New federal law lets Oregon tribes extend leases

By Winston Ross
Florence, Oregon (AP)

When Oregon Indian tribes place land into trust, it allows them to conduct business there that they couldn’t otherwise, including enterprises that are off-limits to non-Indians – building a casino, for example.

Until earlier this month, though, there was a significant catch, at least for five of the state’s nine federally recognized tribes: Because tribes can’t sell trust land, they could only enter into leases with other companies that might want to develop retail outlets, housing or something else on that land, leases that must be renewed every 25 years.

Two and a half decades isn’t long enough to recoup a return on many investments, though, so the 1955 federal law that contains the lease restriction has the effect of stifling tribal economic development, the tribes have said. Indians can build casinos, but they can’t enter into other business agreements that involve long-term contracts for anything else.

At least, five of them couldn’t. Starting with the Cow Creek Band of Umpqua Indians, four tribes have successfully appealed to Congress in recent years to get an exception, so they can sign leases of up to 99 years.

The Cow Creek Indians have arguably made the most of their casino profits, building an RV park, an advertising company, a truck and travel center and a communications business. Other tribes have looked to the Cow Creek operation in Canyonville as a model for branching out, using the proceeds of their casinos.

But, until President Obama signed Senate Bill 1448 into law on Dec. 22, five tribes still had only the 25-year lease option. Now, all of the state’s Indian tribes can sign leases up to 99 years on trust land.

“We did think it was pretty important,” said Bob Garcia, chairman of the Coos, Lower Umpqua and Siuslaw Indians, which owns and operates the Three Rivers Casino in Florence. “This is important for financial surety for potential investors.”

That tribe – along with the Coquille, Siletz, Burns-Paiute and Klamath Tribes – now has the new dealmaking ability. And it could affect what ventures the tribes enter into in the future.

For example, Garcia said he could see the confederated tribes developing an outlet mall on their property in Florence, which includes the Hatch Tract, where their casino sits, and a stretch of land on Highway 101.

“If we did that, anyone who built it would need to know they have a lease on the property long enough to get their money back out of it,” Garcia said.

In 2004, the tribes acquired a coveted 43-acre parcel of land at Coos Head near Charleston, when the U.S. General Services Administration agreed to turn the property over after declaring it “excess.” The tribe doesn’t know what might be in store for the property yet, but having the 99-year lease option expands the possibilities.

“Without this bill, the only actor could have been the tribes,” Garcia said. “And the tribes, like anyone else, have limits on the amount of funds we have available to do things.”

The Coquilles also welcome the new law, tribal attorney Brett Kenney said. There’s no specific project it affects at the moment, but it could affect the stretch of land the tribe owns adjacent to the Mill Casino in North Bend, where there has been talk of a mixed-use, waterfront development.

It’s tough to borrow money for developments on trust land, Kenney said, because banks can’t repossess the property if there’s a default, so they charge higher interest rates.

“What the 99-year lease bill does is basically simulate a regular mortgage, providing lenders with a much longer lease term,” Kenney said. “It gives them more security and lowers the cost of capital, and that’s a good thing for everyone.”

For tribal housing, there’s a federally guaranteed loan program that allows tribe members to get private loans for building a house, but the loan program requires a 50-year term for the lender. With the old law, tribe members had to sign one 25-year lease and then renew it, once the term was up. Having 99 years to work with will make it easier for tribe members to buy homes, Kenney said.

While tribal leaders said they were pleased by the bill’s passage, they added that they were surprised that a non
-controversial piece of legislation took such a long time to make it into law.

“I don’t remember ever hearing anyone saying a member of Congress thinks this bill is a bad idea,” Kenney said. “But it’s difficult to get anything through Congress right now.”

It was introduced in July 2009 by Sen. Jeff Merkley, D-Ore., but there was debate about whether there should be a “global fix” that applies to all U.S. Indian tribes.