Commercial Leasing on Federal Indian Lands

Course Objective: Student will have a basic understanding of the leasing statutes, regulations and practices regarding leasing land for commercial or business purposes. The practices will include what is needed to make a lease successful, what should be avoided.

Nearly everyone has some commercial or business leasing. Even if you only have one lease, it is essential that you have some knowledge in negotiating and the drafting of the commercial lease. A mistake in a commercial lease is magnified many times over and will continue to magnify for 50 years or more.

Be Proactive

A. Prepare for Economic Development

  • The steps involved in preparing for promotion of economic development through the commercial leasing process. Preparation involves planning on the part of the tribe and BIA staff.

What type of development do we want on our reservation?
There are pros and cons with allowing economic development on the reservation.

On the pro side, there is always the cash flow to the reservation, the employment factor for that particular industry, the generation of additional jobs and money resulting in other related businesses.

Con – Other people will have a say in what you are doing. They may be unhappy with circumstances beyond their control on the reservation so they contact their congressman and voice their objections. You really run into these problems with residential leasing. With other types of leases, the operator or tenant may have objections with the tribe which they choose to air through the media. Non-Indians living on or near the reservation may organize an “anti-Indian” group to object to the tribes development plans.

Once the tribe has identified what type of development will be authorized, ideas should be discussed as to what type of activity will be feasible on the reservation. You must take into account the demographics of the area. A small general store, or trading post will likely draw only from the reservation. What are the local demographics and what type of businesses will succeed in your area. If it appears to be feasible, you may want to hire a professional to complete a feasibility study. You may have the ability to utilize staff to provide enough information to persuade a developer to move forward with the lease. When you do your homework, and a developer has confidence in your work, they will usually start their due diligence to determine feasibility. If all indications are that the proposal is not feasible, try something else. Don’t insist on doing a project that is doomed to fail from the start. We’ve seen this happen too many times. What is amazing is that often these people get financing somehow for these projects.

2. Advantages of developing on the reservation through Commercial Leasing.

3. Financing of Indian Lands through the Leasing process

4. Tax credits

5. Tribal Codes

B. How to handle the Walk-in Development Proposal.

C. The negotiation process.

D. Required documentation throughout the negotiation process.

E. Roles of the tribe and the BIA in the negotiation process.

F. The necessity to separate the roles of the BIA and the Tribe.
1. Communication during negotiation.

G. Deal Memo (Why a Deal Memo is essential prior to lease negotiation)
1. Pre-Deal Memo meeting
a. BIA/Tribe
2. Deal Memo
a. Drafting assignment.

H. Option to Lease (Pre-Lease responsibility of BIA, the Tribe and Landowner)
Lease Negotiations
K. Establishment of a Lease Council for allotted lands.