By Admin on May 2017
WINDOW ROCK – President Russell Begaye urges the Navajo Nation Council to approve legislation petitioning the Department of the Interior to approve the charter of the Naat’áanii Development Corporation.
This initiative is central to the administration’s economic plan and its pillars of job creation and infrastructure. The Naat’áanii Development Corporation is a holding company incorporated under Section 17 of the Indian Reorganization Act that will act as a private sector vehicle to focus on job creation, economic development projects and generate revenues for the Nation by way of sharing dividends with the Nation’s General Fund and Permanent Trust Fund.
At the beginning of the Begaye-Nez administration’s current term, staff members of the Office of the President and Vice President traveled with a group of Council Delegates and enterprise staff to visit various tribes who had established successful tribal corporations. These corporations included the NANA Development Corporation, Southern Ute Growth Fund, Wild Horse Pass Development Authority, and Ho-Chunk, Inc.
Conversations with principals from these companies revealed a common thread to their success, namely distancing their day-to-day operations from tribal politics.
Shiprock Council Delegate Tom Chee said, “This is a grand opportunity; it’s visionary and transformational. We need to change how we think about money and a paradigm shift must happen. We could have more companies come to Navajo. Let’s move this forward and get things done.”
They were able to achieve this by reducing the number of board members through a consolidation process that put all of their enterprises and corporations under one holding corporation governed by one single board with only five directors. Secondly, they established professional eligibility requirements for new board members, bringing much needed business acumen and network to the corporation’s governance. Lastly, they had a minimum of elected officials serving as shareholder representatives, minimizing political interference in business decisions of the corporation.
These actions alone dramatically reduced overhead costs and increased net profits immediately upon implementation.
Currently, the existing Navajo corporations and enterprises collectively employ 4,500 people and generate close to $1 billion in revenues, yet a minimal amount of their net profits go back toward helping fund the Nation’s government. Furthermore, the number of board members grossly exceeds the number of enterprises and corporations by more than six to one, representing an unnecessary financial drain and duplication of corporate functions.
To address this matter, President Begaye’s administration worked with the Navajo Nation Council to develop a new corporate structure known as the Naat’áanii Development Corporation, organized under Section 17 of the Indian Reorganization Act.
Under this new business model, 20 percent of the new corporation’s net earnings will go back to the Nation’s treasury immediately upon inception and up to 40% over the next 10 years.
“This is critical in light of the imminent impact that the loss of coal royalties will have on the Nation’s budget. By investing in profitable ventures and with a strong emphasis on financial performance, the new corporation’s dividend schedule will start contributing funds in time to mitigate the decrease in natural resource revenues,” said President Russell Begaye.
To expedite the company’s starting date, legislation sponsor and Chairman of the Resource and Development Committee, Delegate Alton Joe Shepherd has introduced a legislative initiative to create a tribally chartered corporation that will begin operating immediately after Council approval and subsequent issuance of business regulatory licensing. “This is an opportunity to setup a corporation where our future generations would benefit,” said Delegate Shepherd.
Once the Section 17 charter is approved by the Department of the Interior and ratified by Council—a process that could take several months–the tribal corporation will adopt the federal charter along with all its benefits.
Tribally owned companies organized under Section 17 of the Indian Reorganization Act, offer the unique advantage of being covered by the tribe’s sovereign immunity, including from federal and state taxes, while their liability is limited only to the assets owned by the company. This structure also allows for the company to raise capital by issuing tribal economic development bonds through allocations approved by the tribe. The Naat’áanii Development Corporation intends to leverage these advantages through its subsidiaries in innovative ways never used before by other tribal corporations.
Naat’áanii Development Corporation represents only the beginning of many opportunities that will become available in the areas of health care, energy, tourism, manufacturing, finance and infrastructure development.
“This is a unique and visionary opportunity for the 23rd Navajo Nation Council and President Begaye to legislate an economic engine that is designed to create jobs for our people, work with small business, and provide annual dividends back to the Navajo Nation,” said Robert Joe, Chief Operating Officer of the Navajo Nation.
“Our Navajo leaders predicted decades ago that a day would come in which we could no longer rely on our natural resources to fund our government. The eminent revenue crisis that we are approaching confirms the wisdom and foresight of our elders who also advised us to be prepared by growing the Nation’s treasury and by giving our youth good education opportunities,” said former Chairman and President Peterson Zah.
On Wednesday, May 3, the Budget and Finance Committee approved the legislation for the section 17 corporation with a vote of 3-0. Keith Watkins the Senior Vice President of the Arizona Commerce Authority attended the B&F committee meeting and stated, “People and real estate are the key elements of economic development. The Naat’áanii Development Corporation provides a link to both. Having this corporation will enhance both Arizona’s and the Navajo Nation’s economic development efforts.”
The Naat’áanii Development Corporation is the economic vehicle that will bring our business talent back home to navigate the Navajo Nation through today’s changing economic tide with the experience and knowledge that they have developed out in the business world. The Navajo Nation more than ever needs a business arm that can give our leaders advice to avoid repeating the errors of the past and to pave the way for a diversified, sustainable and prosperous future for our people.