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Tribal land deal lures automaker
July 14, 2006
By Anthony Thornton
The Oklahoman
The Chickasaw Nation's ground-breaking deal with a Chinese automaker "is just the
cusp of what's out there" for Oklahoma tribes willing to embark on international
trade, a broker of such arrangements said.
Phil Busey sells corporations and government agencies on the advantages of partnering
with American Indian tribes.
Oklahoma tribes, he said, offer land advantages unlike tribes in any other state.
That stems from Oklahoma's unique status among states with tribal governments.
Nanjing Automobile, which announced plans this week to bring back the MG sports
car at a plant to be built near Ardmore, is the first major corporation to accept
those incentives, Busey said.
The tribe will buy land near the Ardmore Airpark from Oklahoma Sovereign Development
Group LLC and lease part of that land to the Chinese company.
"This is a big deal. I don't know of any others like it," said Busey, whose consulting
company recently was named Oklahoma City area business of the year by the American
Indian Chamber of Commerce of Oklahoma.
While other states have reservations, Oklahoma has former reservations that can
be converted into Indian country. The Chickasaws' territory, for instance, consists
of all or part of 12 counties.
That gives the tribe more territory to entice a possible buyer.
Other Oklahoma tribes with huge former reservations include the Cherokees, Choctaws,
Muscogee (Creeks) and the Cheyenne and Arapaho Tribes.
Generally, only a tiny fraction of land in those former reservations is in federal
trust. Here are some advantages available to companies that locate in Indian country:
Property tax exemption: When an Oklahoma tribe buys land within its former reservation,
it can ask the federal government to put the land in trust for the tribe's use,
which removes it from local property tax rolls.
Busey said he encourages his tribal clients to negotiate payments in lieu of taxes,
either to the state or to a local government entity, to ensure good will. A Chickasaw
Nation consultant said that is planned for the car plant.
Accelerated tax depreciation: A corporation that builds on Indian trust land or
a reservation can apply for an accelerated tax depreciation and an inventory sales
tax exemption.
The depreciation can be done about twice as fast as the normal depreciation, Busey
said, which can be huge for a business the size of the proposed MG plant.
A bill in Congress would extend the program only through Dec. 31. Busey expects
Oklahoma's delegation, particularly U.S. Rep. Tom Cole, R-Moore, to fight that effort.
Cole is a Chickasaw Nation tribal member.
"We've always felt like this was very important for Oklahoma, because it gives us
a lot of economic firepower with the state working with a tribe to offer these businesses,"
Busey said.
Employment tax credits: A company that locates in Indian country receives a $4,000
annual federal tax credit for every tribal member it employs.
Larger and more politically stable tribes hold the best odds of capitalizing on
partnerships like the Chickasaws forged with Nanjing Automobile, Busey said.
Conventional wisdom would indicate a tribe would need cash to buy the land that
it would then lease to a corporation. That would seem to give an edge to tribes
such as the Chickasaws that are flush with casino money.
However, a company could front a tribe the money to buy the land, then reduce that
amount from its lease payments.
"This is a real unique and important step for the Chickasaws to do this," Busey
said.
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OKC, OK 73142
Ph: 405.721.7776
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