When developers and Indian communities meet - East Valley Tribune: News

When developers and Indian communities meet

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Posted: Sunday, July 2, 2006 6:34 am | Updated: 4:33 pm, Fri Oct 7, 2011.

Doing business on an Indian community requires trust — years of it. Gerry Blomquist spent seven years putting together the deal that would result in the Pima Center, a multiuse business straddling Loop 101.

The project is on 209 acres of land controlled by some 200 family members on the Salt River Pima-Maricopa Indian Community.

Ownership on the reservation is tangled web of family trees that date back to the mid-1800s. It took years to secure leases from those representing generations of landowners.

“That was with weekend meetings where we would have anywhere from five to 20 people out there,” Blomquist remembered. “There were a couple of guys who were pretty up-front saying ‘Are you just another guy coming to steal my land.’ It took awhile for us to build their trust. It’s respect you have to earn probably more so than the rest of the Valley who will take you at face value and let you screw up before they make the opinion. Here, they’re not going to make the evaluation or opinion of who you are up front. They’re going to let you prove it.”

Added to the challenge of assembling the land was working through red tape. On the community, the Bureau of Indian Affairs controls probate, the legal determination of the validity of a will.

“There’s one 20-acre parcel we have here where I believe there’s probably 85 different people with interest in it and when you look at their fractionated interest, because maybe this is like the fifth generation or something like that, there are people that actually have a 10-square-feet interest if you take it down to a decimal point.”

Thankfully for Blomquist, he didn’t have to get everyone to agree. Depending on the number of landowners, the government uses a sliding scale to determine how many owners are needed to agree to a lease.

“The federal government recognizes they have to streamline, as well,” Blomquist said. “One of the biggest problems they’re having right now . . . is reporting every year on a guy that’s got a ten-squarefoot interest in a piece of property and maybe his royalty check on the property is 10 cents. It probably cost the government $100. They’re trying to get out of that business as well and trying to consolidate.”

Once the first overview of federal requirements is met, the deal becomes easier because the Salt River community is one of the few Indian communities in the United States that has a selfgovernance compact.

“To start a building, it probably takes a little bit longer than if you go out and buy a piece of property and put a building and get financing on it, but it’s doable and you don’t starve to death while you’re doing it,” Blomquist said, adding the community is similar to dealing with any other East Valley city in terms of building permits and other government reviews.

Blomquist was looking at parcels on the community when he was approached by members of a family who had about 100 acres. Ownership went back to 1909, he said. There were as many as 60 owners with undivided interests in the land. A decision was made to look at adjacent acres to make the project more appealing.

“Fortunately, a good part of them were extended family members,” Blomquist said. “It probably took us a good two to three years of networking to get that through and we started that about 1997 or 1998.”

The BIA’s job is to make sure the land owners are getting a fair market return for their investment and the community shares fairly in whatever the use of the property.

“It’s not that far different from what you might expect for land lease anywhere else,” Blomquist said. “It’s just that going through the federal government makes it harder.”

Blomquist is a partner in MainSpring Capital Group, developer of the center. The company has a long-term lease on the property.

“We look at our landlords as our partners because as far as we’re concerned we’re joined at the hip for the next 65 or 70 years,” he said. “That’s how we approached this from the beginning. We came at this as a joint venture between us and the landowners.”

The park is the largest third-party lease on American Indian land in the United States. The project is just west of the freeway and is bordered by Via de Ventura on the south and Pima Road on the west.

So far Calex Homes has moved into 15,000-square-foot building on the northwest corner of 90th Street and Del Camino. The Renaissance Companies, Mainspring and Ross Brown Partners, the real estate marketing firm for Pima Center, have moved onto the second floor of a building on the southwest corner of 90th Street and Pima Center Parkway.

Developers are hopeful retail, restaurant and hotel space will follow sometime in 2007. When finished the project will consist of some 3 million square feet.

The Salt River community has gone through many of the same growing pains other local cities have thanks to rapid growth, Blomquist said.

“The one thing I give these guys credit for is they went to school on the other small cities and started figuring out early what they had to do in anticipation of what was coming on here, mainly because their development here is going to be driven by commercial uses as opposed to the residential engine that tends to inundate a small town someplace else as the first wave,” he said. “The big demand that they’ve got isn’t a $200,000 house. It’s a $10 million building.”

THE COMMUNITY MEMBER

During the seven years it took to build Pima Center, the Salt River Pima-Maricopa Indian Community went through a handful of community development directors and more than a dozen staff turnovers in the economic development department.

Keeping the community’s administration educated about the huge business park project was a challenge, said Russel Ray, a former Tribal Council member and landowner where the Pima Center is built.

“There were probably some employees that were using their employment as a stepping stone out of the community,” he said. “Salt River . . . is very unique in being next door to a major growing municipality. I think people gain experience, people gain educational experience as well, and opportunities open up for them.”

Nonetheless, the deal was done thanks to some longtime employees and a feeling the partnership wasn’t only on paper, he said.

“What helped us along was developing a business relationship versus a contractual relationship,” Ray said. “In a business relationship, there’s open communication back and forth and that’s pretty much what we’ve done with the economic development. We have developed a a very good business relationship with them where we’re able to communicate and have meetings on issues that may arise and try to work out an amicable solution.”

Ray’s family was one of 200 involved with the project. Sixty-one of his relatives have interest in the land, some dating back to the mid-1800s.

“Pretty much on an expiration of an individual, it goes to their survivors, either spouse or children,” he said. “That increases the number of people with holdings on the land.”

Ray, who served on the Tribal Council for 12 years, said Pima Center is welcomed by the community.

“It generates income both for the landowners and the community based on the tax revenues,” he said. “On some parcels, the community is also a land owner. It’s a small portion though.”

Land leases had to be approved by the Bureau of Indian Affairs, both its regional office in Phoenix and at an agency level on the community. Whether the tribe likes it or not, the bureau is involved, Ray said.

“The agency at Salt River has been very cooperative,” he said. “When we request a meeting with them to either update them or provide them information, they have not turned us away. In fact, they also follow up with us on different items.”

THE BROKER

Curtis Brown spends much of his time knocking down the rumors that come with opening a business on American Indian soil.

“I see the front lines, if you will,” he said. “When people come to reconsider relocating their company and you’re standing on the site and they love the location and they love the infastructure and they love the buildings and then they start kind of kicking the dirt and looking at their feet and going ‘Well, what about locating on the Indian reservation.’ ”

Brown, of Ross Brown Partners, is marketing the Pima Center, a project that is expected to be 3 million square feet of office, retail and hotel space on the Salt River Pima-Maricopa Indian Community.

The challenge in landing tenants is to educate both business owners and fellow brokers, he said.

“I’ve been a broker for over 20 years and I know the community personally and I know the stereotype,” Brown said of his colleagues. “They don’t necessarily want to learn new tricks. They’re all making a lot money. They’re doing real well with business as usual. So, having to educate their clients to the point where they dispel these rumors, that’s a new trick.”

The first question most prospective tenants have it whether they must hire all Indians, Brown said. He describes the preferential hiring practices of the community as similar to any federally mandated affirmative action plan.

If new people are hired for jobs, the community requires its human resources department be notified so it can offer Indians who are qualified.

“If you have, for instance, several applicants that are all equally qualified and one of them is one of their applicants from the community, you have to hire that person if they’re equally or better qualified than any other applicant that you have,” Brown said. “In one sense it’s less restrictive than federal guidelines for affirmative action because it doesn’t say you have to hire any Native Americans. It’s just that if they are equally or better qualified for the position you’re hiring for, the tiebreaker is they came from the Native American community.”

Those considering leasing on the community also worry about the tribe’s power when it comes to their business.

“That’s probably the biggest one (rumor),” Brown said. “The people who have been here a long time remember when the Native Americans had the dispute with the Arizona Department of Transportation and they shut down Pima Road to get the freeway realigned. That was 25 years ago but people’s memories linger. They want to know ‘Can they shut down access to my building?’ ”

A clause in the leases states the tribe is waiving its sovereign immunity when it comes to having legal matters adjudicated in tribal court, Brown said. In disputes over small dollar amounts, business owners have the right to go to arbitration instead of tribal court. One of the most legitimate questions people have is concerns over fire services.

“There’s good answers to all those things when you look at what the community has done in terms of investing in their people and their infrastructure,” Brown said. “It’s top-notch. They meet all of the safety regulations that the insurance companies insist upon so there isn’t any problem getting fire insurance.”

The biggest hurdle for Brown may be informing potential tenants about the community’s voice and data communications, one of the most critical areas for any company, he said. The Salt River community does not allow outside service providers like Qwest and Cox to have contracts on the community, Brown said. Instead, customers receive Saddleback Communications, a tribal enterprise.

The single provider makes many wonder if they will pay double or have substandard service, he said, adding Saddleback has hired a consultant to re-market its services.

When it comes to taxes, Brown says they’re generally lower on the Salt River community than they would be elsewhere.

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