribes in a series of workshops to improve tribal access to data and create new tools to make data more accessible for tribes.

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—Encouraging the use of tax-exempt bonds for tribal economic development. The Treasury Department will expand awareness and understanding of Tribal Economic Development (TED) Bonds used to finance economic development projects.

In addition, as proposed in the Indian Tribal Energy Development and Self-Determination Act Amendments of 2014, the government would transfer authority to tribes and streamline the review process for energy development. Lettig noted in his testimony that these are all positive steps in making self-determination and self-government a reality.

Success Stories Underscore Potential for Indian Country

Despite the obstacles that Indian Country faces, several tribes have been successful in economic development initiatives.

Puyallup Tribe of Indians (Pacific Northwest): Marine View Ventures, Inc. is the economic development arm of the Puyallup Tribe of Indians. It manages a variety of industrial and commercial properties on the Puyallup Reservation and leases some of these properties to tenants for purposes ranging from construction and operation of an international shipping container terminal to port support services and a recreational marina.

Seneca Nation (NY): The Seneca Nation of Indians has developed a sophisticated and comprehensive planning process to boost job creation, increase investment, improve infrastructure and encourage economic diversification.

Winnebago Tribe of Nebraska: Ho-Chunk, Inc. is the economic development corporation owned by the Winnebago Tribe of Nebraska. It operates over 30 subsidiaries in a diverse range of industries including information technology, construction, government contracting, professional services, wholesale distribution, office products and technology, logistics, marketing, media and retail.

Navajo Nation (AZ, NM, UT). The Navajo Nation has developed the largest Native American court system in the U.S. Harvard Law School called it “the most active tribal judicial system in the United States, with a case load that rivals, and in some instances exceeds, many municipal, county, and state judicial systems.”

Alaska Native Corporations: Alaska’s Native corporations (ANCs) are an important part of the state’s economy and on track to play an even more significant role in the future. Among Alaska’s largest enterprises and employers, the 12 regional ANCs and village corporations employ 58,000 people worldwide.

As these examples illustrate, Indian Country has great potential. A simplified regulatory environment and tribal autonomy would enable Native American communities to achieve even more.

The Road to Economic Independence: Indian Country’s Responsibilities

In his testimony to the U.S. Senate Committee on Indian Affairs, Lettig underscored that Indian Country leadership must play a major role in creating a new economic development environment based on greater tribal autonomy. Leaders need to stay focused on economic development, infrastructure improvement, judicial system updating and the creation of intellectual capital.

Importantly, tribes must have a long-term development strategy and policies and procedures to demonstrate readiness for more autonomy. Finally, Lettig emphasized that tribal leadership should engender cooperation between tribes and develop working relationships with city, county, state and federal governments where there are multi-jurisdictional interests.

Raising the quality of life in Indian Country through economic development is an important goal, one that KeyBank places high on its list of priorities. One of the first financial institutions to create a dedicated team to serve Native American communities, KeyBank’s Native American Financial Services Team offers one of the most extensive financial platforms designed to help Indian Country meet its economic development needs.

The information and recommendations contained herein are compiled from sources believed to be reliable and represent the best current opinion on the subject. No warranty, express or implied by KeyBank is made as to the absolute correctness or sufficiency of the information contained. This is meant as general information only, particular situations may require additional actions. KeyBank is Member FDIC.