Qualla 2020: Diversifying the Qualla Economy

Fourth Meeting May 21, 2014

Agenda - Morning

9:00 Welcome and Introduction 9:15 Trust Land Law and Regulation - Presentation 10:00 Real Estate Action Plans 10:45 Knowledge Industries – Presentation 11:15 Knowledge Industry Action Plans 12:00 Lunch Page 2

Agenda - Afternoon

12:30 Review Potential Action Plans; Add New Ones - Enterprise Structure - Tourism - Small Business 2:30 Next Steps, Assignments 3:00 Adjourn Page 3

Page 4

Qualla 2020 Goals

 The purpose of the Qualla 2020 Project is to diversify the Cherokee economy and reduce its risks so that it can better ensure the well-being of the Cherokee population into the future.

 In order to do this, the Qualla 2020 Project will seek to mitigate the dependence of the economy on gaming revenues, and to develop and expand businesses in ways that uphold the core values of the Cherokee people.

Page 5

Qualla 2020 Process

 Six Committee meetings   Tuesday, February 25, 9:00 am – 3:00 pm  Friday, March 21, 9:00 am – 3:00 pm       Yellow Hill Activity Center (Old Hardware Store) Wednesday, April 23, 9:00 am – 3:00 pm  Wednesday, May 21, 9:00 am – 3:00 pm Friday, June 27, 9:00 am – 3:00 pm Tuesday, July 15, 9:00 am – 3:00 pm  Task teams will meet by phone between Committee meetings to develop detailed action plans for Committee review  Committee will choose action plans to recommend to EBCI Administration, EBCI Tribal Council and Cherokee Preservation Foundation

Page 6

Action Plan Definition

 Action plan criteria:  Achievable with the resources controlled by institutions and individuals on the Qualla Boundary   Create visible differences within a year or two Support traditional Cherokee values and culture  Action plan elements:  Goal       Participants Activities Organizational leadership Resources required Funding sources Timeline

Agenda - Morning

9:00 Welcome and Introduction 9:15 Trust Land Law and Regulation - Presentation 10:00 Real Estate Action Plans 10:45 Knowledge Industries – Presentation 11:15 Knowledge Industry Action Plans 12:00 Lunch Page 7

Page 8

Trust Land Law and Regulation

 In order to streamline and simplify the leasing process, it will be critical to have oversight of leasing moved from the BIA to the Tribe. There are three key legal and regulatory areas that are important to understand:  EBCI Statutory Law – individual possessory holdings   HEARTH Act – leasing regulations for trust land Contracting and Compacting – Tribal assumption of part or all of the Realty function  We also will look briefly at state property tax on the Boundary

Page 9

EBCI Statutory Law: Individual Possessory Holdings

 The EBCI Attorney General holds that because of the specific way in which EBCI land is held in trust, individual possessory holdings are governed by EBCI statute, not by federal law   Section 47 - Real Property of the Cherokee Code contains the statutes governing real property; Section 47-4 stipulates the rights granted to a member when a possessory holding is issued The fact that the individual possessory holdings are governed by EBCI statute implies that EBCI Tribal Council has the authority to change the statutes governing individual possessory holdings without having to consult with the BIA Source: Hannah Smith, Attorney General’s Office

Page 10

EBCI Statutory Law: Individual Possessory Holdings

 The way that the law is currently written involves the BIA in leasing. Section 47-4(f):  “The possessory holder may grant leases or permits on this possessory holding to a member, or nonmember of the Band for a definite period of time and for a prescribed consideration, in accordance with the then applicable rules and regulations of the Bureau of Indian Affairs and the Tribe, and subject to the approval of the Business Committee and the Secretary of the Interior or his authorized representative.”  This law clearly requires the BIA to be involved in leasing – but this law can be changed without the BIA’s involvement or consent.

Page 11

HEARTH Act – Overview

 HEARTH Act (Helping Expedite and Advance Responsible Tribal Home Ownership Act of 2012) establishes new framework for leasing tribal trust lands  The HEARTH Act allows all tribes to opt-out of the secretarial approval requirement when leasing their own lands for the first time in the history of federal Indian law. In effect, the HEARTH Act restores tribes’ inherent authority over the use and development of their own lands.

Details adapted from Bryan Newland, Fletcher PLLC

Page 12

HEARTH Act

 To opt-in, tribes must adopt their own leasing regulations  Tribal regulations must be approved by the Secretary of the Interior  Secretary has 120 days to review tribal regulations  Law is limited to tribally-owned trust lands  Doesn’t apply to individually-owned lands  Law is limited to surface leasing  No oil & gas leasing Details adapted from Bryan Newland, Fletcher PLLC

HEARTH Act Requirements

 Tribal regulations must:  Be “consistent” with BIA’s leasing regulations  Establish an environmental review process  Environmental review process requirements  Identification of significant environmental effects    Public notice and comment Tribe must respond to substantive public comments NOTE: NEPA doesn’t apply > this is a tribal process Page 13 Details adapted from Bryan Newland, Fletcher PLLC

Tribes Whose Regulations Have Been Accepted Under HEARTH Act

Page 14 1. Graton Rancheria (CA) 2. Pueblo of Sandia (NM) 3. Pokagon Band of Potawatomi (MI) 4. Ak-Chin Indian Community (AZ) 5. Santa Rosa Band of Cahuilla Indians (CA) 6. Citizen Potawatomi Band (OK) 7. Ewiiaapaayp Band of Kumeyaay Indians (CA) 8. Kaw Nation (OK) 9. Dry Creek Rancheria (CA) 10. Jamestown S’Klallam (WA) 11. Mohegan Tribe (CT) 12. Wichita and Affiliated Tribes (OK) Details adapted from Bryan Newland, Fletcher PLLC

Page 15

Taking Over the Realty Function: Contracting and Compacting

 Tribes have the authority to take over a part (contracting) or all (compacting) of the administrative functions performed by the BIA, the HIS, and other government entities.  EBCI has already compacted the administration of the Cherokee Indian Hospital from the HIS  More than 100 tribes have compacted one or more functions  Legal framework:   Self-Determination contracts are authorized under the 1975 Indian Self Determination and Education Assistance Act.

Self-Governance compacts are made possible by 1994 amendments to the 1975 Indian Self Determination and Education Assistance Act.

From Self-Governance: The Red Book by The Office of Self Governance

Page 16

Self-Determination Contracts (Realty)

 Tribe negotiates with local BIA Agency/Area  Tribe agrees to provide specific services that otherwise would be provided as part of the activities of the BIA  The Tribe is paid a specific amount (fixed price) for each contracted service  The Tribe submits quarterly reports on expenditures in each contract  BIA rules, regulations and manual apply  The BIA has ultimate responsibility for ensuring services are delivered appropriately. From Self-Governance: The Red Book by The Office of Self Governance

Page 17

Self-Governance Compacts (Realty)

      Tribe negotiates with Office of Self-Governance (DC) Tribe agrees to take over an entire function that otherwise would be provided as part of the activities of the BIA. This may include Realty Services and Title Plant   Tribe may redesign programs and activities within that function Tribe must have appropriate data and management system, such as BIA Trust Asset and Accounting Management System Tribe has an annual funding agreement from the BIA for the function (not program by program or service by service) The Tribe submits quarterly reports on total expenditures; has authority to shift expenditures within function (up to a limit) BIA rules and regulations apply, but Tribe may replace BIA guidelines with its own guidelines. BIA manual doesn’t apply.

The Tribe has the ultimate responsibility for ensuring that services are delivered appropriately.

From Self-Governance: The Red Book by The Office of Self Governance

Lummi Tribe: Example of Realty Compact Page 18

Page 19

Advice on Compacting

  Confederated Salish and Kootenai Tribes (CSKT) began compacting BIA Real Estate Services in 1990’s and added BIA Title Plant Services in 1994  BIA compact revenue is $5.6 million annually. CSKT supplements this with its own funds to improve the quality of service.

CSKT advice for other Tribes considering compacting:   Be extremely well-prepared and flexible before beginning self-governance negotiations.    Backlog issues Reporting requirements Is there a passion for providing these services?

Tribe and BIA should both be flexible and recognize the importance of a continued partnership after the initial self governance compact

Page 20

State Taxation of Property on the Boundary

   North Carolina property tax is levied by counties both on real estate and on business property (computers, office equipment, etc.). NC regards a long-term lease as being real property, and therefore subject to property tax NC holds that when the Tribe or a Tribal member enters into a long-term lease with a non-member, the non-member will owe property tax to the local county on the value of the leasehold interest and business property whether or not the property is on the Boundary.  Example: Food Lion Shopping Center – the lessee is paying property tax to Jackson County  New BIA regulations (25 CFR Part 162) suggest that NC’s view is not correct, and no property tax can be levied on the Boundary, regardless of who holds the lease

Agenda - Morning

9:00 Welcome and Introduction 9:15 Trust Land Law and Regulation - Presentation 10:00 Real Estate Action Plans 10:45 Knowledge Industries – Presentation 11:15 Knowledge Industry Action Plans 12:00 Lunch Page 21

Page 22

Real Estate Action Plans

 Two action plans under development for review today  Create implementation plan for compacting BIA Realty function  Develop draft statutes to required to change individual possessory holding legal framework  EBCI Attorney General’s Office, Commerce Department and Finance Department are actively reviewing HEARTH Act, so no need for an action plan on this subject

Create Implementation Plan for Compacting BIA Realty Function

Page 23  Goal: create an implementation plan for compacting the BIA Realty function.

 What questions should the implementation plan answer?

 Options: What are the potential different options for compacting the Realty function?

   Finances:   How much it would cost the Tribe to take over the function?

How much money would the BIA pay the Tribe to provide the service? Operations:   What are the requirements in terms of people, software, and machines?

What will be the impact on jobs? Examples: What other tribes have done this and what has their experience been?

Create Implementation Plan for Compacting BIA Realty Function

Page 24    Activities:   Assessment of current Tribal Land Records documents management by BIA Analysis of Realty Services workflow and procedures    Recommendations and modifications to Land Records Management database schema Estimate of the initial startup implementation cost Estimate of the long-term operating cost Organizational leadership – Commerce Department Organizational participants in addition to Commerce      Tribal Housing Program - Paulette Cox EBCI Courts – Hannah Smith and her staff Chief’s Office - Paxton Myers Finance – Corey Blankenship or his designee GIS Office – David Wyatt

Create Implementation Plan for Compacting BIA Realty Function

Page 25    Resources:   Hiring of independent contractor to facilitate development of implementation plan and development of new procedures  $15,000 Travel cost for GIS office staff site visits to two other Tribes and National Tribal GIS conference     $14,000 GIS database schema modification cost and custom workflow programming  $20,000 Supplies  $1,000 Total cost of implementation plan development: $50,000 Funding sources - TBD Timeline – 18 months

Develop Draft Statutes for Individual Possessory Holding Legal Framework

Page 26      Goal:  Fund the legal work required to conduct research on how/whether other tribes have changed statutes regarding individual possessory interests, and to develop draft statutes and regulations that would simplifying the process for leases and sales of individual possessory interests Activities:       Engage outside expert counsel Survey relevant tribal experience Review existing EBCI statutes, regulations and case law Develop initial draft of new proposed statutes and review with Executive and Tribal Council leadership  Public comment and community engagement Prepare final draft of new proposed statutes for submission to Council Develop regulations and procedures required to fully implement new statutes Resources required: approximately $40,000 for research, legal drafting and community engagement Funding sources – TBD Timeline – 18 months

Agenda - Morning

9:00 Welcome and Introduction 9:15 Trust Land Law and Regulation - Presentation 10:00 Real Estate Action Plans 10:45 Knowledge Industries – Presentation 11:15 Knowledge Industry Action Plans 12:00 Lunch Page 27

Page 28

Knowledge Industries

 Knowledge Industry definition   Businesses whose operations and success depends mainly on knowledge, innovation and technology. Examples include software, high-tech manufacturing, communications, R&D, and finance. Knowledge workers are workers whose main asset is knowledge. They are paid to “think for a living”. Typical examples may include software engineers, architects, engineers, scientists and lawyers.

 We will focus on a segment of knowledge industry:  Knowledge industry clusters that are growing in NC, and for whom the “5-9’s” reliability and bandwidth provided by BalsamWest are “mission-critical”

Knowledge Industry Clusters Growing in NC and That Require “5-9s” Reliability

Page 29  Existing clusters  Computer programming, systems design, & related services   Health sciences (incl. pharmaceuticals) and informatics Surgical and medical instruments  Emerging clusters        Magnetic & optical media manufacturing & reproduction Data processing, Internet hosting, & related services Software publishing Banking and finance Internet publishing & broadcasting, ISPs & search portals, & other information services Business, scientific, & technical consulting services Rapid prototyping and specialized design services

Page 30

Business Attraction: Mountain West Alliance

   Qualla Boundary and seven westernmost NC counties are each too small individually to have the resources and the sites necessary to compete effectively to attract knowledge businesses Have formed Mountain West Alliance to work together to be able to identify and pursue potential knowledge industries Regional approach has been successful for other rural NC communities in attracting knowledge industries  Example: “Data center corridor” in rural NC, including Alexander, Burke, Caldwell, Catawba and Iredell counties.  Data centers from Google, Apple, financial services, etc.

Page 31

Page 32

Key Assets for Attracting Knowledge Industries

    Infrastructure: “5 9’s” high bandwidth fiber, inexpensive redundant power, plentiful water Workforce: skilled labor for knowledge industry applications  Build on WCU, community college training Public sector: supportive, business friendly Quality of life: natural resources, housing, schools

Profile of Entrepreneur/Firm Owner

     Interest in outdoor recreation Mountain roots Rural lifestyle preference Family at Western Carolina University, or alumni Retirement transitioning Page 33

Page 34

Attracting Knowledge Industries

 Conduct market research to determine best potential areas/networks in which to recruit  Develop “market offering”: sites, information, incentives to share with potentially interested companies.  Locations available   Information on workforce, quality of life, industry clusters Incentive packages and assistance  Develop and launch marketing campaign

Page 35

Knowledge Industry Action Plans

 To be reviewed today  Marketing plan for attraction of Knowledge Industries  Feasibility study for fiber-enabled office building and co working space  On hold   Tribally-owned data center  This is already being explored by EBCI Commerce.

Call center to service Harrah’s and other Caesar’s properties  This is being reviewed by a team at Harrah’s

Page 36

Marketing Plan for Attraction of Knowledge Industries

 Goal: identify and attract small-midsize knowledge businesses to Boundary and 7 counties of Western NC  Activities:  Inventory and quantify the key assets of Mountain West Alliance region make it uniquely attractive to small, growing, entrepreneurial knowledge industry businesses    Conduct market research to develop clear profiles of target market segments/customers who would find the assets of Mountain West Alliance locations attractive. Develop “market offering”: sites, information, incentives to share with potentially interested companies. Develop and launch marketing campaign

Page 37

Marketing Plan for Attraction of Knowledge Industries

     Organizational home: Southwest Commission Potential Partners  EBCI Commerce, Economic Development Depts of 7 Western Counties, Duke Energy, Drake Software Resources: TBD Potential funding in cash and in kind  Drake Software?

  Special assessment from 7 counties?

EBCI? Cherokee Preservation Foundation? Timeline: 18 months

Page 38

Feasibility Study for Fiber-Enabled Office Building and Co-Working Space

    Goal: determine whether sufficient demand exists at specific rental price points to support cost of fiber-enabled office building/co-work space (similar to Mojo in Asheville) Activities:  Develop profile of potential users   Conduct individual interviews and online survey of tech and home-based entrepreneurs businesses within a 30-mile radius/located in Jackson or Swain County Develop estimate of potential demand for office and co-working space and a suite of services at particular price points Organizational leadership: Sequoyah Fund and Southwestern Commission Potential Partners: Chamber of Commerce, EBCI Commerce Department, WCU Small Business Technical Development Center, Haywood Committee College Entrepreneurial Program and the TERO Office.

Agenda - Afternoon

12:30 Review Potential Action Plans; Add New Ones - Enterprise Structure 2:30 - Small Business - Tourism Next Steps, Assignments 3:00 Adjourn Page 39

Page 40

Small Business Action Plans

 Small Business and Entrepreneurship Action Plans for discussion today:     Expand sales of Cherokee art Strengthen Chamber of Commerce Create an economic coalition to support small business development and growth Build a more vibrant entrepreneurial culture on the Boundary

Success Factors for Small Business

Market Demand Entrep. Culture Trained Workforce Suppliers & Resources Transport & Comm.

Public Sector Support Capital Page 41

Action Plan: Expand Sales of Cherokee Art

Goal – Expand sales by Cherokee artists, both traditional and contemporary art.

Activities    Create online sales using available social media tools Develop a Cherokee authenticity label Develop a distinctive Cherokee brand     Create a Cherokee artist council Include both traditional and contemporary art Broker Cherokee art off-Boundary Provide entrepreneurial training     Qualify Cherokee artist as trainers Support creation of artist portfolios Provide micro-loans to artists Support artists’ sales booths at various events Page 42

Action Plan: Expand Sales of Cherokee Art

Organizational leadership – Sequoyah Fund Participants   Sequoyah Fund – Russ Seagle, Hope Huskey Qualla Arts & Crafts – Vicki Cruz Resources required – Estimates to be developed by Sequoyah Fund Funding sources – Primarily Sequoyah Fund Timeline – Steps being taken now Page 43

Page 44

Action Plan: Strengthen the Chamber of Commerce

Goal – Strengthen Cherokee Chamber of Commerce financially and operationally Activities    Develop a business case for supporting the Chamber from levy and privilege taxes on Cherokee businesses Work with EBCI Finance to develop potential formulas for obtaining funding from levy and privilege taxes Seek sources of ongoing funding from levy and privilege taxes through EBCI Administration and Tribal Council    In parallel with the above, create a plan for expanding business assets in Cherokee Develop and provide a complete array of small business services to Cherokee Collaborate with surrounding Chambers and economic development agencies to seek small business growth

Page 45

Action Plan: Strengthen the Chamber of Commerce

Organizational leadership – Cherokee Chamber of Commerce Participants   Cherokee Chamber of Commerce – Amy Parker EBCI Finance – TBD  Surrounding Chambers and E.D. agencies Resources required - TBD Funding sources - TBD Timeline - TBD

Page 46

Action Plan: Create Economic Development Coalition

Goal – Create an economic coalition to support small business attraction, development and growth Activities     Develop a coordinated strategy to create new jobs in all sectors of existing businesses through expansion and growth Create and implement a coordinated plan to attract businesses to locate in Cherokee and the surrounding three counties Develop a strategy that encourages entrepreneurial efforts to start businesses in targeted fields Coordinate and integrate the efforts of economic development on the Boundary with neighboring interests, including economic development agencies and Chambers in Swain, Jackson and Haywood Counties

Action Plan: Create Economic Development Coalition

Organizational leadership   Cherokee Chamber of Commerce – Amy Parker EBCI Commerce – Jason Lambert      Sequoyah Fund – Russ Seagle Destination Marketing – Skooter McCoy Swain, Jackson and Haywood Counties Smoky Mountain Host WCU – Steve Morse  CPF – Mary Jane Ferguson Resources required – TBD Funding sources – TBD Timeline - TBD Page 47

Page 48

Action Plan: Build a More Vibrant Entrepreneurial Culture

Goal – Build a more vibrant entrepreneurial culture on the Boundary.

Entrepreneurial Small Business needs:  Markets      Location to lease or build Access to Capital Employees Small Business Training/Development Resources Business Services – Insurance, Accounting, Marketing, etc.

    Clear, Concise Information about the Selected Environment Supply and Distribution Chain Information Connectivity Inspiration

Page 49

Action Plan: Build a More Vibrant Entrepreneurial Culture

Activities  Establish a baseline description of a desirable/optimal small business environment    Complete research necessary to map the small business environment in Cherokee Identify gaps/constraints between Cherokee environment and baseline Prioritize the challenges and attack the problem     Create incentives to come to Cherokee Develop the resources and avenues to connect with potential small businesses locally, regionally and beyond Offer Indianpreneurship training Start, gain momentum, and sustain the effort

Page 50

Action Plan: Build a More Vibrant Entrepreneurial Culture

Organizational leadership  Sequoyah Fund – Russ Seagle     EBCI Commerce – Jason Lambert TCGE – Ray Rose EBCI Destination Marketing – Skooter McCoy Cherokee Chamber of Commerce – Amy Parker Resources required - TBD Funding sources -TBD Timeline - TBD

Page 51

Tourism Action Plan

Goal – Develop options for increasing tourism, utilizing cultural and natural assets Organizational Leadership - Skooter McCoy, Destination Marketing Activities  New programs for Unto These Hills being discussed with CHA Board   Relocate Oconaluftee village near the Museum Add fly fishing museum along with trout exhibit/aquarium          Create a downtown Base Camp of the Smokies with appropriate retail Relocate Fairgrounds to old high school site Add convention center to high school site Develop wildlife attraction at the Oconaluftee Village site Improve attractiveness of Saunooke Village Add visitor amenities to the gaming destination Create all new visitor way-finding signage Develop a fishing pond for children Prepare a community gathering place

Page 52

Tourism Action Plan

Next Steps  Bring the concept to the CHA and Museum Boards, and get their acceptance and approval…discussions under way   Communicate the district concept to EBCI Administration, Planning Board, Tribal Council, business owners, and community leaders Convene a coalition of organizations within each district to provide input during the transition    Develop a master plan with renderings with cost estimates for the creation of the districts Conduct feasibility studies for the major element of the program Start archeological and Phase I environmental studies Organizational leadership – EBCI Destination Marketing Resources required - TBD Funding sources - TBD Timeline - TBD

Page 53

Next Steps

 Fourth meeting of task teams by phone  Continue work on options      Research Interviews Financial analysis Exploration of funding sources Development of recommendations  BWB Solutions and Medicine Root will staff and facilitate tasks teams and conduct additional research as necessary

Contact Information Ben Sherman [email protected]

(303) 818-4926 John Weiser [email protected]

(203) 314-8600

Page 54

Appendix

Page 55

Page 56

State Taxation of Property on the Boundary

  North Carolina property tax is levied both on real estate and on business property (computers, office equipment, etc.).   The tax is levied by and paid to the counties. Each county sets its own property tax rate.

 Jackson $.28 per $100 of valuation; Swain $.36 per $100 NC regards a long-term lease as being real property, and therefore subject to property tax NC position on taxation     Property owned, developed and held by the Tribe is not subject to property tax (example: Harrah’s) Property owned, developed and held by Tribal members is not subject to property tax. If the Tribe or a Tribal member enters into a long-term lease with a non-member, the non-member will owe property tax to the local county on the value of the leasehold interest, whether or not the property is on the Boundary.  Example: Food Lion Shopping Center – the leasee is paying property tax to Jackson County Business property held by a non-member is subject to property tax, whether or not the business property is on the Boundary.

Page 57

New BIA Leasing Regulations: A Contrary Position

  New BIA leasing regulations (25 CFR Part 162) provide a position contrary to NC’s position    162.017. “The purposes of residential, business, and wind/ solar resource leasing on Indian land are to promote Indian housing and to allow Indian landowners to use their land profitably for economic development, ultimately contributing to tribal well-being and self-government.” 162.017(a). “Subject only to applicable Federal law, permanent improvements on trust or restricted land are not taxable by States or localities, regardless of who owns the improvements.” 162.017(b). “Subject only to applicable Federal law, activities conducted under a lease of trust or restricted land that occur on the leased premises are not taxable by States or localities, regardless of who conducts the activities.” These new regulations open the door to changing the current property tax situation on the Boundary.