[Senate Hearing 113-439]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 113-439
 
     ECONOMIC DEVELOPMENT: ENCOURAGING INVESTMENT IN INDIAN COUNTRY

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 25, 2014

                               __________

         Printed for the use of the Committee on Indian Affairs

                               ----------

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                      COMMITTEE ON INDIAN AFFAIRS

                     JON TESTER, Montana, Chairman
                 JOHN BARRASSO, Wyoming, Vice Chairman
TIM JOHNSON, South Dakota            JOHN McCAIN, Arizona
MARIA CANTWELL, Washington           LISA MURKOWSKI, Alaska
TOM UDALL, New Mexico                JOHN HOEVEN, North Dakota
AL FRANKEN, Minnesota                MIKE CRAPO, Idaho
MARK BEGICH, Alaska                  DEB FISCHER, Nebraska
BRIAN SCHATZ, Hawaii
HEIDI HEITKAMP, North Dakota
        Mary J. Pavel, Majority Staff Director and Chief Counsel
              Rhonda Harjo, Minority Deputy Chief Counsel


                            C O N T E N T S

                              ----------
                                                                   Page
Hearing held on June 25, 2014....................................     1
Statement of Senator Barrasso....................................    12
Statement of Senator Begich......................................     7
Statement of Senator Heitkamp....................................     6
Statement of Senator Tester......................................     1

                               Witnesses

Allis, Kevin J., Executive Director, Native American Contractors
  Association....................................................    33
    Prepared statement...........................................    34
Davis, Gary, President/CEO, National Center for American Indian
  Enterprise Development.........................................    12
    Prepared statement...........................................    15
Lettig, William ``Mike'', Executive Vice President, National
  Executive Native American Financial Services and Agribusiness,
  KeyBank........................................................    22
    Prepared statement...........................................    24
Nolan, Dennis, Acting Director, Community Development Financial
  Institutions, U.S. Department of the Treasury..................     2
    Prepared statement...........................................     3
Rupert, Sherry L., President, Board of Directors, American Indian
  Alaska Native Tourism Association..............................    38
    Prepared statement...........................................    40
Sherman, Gerald, Vice Chairman, Native CDFI Network..............    26
    Prepared statement...........................................    27

                                Appendix

Akana, Rowena, Trustee, Office of Hawaiian Affairs, prepared
  statement......................................................    47
Azure, Mark, President, Fort Belknap Indian Community Council,
  prepared statement.............................................    48
Schatz, Hon. Brian, U.S. Senator from Hawaii, prepared statement.    47




    ECONOMIC DEVELOPMENT: ENCOURAGING INVESTMENT IN INDIAN COUNTRY

                              ----------


                        WEDNESDAY, JUNE 25, 2014


                                       U.S. Senate,
                               Committee on Indian Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:30 p.m. in room
628, Dirksen Senate Office Building, Hon. Jon Tester,
Chairman of the Committee, presiding.

             OPENING STATEMENT OF HON. JON TESTER,
                   U.S. SENATOR FROM MONTANA

    The Chairman. I call this hearing of the Senate Indian
Affairs Committee to order.
    Today we are going to hold an oversight hearing on Economic
Development: Encouraging Investment in Indian Country. We all
know how important economy is. According to the BIA, 50 percent
of the folks over the age of 16 in Indian Country are
unemployed.
    Today we are going to look at what tools are out there,
what resources are available, whether it is in energy,
agriculture, tourism or manufacturing. We are going to look at
the impacts of bureaucratic red tape on holding back economic
development as well as the availability of capital and a number
of other things that are very important to economic development
in Indian Country.
    I want to thank our panelists for being here today. What we
are going to do, because we have votes at 2:30, so this is
going to be kind of a screwed up hearing. We will get right to
you, Mr. Nolan, and right to the testimony. Our first witness
will discuss the programs with the U.S. Department of Treasury.
Mr. Dennis Nolan is Deputy Director of the CDFI Fund, which was
created to foster community development at financial
institutions that provide access to capital to distressed and
under-served communities, which includes much of Indian
Country. While Mr. Nolan works with the CDFI Fund, I want to
take a moment to express my appreciation for the Treasury's
efforts on improving its relationship with Indian Country and
the IRS for publishing a final rule on the general welfare
exclusion doctrine. We thank you very much.
    You may proceed, Mr. Nolan.

          STATEMENT OF DENNIS NOLAN, ACTING DIRECTOR,
 COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS, U.S. DEPARTMENT
                        OF THE TREASURY

    Mr. Nolan. Good afternoon, Chairman Tester and
distinguished members of the Senate Committee on Indian
Affairs. My name is Dennis Nolan and I am the Acting Director
of the Community Development Financial Institutions or CDFI
Fund.
    I am very pleased to have this opportunity to join you
today and speak about the CDFI Fund's efforts to promote
development in Indian Country. The CDFI Fund's work in Indian
Country is born of an awareness that Native communities all
across the Nation face extraordinary economic challenges and
limited access to capital.
    However, while the CDFI Fund is well aware that Native
people continue to face daunting challenges, we also recognize
that there is another story to be told about the economic life
of Native communities, a story that is far more positive and
far less widely reported. This story is one of progress. More
and more Native communities are promoting sustainable economic
that is fostering greater opportunities and transforming the
lives of their people. I am proud to report that this story is
one that the CDFI Fund is helping to write.
    The CDFI Fund's commitment to serving Native communities
has its origins in the creation of the CDFI Fund itself and is
deeply rooted in the CDFI Fund's mission and vision. Soon after
the CDFI Fund's creation, we began a comprehensive, multi-year
study of lending and investment practices on Indian
reservations and other land held in trust by the United States.
    In 2001, the CDFI published the landmark Native American
Lending Study. The study concluded that one of the key reasons
for the lack of economic opportunity in Native communities was
the lack of access to capital and financial services. The study
identified 17 major barriers that limit access to capital in
Native communities and offered a variety of recommendations to
address them. Those recommendations became the blueprint for
the CDFI's Native Initiatives.
    The Native Initiatives has two main components. The first
is the Native American CDFI Assistance Program, a funding
program that provides financial assistance and technical
assistance awards to build and expand the capacity of Native
community development financial institutions, or Native CDFIs.
Since it was launched in 2001, the Native American CDFI
Assistance Program has provided awards totaling more than $93
million to help Native CDFIs deliver financial services and
financial products to their communities.
    What started as just a few Native CDFIs a ten years ago has
grown to 68 Native CDFIs headquartered in 21 States.
    The second component of the Native Initiatives is a series
of training initiatives that further support the development of
Native CDFIs. For example, we have recently launched part two
of our training series called the Leadership Journey: Native
CDFI Growth and Excellence. Between the Leadership Journey I
and II, we provided over 2,000 hours of direct one-on-one
capacity building efforts.
    In addition to providing financial assistance and training
for Native CDFIs, the CDFI Fund is committed to conducting
comprehensive research to evaluate economic issues in Native
communities. I mentioned the CDFI's Native Lending Study
published in 2001. In 2013, we began working on a new lending
study called Access to Credit and Capital in Native
Communities, which will provide a detailed analysis to support
new, actionable recommendations for improving access to capital
and credit in Native communities.
    The CDFI Fund has listed comments from Indian Country to
help shape this new study and has conducted seven tribal
consultations and numerous interviews with individuals at the
local, regional and national level. The study examines such
topics as financial education, Native entrepreneurship,
housing, tribes and tribal enterprises and legal institutions,
among others.
    There is clear evidence about the CDFI program's economic
development in Native communities. From 2004 to 2012, Native
CDFIs made over 15,000 loans totaling $365 million in Native
communities. Certified CDFIs made almost 7,000 loans and
investments totaling $184 million in Native communities. Native
CDFIs reported that their loans and investments created or
retained more than 2,000 jobs. And new market tax credit
program investments in Native communities totaled approximately
$600 million.
    While these are impressive statistics, we at the CDFI Fund
believe that the true impact of our programs cannot be measured
by the numbers alone, because our work is not just about
creating programs and offering services. Our work and the work
of every Native CDFI is about changing lives and building
stronger, more resilient communities.
    While we are mindful that these communities still face many
challenges, we know that they are resourceful, resilient and
capable because we have seen what can be accomplished. So we
are more committed than ever to serving Native communities and
extending access to capital to those places where access to
opportunity is needed most.
    On behalf of everyone at Treasury and the CDFI Fund, I
would like to express our gratitude for the important work of
this Committee and I look forward to working with you in the
future.
    Mr. Chairman, that concludes my formal statement. I will be
happy to answer any questions.
    [The prepared statement of Mr. Nolan follows:]

    Prepared Statement of Dennis Nolan, Acting Director, Community
  Development Financial Institutions, U.S. Department of the Treasury
    Good afternoon, Chairman Tester, Vice Chairman Barrasso, and
distinguished members of the Senate Committee on Indian Affairs. My
name is Dennis Nolan, and I am the Acting Director of the Community
Development Financial Institutions Fund (CDFI Fund). I am very pleased
to have this opportunity to join you today and to speak about the CDFI
Fund's efforts to promote economic development in Indian Country.
    The CDFI Fund's work in Indian Country is born of an awareness that
Native communities all across the nation continue to face extraordinary
economic challenges that limit access to capital. However, while the
CDFI Fund is well aware that Native people continue to face daunting
challenges, we also recognize that there is another story to be told
about the economic life of Native communities--a story that is far more
positive and far less widely reported.
    This story is one of progress. More and more Native communities are
promoting sustainable economic development that is fostering greater
opportunities and transforming the lives of their people.
    I am proud to report that this story is one that the CDFI Fund is
helping to write.
The CDFI Fund's Commitment to Native Communities
    The CDFI Fund's commitment to serving Native communities has its
origins in the creation of the CDFI Fund itself and is deeply rooted in
the CDFI Fund's mission and vision.
    The CDFI Fund was established by Congress with the passage of the
Riegle Community Development and Regulatory Improvement Act of 1994, a
bipartisan initiative. Our mission is to promote economic development
in disadvantaged communities throughout the United States. We
accomplish that goal not by providing direct funding to individuals or
projects, but by certifying and providing financing and capacity-
building services to non-governmental entities called Community
Development Financial Institutions or CDFIs.
    CDFIs are specialized financial institutions dedicated to serving
low-income communities. There are several different types of CDFIs,
including loan funds, community development banks, credit unions, and
venture capital funds. All of them have the primary mission of serving
communities and individuals that lack access to credit and other
financial services from mainstream financial institutions.
    Soon after the CDFI Fund's creation, we began a comprehensive
multi-year study of lending and investment practices on Indian
reservations and other land held in trust by the United States. In
2001, the CDFI Fund published the landmark Native American Lending
Study. \1\ The Study concluded that one of the key reasons for the lack
of economic opportunity in Native communities was the lack of access to
capital and financial services. The Study identified 17 major barriers
that limit access to capital in Native communities and offered a
variety of recommendations to address them. Those recommendations
became the blueprint for the CDFI Fund's Native Initiatives.
---------------------------------------------------------------------------
    \1\ Study: http://www.cdfifund.gov/docs/
2001_nacta_lending_study.pdf.
---------------------------------------------------------------------------
    The Native Initiatives have two main components. The first is the
Native American CDFI Assistance Program (NACA Program), a funding
program that provides financial assistance and technical assistance
awards to build and expand the capacity of Native CDFIs. Financial
assistance awards, used primarily for financial capital, are available
only to entities that have been certified as Native CDFIs. In contrast,
technical assistance grants are available to certified Native CDFIs,
emerging Native CDFIs, and sponsoring entities. Sponsoring entities are
unique to the NACA Program. Usually tribes or tribal entities,
sponsoring entities create and support fledgling Native organizations
as they move toward CDFI certification. Technical assistance grants are
often used to acquire products or services including computer
technology, staff training, and professional services such as market
analysis, and support for other general capacity-building activities.
    Since it was launched in 2001, the NACA Program has provided awards
totaling more than $93 million to help Native CDFIs deliver financial
services and financial products to their communities. What started as
just a few Native CDFIs ten years ago has now grown to 68 Native CDFIs
headquartered in 21 states. This growth was provided with extra support
following the financial crisis when Congress waived the matching funds
requirement for financial assistance awards from fiscal year 2009-2013.
    The second component of the Native Initiatives is a series of
training initiatives that further support the development of Native
CDFIs. For example, we have recently launched Part II of a training
series called The Leadership Journey: Native CDFI Growth & Excellence.
The highly successful first part of the program provided training to 16
experienced Native CDFIs. Part II builds upon that success and offers a
new cohort of 13 Native CDFIs in-person training events, along with
continuous customized technical assistance, executive coaching, and
peer mentoring over two years. Between The Leadership Journey I and II,
we have provided over 2,000 hours of direct one-on-one capacity
building efforts.
    In addition, we have created a resource bank on our website that
makes training curricula and reference materials used in a number of
our training programs available to all Native CDFIs at no cost.
Materials from Part II of The Leadership Journey series will be added
to the resource bank as well, so even more Native CDFI leaders will
have access to this outstanding training program.
    In addition to providing financial assistance and training for
Native CDFIs through the NACA Program, the CDFI Fund is committed to
conducting comprehensive research to evaluate economic issues in Native
communities. I mentioned the CDFI Fund's Native American Lending Study,
published in 2001. In 2013, we began working on a new lending study
called Access to Capital and Credit in Native Communities, which will
provide detailed analysis to support new, actionable recommendations
for improving access to capital and credit in Native communities. The
CDFI Fund has solicited comments from Indian Country to help shape this
new study, and has conducted seven tribal consultations and numerous
interviews with individuals and local, regional, and national Native
organizations. The study will examine such topics as financial
education, Native entrepreneurship, housing, tribes and tribal
enterprises, and legal institutions, among others. We expect the study
to be completed by the end of 2014.
    I will briefly mention two other CDFI Fund programs that are
helping Native communities.
    In 2013, we launched our new CDFI Bond Guarantee Program, an
innovative initiative designed to inject substantial, long-term capital
into our nation's most distressed communities, including Native
communities. We are working closely with Native organizations to
identify financial structures that will enable the CDFI Bond Guarantee
Program to serve Native communities most effectively. We have already
developed a case study to demonstrate some of the ways that Native
CDFIs can participate in the program. This case study was presented at
all outreach and training sessions during the FY 2014 round to
highlight successful ways the CDFI Bond Guarantee Program can serve
Native communities.
    In addition, our New Markets Tax Credit Program (NMTC Program)
continues to attract new investment capital to Native communities. The
purpose of the program is to promote investment in low-income
communities by permitting individual and corporate investors to receive
a federal tax credit in exchange for making equity investments in
specialized financial institutions called Community Development
Entities. The NMTC Program is the most competitive program the CDFI
Fund administers, and it includes a statutory requirement that non-
metropolitan counties receive a proportional allocation of tax credits,
helping to ensure that Native communities receive NMTC investment. From
2004 to 2012, NMTC Program investments in Native Communities totaled
almost $600 million.
The CDFI Fund's Impact in Native Communities
    There is clear evidence that the CDFI Fund's programs promote
economic development in Native communities. \2\ From 2004 to 2012:
---------------------------------------------------------------------------
    \2\ Data includes Native American areas that are federally-
designated Native American reservations, Hawaiian homelands, Alaska
Native Villages, and U.S. Census Bureau designated Tribal Statistical
Areas.

   Native CDFIs that received NACA Program awards made over 15
---------------------------------------------------------------------------
        thousand loans totaling $365 million in Native communities;

   Certified CDFIs that received awards from the CDFI Fund made
        almost 7,000 loans and investments totaling $184 million in
        Native communities; and

   Native CDFIs reported that their loans and investments
        created or retained more than 2,000 jobs.

    While these are impressive statistics, we at the CDFI Fund believe
that the true impact of our programs cannot be measured by numbers
alone, because our work is not just about creating programs and
offering services. Our work, and the work of every Native CDFI, is
about changing lives and building stronger, more resilient communities.

    Here is an example of what I mean.

    Four Bands Community Fund, in Eagle Butte, South Dakota, is a
Native CDFI that was founded in 2000 to serve the Cheyenne River Sioux
Indian Reservation--a territory in rural western South Dakota that is
the size of Connecticut and has some of the highest poverty rates in
the nation. Four Band Community Fund's programs are based on Icahya
Woecun, a traditional Lakota model that translates as ``the place to
grow,'' and focus on providing loans and training to develop private
businesses for the reservation.
    Since 2001, Four Bands has received 11 financial assistance and
technical assistance awards totaling $4.6 million from the CDFI Fund.
From 2000 to 2013, these awards enabled Four Bands to provide 278
credit builder loans and 433 business loans to their community that
created or retained 440 jobs. In addition, Four Bands has provided
business and financial literacy training to students, prospective
entrepreneurs, and other individuals throughout the community.
    Among the nearly 5,000 clients that Four Bands has served is Aaron
Runs, who used his Credit Builder Loan as a stepping stone to
homeownership. As a father of five, Aaron wished to make a permanent
home that his children would enjoy, but he knew his credit score was a
barrier in reaching that goal. He decided to use the Four Bands Credit
Builder Loan to consolidate and pay off multiple debts and was able to
increase his credit score by an astounding 90 points in the first year.
He now owns a four bedroom home that his children can enjoy.
    This is just one of the countless success stories that the CDFI
Fund and Native CDFIs are helping to write each year. Together, we are
expanding economic opportunity and building stronger and more self-
sufficient Native communities.
Conclusion
    While we are mindful that these communities still face many
challenges, we know that they are resourceful, resilient and capable,
because we have seen what can be accomplished. And so we are more
committed than ever to serving Native communities and expanding access
to capital to those places where access to opportunity is needed most.
    On behalf of everyone at Treasury and the CDFI Fund, I would like
to express our gratitude to the important work of this Committee, and I
look forward to continuing to work with you in the future.
    Mr. Chairman, this concludes my formal statement, and I will be
happy to answer any of your questions.

    The Chairman. Thank you, Mr. Nolan. Thank you for your
statement.
    We are going to do things a little bit differently because
of the vote. I am going to let Senator Heitkamp go first and I
will go last. Then we will swap out depending on who can be
chair.
    You are up, Senator Heitkamp.

               STATEMENT OF HON. HEIDI HEITKAMP,
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Heitkamp. Thanks so much, and thanks for kind of a
rendition of your program.
    I just have a couple of quick questions. Some in Indian
Country have expressed concern that your bond guarantee program
emphasizes land as collateral. We see this all across lending
in Indian Country, where land is held in trust or land is
allotted and held in trust. There is a lot of concern about
that as a policy which really limits the availability of access
to a lot of programs, and from what I understand, potentially
yours included.
    Can you detail the steps Treasury has taken to work with
tribes to address the concern?
    Mr. Nolan. Thank you very much for that question, Senator.
And also, I would like to take this opportunity to clear up
what I think is a common misconception about the bond program,
that land is a preferred form of collateral for the program.
The program is designed, there are 12 different secondary loan
categories. All can be secured by various types of collateral.
Land is obviously a choice; it is not the only form of
collateral for the program.
    I think the type of things we are doing specifically to
address the issue that you raised, we are currently looking at
the possibility of being able to have what we are calling
needs-lease-hold mortgages, which would allow us to be able to
accept that as a form of collateral for the program. We have
also, as part of our outreach that we just recently conducted
in Detroit, San Francisco and in Washington, have developed a
case study that is specific to the Native community and how
they can better access this program.
    So I think we are taking several positive steps to try to
improve the access that Native communities have to the program.
    Senator Heitkamp. It is troubling, because securitizing a
loan, frequently is it done with land. There is great
limitations in terms of number one, even if the tribes wanted
to do it, whether it would be advisable.
    On a more general level, the nature of collateral in trust
lands obviously is a longstanding issue. If you look at kind of
your range of products and what you can do, are you looking at
developing another line of innovative projects, now that you
have this experience working in Indian Country? What would you
recommend in terms of additional avenues moving forward to help
capitalize business opportunities in Indian Country?
    Mr. Nolan. Senator, in addition to the bond program, which
as you know is our newest program, it is the only one of our
programs that actually requires collateral, because of the fact
that it is a zero subsidy program. Therefore, in order to try
and achieve a zero subsidy, we need to be able to have
collateral in case of losses in the program to cover those
losses. But our other program, the Native CDFI program as well
as our CDFI program itself, offers loans and grants which do
not require collateral.
    Senator Heitkamp. I guess what I am getting at is, Indian
Country, like a lot of other places where you see a higher
level of poverty, basically, it lacks financial institutions.
That means unless you have a great local community banker in
the outlying communities, it becomes very difficult. In fact,
we have one Indian Nation in North Dakota that actually has
begun a mortgage bank.
    So this is not a new problem. It is a problem that I
confronted when we ran Housing and Finance in terms of the
first-time homeowners program. But I want to also ask you what
Treasury has done in collaboration or in discussion with the
Department of Interior, in collaboration or discussion with
SBA, other kinds of programs, to really build out increased
resources and create maybe a broader range of strategies for
economic development in Indian Country.
    Mr. Nolan. We have engaged in some discussions, but I get
your point and I think we can certainly reach out more to SBA
and the other agencies to continue those discussions.
    Senator Heitkamp. And I say this because Senator Dorgan,
when he was here, told us about having programs on reservations
where one didn't even know what the other was doing and they
all had the same mission. So I think it is critically
important, as the Secretary has done in Education, bring in all
the relevant agencies in this area, for someone to take
leadership in economic development, especially capitalizing
economic development in Indian Country and bring in all the
agencies, streamline the programs, make the programs fit better
for the unique situation that we have in Indian Country.
    Thank you, Mr. Chairman.
    The Chairman. Senator Begich?

                STATEMENT OF HON. MARK BEGICH,
                    U.S. SENATOR FROM ALASKA

    Senator Begich. Thank you very much, Mr. Chairman, and
thank you for being here today.
    Mr. Nolan, let me ask, Alaska, as you know, we have the
Alaska Community Development Entity, the CDE there that does
work. We sent a letter to Treasury about two or three weeks
ago. We have had none yet in the last five years, new market
tax credit access for any of our entities up in Alaska. In this
last round, none came to Alaska.
    I know one of the analyses that was done is always like the
highest and best benefit and quantity. As you know, a lot of
our villages and communities are small and remote. For them,
access to capital is even harder, because they are not in an
urban area, like the Lower 48, a large urban area where there
may be lots of capacity or a lot of history of investment. And
I am just wondering, again, we haven't received any new market
tax credits since 2009. Which to be frank with you, is very
problematic for a State that has half the tribes in the Nation,
maybe not by population, but tribes; one-fifth the size by mass
of the State and very remote and very tough economic issues in
some of our communities.
    Can you respond to that? I am a big supporter of the
program, I think it is an important program. But when half the
tribes in the Nation can't get access to it, that is a problem.
Can you give me some thought there?
    Mr. Nolan. Sure. Thank you for the question, Senator.
    I would like to start off by saying that the new market tax
credit program is really, the CDFI Fund's most oversubscribed
program. So for the latest round, we had approximately $25
billion in a request against $3.5 billion in authority.
Cumulatively we have over the life of the program approximately
$257 billion that has been requested against $40 million in
authority. So it is an extremely competitive program.
    The second point I would like to make is that it is a very,
the competition does not really look at, it is not a place-
based program, so it doesn't look at the location of a
particular applicant or even with the service area that we
serve. But I would like to point out that while I do understand
your point that CDFIs in Alaska have not been directly awarded
allocations for the past several years, other CDFIs outside of
the Alaska area are provided allocations, those that work on a
nationwide basis and have a nationwide target market.
    So from 2010 to 2012 Alaska did receive $174.6 million in
new market tax credit investments. And cumulatively, from the
inception of the program, approximately $246 million has been
received, with 76 percent of that, however, that has been
provided by CDFIs that are outside the State of Alaska. And of
that $246 million, approximately $124 million, or 51 percent,
has been given to counties within Alaska that are considered
non-metropolitan.
    So I think even though there has been an issue with the
direct allocation to the actual CDEs within Alaska, other CDEs
have certainly been making allocations for projects within the
State.
    Senator Begich. Doesn't it then beg the question why don't
you just do direct and cut the middleman out? I get what you
are saying, that they are national, but somehow once it is
allocated out into the nationals, the nationals recognize there
is a value. So they are making that happen. Why wouldn't we
look at this program and figure out how to make it a little
more direct?
    Mr. Nolan. I think because it is the competitive nature of
the program, so it is really, as we go through, and again,
being over-subscribed, we go through the competitive process
and the awards are basically made on a competitive basis. So
these other organizations are the ones that have received the
allocations; however, they have been able to target Alaska as
part of their allocation process.
    Senator Begich. Let me ask you this and then I will end on
this question. Mr. Chairman, thank you for allowing me this.
    Obviously your point also is that there are not enough
resources for this program that has been beneficial. Is that a
fair statement?
    Mr. Nolan. That is a fair statement.
    Senator Begich. Do you or has the Administration
recommended higher amounts that Congress, the Senate, I don't
know about the House, because they cut everything. Their
investment strategy is no investment. So I get that. Have we
reached the levels that you need or are there requests you have
made that we have not fulfilled?
    Mr. Nolan. The 2015 President's budget request, we asked
for $5 billion for the new market tax credit program as well as
a permanent extension of the program.
    Senator Begich. Right.
    Mr. Nolan. So we have requested increased funding which
would allow us then to be able to go further down on the risk
of, if we get approximately two times, two to three times the
number of applications that we can actually fund. So increased
funding would allow us to go farther down on that list.
    Senator Begich. I am saying this because both Senator
Tester and I are on the Appropriations Committee, so I am doing
a little opportunity for you. Is the right subcommittee
conversation you are having in Appropriations leaving you to
believe that on the Senate side, that that amount would be
added?
    Mr. Nolan. We don't have any indication at this point where
that really is.
    Senator Begich. That is fair enough. Thank you, Mr.
Chairman.
    The Chairman. Thank you, Senator Begich.
    First of all, Mr. Nolan, thank you for being here. We
appreciate your testimony and appreciate your taking the time.
    We will continue with the CDFI conversation. How many total
CDFIs are there in this Country?
    Mr. Nolan. Approximately 833.
    The Chairman. How many of that 833 are Native CDFIs?
    Mr. Nolan. We currently have 68.
    The Chairman. Yet over the last two years, it goes to
Senator Begich's question, for the last two years, no Native
CDFIs were awarded in the program. Now, I know you said it
wasn't place-based, and I know you said there are non-Native
CDFIs that gave money to Native operations. But why in two
years were none of these CDFI's funded that were Native?
    Mr. Nolan. Again, Senator, I think, let me just say that in
the last round, 2013, we actually only had two Native CDFIs
that actually applied for the program.
    The Chairman. In this very last round?
    Mr. Nolan. In the 2013 round.
    The Chairman. Well, that makes a difference. Okay.
    Mr. Nolan. So we only had two that actually applied. And
one of them probably would have made the qualified list to
receive an award had we had some further funding. I think it
has been partially a low rate of application.
    The Chairman. I got it. So what kind of outreach is done to
the Native CDFIs to make sure they know there are programs? I
know they are over-subscribed, and they are over-subscribed.
And they are a pretty darned good program, too, by the way. So
what kind of outreach are you doing to the Native CDFIs to let
them know that there is opportunity here, even though it is
going to be tough to get that funding, there is still
opportunity?
    Mr. Nolan. We have a number of different outreach programs
that we have done in the past and some we are planning in the
future. Actually, just yesterday we released a request for
information to bring a vendor on board who is going to focus on
minority CDEs across the board, including Native CDEs. That
vendor is specifically going to focus on assisting CDEs with
training and other tools to assist them in becoming more
successful for the new market tax credit program.
    The Chairman. Okay
    Mr. Nolan. That is actually just something that we just
released yesterday.
    We have also done, as I mentioned in my opening remarks,
the Leadership Journey I and Leadership Journey II as another
training series that we have offered for executives and other
management of the Native CDFIs to assist them in building
organizational capacity, financial funding capacity. So we have
offered those as well.
    In addition to that, we will be looking at another
capacity-building training that we are probably going to start
early in the next fiscal year, which will also continue to
focus on building capacity in these organizations to be
successful in applying and receiving our programs.
    The Chairman. Your testimony has shown that when proper
resources are dedicated to Indian Country, good things can
happen. Over the last decade, your program and other CDFIs led
to $500 million in loans and well over 2,000 jobs. That is
significant. Have you seen any trends that would indicate where
these programs are more successful in Indian Country?
    Mr. Nolan. Are you talking about locations or programs that
are more successful?
    The Chairman. When you are looking at success of the
dollars spent, are there any trends that show it is more
successful in certain areas or certain tribes than others? And
my next question was going to be why. For example, if you have
a tribe that is requesting money for maybe a tourism project or
an agriculture project or a manufacturing project or an energy
project, or whatever else they are working on, is there a
pattern to some that are more successful than others? Or is it
a mixed bag?
    Mr. Nolan. To be honest, I don't have an immediate answer
to that question. But it is certainly something we can look at
and I would be happy to get back to you on that.
    The Chairman. It seems like information that might be
useful, especially when you are giving the awards out, if you
have something that tends to be successful.
    The other thing I would also look at is if there are
certain tribes that are more successful at it. Then the next
question would be, why are they more successful at it. Is it
because they have infrastructure the other tribes don't have,
or what might it be? If you could take a look at that and get
back to us, I think it would be great.
    Now, I want to talk about the bond guarantee program.
Senator Heitkamp talked about it for a second. You said there
are 12 programs, if I heard you correctly.
    Mr. Nolan. Twelve programs.
    The Chairman. One of them requires on land?
    Mr. Nolan. Twelve different loan categories.
    The Chairman. Twelve different loan categories.
    Mr. Nolan. Land is one form of collateral.
    The Chairman. And there are 11 different or other forms of
collateral. Talk to me about the bond guarantee program, then,
overall. Because with trusted lands, the land thing doesn't
work for Indian Country. So what are the other methods of
collateral we are talking about, and do any of those methods of
collateral fit better with Indian Country than others?
    Mr. Nolan. As I mentioned to Senator Heitkamp, with the
land issue, one of the things we are looking at is this idea of
being able to take a lease-hold mortgage. And so I think that,
and really, we have been working and looking at that, we have
been talking to a number of different groups about that. I
think that could be a viable alternative to the land issue.
    However, we also take other forms of collateral, depending
on the type of the loan. It could be equipment, it could be
accounts receivable, it could be different forms of collateral,
depending on what the actual loan is.
    The other thing I wanted to mention in relation to that is,
we also have a provision within the program to be able to, what
we call principal loss provision, which is basically the
possibility of a third party guarantee that takes the place of
collateral under the program. So if we can secure from a
philanthropic organization or another organization a grant or
some other type of collateral, then that can also take the
place of collateral. I think that is also something we have
been discussing as another potential way to gain entry into the
bond program.
    The Chairman. Thank you for that. I think that part of this
is going to be an educational process, as you educate the
different tribes around the Country.
    Tell me this. The position of the CDFI Fund Director was
recently vacated. How would you inform an incoming Director on
the issues at CDFI affecting Indian Country?
    Mr. Nolan. I think that one of the first things I would
discuss is, I think in many cases for us, again, similar to the
discussion we were having about the new market tax credit
program, the need within Indian Country far exceeds the amount
of resources that we have available at the current time to fund
those. I think that is definitely something that we will
probably want to take up with a new Director.
    Then I think also just the bond program is another thing we
are certainly looking at. It is a new program. So there has
been a lot of growing pains within it, as it relates not only
to Indian Country but I think in general that is another
program we are going to look at as to how we are able to do
additional access with that type of a program.
    So I think it is really looking at all of our programs and
looking at different ways that we may be able to make changes
within the statutes and within the guidelines for these
programs, to make them more accessible to Native Americans as
well as to others who also find it difficult sometimes to gain
entry into these programs.
    The Chairman. Once again, thank you for your testimony.
Thank you for what you do. I very much appreciate it. I think
if we can get better communication to Indian Country, I think
it may help reduce that 50 percent unemployment rate in Indian
Country. Thank you very much for being here today, Mr. Nolan.
    We are going to have the second panel come up. So Mr.
Davis, Mr. Lettig, Mr. Sherman, Mr. Allis and Ms. Rupert, if
you could get ready to come up. We will set up our second
panel, consisting of a number of organizations that will
discuss various perspectives on economic development in Indian
Country.
    First, we are going to have Gary Davis, President and CEO
of the National Center for American Indian Enterprise
Development. The National Center has worked for 40 years
promoting tribal businesses and individual Indian
entrepreneurs. Then we are going to hear from Mike Lettig, who
is Executive Vice President of the Native American Financial
Services at KeyBank, an institution that has done extensive
work in Indian Country and that hopefully dispels the myth that
projects in Indian Country are a bad bet.
    We will also hear from Gerald Sherman, from Roscoe,
Montana, who is Vice Chair of the Native CDFI Network and can
tell us how CDFI funds and programs are working on the ground
in Indian Country. Good to have you here, Gerald. Then we will
turn to Kevin Allis, the Executive Director of the Native
American Contractors Association, who is here to discuss Indian
business participation in Federal contracting which has been
one of the more successful programs across Indian Country.
Finally we have Sherry Rupert, President of the Board of
Directors of the American Indian Alaska Native Tourism
Association, to discuss the growing tourism industry in Indian
Country.
    Thank you all for being here. Keep your statements to five
minutes. Your entire written statement will be a part of the
record. With that, I am going to turn the gavel over to Vice
Chairman Barrasso, and he can give an opening statement or just
hear these guys. I am going to go vote.

               STATEMENT OF HON. JOHN BARRASSO,
                   U.S. SENATOR FROM WYOMING

    Senator Barrasso. [Presiding.] Welcome. Go right ahead.

  STATEMENT OF GARY DAVIS, PRESIDENT/CEO, NATIONAL CENTER FOR
             AMERICAN INDIAN ENTERPRISE DEVELOPMENT

    Mr. Davis. Good afternoon, Senator Tester and members of
the Committee dedicated to improve Indian Country. I am Gary
Davis, a proud member of the Cherokee Nation of Oklahoma and
President and CEO of the National Center for American Indian
Enterprise Development. Thank you for inviting us to testify
today on Economic Development: Encouraging Investment in Indian
Country.
    For over 45 years, the National Center has worked to raise
the profile of American Indian businesses and to advance
economic opportunity for Indian tribes, tribal enterprises and
businesses owned by American Indians, Alaska Natives and Native
Hawaiians nationwide. I am proud to say that for 22 years, I
have enjoyed great success as a Native American entrepreneur,
running several private sector businesses. A few years ago, I
was asked to join the board of the National Center. After 10
months of serving the organization as a member of its board, I
was asked to step up and serve the organization now as its
President and CEO.
    Since that time, I have become very familiar with the
challenges associated with operating a non-profit solely
focused on advancing, assisting and developing American Indian
businesses and the economy of tribal communities. Those efforts
are oftentimes frustrated by Federal programs that provide too
few dollars and too many rigid operating and private matching
fund requirements in order for them to viable, long-term
solutions in helping the National Center accomplish its
mission.
    This has caused the National Center to reinvest in itself
and to develop new programs and initiatives that accomplish its
mission and importantly generate financial sustainability for
our organization. Subsequently, we serve as an example of the
entrepreneurial spirit and self-sufficiency that we encourage
to our American Indian enterprises and entrepreneurs.
    The National Center is the Nation's leading and longest-
serving advocate and provider of American Indian business
development assistance. Every day, we encourage investment in
Indian Country by assisting and promoting Native business
interests and commercial and government marketplaces, both
domestic and international.
    For nearly 30 years, we have also produced reservation
economic summits, known by the acronym RES. Our RES events also
help us generate the revenues we need to meet our Federal
program requirements and enhance our operations. Our RES events
include business development and training sessions, forums,
trade shows and procurement and business matchmaking expos to
encourage corporations and Federal agencies to buy from
American Indian suppliers.
    As we speak, this hearing is being streamed into our first
Reservation Economic Summit in D.C. for hundreds of our
conference participants to see and hear this important
proceeding. This week's three-day RES D.C. Summit being held at
the Omni Shoreham Hotel here in the Nation's capital covers
many topics, including the Buy Indian Act, global trade, CDFIs,
Native ANA contracting, energy, telecommunications, technology,
e-commerce and much more.
    The National Center serves as a facilitator, a connector
and closer to ensure investment in Indian Country. We are now
gearing up to expand trade opportunities for tribes, tribal
enterprises and all Native-owned businesses through our Native
American Global Trade Center, which is funded by the United
Parcel Service, UPS. We are sustaining economic momentum by
holding our Reservation Economic Summits every four months
across Indian Country on tribal lands to serve as economic
launch pads for Indian Country's enterprises and our corporate
partners. Beginning this September, we will offer internet-
based business development and training through our National
Center Edge web portal.
    The National Center is progressing because of lessons
learned. Here are some of those lessons. First, the hand up
works better than the handout approach to instill self-
determination and self-sufficiency. Second, Federal business
development programs are more successful if they are designed
specifically to help startups and larger companies in Indian
Country and include consultation from organizations like the
National Center who work for Indian business each day and know
their needs.
    Third, adequate Federal funding, whether through direct
appropriations or contracts, really does help technical
assistance organizations improve their performance and enables
them to scale up and attract better educated, better
experienced trainers and business counselors to serve their
Indian Country clients.
    Fourth, Federal responsiveness improves with a high level
Native American or tribal liaison office with its own staff and
budget. These offices now exist in nearly every economic
focused Federal entity: HUD, USDA, Energy, Treasury, FCC and
SBA. It is past time for the Department of Commerce to beef up
its office focused on Indian Country. At least two specific
laws enacted in 2000 direct Commerce to advance business and
economic development, trade and tourism promotion in Indian
Country, P.L. 106-447 and P.L. 106-464. The current senior
advisor on Native American affairs now must devote half his
time to his intergovernmental affairs office duties. However,
if the Native American office had its own budget, it could do
more than advance the President's initiatives, it could start
fulfilling the directives enacted 14 years ago.
    The National Center thanks Senator Mark Begich for pursuing
a Senate Floor amendment to the fiscal year 2015 Commerce
appropriations in order to make existing funds available to
provide for this office of Commerce its own budget. At least 12
national and regional Native organizations have endorsed such a
move.
    Sixth, Indian Country programs that work should be
reinforced. Good examples are two programs the National Center
has supported since endorsing them in 1987 and 1990 testimony
before the Senate Indian Affairs leadership. One, the Buy
Indian Act and two, the Indian Loan Guarantee Program.
    To wrap up, the National Center calls for the following
executive and congressional actions, which I recommended two
months ago on April 30th to the Senate leadership and is
outlined at the end of my written testimony. The National
Center applauds the Committee for reporting to the full Senate
Chairman Tester's bill, S. 2188, a Carcieri fix, and Ranking
Member Barrasso's Tribal Energy Development Bill, S. 2132. Now
Congress must pass these and others to help tribes and
businesses in Indian Country overcome judicial, regulatory and
financial barriers.
    We ask the Committee to hold three additional oversight
hearings, one on Buy Indian Act enforcement, one on expanding
the Native American Affairs Office at the Department of
Commerce, and one on e-commerce, including legitimate and
compliant online lending by tribes who are dependent on the
internet for revenue generation.
    For our part, we will continue to work tirelessly to help
attract the business partners and investors, whether tribal,
national or even international, to fulfill our mission as the
National Center for American Indian Enterprise Development.
Thank you again for inviting the National Center's testimony
today.
    [The prepared statement of Mr. Davis follows:]

 Prepared Statement of Gary Davis, President/CEO, National Center for
                 American Indian Enterprise Development
    Good afternoon, Chairman Tester and members of this extraordinary
Senate Committee dedicated to improving Indian Country. I am Gary
Davis, President and CEO of the National Center for American Indian
Enterprise Development. I thank the Committee for inviting the National
Center to testify today on ``Economic Development: Encouraging
Investment in Indian Country.'' The National Center embraces that
challenge every day in serving nationwide with thousands of Indian
tribes, tribal enterprises, and businesses owned by American Indians,
Alaska Natives and Native Hawaiians.
    The National Center, now in its 5th decade, is the Nation's leading
and longest serving advocate and provider of American Indian business
development assistance. Every day, the National Center works in the
private sector and collaborates with private and public sector players
to encourage investment in Indian Country by assisting and promoting
Native business interests in commercial and government marketplaces,
both domestic and international. We also produce national and regional
Reservation Economic Summits (RES) and Trade Shows. As we speak, this
hearing is being streamed into the National Center's first RES DC for
hundreds of our conference participants to hear and see this important
proceeding.
    This week's DC Summit, Trade Show and Buy Native Matchmaking Expo
runs June 24-26 at the Omni Shoreham Hotel, with workshops and
trainings on a broad range of topics, including:

   Buy Indian Act regulations and enforcement

   International export and trade investment initiatives

   Native Community Development Financial Institutions and CDFI
        bond guarantees

   The state of Native 8(a) contracting

   Energy and economic development initiatives and investment
        opportunities

   Telecommunication solutions facilitated by tribes, the FCC,
        USDA, and Congress

   Technology innovations to power E-commerce, encourage
        investment, and spur job creation and business growth in Indian
        Country.

The National Center's Role in Encouraging Investment in Indian Country
    Our non-profit organization launched in 1969 to assist individual
American Indian-owned businesses in building their businesses by
connecting them with larger, well-established companies as business
partners and mentors. Many of these larger companies--in the energy,
technology and defense sectors--became National Center partners by
serving on our National Resource Council.
    As the Federal Government began to step up its entrepreneurial
development, business and procurement technical assistance efforts, the
National Center became one of the first American Indian organizations
to advocate and partner with some of the federal agencies. One of our
founders, David Lester, served on the advisory group that conceived of
what President Nixon then launched in his 1971 Executive Order as the
Minority Business Development Agency (MBDA). The National Center
developed and operated the first of what became a group of Native
American Business Development Centers. (In 2012, MBDA converted them
all to Minority Business Centers.) The National Center also worked with
Congress to expand the Defense Logistics Agency's Procurement Technical
Assistance Program to create American Indian Procurement Technical
Assistance Centers (AIPTACs) in the 1980s. The National Center launched
and still operates the longest serving and most successful AIPTAC. We
collaborate with the Montana and other four AIPTACs whose clients
benefit from our RES conferences that always include trade shows and
extraordinary procurement matchmaking expos.
    The National Center leaders also have long advocated for broader
use of Buy Indian Act authority. In 1987 and 1990 testimony before the
Senate Indian Affairs leadership, then President Steve Stallings urged
strengthening Buy Indian Act provisions to apply beyond the Bureau of
Indian Affairs (BIA) and Indian Health Service (IHS) to other federal
agencies that expend funds for the benefit of American Indians and
Alaska Natives. It took 20 more years, over 100 altogether, for BIA to
propose implementing regulations in 2010. As the National Center wrote
in its May, 2010 comments on BIA's proposed rule, energizing and
strengthening Indian enterprises through robust government contracting
set asides is a tool that BIA, Interior and other departments should
continue to develop to invigorate tribal and Indian enterprise growth.
To be as expansive and inclusive as possible, the National Center urged
that the final regulations: (1) be made applicable to every Bureau or
Office that has delegated authority to complete acquisitions under the
Buy Indian Act; (2) outline the overall goal of 100 percent utilization
of Indian economic enterprises; (3) provide for an Accountability
Officer responsible for monitoring compliance and reporting annually to
the Secretary on the extent of use and amount of contracts awarded to
Indian economic enterprises. The final regulations published in July,
2013 reflected many of the National Center's comments, but
unfortunately did not include the recommended goal of 100 percent
utilization of Native enterprises.
    Today, many federal departments and agencies expend funds for the
benefit of Indians but do not utilize procedures designed to ensure
that such ``benefit'' is extended through contracting, purchasing and
hiring policies or activities. That is a shame, because expanded Buy
Indian Act authority could encourage investment in Indian Country,
create jobs and strengthen tribal economies in its requirements for
maximum employment of Indian labor and purchase of Indian goods and
services.
    Two other recommendations made at the 1987 Senate hearing
referenced above--which Congress took quick action to pass--were
amendments to the Indian Finance Act to encourage more business and
economic development activity in Indian Country by tribes, tribal
enterprises and companies owned by individual American Indians and
Alaska Natives by:

        1.  allowing prime contractors 5 percent incentive payments for
        awarding some of their federal contract dollars to Indian-owned
        economic enterprises (incentive payments worth 5 percent of the
        value of the subcontract work performed by the Indian
        subcontractor); and

        2.  increasing to $500 million the total amount of loans
        eligible under the Indian Loan Guarantee Program. In 2006,
        Congress raised the level even higher to $1.5 billion.

    Sadly, none of the federal agencies did anything to implement the 5
percent Indian Incentive Program (IIP) authority. So, tribal-owned
contractors urged Congress to help intercede with the Department of
Defense (DOD), by far the largest federal contracting agency. Congress
did so by including provisions in the Defense Appropriations FY 1990 to
fund IIP payments. As DOD took no implementing action in that year, the
next fiscal year's DOD appropriations measure directed promulgation of
implementing regulations within 90 days. Finally after DOD streamlined
its regulations and inserted specific IIP clauses in DOD contracts, the
IIP became successful in helping to generate well over $300 million
annually in subcontract dollars to Native-owned companies. In recent
years, backlogs of DOD-approved IIP requests have always exceeded the
annual appropriation of $15 million for the payments, evidencing the
program's success in enabling Native businesses to market their
capabilities and land contract work. For many tribes, the IIP has been
key to incentivizing DOD contractors to subcontract work to tribal
enterprises which, in turn, have expanded their operations to help
build their tribal economies.
    As to the Indian Loan Guarantee Program, however, Congress has
never appropriated the full amounts authorized, and has so short-
changed the credit subsidy for this essential program that BIA has not
been able to guarantee loans totaling more than about $300 million per
year.
    Today, the National Center sees its mission as not only to
encourage and advocate for American Indian Enterprise Development, but
also to serve as a facilitator, a connector, and closer to ensure
investment in Indian Country. We serve tribal communities and tribal
enterprises, companies owned by tribal members and shareholders, and
all the private and public entities interested in partnering with these
Native businesses. We link investors, lenders, guarantors, co-
producers, purchasers, suppliers, joint venture mentors and proteges--
whether the relationships are intra-tribal, inter-tribal, national or
international.
    As The National Center for American Indian Enterprise Development,
we want to lead the charge in opening up trade and export opportunities
for tribes, tribal enterprises and all Native-owned businesses. We are
accomplishing this push with our National and Regional Reservation
Economic Summits as economic development launch pads for these Indian
Country enterprises and our corporate partners. We also will offer web-
based business development through our National Center Edge portal,
proactively utilizing technology and the Internet to provide economic
opportunities, trainings, business development services, and much more,
to tribes and Native businesses nationwide. The National Center's
Native American Global Trade Center will expand to introduce and
facilitate more global opportunities and relationships for tribes and
tribal enterprises. As the world becomes smaller through technology and
the Internet, the National Center is strategically positioning to
facilitate both domestic and international trade for Indian Country.
    Just as other nonprofits and businesses must operate today, the
National Center must be lean, mean, efficient and effective. Working
out of small offices, strategically located, perhaps even in
Washington, DC, we will continue to collaborate with corporate and
tribal partners to maximize synergies and reduce operational costs. As
a national organization, we will continue building key relationships in
DC and working partnerships with federal agencies and Congress to
improve business and economic program delivery to, and increase
investment in, Indian Country.
Lessons Learned
    The National Center first welcomed me as private sector
entrepreneur running several successful businesses. After joining the
National Center's Board of Directors and now as President and CEO, I am
grasping the challenge of running a nonprofit serving businesses and
tribal communities with funds from a mix of federal cooperative
assistance agreements with rigid operating constraints, and private
sector funds to supplement, sustain, and enhance our operations.
Creativity and inspiration in our RES conferences, trade shows and
other trainings help generate the revenues we need to sustain and grow.
Below are some of our lessons learned:
    First, some federal programs have been more helpful than others for
Indian Country. The ``hand up'' works better than the ``hand out''
approach to instill self-determination and self-sufficiency.
    Second, based on the National Center's direct experience, the more
successful federal business development programs are those that are
specifically designed to help startups and larger companies in Indian
Country. What does not work well is the ``square peg--round hole''
approach of repackaging legacy federal programs and dictating how
assistance must be delivered and to what size of business. Least
successful are those programs that focus on getting the highest
possible return on the federal investment by requiring business
assistance centers to work only with American Indian businesses
generating well over $1 million in annual revenues--not the Indian
business startups that most need the entrepreneurial development
assistance. The Small Business Administration (SBA) recently took the
right approach in announcing a PRIME grant program that calls for
proposals from tribes and other entities willing to serve micro
enterprises.
    Third, adequate federal funding has been key to the more successful
Indian Country-focused programs that provide technical assistance to
users of the federal programs. Whether through direct appropriations
(e.g., National American Indian Housing Council) or contracts to
provide the technical assistance (e.g., Oweesta Corporation), stronger
federal support enables technical assistance organizations to scale up
and attract better educated and experienced trainers and business
counselors.
    Fourth, another key has been establishment of a high level Office
of Native American Affairs or Tribal Liaison within the major federal
departments and agencies operating programs that can advance business
and economic development in Indian Country. For years, the Department
of the Interior's BIA and IHS paid primary attention to Indian
Country's needs. Broader federal attention started to occur when the
Department of Housing and Urban Development formed the Office of Native
American Programs, and then Congress passed the Native American Housing
and Self Determination Act. The SBA started to improve its assistance
to American Indian- and tribal-owned businesses and contractors with
establishment of its Office of Native American Affairs with increased
funding. The Federal Communications Commission (FCC) became more
responsive to Indian Country needs with establishment of its Office of
Native American Affairs and Policy. The Department of Agriculture
(USDA) expanded its outreach and improved program delivery to Indian
Country with establishment of the Office of Tribal Liaison. Congress
saw the wisdom of that approach and codified the Office with line item
funding in the Farm Bill enactment. Likewise, the Congress embraced and
funded the Department of Energy's Office of Indian Energy Policy and
Programs.
    Fifth, a major push is needed to fulfill Congress' intent for the
Department of Commerce to pay far greater attention to its mandates to
advance business and economic development, trade and tourism promotion
in Indian Country. Back in the late 1990s, then Commerce Secretary
William Daley took administrative action to establish an office for
Native American Affairs reporting directly to the Secretary. Congress
recognized the importance of Commerce's portfolio to advancement of
Indian Country's interests and passed two important measures that
became law in 2000:

   The Indian Tribal Regulatory Reform and Business Development
        Act (Public Law 106-447) directed the Secretary of Commerce, in
        consultation with the Secretary of the Interior and others, to
        establish a Regulatory Reform and Business Development on
        Indian Lands Authority to facilitate identification and
        subsequent removal of obstacles to investment, business
        development, and creation of wealth for the economies of Native
        American communities. The Authority was allotted one year to do
        its work and report back to Congress, and disband within 3
        months thereafter.

   The Native American Business Development, Trade Promotion
        and Tourism Act (Public Law 106-464) codified an Office of
        Native American Business Development headed by a Director,
        appointed by and reporting to the Secretary, to fulfill
        enumerated duties of the Secretary, including to: (1) ensure
        intra- and inter-agency coordination of federal programs that
        provide financial and technical assistance for business and
        economic development, and expansion of trade; (2) carry out a
        Native American export and trade promotion program; (3) conduct
        a Native American tourism program; and (4) report annually to
        the Senate Committee on Indian Affairs and House Committee on
        Natural Resources on the operation of the Office and any
        recommendations for legislation that the Secretary, in
        consultation with the Office's Director, deems necessary to
        carry out the Secretary's duties under the Act.

    Recently, Washington Congresswoman Del Bene introduced the ``Indian
Country Economic Revitalization Act of 2014'' (H.R. 4699) to amend the
second of these two Acts to require the Secretary to prepare and submit
to the House Committee on Natural Resources and Senate Committee on
Indian Affairs, a report and recommendations for promoting the
sustained growth of the economies of Indian tribes and Indian lands.
Such a report would be due within one year of the bill's enactment and
each year thereafter for 3 years.
    Here's the big problem. Unfortunately, no action was ever taken to
establish the Authority mandated in Public Law 106-447, and only
minimal steps have been taken since 2000 to implement Public Law 106-
464. In 2005, the MBDA Director agreed to become Director of the Office
of Native American Business Development and allocate about $200,000 to
hire an experienced Native American to develop a business plan and
begin fulfilling the requirements of the two Acts above. Three Native
Americans, successively, have since held that position, with the latter
two also designated at the Senior Advisor to the Secretary on Native
American Affairs. The current Senior Advisor is now housed in the
Inter-Governmental Affairs Office and doing his best to help implement
President Obama's new Indian Country initiatives. However, with its own
budget for more than just one person, the Office of Native American
Business Development could help implement the President's new
initiatives, and fulfill the Secretary's duties under the two Acts (and
possibly others).
    The National Center wishes to thank Alaska Senator Mark Begich for
offering to pursue a Senate floor amendment to the FY 2015 Commerce
Appropriations measure to make available, within the existing
Departmental Management budget, specific funds to provide the Office
its own budget. Twelve national and regional Native organizations are
on record supporting such a move, and we all will work to secure this
funding at long last.
    The National Center calls on this Committee and the entire Congress
to step up and provide the targeted funding and impetus to improve the
programs that enable tribes and Native businesses to succeed on their
own terms. In recent years, the National Center has taken the lead to
develop, in coordination with other national Native organizations, the
key recommendations and specific funding requests for the federal
programs that leverage non-federal dollars to catalyze economic growth
in Indian Country. Just two months ago on April 30, the National Center
presented these specific recommendations to the Senate leadership and
they are listed at the end of my testimony.
National Center Recommendations for Executive and Congressional Action
Review the Buy Indian Act for Enforcement and Impact
    During his recent visit to the Standing Rock Sioux Community,
President Obama announced a new Interior initiative to improve Buy
Indian Act implementation and increase Interior procurement purchases
by 10 percent. That is a step in the right direction. To hear how BIA
and IHS are progressing in their use of Buy Indian Act procedures in
their procurement awards and purchases, the National Center hosted a
RES DC workshop yesterday to receive their progress reports. Within the
coming months, we urge this Committee to conduct an oversight hearing
to receive testimony and reports from these and other agencies with
update on their use of Buy Indian Act authority. The Committee also
should seek testimony on how to expand the Act's application to
additional federal departments and agencies.
Ensure Expansion of Commerce's Office Devoted to Native American
        Affairs
    For years, the National Center and other national Native
organizations have urged expansion of this Office reporting directly to
the Secretary of Commerce and line item funding for this Office within
Commerce's Departmental Management budget. This key Office must fulfill
the duties prescribed in Public Laws 106-447 and 464 to implement
Indian policy initiatives and expand Native American business
development, trade promotion and tourism initiatives both domestically
and internationally in collaboration with other agencies within
Commerce and other cabinet departments and agencies. The National
Center is raising this issue in the RES DC panel discussion on
international trade. President Obama's recently announced initiatives
to support growth of new markets and improve access to export
opportunities can be accelerated if Commerce provides funding for a
more robust Office of Native American Affairs. In addition, we urge
this Committee to do its part by pressing for expansion and funding for
this important Office.
Erase Discrimination and Restore Parity Disrupted by the ``Carcieri''
        Decision
    For Indian Country to be able to attract investment, create jobs
and build tribal economies, all federally recognized Indian tribes must
be able to protect and enhance their tribal lands, and generate self-
sustaining income from tribal lands. The Interior Department decisions
and opinions have gone as far as they can to restore parity among
tribes striving to reacquire some of their original land base. Congress
must take long overdue action to pass legislation to clarify the
authority of the Interior Secretary to acquire land in trust for any
federally recognized tribe so as to remedy confusion and harmful
impacts stemming from the U.S. Supreme Court's decision in Carcieri v.
Salazar. That decision has caused processing delays in trust land
applications, additional bureaucratic red tape for potential investors,
and confusion over legal jurisdiction. The National Center applauds
this Committee for reporting the needed remedial legislation to the
full Senate on June 12 for further action.
Promote Tax Parity for Tribes
    The National Center commends enactment of authority for Indian
tribes to issue tax exempt Tribal Economic Development (TED) Bonds, and
the Obama Administrative iterative implementation to encourage tribes
to use TED bonds to finance economic development projects, such as
laying new broadband fiber, improving access to clean water, building
hotels for tourists and manufacturing plants. With the TED Bond
provisions, Congress took an important step toward providing more
parity in the tax treatment of tribal, state and municipal governments.
Likewise, in action on tax reform or any other tax legislation, it must
be ensured that tribal governments are treated as taxing authorities in
any provisions for collecting remote sales taxes (in parity with state
and local governments and other taxing authorities). As sovereigns,
tribes must be able to exercise the right to collect tax revenues to
provide for their members and promote business and job creation, and
even offer tax advantages to attract outside investment necessary to
build their tribal economies.
Support More Measures to Encourage Energy Investment and Development
    In numerous energy-related workshops hosted at our National RES and
RES DC conferences, there has been great interest in development of
renewable and conventional energy resources, and the related potential
for workforce and economic development. President Obama fully
recognizes this interest and recently announced new initiatives to
remove regulatory barriers to energy and infrastructure development on
Indian land by streamlining approval processes for rights-of-way,
including transition lines and broadband access. Congress also must act
by passing legislation that provides tribes options and funding
mechanisms to develop their energy resources, respects tribes' ability
to regulate the development of their own resources, and removes
unnecessary regulatory barriers to American Indian energy development.
Enact FY 2015 Funding that Spurs Business and Economic Development in
        Indian Country
    The most obvious action that Congress can take is appropriating
adequate funding for programs that improve access to tools for tribes
and their members to make freer and better use of their lands, grow
businesses, create more jobs, access more income streams, improve their
infrastructure (roads, utilities, housing, schools, community centers,
health clinics, government operations, courts) and pursue larger scale
business and resource development. Below are the National Center's
specific requests for FY 2015 funding actions:
Department of the Interior
   $25 million for the Office of Indian Energy and Economic
        Development (OIEED)

    OIEED should receive more funding and latitude to: (1) speed the
HEARTH Act's implementation; (2) develop a model tribal environmental
code that tribes could consider, adapt and implement along with new
tribal ordinances for leasing tribal lands for energy and economic
development projects; (3) provide funding to requesting tribes for
business plans or feasibility studies for business and economic
development projects; (4) expand the scope and usefulness of its Indian
Loan Guarantee Program to finance more business operations and
expansions, provide standby letters of credit that could encourage
sureties to provide needed surety bonding, and finance start up energy
and economic development projects; and (5) provide more technical
assistance (including providing guidance on preparing business plans,
repairing credit records, and completing loan applications).

   $15 million for the Indian Loan Guarantee Program

    OIEED's Division of Capital Investment oversees the Indian Loan
Guarantee Program and loan subsidy program, and has authority to
support surety bonding for American Indian contractors. The Loan
Guarantee Program is the only federal guarantee program that
facilitates the process for eligible tribal and individual American
Indian borrowers to obtain conventional lender financing for businesses
and economic development projects. BIA-certified lenders are willing
and able to lend to Tribes and Indian businesses on reservations and
submit to tribal court jurisdiction (whereas SBA-certified lenders must
adjudicate loan defaults in federal court). OIEED also operates a
revolving credit facility (SBA has no such support) that assists
American Indian borrowers with lines of credit for working capital,
payrolls for hiring new employees, and even assurances sufficient for
sureties to provide performance bonds to tribal- and other Native-owned
contractors. As noted earlier in this testimony, Congress authorized a
substantial increase in the aggregate limit on Indian loan and surety
bond guarantees from $500 million to $1.5 billion in 2006. Congress has
so far failed to approve a parallel hike in the credit subsidy, but it
can start by providing at least $15 million for FY 2015 to permit
guarantee of total loan principal up to about $240 million.
Department of Commerce
   At least $1 million for Commerce's Office of Native American
        Affairs

    This line item funding is essential to expand the Office of Native
American Affairs (ONAA) contemplated in the Native American Business
Development, Trade Promotion and Tourism Act of 2000. Line item ONAA
funding within Commerce's Departmental Management budget will better
enable the Office to implement Indian policy initiatives and expand
Native American business development, trade promotion and tourism
initiatives both domestically and internationally in collaboration with
other agencies within Commerce and other cabinet departments and
agencies. Line item funding for the ONAA is particularly important
since Commerce's Minority Business Development Agency has eliminated
the Native American-focused business enterprise centers that provided
valuable business assistance for many years to tribes, tribal
enterprises and individual Native-owned businesses and Native
entrepreneurs.
Small Business Administration
   At least $1.25 million for SBA's Office of Native American
        Affairs

    The SBA Office of Native American Affairs (ONAA) plays an integral
role in helping tribes and Native businesses access SBA's many business
assistance and lending programs. Fortunately the line item for ``Native
American Outreach'' funding has increased somewhat, but a specific
budget for the ONAA would better enable the Office to expand its
successful activities that: (1) spur business development with SBA
loans, loan guarantees and surety bond guarantees; (2) provide tribal
and business executive training; and (3) engage in multi-agency
workshops and native supplier initiative events around the U.S., as
recently announced by President Obama during his visit to Standing
Rock. At that time, Standing Rock announced approval of its Tribal
Uniform Commercial Code. This news was welcome, and a tribute to
groundwork supported in part by SBA and the Federal Reserve Board of
Minneapolis to assist Indian tribes in considering and adopting
business ordinances modeled on the UCC. It is especially important to
fund the ONAA adequately given the loss of funding for the Small
Business Teaming Grant program that supported two centers focused on
teaming among tribal and other Native-owned contractors.
Federal Communications Commission
   $2 million for the FCC's Office of Native Affairs and Policy

    The FCC-ONAP jump-started an expansive educational effort within
the agency and in Indian Country on telecommunications issues and
programs. ONAP promotes increased Internet, broadband and
telecommunications access for tribal communities that suffer from the
lowest penetration rates for basic telephone service and broadband.
Today's economy relies heavily on E-commerce for business growth and
job creation. The ONAP helps ensure that FCC and other federal
decisions properly address Indian Country's needs for better electronic
communication.
Department of Agriculture
   $1.5 million for USDA's Office of Tribal Relations

    The OTR reports directly to the USA Secretary and serves a linchpin
role in expanding all USDA program support throughout Indian Country.
Congress should appropriate adequate funding for OTR and USDA-Rural
Development programs that support economic development activities in
Indian Country by providing loans, loan guarantees, grants and other
assistance for business and economic development, telecommunications,
water systems and other infrastructure deployment, international trade
in agricultural products, and crop insurance.
Department of Defense
   $4.5 million for AIPTACs within $36,262 million for
        Procurement Technical Assistance

    Since 1990, the Defense Logistics Agency (DLA) has supported
Procurement Technical Assistance through cooperative agreements with
regional, statewide and local centers (PTACs), and American Indian
PTACs that serve at least two BIA Areas. Six such AIPTACs now exist
across the U.S., and all PTACs must raise private funds to make the
match that DLA requires and to sustain operations. AIPTACs offer
valuable assistance to tribal and other Native-owned companies in
navigating the large, complex federal procurement market, winning
government contracts and complying with myriad government procurement
and other regulatory requirements. Last year, Congress increased the
authorization levels for statewide PTACs and AIPTACs. In turn, Congress
should increase the amount reserved for AIPTACs ($4.5 million) within
at least level funding of $36,262 million for the overall program.

   $15 million for the 5 percent Indian Incentive Payment
        Program

    Section 504 of the Indian Finance Act authorized, and DOD
regulations implemented, the 5 percent Indian Incentive Payment (IIP)
Program that permits a DOD higher tier contractor to receive an IIP of
5 percent of the value of a subcontract it awards to a Native-owned
subcontractor or supplier. DOD's Office of Small Business Programs
reviews such requests which, if approved, are paid from funds
appropriated for the IIP. Since FY 1991, Congress annually has
appropriated funds for DOD to make these 5 percent IIP payments. As
noted earlier in this testimony, the IIP program has helped generate
well over $300 million annually in subcontract dollars to Native-owned
companies in recent years. The backlog of IIP requests always exceeds
the amount appropriated for the payments, evidencing the program's
success in enabling Native businesses to market their capabilities and
land contract work. For many tribes, the IIP has been key to
incentivizing DOD contractors to subcontract work to tribal enterprises
which, in turn, have expanded their operations to help build their
tribal economies.
Department of Treasury
   $15 million for Native Community Development Financial
        Institutions

    Indian Country has benefitted significantly from the Native
Initiative of the Community Development Financial Institutions Fund
(CDFI Fund) through expanded access to capital for individuals and
small businesses. The initiative funds Native CDFIs to provide micro
loans and facilitates financial literacy and entrepreneurial
development training in Native communities across the country.
    Once again, thank you, Mr. Chairman, and the Committee for the
opportunity to present testimony on behalf of the National Center and
our recommendations. We urge the Senate, and House, to consider and act
on these matters promptly.

    Senator Barrasso. Thank you very much, Mr. Davis, for your
testimony. We appreciate your being here and joining the
Committee today.
    Mr. Lettig, welcome to you and we will appreciate hearing
what you have to say. Thank you.

STATEMENT OF WILLIAM ``MIKE'' LETTIG, EXECUTIVE VICE PRESIDENT,
              NATIONAL EXECUTIVE NATIVE AMERICAN
          FINANCIAL SERVICES AND AGRIBUSINESS, KEYBANK

    Mr. Lettig. Thank you, Vice Chairman Barrasso and members
of the Committee. Thank you for inviting me today and giving me
the opportunity to testify on the role investment can play in
encouraging economic development in Indian Country. My name is
Mike Lettig and I lead the KeyBank's Native American Financial
Services segment, which is part of our community bank.
    KeyBank is a regional bank headquartered in Cleveland,
Ohio, with approximately $93 billion in assets. Our customer
base spans retail, small business and corporate investment
clients. We have over 14,000 employees and approximately 1,000
branches spread across 12 States in our footprint.
    KeyBank has provided financial solutions to Indian Country
for more than 50 years. Over the past five years, KeyBank has
helped raise more than $3 billion in capital for Indian Country
and we are on track in assisting and raise more than a billion
dollars this year alone. We at KeyBank consider this to be very
important work.
    As President Obama noted during his visit to Indian
Country, there are still wide disparities, both among tribes
and Native Americans in general, and the U.S. population as a
whole. While Native Americans living on reservations have seen
personal income nearly double in real terms since 1970 the
average poverty rates for these communities from 2006 through
2010 was 30 percent compared with 14 percent nationally. Child
poverty rate was more than 15 percent higher than the national
average of 36 percent.
    We are grateful for the opportunity to help bridge these
disparities by assisting Indian Country leadership in raising
capital and by doing so, gaining confidence in their ability to
set good fiscal policy and practice. I am very pleased to be
here today to share my perspective on how the private sector
investments can help foster significant economic development in
Indian Country. Based on my years of experience working with
Indian Country leaders, I have developed a little bit of an
understanding of the challenges, real and perceived, that
hamper the timely investment in infrastructure in Indian
Country and as a result, delays much-needed economic
development.
    Despite notable progress over recent years, there still
remains private sector uncertainty about whether Indian Country
is a good investment. This uncertainty, which I believe is
based on lack of information and understanding about Indian
Country, has a chilling effect on the capital market's appetite
for investing in Native America. Most of these challenges, such
as the lack of experience in dealing with Native sovereigns,
are well known and I won't deal with those today.
    Economic development is also stymied by regulatory barriers
to infrastructure development. For example, all new
infrastructure construction on tribal lands require rights-of-
way approval. It is a time-consuming and cumbersome process and
I applaud and look forward to seeing the Bureau of Indian
Affairs' formal proposal to streamline this process.
    I also applaud the plans for training to help tribal
leaders implement the HEARTH Act and in so doing, empower
tribes to establish and enforce land leasing regulations rather
than relying on the BIA for approval.
    Indian Country faces continued challenges in developing a
workforce that is prepared to meet these business needs. As the
President noted, Native American students continue to lag
behind their peers on national assessments and lead in the
highest dropout rates for any racial or ethnic population, and
hold a dramatically lower share of the baccalaureate degrees
that the rest of the population has.
    While we need to raise the bar for all learners in the
United States to ensure that our future workforce can compete
in a global economy, Indian Country students have higher
hurdles than most in order to compete.
    Challenges specific to doing business in Indian Country
exist, but it is clear the tribes continue to take steps in
developing their economics. For example, many tribes such as
the Navajo Nation, the Muskogee Creek Nation, Puyallup Tribe,
Shoshone Bannock have developed sophisticated judicial and
legal systems. Tribes continue to develop disciplined,
strategic plans. Developing infrastructure, whether that
involves roads, schools or utilities, are a high priority.
Strong infrastructure is essential to tribal members' quality
of life as well as economic development.
    Tribal human capital is improving. There are increasing
numbers of Native Americans in law, medicine and finance who
are contributing to their communities. And there is continued
focus on developing stronger working relationships with
multiple jurisdictional interests, such as cities, counties,
States and the Federal entities.
    Tribes and the private sector must develop mutually
acceptable terms on several issues in order to attract capital.
Some tribes and the private sector need clear and enforceable
business agreements. Tribes and the private sector must develop
dispute resolution processes. This entails tribes and the
private sector developing mutually acceptable agreements on the
sovereign immunity issue and choice of law.
    Still, there are a number of obstacles. By transferring
authority to tribes and streamlining the review process, as is
proposed in the recommended enhancements to the Indian Tribal
Energy Development and Self-Determination Act Amendment of
2014, the government can help Indian Country more easily
attract interest in energy development. Government needs to
continue to identify simple and accountable ways to reduce
Federal review or approval and continue a responsible transfer
of authority to Indian leadership. Government can continue to
facilitate economic development by supporting the existing
incentives, such as new market tax credits, low income housing
tax credits and tribal economic development bonds.
    I want to note that KeyBank believes in helping all our
communities, including our Indian Country communities. Reducing
the review process and creating more autonomy for tribes to
attract investments by the private sector will enhance the
ability of Indian Country leaders to help their own communities
thrive. With experience in Indian Country by the private
sector, they will come to understand that Indian Country is a
dynamic place to do business, that mutually acceptable tools
can be developed and build Indian Country economic independence
and sustained quality of life for Native America.
    [The prepared statement of Mr. Lettig follows:]

     Prepared Statement of William ``Mike'' Lettig, Executive Vice
                              President,
       National Executive Native American Financial Services and
                         Agribusiness, KeyBank
Introduction
    Chairman Tester, Vice Chairman Barasso, and Members of the
Committee, thank you for inviting me to today's hearing and giving me
the opportunity to testify on the role investment can play in
encouraging economic development in Indian Country.
    My name is Mike Lettig, and I lead KeyBank's Native American
Financial Services segment, which is part of our KeyBank Community
Bank.
    KeyBank is a regional bank headquartered in Cleveland with
approximately $93 billion in assets. KeyCorp's customer base spans
retail, small business, corporate, and investment clients. KeyCorp has
more than 14,000 employees, and approximately 1,000 KeyBank branches
spread across 12 states within in our retail branch footprint.
    KeyBank has provided financial solutions to Indian Country for more
than 50 years. Over the past five years, KeyBank has helped to raise
more than $3 billion in capital for Indian Country, and we are on track
to assist in raising more than $1 billion this year alone.
    We at KeyBank consider this to be very important work. As President
Obama noted during his recent historic visit to Indian Country, there
are still wide disparities both among tribes and Native Americans in
general and the U.S. population as a whole. While Native Americans
living on reservations have seen personal income nearly double in real
terms since 1970, the average poverty rate for these communities from
2006-2010 was 30 percent, compared with 14 percent nationally, and the
child poverty rate was more than 15 percent higher than the national
average of 36 percent.
    We are grateful for the opportunity to help bridge these
disparities by assisting Indian Country leadership in raising capital
and, by doing so, gaining confidence in their ability to set good
fiscal policy and practice.
    I am very pleased to be here today to share my perspective on how
private sector investment can foster significant economic development
in Indian Country.
    Based on my years of experience working with Indian Country
leaders, I have developed an understanding of challenges--real and
perceived--that hamper the timely investment into infrastructures in
Indian Country and as a result delay much-needed economic development.
    Despite notable progress over recent years, there still remains
private sector uncertainty about whether Indian Country is a good
investment. This uncertainty--which I believe is based on lack of
information and understanding about Indian Country--has a chilling
effect on capital markets' appetite for investing in Native America.
    Most of these challenges, such as lack of experience in dealing
with Native sovereigns, are well known, and I won't detail them here.
    Economic development is stymied by regulatory barriers to
infrastructure development. For example, all new infrastructure
construction on tribal lands requires ``rights-of-way'' approval. This
is a time-consuming and cumbersome process. I applaud and look forward
to seeing the Bureau of Indian Affair's s formal proposal to streamline
this process. In the same spirit, I applaud plans for training to help
tribal leaders implement the HEARTH Act and in so doing to empower
tribes to establish and enforce land leasing regulations rather than
relying on BIA lease approval.
    Indian Country faces continuing challenges in developing a
workforce that is prepared to meet business needs. As President Obama
also noted, Native American students continue to lag behind their peers
on national assessments, to account for the highest dropout rate of any
racial or ethnic population, and to hold a dramatically lower share of
baccalaureate degrees than the rest of the population. While we need to
raise the bar for all learners in the United States to ensure that our
future workforce can compete in a global economy, Indian Country
students have higher hurdles than most in order to successfully
compete.
    There are challenges specific to doing business in Indian Country.
But it is also clear that tribes have and continue to take steps to
address economic development issues. For example:

   Many tribes, such as the Navajo Nation, Muscogee Creek
        Nation, Pullayup Tribes and Shoshone Bannock, have developed
        sophisticated judicial and legal systems.

   Tribes continue to develop disciplined strategic plans.

   Developing infrastructure, whether that involves roads,
        schools or utilities, remains a high priority. Strong
        infrastructure is essential for tribal members' quality of life
        as well as economic development.

   Tribal human capital is improving. There are increasing
        numbers of Native American professionals in law, medicine and
        finance who are contributing to their communities.

   There's continuing focus on developing stronger working
        relationships with multi-jurisdictional interests such as
        cities, counties, states and federal entities.

    Tribes and the private sector must develop mutually acceptable
terms on several issues in order to attract capital. Some key terms
are:

   The tribe must duly authorize the proposed relationship
        between the tribe and the private sector.

   The tribe and the private sector need clear and enforceable
        business and credit agreements.

   The tribe and private sector must develop disputes
        resolution processes. This entails tribes and the private
        sector developing mutually acceptable agreements on sovereign
        immunity and, choice of law.

    In short, there are still obstacles tribal governments must
overcome in order to attract consistent and appropriate investment
interest.
    For example, by transferring authority to tribes and streamlining
the review process, as is proposed in the recommended enhancements of
the Indian Tribal Energy Development and Self-Determination Act
Amendments of 2014, the government can help Indian Country more easily
attract interest from energy development.
    More generally, I believe the Federal Government, Indian Country
leadership and the private sector can work together on steps to
increase investment potential.
    Government needs to continue to identify simple and accountable
ways to reduce federal review and/or approvals and to continue the
responsible transfer of authority to Indian Country leadership.
    Government can facilitate economic development by supporting
existing incentives such as New Market Tax Credits, Low-Income Housing
Tax Credits and Tribal Economic Development Bonds.
    Indian Country leadership has an important role to play by staying
focused on developing judicial and legislative capacity and basic
infrastructure. It is imperative that Indian Country leadership obtain
stakeholder support and that stakeholders' interests are aligned with
the interests of their respective tribes. Finally, tribal leadership
should engender cooperation between tribes, impacted communities and
businesses to develop and execute investment strategies.
    In closing, I want to note that KeyBank believes in helping all of
our communities to thrive, including our Indian Country communities.
Reducing the review process and creating more autonomy for tribes to
attract investment by the private sector will enhance the ability of
Indian Country leaders to help their own communities to thrive.
    With experience in Indian Country, the private sector will come to
understand that Indian Country is a dynamic place to do business, that
mutually acceptable terms can be developed that build Indian Country
economic independence and sustainable quality of life for Native
America.
    Thank you again for your time and attention to this very important
issue, and I would be happy to answer your questions.

    Senator Barrasso. Thank you very much, Mr. Lettig. We
appreciate your testimony. Thanks for joining us today.
    Mr. Sherman, welcome to the Committee. If I could ask you
to present your testimony.

STATEMENT OF GERALD SHERMAN, VICE CHAIRMAN, NATIVE CDFI NETWORK

    Mr. Sherman. Chairman Tester, Vice Chairman Barrasso and
members of the Senate Committee on Indian Affairs, thank you
for this opportunity to testify.
    My name is Gerald Sherman, I am an Oglala Lakota, and I
grew up on the Pine Ridge Indian Reservation in South Dakota.
Today my home is in Red Lodge, Montana. I have been working for
over 20 years in finance and banking in Indian Country. Most
recently, I have been the President of Indian Land Capital
Company, where I did full faith and credit lending to tribes to
buy lands. ILCC's unique lending methods work well for tribes.
    I am here today on behalf of the Native CDFI network. Our
mission is to be a national voice and advocate that strengthens
and promotes Native Community Development Financial
Institutions, creating access to capital and resources for
Native peoples. In my testimony today, I would like to cover
three things: one, the unmet demand for investments in Indian
Country; two, how CDFIs can serve as conduits for those
investments; and three, how policy makers can help to improve
the environment in which Native CDFIs operate in order to
strengthen the role they play in stimulating Native economies.
    First, the unmet demand for investments in Indian Country.
As you know, Native communities experience substantially higher
rates of poverty and unemply9ment than mainstream America and
face a unique set of challenges to economic growth, including a
lack of basic financial services.
    A recent FDIC study revealed that 41.3 percent of Native
households are under-banked and 14.5 percent of Native
households are completely unbanked. Also, the Treasury
Department estimates an unmet capital need in Native
communities of about $44 billion.
    So how are Native CDFIs serving as a conduit for Indian
Country investments? Native CDFIs are filling the credit and
capital gaps not met by traditional lenders and investors and
provide a viable alternative to predatory lenders. They have
been working to create innovative solutions to economic
development barriers and are beginning to show impact.
    One example of the impact that Native CDFIs can have on
tribal economies is evidenced by a 2009 study of Lakota Funds,
one of the longest standing CDFIs operating on the Pine Ridge
Indian Reservation. The Small Business Economics Journal
published a study showing the positive impact of Lakota Funds
over a 19-year time frame on the quality of life on the
reservation. They found that Lakota Funds succeeded in raising
per capita income, creating social benefits and contributing to
household and community success.
    In order to continue to build on the successful impact that
Native CDFIs have had on their local economies, the Native CDFI
network respectfully presents the following recommendations.
First, we urge Congress to fund the fiscal year 2015 NACA
appropriations at $15 million. We would like to re cognize
Senator Tom Udall from New Mexico for his strong support of
Native CDFIs. He has championed the first increase in the NACA
appropriations since fiscal year 2009. We appreciate his
efforts as well as the support from Chairman Tester, Senator
Tim Johnson from South Dakota, and the rest of your colleagues
on the Senate Appropriations Committee.
    Second, we encourage Congress to make the waiver for the
loan Federal match requirement permit for the NACA financial
institution assistance program in the CDFI Fund. Given the
economic conditions in Indian Country, Native CDFIs faced
bigger hurdles than their non-Native counterparts in accessing
private sector funding from corporate and philanthropic sources
as well as individual donors. We propose that USDA create a
pilot intermediary re-lending program that allows Native CDFIs
to access mortgage capital through the Rural Development
Section 502 loan program.
    Fourth, we urge the CDFI Fund to implement its non-guaranty
program so that it is accessible to Native CDFIs. The Native
CDFI Network and its partners have been working to identify
strategies to ensure full participation by Native CDFIs and
Indian Country. In particular, we urge the CDFI Fund to ensure
that the alternative forms of collateral are eligible to secure
lending under the bond program, including lease-hold mortgages.
    Finally, we encourage the CDFI Fund to implement the new
market tax credit program in a way that maximizes the flow of
capital to Indian Country. We were pleased to see yesterday
that the CDFI Fund is launching a new capacity-building
initiative to educate minority and community development
entities.
    In conclusion, I would like to recognize our relationship
with the CDFI Fund staff for their commitment to the growth and
stability of the Native CDFI industry. We appreciate the
willingness to work toward fitting the programs into Indian
Country rather than requiring Indian Country to fit into their
programs.
    I would also like to thank you, Mr. Chairman, for this
opportunity to present the testimony of the Native CDFI
network. We look forward to working with you and the Committee
to continue to explore ways to improve the economic conditions
in Native communities. Thank you.
    [The prepared statement of Mr. Sherman follows:]

   Prepared Statement of Gerald Sherman, Vice Chairman, Native CDFI
                                Network
Introduction
    Chairman Tester, Vice Chairman Barrasso, and members of the Senate
Committee on Indian Affairs--thank you for this opportunity to testify
at this oversight hearing on Economic Development: Encouraging
Investment in Indian Country. My name is Gerald Sherman. I am an Oglala
Lakota, and I grew up on the Pine Ridge Indian Reservation in South
Dakota. Today, my home is in Roscoe, MT.
    I have been working for over 20 years to encourage investment in
Indian Country. I am the founding board chairman and first executive
director of the Lakota Funds, a community development loan fund on the
Pine Ridge Reservation and one of the first micro-enterprise loan funds
in the U.S. My banking career also included working with Norwest Bank
(now Wells Fargo Bank), where I worked in commercial lending and as
manager of a bank on the Lower Brule Reservation in South Dakota. I
also worked for the Federal Reserve Bank of Minneapolis and later for
First Interstate BancSystem of Montana where my focus was on increasing
banking services to Indian Nations and low-income communities, and
managing the bank's Community Reinvestment Act efforts.
    In 2005, I worked with the Indian Land Tenure Foundation to create
the the Indian Land Capital Company (ILCC), a national financial
institution that makes loans to tribal governments to purchase
alienated lands and fractionated ownership interests in trust lands. As
the President and CEO, I have helped to deploy over $7 million in
loans. ILCC views and deals with tribes as sovereign nations. It works
toward changing the way traditional lenders view lending to Indian
nations, demonstrating that these are credit-worthy, sophisticated
political and economic entities that represent good business
opportunities. Whereas tribes are treated merely as corporate entities
by some lenders, ILCC views them as sovereigns and, as such, lends to
them in a way that respects their sovereign status.
    I am here today on behalf of the Native CDFI Network (NCN), which
is a coalition of Native CDFIs and partners. Our mission is to be a
national voice and advocate that strengthens and promotes Native
community development financial institutions, creating access to
capital and resources for Native peoples. Formed in 2009, the
organization unifies Native CDFIs serving American Indian, Alaska
Native, and Native Hawaiian communities. Our purpose is to create
opportunities to assess the relative successes and challenges of
serving distressed markets, identify our collective priorities, and
strengthen our industry.
    The Native CDFI Network is led by a Board of Directors comprised of
nine dedicated leaders and practitioners within the Native CDFI
industry. Members of the Board inform the Network's organizational
growth and development by directing committee initiatives designed to
maximize our impact while engaging our membership base. In addition,
the Native CDFI Network's Board includes two Ex Officio seats filled by
representatives of long-established national community development
organizations.
    In my testimony today, I would like to cover three things: (1) the
unmet demand for investments in Indian Country, (2) how Native
community development financial institutions or CDFIs serve as conduits
for investments in Indian Country, and (3) how policy makers can help
to improve the environment in which Native CDFIs operate in order to
strenghthen the role they play in stimulating Native economies.
The Umet Demand for Investments in Indian Country
    As you know, Native communities experience substantially higher
rates of poverty and unemployment than mainstream America and face a
unique set of challenges to economic growth. Lack of physical, legal,
and telecommunications infrastructure; access to affordable financial
products and services; and limited workforce development strategies are
common challenges that Native entrepreneurs, homebuyers, and consumers
face and must overcome in order to be successful in their local
economy.
    According to the U.S. Department of the Treasury's 2001 Native
American Lending Study, 86 percent of Native communities lack access to
a single financial institution (with a broad definition that includes a
simple ATM), and 15 percent of tribal citizens need to travel over 100
miles to access a financial institution. \1\ Financial institutions
with American Indian, Alaska Native, and Native Hawaiian communities in
their service areas clearly have not adequately met the needs of these
communities. The geographic boundaries of Indian reservations,
confusion about tribal sovereignty, and an historic lack of access to
credit and financial services in Native communites have caused many
financial institutions to overlook these potential market segments.
This lack of financial services has had a severe economic impact in
underserved Native communities across Indian Country.
---------------------------------------------------------------------------
    \1\ Department of the Treasury, (2001) Native American Lending
Study, http://www.cdfifund.gov/docs/2001_nacta_lending_study.pdf.
---------------------------------------------------------------------------
    A recent Federal Deposit Insurance Corporation (FDIC) study
revealed that 41.3 percent of American Indian and Alaska Native
households are underbanked, and 14.5 percent of American Indian and
Alaska Native households are completely unbanked. \2\ This limited
access to basic financial services in Native communities highlights the
work left to be done to connect Native people to the benefits of the
American financial system. The Treasury Department estimates an unmet
capital need in Native communities of $44 billion. \3\
---------------------------------------------------------------------------
    \2\ 2011 FDIC National Survey of Unbanked and Underbanked
Households (September 2012), accessed at http://www.fdic.gov/
householdsurvey/2012_unbankedreport.pdf, p.15.
    \3\ Treasury, 2001.
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How Native CDFIs Can Serve as a Conduit for Investments in Indian
        Country
    CDFIs are private-sector, financial intermediaries with community
development as their primary mission. While CDFIs share a common
mission, they have a variety of structures and development lending
goals. There are six basic types of CDFIs: community development banks,
community development loan funds, community development credit unions,
microenterprise funds, community development corporation-based lenders
and investors, and community development venture capital funds. All are
market-driven, locally-controlled, private-sector organizations. CDFIs
measure success by focusing on the ``double bottom line:'' economic
gains and the contributions they make to the local community. \4\
---------------------------------------------------------------------------
    \4\ http://www.cdfi.org/about-cdfis/what-are-cdfis/.
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    There are 831 certified CDFIs in existence across the United
States. Of those, 68 are certified Native CDFIs, which means that they
are entities that primarily serve a Native community, i.e., at least 50
percent of its activities are directed toward serving American Indians,
Alaska Natives and/or Native Hawaiians. The 68 certified Native CDFIs
are located in 21 states, including four in Montana. There are
approximately 60 emerging Native CDFIs across Indian Country preparing
for certification. The Native CDFI industry's rapid growth is a direct
response to the lack of access to conventional financial services in
Indian Country.
    In the short term, Native CDFIs are filling the credit and capital
gaps in Indian Country left by traditional lenders and investors. In
the long term, they are grooming Native consumers, entreprenuers, and
potential homebuyers to access traditional lenders in the future. They
have been working to create innovative solutions to overcome economic
development barriers and are beginning to show impact:
    Developing Economies and Building Assets Native CDFIs have proven
themselves as vehicles towards developing healthy, vibrant Native
economies and communities. They have entered markets normally
considered ``high-risk'' and have been responsible for an astounding
transformation--serving as the catalyst for developing local economies,
building assets, and reducing persistent poverty.
    Native CDFIs' programs and services are designed to help their
clients, who are otherwise underserved, to build individual financial
assets and savings skills so that they have access to mainstream
economic opportunities such as homeownership, education, and small
business creation, as well as cultural assets such as regalia for
ceremonies, traditional foods and gardens, or items necessary for
subsistence.
    Here are some examples of the positive impact some Native CDFIs
have had:

    Lakota Funds, Oglala Sioux Tribe, SD

    A 2009 study of the work of the Lakota Funds shows specific
examples of economic impact. The Small Business Economics journal
published a study by four university economists in April 2009 showing
strong and consistent positive impact of the Lakota Funds on the
quality of life on the Pine Ridge Indian Reservation. They concluded:

         The Lakota Funds succeeded in raising real per capita income
        of Shannon county residents consistently and significantly
        throughout the 1987-2006 study period. . .[thus showing how] a
        well-designed and highly successful micro-enterprise financing
        structure can confer large and significant private and social
        benefits. . .sustained growth in real incomes. . .net wealth
        and further personal, household, and community successes in
        socio-economic, health. . ., educational. . ., and other
        dimensions of progressive quality living. \5\

    \5\ Benson, D; Lies, A; Okunade, A; and Wunnava, P, ``Economic
impact of a private sector micro-financing scheme in South Dakota,''
(2009), accessed at http://www.lakotafunds.org/docs/SDmicrofinance.pdf.
---------------------------------------------------------------------------
    Four Bands Community Fund, Cheyenne River Sioux Tribe, SD

    Four Bands Community Fund provides another example of the economic
impact that a Native CDFI can have on its community. Four Bands is a
non-profit, Native CDFI serving the Cheyenne River Indian Reservation,
which is about the size of the State of Connecticut. Founded in 2000,
Four Bands' mission is to create economic opportunity by helping people
build strong and sustainable small businesses and increase their
financial capability to create assets and wealth. Since it began
providing services, this small CDFI has assisted nearly 5000 customers
which is 60 percent of the reservation's population. This includes $4.2
million credit builder and small business loans, creating or retaining
440 jobs, helping 520 individuals complete financial literacy training,
sponsoring 150 youth entreprenuer inters, and exposing 2,500 students
to the concepts of financial literacy and entrepreneurship.
    Financial Capability and Inclusion Financial education
opportunities provided by Native CDFIs have helped clients--both adults
and youth--to improve their access to conventional financial services
such as consumer loans, mortgages, tax preparation services, and small
business credit. They have also allowed them to enter the financial
mainstream more competitively with better rates and fees, based on
improved credit scores and history. They have provided a viable
alternative to predatory lenders who prey on uneducated consumers and
trap them into cycles of high-cost debt and other financial products.

    Native American Community Development Corporation, Blackfeet Indian
Reservation, MT

    The Native American Community Development Corporaton started the
Mini-Bank Program in 1996 in Browning, Montana at the Browning Middle
School. Since its inception, the Blackfeet ``Mini-Bank'' has garnered
interest from many schools and institutions around the State of Montana
and the nation. Now serving six reservations in three states, the Mini-
Bank program currently has more than 670 youth accounts with more than
$40,000 in their savings accounts. This Native CDFI believes that young
people should be taught early in life that financial literacy equals
economic empowerment. Their program helps youth develop good saving
habits and gives them the confidence and independence to make sound
financial decisions. Builidng financial capability of youth is a key to
building wealth and economic prosperity in Native communities.
Policy Recommendations to Strenghthen the Role Native CDFIs Play in
        Stimulating Native Economies
    In order to continue to build on the successful impact that Native
CDFI's have had on their local economies, the Native CDFI Network
respectfully presents the following general and specific
recommendations to policy makers.
    Generally, we encourage federal and state policy makers to
recognize the unique land, legal, and jurisdictional issues in Indian
Country when implementing their community and economic development
programs. Native efforts may not fit into existing programs and may
require flexibility, exceptions, or innovative pilot programs. In some
cases, the need in Indian Country may be so severe that competitive
government programs should include extra points or designated set-
asides specifically for efforts serving Native communities. The CDFI
Fund's Native American CDFI Assistance (NACA) program is a perfect
example of a Native-focused program designed by the Treasury Department
to meet the capital and credit needs identified by its Native American
Lending Study in 2001. \6\
---------------------------------------------------------------------------
    \6\ Treasury, 2001.
---------------------------------------------------------------------------
    Specifically, we would like to offer the following recommendations:

        1. Fund FY 15 NACA Appropriations at $15 million.

    We would like to recognize Senator Tom Udall from New Mexico for
his strong support of the work of Native CDFIs. As Chairman of the
Senate Appropriations Committee on Financial Services and General
Government, he has championed the first increase in NACA appropriations
under the Treasury's CDFI Fund since FY 2009. We appreciate his efforts
as well as the support from you, Chairman Tester, Senator Tim Johnson
from South Dakota, and the rest of your colleagues on the Senate
Appropriations Committee.
    We urge Congress to continue to fund the Native American CDFI
Assistance Initiative program at the $15 million level in the FY 2015
Appropriations bill because (1) Native CDFIs can help to address the
unmet financial services and capital need in Native communities, (2)
the demand for NACA funds from certified and emerging CDFIs continues
to sky rocket--over double the available funds in FY 13, and (3) the
economic impact of Native CDFIs is significant.

        2.  Make the waiver for the non-federal match requirement
        permanent for the NACA Financial Assistance program.

    The Native CDFI Network urges Congress to reinstate and make
permanent the waiver for the non-federal match requirement for
Treasury's CDFI Fund Native American CDFI Assistance Financial
Assistance program. This recommendation is based on the unique status
and characteristics of Indian Country and Native CDFIs.
    The CDFI Fund acknowledged the challenges to raising non-federal
match for Native CDFIs in its Native Initiatives Strategic Plan for FY
2009--2014, which identified as a key strategy to ``Increase
Opportunities for Native CDFIs to Access Available Capital:''

         The Native American Lending Study identified the lack of
        lending capital as one of the greatest barriers to economic
        development in Native Communities, and securing capital remains
        one the most significant challenges Native CDFIs face. The NACA
        Program's Financial Assistance component requires. . .the CDFI
        to match the award amount dollar for dollar with non-Federal
        funds. Meeting this non-Federal match requirement can be
        difficult for Native CDFIs because, for most Native
        communities, Federal agencies are the main source of funds. As
        a result, the requirement may undermine the ability of some
        Native CDFIs to secure capital through the NACA Program or may
        even discourage them from applying. In 2009-2014, the CDFI Fund
        will explore ways to increase opportunities for Native CDFIs to
        access available capital. \7\
---------------------------------------------------------------------------
    \7\ Department of the Treasury--CDFI Fund, (2009), Native
Initiatives Strategic Plan for Fiscal Years 2009-2014, http://
cdfifund.gov/docs/2009/naca/Native%20American%20Strategic%20Plan.pdf.

    The following are key factors that make raising non-federal
---------------------------------------------------------------------------
matching funds especially challenging for Native CDFIs.

    Economic Conditions

    Indian Country continues to struggle through an economic downturn.
Congress waived non-federal match requirements for NACA from FY09 to
FY13 during the recession. While there have been some signs of recovery
in Indian Country, many tribal communities are in persistent poverty
counties where ongoing investment and opportunities are necessary. The
ability of Native CDFIs to access NACA without a non-federal match is a
strategy that was working well to overcome significant economic
barriers.
    Economic indicators in Indian Country have always lagged the
mainstream U.S. economy. For example, according to the Economic Policy
Institute, ``Although the Great Recession is technically over, when
looking at the American Indian employment situation, there is little
sign of recovery. Nationally, Native American unemployment continues to
rise, and employment continues to decline.'' \8\ Making the NACA match
waiver permanent would ensure that Native CDFIs are using scarce
dollars more efficiently to create jobs.
---------------------------------------------------------------------------
    \8\ Algernon Austin, (2010), ``Different Race, Different Recession:
American Indian Unemployment in 2010.'' http://www.epi.org/page/-/pdf/
ib289.pdf?nocdn=1

---------------------------------------------------------------------------
    Philanthropic Environment

    Native CDFIs face bigger hurdles than their non-Native counterparts
to accessing private sector funding from corporate and philanthropic
sources, as well as individual donors. This is evident historically and
even more so in the wake of the recession. According to a report
published by the Foundation Center and Native Americans in Philanthropy
in 2011, U.S. foundation support explicitly targeting Native Americans
declined as a share of total foundation giving from 2000-2009. \9\
While mainstream CDFIs are able to raise their match through long-
standing relationships with private sector partners, most Native
communities do not have these sources because they are isolated and do
not have local wealth available to their communities. Making the NACA
match waiver permanent would allow Native CDFIs to build their capacity
to establish these relationships going forward.
---------------------------------------------------------------------------
    \9\ Mukai, Reina and Lawrence, Steven (2011), ``Foundation Funding
for Native American Issues and Peoples,'' http://
www.nativephilanthropy.org/

---------------------------------------------------------------------------
    Organizational Capacity

    Many NCDFIs are small and emerging, and, as a result, may not have
a fundraiser on staff or board members with fundraising experience to
raise monies from non-federal sources. To create a strong balance
sheet, emerging CDFIs need equity (not debt) at early stage of
development. Without access to NACA, many emerging and newly certified
Native find it difficult to attract other capital. Non-federal
resources are precious and often Native CDFIs are torn between using
non-federal funding to attractive several different funding sources.
This becomes an unproductive juggling act.
    NACA is the most common source of equity for all Native CDFIs. This
equity is being leveraged by more established Native CDFIs with the
wherewithal to qualify for private sector debt.

        3.  Launch a pilot mortgage intermediary relending program that
        allows Native CDFIs to access mortgage capital through the U.S.
        Department of Agriculture's Rural Development Section 502
        Direct and Guaranteed Loan Program.

    The Single Family Housing Direct and Guaranteed Loan Program (502)
is successfully bringing mortgage capital to rural communities across
America. Unfortunately, its success on Native trust land has been
limited. Native CDFIs are perfectly situated to partner with Rural
Development personnel to improve the outreach and delivery of the
program.
    We urge USDA Rural Development to launch a pilot program in Indian
Country to allow Native CDFIs to be guaranteed lenders under the 502
Guaranteed Loan Program and intermediary lenders under the 502 Direct
Loan Program.

        4.  Implement the CDFI Fund Bond Guarantee Program so that it
        is accessible to Native CDFIs.

    The Native CDFI Network, Opportunity Finance Network, Native
American Finance Officers Association, and CDFIs across the country
interested in making the CDFI Bond Guarantee Program successful have
been working closely with the CDFI Fund to improve the viability of the
program in Indian Country. Our talks have focused on common sense
adaptations to the existing program structure to allow for broader CDFI
participation. We are happy to report that we have made some progress
with the CDFI Fund, but we are continuing to identify strategies to
ensure full participation by Native CDFIs and Indian Country.
    In particular, we urge the CDFI Fund to ensure that that alternate
forms of collateral are eligible to secure lending under the Bond
Program. This would assist Native CDFIs as they originate loans to
small businesses and other entities. It would be helpful for the CDFI
Fund to confirm that Leasehold Equity Mortgages are acceptable forms of
collateral.
    Additionally, there is ambiguity over the application of the
Principle Loss Collateral Provision (PLCP). This provision enables
third parties to provide a guarantee in instances where there is
insufficient collateral. While the CDFI Fund will allow tribes to
provide the PLCP for tribal applicants (so long as they are deemed
sufficiently separate), entities which provide the PLCP must be
publicly rated as investment grade. If an entity is not publicly rated
(as is the case for many tribes), their credit worthiness is assessed
by the Fund, which ultimately decides whether they are eligible to
provide the PLCP. It would be helpful to have more information about
this evaluation process. What methods are used? Are tribes evaluated
like any other non-publicly rated entity?
    Finally, there is uncertainty among the Eligible CDFIs and
Qualified Issuers as to whether they can amend their capital
distribution plans to accommodate tribal applicants. We encourage the
CDFI Fund to provide greater clarity on the matter.

        5.  Implement the CDFI Fund New Markets Tax Credit Program to
        maximize the flow of capital to Indian Country.

    The CDFI Fund New Markets Tax Credit (NMTC) Program has great
potential to bring capital to Indian Country. To maximize its
effectiveness, we recommend the following:

   The CDFI Fund should require that NMTC allocation
        application reviewers reading applications from Community
        Development Entities (CDEs) with the primary mission of serving
        Native communities have experience working in these
        communities. If that is not possible, then all such
        applications should be read by CDFI Fund Native Initiatives
        staff and not outside contractors.

   The NMTC allocation application allows applicants to commit
        to serve states that have received disproportionately low
        levels of NMTC investment (``underserved states''). American
        Indian, Alaska Native and Native Hawaiian communities should be
        considered equivalent to ``underserved states'' since they too
        have low levels of NMTC investments.

        6.  Expand the Community Reinvestment Act (CRA) to encourage
        investments in Native communities and Native CDFIs that serve
        them.

    The federal bank regulators should expand the CRA regulations to
explicitly recognize lending, services, and investments in Indian
Country. In particular, bank examiners should place a higher value on
mortgage lending activity on tribal trust lands in order to provide
incentive to lenders that have heretofore met their Native American
goals by lending to tribal members living in urban areas or other non-
trust lands.
Conclusion
    I'd like to thank you, Mr. Chairman, for this opportunity to
present the testimony of the Native CDFI Network. We look forward to
working with you and the Committee to improve the economic conditions
across Indian Country.

    The Chairman. [Presiding] Mr. Allis, you are up.

    STATEMENT OF KEVIN J. ALLIS, EXECUTIVE DIRECTOR, NATIVE
                AMERICAN CONTRACTORS ASSOCIATION

    Mr. Allis. Thank you, Chairman Tester. I would like to
thank you and the honorable members of the Senate Indian
Affairs Committee for allowing me to come here and testify
today. It truly is a pleasure and I know that there are many
people sitting behind me that deserve to be up here as well and
are worth noting: the leaders of the Native American Finance
Officers Association, those at the American Indian Chamber of
Commerce in California, in Arizona, South Carolina; National
Indian Gaming Association all have had a lot of input on this
and all are boots-on-the-ground organizations that do great
things for Indian Country. To be here is wonderful.
    Economic development and discussion of economic development
is an important issue and has been for decades. Regular
dialogue is necessary and this is a warmly welcomed opportunity
to speak to it.
    For the birth of the present day era of self-determination,
we can look back to President Nixon in 1970. Back then, he
recognized Indian Country as being the most deprived and most
isolated minority group in the Nation. Although since 1970
there has been great improvement and a lot of really cool
things have happened, a lot of work needs to be done.
Certainly, Indian Country has a whole has challenges with
respect to access to capital and access to financial investment
and resources. But unless the valuable investments that
Congress has made in the past are safeguarded and protected and
attended to, some of the new initiatives that we discuss today
and consider in the future likely could woefully fail. When I
speak to that, the importance of vibrant tribal communities are
certainly attractive places for investment. If we can maintain
that and continue to grow those tribal communities, we will see
great things happen in Indian Country.
    I speak specifically to the investment that Congress has
made in allowing Indian tribes, Alaska Native corporations,
Native Hawaiian organizations to operate in the SBA 8(a)
program. Support of this program and our participation in this
program is enormously important. These are programs that can do
and can continue to provide critically needed resources to some
of the most remote Native communities across the Country.
    Indian gaming has been a wonderful thing for Indian
Country. I am a tribal member of the Forest County Potawatomi
Community in Wisconsin. My mother grew up on an Indian
reservation, my grandfather Harry Ritchie and my great-
grandfather Henry Ritchie were great tribal leaders of our
community. If they could see today what Indian gaming has done,
they would be amazed.
    But not all tribes are lucky like ours and located near
metropolitan areas. Most of our communities live in very rural,
remote areas of the Country, not near major metropolitan areas.
Our brothers and sisters in Alaska are in some of the most
rural areas in the world. And these communities desperately
need resources to continue to flow into those areas so they can
achieve self-determination and a way of life that the rest of
the Country is able to experience in this great Nation.
    So we need to continue to give attention to programs like
the SBA 8(a) program, because it doesn't matter where your
tribe is located, it doesn't matter where your Native community
is located. Valuable resources can still come into your
community in a way that makes a big difference.
    In allowing tribes to really get involved in the 8(a)
program, Congress recognized that providing access to the
Federal marketplace would spawn business development for tribal
businesses that would produce great results. The purchasing
power of the Federal Government would not only advance
important social issues that were built into the 8(a) program,
but would also fuel increased competition thereby expanding and
diversifying the sources of goods and services that the Federal
Government procures. This is a win-win for both the Federal
Government and Indian Country.
    Back in 1987 and 1988, this Committee looked at this issue,
then chaired by the great Senator Inouye. Relying on a study
commissioned by then-President Ronald Reagan, they looked at
this issue and brilliantly recognized the inherent value that
by ensuring access to Federal contracting for Indian Country,
Native enterprises could grow and solve problems for both their
communities and make taxpayer money be efficiently spent.
    These programs offer an extremely efficient and wise use of
taxpayer dollars. We all know how important that is in today's
world. These types of hands-up programs, instead of a handout
program, are the types of things we need to look at from the
top to the bottom. That is what the 8(a) program is. It is
exchanging goods and services to the Federal Government in
exchange for valuable resources that fund programs. Recently,
Section 811 of the National Defense Authorization Act has
severely impacted Indian Country and has caused a decline in
direct awards to over $20 million and close to $2.5 billion.
That is a lot of money that has left our neighborhood, our
communities, that goes to fund programs that move us toward
self-determination. We really need you, Senator, and the rest
of your Committee, to reach upon your colleagues in other
committees and to really look at the types of things that have
happened in Indian Country with respect to the devastating
impact of Section 811.
    Thank you very much for your time.
    [The prepared statement of Mr. Allis follows:]

   Prepared Statement of Kevin J. Allis, Executive Director, Native
                    American Contractors Association
    Good Afternoon, Honorable Chairman Tester, Vice Chairman Barrasso,
and Members of the Committee. My name is Kevin Allis, and I am a tribal
member of the Forest County Potawatomi Community located in the State
of Wisconsin. I come from a family whose mother grew up on our
reservation, and whose grandfather and great-grandfather served as the
Chairman of our tribe. Today I proudly serve as the Executive Director
of the Native American Contractors Association, and the Board Chairman
of the Potawatomi Business Development Corporation. In both capacities,
my goals are to ensure that Native Americans are able to enjoy the many
things this great nation has to offer, while still being able to
preserve their traditions, languages, and customary ways of life. It
has never been lost on me, and I'm certain my ancestors, that every
minute we live that is dedicated to improving the lives of millions we
will never meet is tremendous. I know that each of you understand and
experience everyday this same kind of responsibility, and go to bed
each night knowing that the hard work of the day will make someone
else's life a little better.
    I would to thank you for holding this hearing, and allowing for me
to testify. Economic development within Indian Country is an important
issue, and regular dialogue and consideration of the issue is
absolutely necessary. The present day era of self-determination was
birthed in large measure by President Richard Nixon, who in a special
message before Congress on July 8, 1970 stated, ``The first Americans,
the Indians, are the most deprived and most isolated minority group in
our nation on virtually every scale of measurement; unemployment,
income, education, health-the condition of Indian people ranks at the
bottom.''
    Although conditions have greatly improved since 1970, much work
remains to be done. Efforts and programs that exist today must be
improved, and at the very least, remain fully intact, so their intended
designs, which are to improve the lives of Native Americans and ability
to control their own destinies, is realized. Today's hearing looks at
``Economic Development: Encouraging Investment in Indian Country.''
There is no doubt that Indian Country, like other minority communities,
has challenges with respect to access to capital. However, unless there
are other viable programs to put such precious investment of capital to
use, accomplishing long-term sustainability is difficult. The existence
of time tested and proven programs, in which Native communities can
invest, and thus parlay the value of such capital is critical in the
achievement of Native sustainable self-determination. Two extremely
effective federal Indian programs have been Native participation in the
Small Business Administration (SBA) 8(a) Business Development Program
(``SBA 8(a) Program''), and the Indian Incentive Program (IIP). It is
here that Native communities, large and small, rural or urban, have
been able to move closer to achieving the goal of self-determination.
SBA 8(a) Program
    The SBA 8(a) Program was enacted during the 1960s to assist
eligible small economically and socially disadvantaged business
concerns to compete in the American economy through federal
contracting. Recognizing that small businesses are critical to our
economy, the SBA is charged with assisting and protecting their
interests. Congress found that by providing access to the federal
procurement market, the business development of small business concerns
of the disadvantaged could be achieved. America has a long history of
using its purchasing power as a means to further the business
development of various individuals and groups who would otherwise be
excluded from the huge government contracting market. This not only
furthers important social goals, but fuels increased competition,
thereby expanding and diversifying the sources of supplies and
products. Native enterprises are starting to use these procurement
programs just as the government intended, and in doing so, are
developing business approaches and models that are building strong
Native economies; thus fostering the realization of self-determination.
    In fact, in hearings held by this Committee in 1987 and 1988, it
was found that including Indian tribes and Alaska Native-owned firms in
government contracting was a wonderful way to address the important
needs of Native communities. This Committee relied upon President
Ronald Reagan's, ``Commission on Indian Reservations Economies,'' which
had documented that the government's procurement policies were
significant obstacles to economic development, yet if crafted
correctly, could provide attractive benefits for both the Native
American population and the Federal Government. In 1983, President
Ronald Reagan commissioned this report to determine how the economies
of Indian reservations could be improved. The Commission produced a
report in 1984 that provided several recommendations to improve
reservation economies, based on parameters established by the
President's statement on American Indian policy. One of the key
recommendations made by the Commission was to create avenues to
increase the participation of Indian tribes (including Alaska Native
Corporations) in the federal contracting marketplace through the SBA
8(a) Program.
    The Commission provided several reasons to open federal contracting
opportunities to Native Americans. First, it was determined that the
increased use of Native business concerns in federal procurement would
not require any new federal funds. It would draw upon the existing
budgets of government agencies for the purchase of goods and services.
Importantly, it would be an effort that simply does not just give money
to Indians, but instead, improves access of Native-owned firms to the
federal marketplace, and allow them the opportunity to earn their way.
This is the classic ``hand-up'' approach, instead of one that is merely
of a ``hand-out'' methodology. This situation creates a ``win-win''
scenario for both the Federal Government and the Native community. It
results in an extremely efficient use of valuable taxpayer dollars,
which in these times is extremely important. In addition, the
Commission found that federal agencies would not be disadvantaged
because the Native American suppliers would have to meet the quality,
delivery, and cost requirements dictated by the missions of the
agencies. While these two quotes are only a snapshot of the
commission's report, they capture the reasoning behind the Commission
recommending that the government allow Native American participation in
the SBA 8(a) Program, as it was seen as logical and cost effective way
to meet the needs and challenges of Native Americans across the
country.
    During the 1988 hearing, Chairman Inouye stated that, ``directing
the purchasing power of the Federal Government to accomplish social
goals such as assisting disadvantaged members of society is well
established,'' and he then noted that unfortunately, ``this public
policy goal has not been achieved with respect to the participation of
businesses owned by Native Americans.'' This fact, in tandem with
recognition of the unique trust obligation the Federal Government has
with Native Americans acknowledged in the Constitution, federal laws,
and by the Supreme Court, led Congress to enact legislation that opened
the federal contracting marketplace to Indian Country. Today we refer
to this program as the Native 8(a) program.
    By creating unique Native 8(a) provisions, Congress recognized the
special needs and its obligations to Indian Tribes, Alaska Native
Corporations, and later Native Hawaiians Organizations. Like other 8(a)
firms, Native business concerns can only participate in the SBA 8(a)
Program through small businesses that are subject to stringent program
entry eligibility requirements. Native enterprises have two key unique
8(a) provisions: (1) the competitive thresholds that limit the amount
of sole-source awards do not apply; and (2) Native enterprises can
participate in the SBA 8(a) Program through more than one company. This
was the intent of Congress, and makes sense in light of the economic
and social disadvantages with which Native communities must contend,
and the number of Native Americans in need within these communities.
The disadvantages suffered by Native Americans encompass entire
communities and villages, as opposed to individuals who are socially
and economically disadvantaged. The ability to operate more than one
company, and perform on larger contracts, provides the necessary level
of resources, through net profits, that can make a difference in
changing large Native communities.
    For years Native enterprises have provided quality services and
cost effective products to the Federal Government. This has translated
to resources being made available to Native communities that not only
are used to fix systemic problems that have plagued Indian Country, but
allows for these communities to preserve their culture, traditions,
languages, and customary ways of life. However, in recent years, this
all has been threatened. With unfair scrutiny, and devastating new
provisions and regulations, Native contracting has seen a sharp decline
over the past five (5) years. Section 811 of the 2010 National Defense
Authorization Act (``Section 811'') has unfairly stigmatized and thus
discriminated against Native federal contractors. Once again, a hurdle
of the kind the Reagan Commission identified as a problem to Native
participation in the federal marketplace is alive and well, and causing
much disruption.
    Section 811 requires a justification and approval process for
direct awards greater than $20 million that are awarded to Native
contractors. Apparently it was designed as an additional process to
ensure value in these contracts. The Government Accountability Office
(GAO) released its report titled, ``Slow Start to Implementation of
Justifications for 8(a) Sole Source Contracts.'' The findings in this
report are extremely important to Native communities, because as
mentioned, their involvement in the SBA 8(a) Program, through
community-owned businesses, provides critically important financial
resources that fund the distribution of needed benefits and services.
    So why is the GAO report so disturbing to Indian Country? The
report clearly shows that the implementation of Section 811 is
shattering Native communities. Because of the inherent inequitableness
of the provision, coupled with the confusion and inconsistency of its
implementation, indispensably needed benefits and services for some of
the poorest communities in this nation face the real possibility of
inadequate funding. The report indicates that between FY 2010-FY 2011,
8(a) contracting dollars valued greater than $20 million decreased
sixty percent (60 percent) decrease in a single year.
    As mentioned, and just as troubling, was the discovery that certain
agencies were employing Section 811 incorrectly and/or inconsistently.
As an example, the report mentioned that an Army Corps contracting
official understood Section 811 as a ``cap'' on the size of 8(a)
awards. Consistently throughout the rule making process it was
explained that Section 811 was NOT a cap, but simply a threshold that
triggers a process to further ensure value. Right from the beginning
NACA was worried that despite the explicit acknowledgment that Section
811 is not a cap, it would be interpreted as such. The report validates
this concern. In addition, the report identified instances whereby
agencies had established their own threshold limits, in a nonsensical
manner, and without any consideration to the entities and the
communities served by such entities, not to mention that such policies
are inconsistent with federal law.
    The 8(a) program for many Native Americans instills pride in
communities that aspire to gain the business acumen essential to
compete in the federal marketplace. Disadvantaged small businesses such
as those owned by Tribes, Alaska Native Corporations, and Native
Hawaiian Organizations may not be able to compete with other
contractors without the business development tools provided by the SBA
8(a) Program. Section 811 is obstructing the growth of Native
community-owned small businesses, which unlike ``individually'' owned
entities, have more than one family to provide needed benefits and
resources. The result of Section 811 is that millions of dollars have
vanished from significantly needed services, benefits and programs for
the national Native community with numbers over 4.5 million
individuals. Up to this point in time, the SBA 8(a) Program has
achieved success in boosting Native economies across the country where
other programs have failed. Although Indian gaming may have some
success in a few populated areas, federal contracting, through the SBA
8(a) Program, has consistently fueled rural and very poor Native
communities. Section 811 threatens this success, and has now become a
new highlight on the 200+ year history of unfair burdens cast upon
Native Americans.
    This Committee and others should take a good look at the
devastating impact Section 811 has inflicted upon Native communities.
It is imperative that this matter be corrected, so that the intent of
Congress with respect to Native enterprise participation in federal
contracting is realized to its fullest extent.
Indian Incentive Program
    A second and equally valuable program in the federal contracting
marketplace has been the Indian Incentive Program (IIP). This program,
just as the SBA 8(a) Program, not only create jobs across the country,
it also represents an efficient use of taxpayer dollars. As noted,
building and maintaining tribal economies through federal contracting
programs is a sensible substitute for a welfare program that no doubt
would be an expensive proposition. Just as important, like other
programs aimed at helping Native Americans, IIP is based on the
government-to-government relationship and federal trust responsibility
to Native Americans.
    Congress authorized the IIP in 1988 as an amendment to Indian
Finance Act. The IIP was created to increase the utilization of Native
American owned businesses into the federal contracting supply chain, by
incentivizing larger businesses to use the valuable goods and services
provided by Native-owned contractors. The program provides incentive
payments of up to five percent (5 percent) when a prime contractor, or
a subcontractor at any level in a procurement, utilizes a Native owned
business as a subcontractor. When enacting the law, Congress explicitly
left the program's funding decisions to the Appropriations Committee.
Recognizing this program's value, Appropriators have funded the IIP,
without interruption, since 1989.
    The program has increased revenue for Native contractors, thereby
successfully and efficiently leveraging a small line item many times
over. Between fiscal years 1999-2010, the IIP leveraged cumulative
program funding of $122 million into more than $2.5 billion in
subcontractor revenue for Native businesses. According to the
Department of Defense, the program has been utilized by more than 300
prime contractors, and more than 500 Native American subcontractors. It
has been a successful tool to promote Native economic development, and
again, is a program that represents the efficient and cost effective
use of valuable taxpayer dollars.
    The impact of this economic activity in Native communities has been
significant. Native communities are often located in some of the most
rural and isolated areas of the country, and lack access to any
measurable amount of economic opportunity. Revenue generated through
participation in the IIP provides a meaningful injection of capital
into these communities in need. However, despite the program's success,
some wish to see its progress halted. During consideration of FY13
appropriations, an amendment was filed to strip the modest $15 million
available for the IIP.
    We are keenly aware of the fiscal challenges faced by the Federal
Government. While reducing wasteful spending in the defense budget is a
widely shared goal, eliminating a program that has positively impacted
Native-owned small businesses is not the way to achieve this goal. As
mentioned, the program represents a brilliant use of taxpayer dollars
in a way that fuels the economies of some of the poorest communities in
this country. Efforts to eliminate such programs unfairly impacts small
businesses that benefit from the modestly funded program, when much
larger savings opportunities exist elsewhere. We ask that you support
the IIP?s funding of $15 million, and greatly appreciate your efforts
in speaking to your colleagues in the Senate on the need to preserve
this program.
Conclusion
    In sum, the communities which Native enterprises serve remain some
of the poorest and most underserved groups in the United States. There
is still tremendous work to be done in effecting positive and
sustainable benefits for these communities. Approximately one percent
(1 percent) of the federal contracting that Native community owned
entities now receive is enabling the communities to create jobs and
opportunities that are desperately needed. Through our self-reliance
and business ingenuity, Native peoples are starting to provide for the
self-sufficiency of our communities, thanks in large measure to
programs like Native 8(a) and IIP. Keeping these are viable investment
opportunities that Native communities can with confidence invest
available capital is critical to the long term sustainability of Indian
Country. The continued economic success and positive move towards self-
determination require investment, access to capital, and the Native
8(a) program and IIP to remain intact as intended. We respectfully ask
for this Committee to take a hard look at these programs, and the great
value that both the Federal Government and Indian Country receive from
their existence. The mere safeguarding of these two federal Indian
programs is an investment in the Indian Country economic development.
    I thank the Chairman, and the entire Committee for the opportunity
to speak before you all today. I welcome any questions your Committee
may have.

    The Chairman. Thank you for your testimony.
    Ms. Rupert, you are up.

 STATEMENT OF SHERRY L. RUPERT, PRESIDENT, BOARD OF DIRECTORS,
       AMERICAN INDIAN ALASKA NATIVE TOURISM ASSOCIATION

    Ms. Rupert. Chairman Tester, Vice Chairman Barrasso, and
members of the Senate Committee on Indian Affairs, thank you
for the opportunity to appear this afternoon to discuss Indian
Country tourism and its current and potential impact on Indian
economic development and the United States.
    The word tourism is an umbrella term for a vast canvas of
travel, hospitality and vacation-related economic activities.
No matter what name you call it, people stopping to spend time
and spend money in Indian Country is a very significant
opportunity for tribes and Native peoples to share and
reinforce their cultures, generate income, create jobs and
improve their quality of life.
    As President of the board of directors of the only non-
profit solely devoted to developing and sustaining Indian
Country tourism, the American Indian Alaska Native Tourism
Association, or AIANTA, provides technical assistance and
training, creates and nurtures partnerships with Federal
agencies, higher education institutions, the tourism industry
and national Indian and non-Indian non-profits to leverage
scarce available resources.
    We provide these services through a cooperative agreement
with the Bureau of Indian Affairs transportation division. This
was authorized through the 1991 highway bill otherwise known as
ISTEA. With support from Congress, we are working toward
establishing a permanent program with a set budget within the
reauthorization of MAP-21 so we can continue to help tribes
build their capacity for tourism development. This has also led
to an MOU with the Department of Interior and all of its
bureaus.
    International tourism is very important to Indian Country.
According to a Department of Commerce survey, nearly 38 million
overseas tourists visited the United States in 2013, and more
than 1.5 million visited Indian Country. From 2011 to 2012,
American Indian communities saw a significant increase in
visitation from China, Australia and France. It is difficult
gathering data for Indian Country, so we monitor the growing
interest in Native-run operations and trips to our
reservations.
    I wanted to share a few success stories in Indian Country.
First, the Standing Rock Sioux Tribe, which straddles North and
South Dakota, operates hundreds of reservation tours every
year. In 2013, eight Japanese visitors stayed six weeks and
spent an average of $1,500 a day at Standing Rock. The tribe
also offers limited buffalo hunts at $10,000 per customer. Icy
Point Strait a majority-owned Native Alaskan business, operates
21 excursions in Icy Strait Point, a majority-owned Native
Alaskan business, operates 21 excursions in Hoonah, Alaska,
just 35 miles west of Juneau. The mostly Tlingit staff
accommodated 69 cruise ships in 2013.
    Monument Valley Simpson's Trailhandler Tours is a regular
part of AIANTA's delegation to ITB Berlin, the second largest
travel trade marketplace in the world. Specializing in tours of
Southern Utah by Navajo guides who teach Navajo culture, the
business welcomes between 80 and 100 people on an average
summer night, mostly foreign tourists, and employs about 30
people year round.
    So there is money to be made in Indian Country tourism.
When that is better understood, more investment will follow. So
to boost awareness, AIANTA is building an Indian Country
destinations website to assist tribes, especially those tribes
that are rural and remote. We are partnering with The George
Washington University to create web-based training courses for
tribal members to earn tourism certificates and a certification
program. We are also partnering with our national American
Indian associations such as the National Congress of American
Indians, the National Indian Gaming Association, Native
American Rights Fund, Southeast Tourism Society, Western States
Policy Council, and National Geographic Society. We are working
with them and they are supporting us in our efforts to build
awareness, attract resources and encourage travel, tourism and
recreation development in Indian Country.
    Because of this intense interest in our culture, more and
more tourists are coming to Indian Country. We are also seeing
the industry take note. Tauck Tours, for example, is the
largest and oldest tour company in North America. They are
adding American Indian attractions and interpretation to their
itineraries. Amtrak is also talking about adding more
interpretation to their tours.
    So in order to prepare for increased international
visitation, Indian Country requires investment in tourism
infrastructure and capacity building. We need to be ready for
these millions of tourists that are coming to the United States
and have an interest in us.
    So how can you help? We would like to see greater
coordination and collaboration between the Indian tourism
programs across the Federal Government. We would also like to
see a permanent tourism program authorized through the highway
bill. We would like to give thanks to the Senator for writing
the NATIVE Act, the Native American Tourism and Improving
Visitor Experience Act, where it does all these things that I
just mentioned, coordinating the Federal efforts, giving us a
seat at the table with Brand USA. If we are going to market the
United States, we need to include our tribes.
    In conclusion, AIANTA's bottom line is this: if the Federal
resources that currently exist for tourism were organized to be
used collaboratively and made available to tribal governments,
communities and businesses, the result would lead to more
visitors, more income and more investment in Indian Country
tourism. Mr. Chairman and members of the Committee, I thank you
for your interest in tribal tourism and AIANTA's work. I thank
you for including tourism in your exploration of investment in
Indian Country economic development, and invite you to call
upon AIANTA in the future as a resource.
    [The prepared statement of Ms. Rupert follows:]

Prepared Statement of Sherry L. Rupert, President, Board of Directors,
           American Indian Alaska Native Tourism Association
Introduction
    Chairman Tester, Vice Chairman Barrasso and Members of the Senate
Committee on Indian Affairs, I thank you for the opportunity to appear
before you today to discuss Indian Country tourism and its current and
potential impact on Indian economic development in the United States.
    The word ``tourism'' is an umbrella term for a vast canvas of
travel, hospitality and vacation-related economic activities. No matter
by what name you call it, people stopping to spend time and money in
Indian Country--not just passing through--is a very significant
opportunity for tribes and native peoples to share and reinforce their
cultures, generate income, create jobs for adults and youth and improve
their quality of life.
    How do we build on tourism from its current base in Indian
Country--help create the capacity to provide all the needed services,
involve our communities in these decisions, inspire investment, build
the infrastructure needed and keep our cultures alive and thriving? At
the American Indian Alaska Native Tourism Association, we ask and try
to answer these questions every day.
American Indian Alaska Native Tourism Association
    As President of the Board of Directors, I have the honor of leading
the Nation's only nonprofit solely devoted to developing and sustaining
Indian Country tourism--the American Indian Alaska Native Tourism
Association (``AIANTA'' for short.) AIANTA's mission is to introduce
the Nation's native peoples to a world where tourism has become a 181
billion dollar industry, the flow of visitors to Indian Country rapidly
increasing from 3.5 percent (975,910) in 2011 to 4.7 percent (1.5
million) in 2013 according to the U.S. Department of Commerce.
Expenditures for overseas visitors average $3,435 per trip.
    From its beginning in 2002 as a volunteer group of American Indians
and Alaska Natives and Native Hawaiians, AIANTA has grown into a
recognized national leader in the tourism industry, included in the
President's National Travel and Tourism Strategy. AIANTA is
headquartered in Albuquerque, New Mexico, at the Indian Pueblo Cultural
Center. In addition to leading AIANTA, I am one of two Southwest
Regional representatives serving on the AIANTA board. I am also
Executive Director of the Nevada Indian Commission and a member of the
U.S. Travel and Tourism Advisory Board, advising the Secretary of
Commerce.
    AIANTA's professional staff and volunteer Board facilitate tribal
tourism technical assistance and training and create and nurture a
network of partners, including federal agencies, universities, tourism
industry leaders and national Indian and non-Indian nonprofits to
leverage scarce available resources. We provide these services through
a cooperative agreement with the Bureau of Indian Affairs, Division of
Transportation, a foremost partner from the beginning of our efforts to
assist tribes. The BIA cooperative agreement is made possible by the
Intermodal Surface Transportation Efficiency Act of 1991(ISTEA) and
subsequent re-authorizations. With supporters in Congress, we are
working to establish a permanent program with a set budget within the
reauthorization of MAP-21 to continue to help tribes build their
capacity for tourism development.
Capitalizing on the International Tourism
    According to Department of Commerce surveys, nearly 38 million
overseas tourists visited the United States in 2013 and more than 1.5
million of those travelers visited Indian Country. From 2011 to 2012,
American Indian communities saw a 135 percent increase in visitors from
China, a 73 percent increase from Australia and a 60 percent increase
from France.
    Though we do not yet have the funds to collect our own data
scientifically, we monitor the growing interest in Native-run
operations and reservation trips. We're seeing significant increases in
travel to Indian Country.
Tourism Successes and Opportunities in Indian Country
    There are more tribal tourism success stories than there is time to
name them.
    Standing Rock Sioux Tribe, which straddles North and South Dakota,
operates hundreds of reservation tours every year. In 2013, eight
Japanese visitors stayed six weeks and spent an average of $1500 a day
at Standing Rock. The tribe also offers limited buffalo hunts at
$10,000 per customer.
    Icy Strait Point, a majority-owned Native Alaskan business,
operates 21 excursions in Hoonah, Alaska, 35 miles west of Juneau. The
mostly Tlingit staff accommodated 69 cruise ships in 2013.
    One of AIANTA's members, Monument Valley Simpson's Trailhandler
Tours, is a regular part of AIANTA's delegation to ITB Berlin, the
second largest travel trade marketplace in the world. Specializing in
tours of Southern Utah by Navajo guides who teach Navajo culture, the
business welcomes between 80 and 100 people on an average summer
night--mostly foreign tourists--and employs about 30 people year round.
    Each of the members of this Committee has Indian Country success
stories of their own like these back home. There is money to be made in
Indian Country tourism, and when that is better understood, more
investment will follow. That is why one of AIANTA's strategic goals is
greater public awareness for Indian Country tourism.
    To boost awareness efforts, AIANTA is building an Indian Country
destinations web site to assist tribes, especially those tribes that
are rural and remote. With our partner The George Washington
University, we are creating web-based training courses for tribal
members to earn tourism certificates. We lead delegations to world
tradeshows, use social and mainstream media to tell our stories, and
work with our partners on projects that recognize the achievements of
America's native peoples. Name any one of two dozen national American
Indian associations or national or regional tourism associations--NCAI,
NIGA, NARF, Southeast Tourism Society, Western States Policy Council,
the American Recreation Coalition, National Geographic Society--and we
are working with them and they are supporting us in our efforts to
build awareness, attract resources and encourage travel, tourism and
recreation development in Indian Country. We also have a Memorandum of
Understanding with the Department of the Interior, and all of its
bureaus.
Answering the Question: Where will investment come from?
    We look to traditional and non-traditional sources for future
investment in Indian Country tourism: from the tribes themselves, from
tribal entrepreneurs, from other tribes, from hospitality industry
investors, from federal partners, and from foreign investors.
    Our confidence comes from the recent strong interest in Native
culture on many fronts. This has resulted in more tourists but also
more trade, as people around the world become more aware of Indian
Country goods and services. International tour companies like Tauck
Inc. are adding Native attractions and Native interpretation to their
itineraries. AMTRAK is talking about adding native interpretation to
their western routes. Because of the data trends and the anecdotal
evidence of the enormous and growing interest in native culture by the
Chinese, European Union countries, Australians and others, we believe
the wave of visitation from international visitors will rise at an
increasingly strong pace. We also believe that if Indian Country is
given a voice and is represented well in BRAND USA marketing, we can
add significant value to the national travel and tourism strategy by
attracting more international visitors than ever before.
Investment in Tourism Infrastructure and Capacity Building
    For every success story in Indian Country tourism there is a
another story of the need for infrastructure and capacity building that
exists in tribal communities to truly make tourism a viable anchor for
tribal economic development. Our work has opened our eyes to the
enormous potential that international visitors represent for tribal
tourism. We also know that most tribes do not have the capacity to
handle this business and would find their communities overrun by the
magnitude of people that are seeking the opportunity to visit.
    The basic infrastructure improvements that tribal communities need
today are the amenities that constitute a successful tourism industry.
No one wants tourism to become a tool of exploitation or to negatively
impact quality of life, but it can happen if our communities are not
prepared. If a tribe, as a sovereign nation, chooses tourism as a means
to diversify their economy and improve quality of life, AIANTA seeks to
assist it with the tools and resources so they are able to manage
tourism and to control the manner and timing of growth.
    The first steps to attracting additional tourism investment are the
ones we are taking: providing additional technical assistance and
training to tribes and encouraging community inventories and
feasibility studies to find the right mix of visitor businesses and
services for each tribe who wants to participate in tourism. We
encourage regional cooperation: tour itineraries that include the best
the tribe has to offer, as well as, the best their region has to offer,
on and off the reservation. We encourage revising or establishing
tribal laws to protect resources, while welcoming investment. These
include intellectual and cultural property laws, land use plans and
zoning. We encourage the participation of youth in the development of
tourism plans, projects, hospitality courses and businesses.
Congress Can Help
    Without asking for any increase in any federal budget, Congress can
increase Indian Country tourism development. How? By refining the
language in the Highway Reauthorization Bill authorizing spending for
technical assistance and training in tribal tourism and recreation and
specifying an amount to be spent, AIANTA can increase delivery of these
services to Indian Country resulting in tourism business development
and employment growth.
    Greater coordination and collaboration between Indian tourism
programs and federal agencies with tourism programs, such as that
outlined in legislation currently being written under the title
``NATIVE Act'' or the Native American Tourism and Improving Visitor
Experience Act, could also boost tourism development in Indian Country
without expending any additional funds.
    AIANTA's bottom line is this: If the federal resources that
currently exist for tourism were organized to be used collaboratively
and made available to tribal governments, communities and businesses,
the result would lead to more visitors, more income and more investment
in Indian Country tourism.
Conclusion
    Mr. Chairman and members of the Committee, I thank you for your
interest in tribal tourism and AIANTA's work. I thank you for including
tourism in your exploration of investment in Indian Country economic
development, and invite you to call upon AIANTA in the future as a
resource.

     Appendix I--The Case for Funding Tribal Tourism Education and
   Development Training Under Bureau of Indian Affairs--Division of
                  Transportation Administrative Funds
    For more than a decade, the American Indian Alaska Native Tourism
Association (AIANTA) has been serving as the national center for
providing tourism and recreational travel technical assistance and
training to American Indian nations. These dynamic and expanding
services have been funded through Bureau of Indian Affairs Division of
Transportation (BIA-DOT) Administrative Funds under ISTEA in
fulfillment of the section on Education and Training--tourism
recreational travel. To sustain and enhance tribal economic development
opportunities in tourism and recreational travel, the services and
support--tribal tourism education, training and technical assistance--
that AIANTA provides to tribes through BIA-DOT should be designated as
a permanent tribal tourism program in reauthorizing legislation.
    The Intermodal Surface Transportation Act of 1991 included language
(unchanged through Map-21) to provide assistance to develop ``tourism
recreational travel to American Indian tribal governments'' (see italic
sections):

        Education and Training program

         (b) GRANTS AND CONTRACTS--The Secretary may make grants and
        enter into contracts for education and training, technical
        assistance, and related support service that will--
         (3) establish, in cooperation with State transportation or
        highway departments and universities (A) urban technical
        assistance program centers in States with 2 or more urbanized
        areas of 50,000 to 1,000,000 population, and (B) rural
        technical assistance program centers. Not less than 2 centers
        under paragraph (3) shall be designated to provide
        transportation assistance that may include, but is not
        necessarily limited to, a ``circuit-rider'' program, providing
        training on intergovernmental transportation planning and
        project selection, and tourism recreational travel to American
        Indian tribal governments.
         (c) FUNDS--The funds required to carry out the provisions of
        this section shall be taken out of administrative funds
        deducted under section 104(a). The sum of $6,000,000 per fiscal
        year for each of the fiscal years 1992, 1993, 1994, 1995, 1996,
        and 1997 shall be set aside from such administrative funds for
        the purpose of providing technical and financial support for
        these centers, including up to 100 percent for services
        provided to American Indian tribal governments.
BIA Division of Transportation
    To carry out the mandate for Education and Training for tourism
recreational travel for tribal governments, BIA-DOT brought tribal
issues to the National Academy of Science's Transportation Research
Board (TRB) in 1993 and tribal participation to the 1995 White House
Conference on Tourism. Three years later, in 1998, BIA-DOT and tribal
tourism leaders from across the country worked together to produce the
first American Indian Tourism Conference (AITC) in Albuquerque, NM.
AIANTA
    The impact of tribal and BIA involvement in the planning and
execution of the Lewis and Clark Bicentennial commemoration led to
formation of the American Indian Alaska Native Tourism Association
(AIANTA). AIANTA's was established in 2002 to support professional
tribal tourism development through education and training and promote
tribal involvement in the tourism industry, including an annual
American Indian Tourism Conference. AIANTA attained 501c3 status in
2009 with the mission ``to define, introduce, grow and sustain American
Indian Alaska Native and Native Hawaiian tourism that honors and
sustains tribal traditions and values.''
AIANTA/BIA Cooperative Agreement
    The relationship between BIA and AIANTA continues to evolve, and
AIANTA's services to Indian Country have expanded and deepened. In 2010
AIANTA and BIA signed a cooperative agreement to continue providing
tribal tourism education, training and other services to tribes, with
funding provided by BIA-DOT under ISTEA. Cooperative agreement funding
to AIANTA in 2012 was $1.3 million, $825,000 in 2013, and $900,000
pending for 2014.
    Under the cooperative agreement, AIANTA provides tribal tourism
education, training and technical assistance to tribes via several
ongoing program areas:

        Expand Tribal Tourism Education and Training

           AIANTA continues to present the American Indian
        Tourism Conference, hosted each September by various American
        Indian and Alaska Native tribes in their homelands. The 2013
        15th annual AITC was hosted by the Cherokee Nation at Catoosa,
        OK.

           The conference is designed to share knowledge,
        experience and best practices and features mobile workshops,
        networking events and a line-up of expert speakers and
        presenters. In 2012, AITC established a scholarship fund to
        support Native American, Alaska Native and Native Hawaiian
        students preparing for careers in the hospitality, tourism and
        culinary arts industries.

           AIANTA also supports regional tribal tourism
        education and development conferences in all six of its member
        regions, including the Native American Tourism of Wisconsin
        (NATOW) annual conference, the annual Alaska Heritage and
        Cultural Tourism Conference in Sitka and others.

        Research and Develop Tribal Tourism Resources

           AIANTA works closely with the Department of
        Commerce, National Travel and Tourism Office, and others to
        make tourism research data available to members via website
        (www.aianta.org), newsletters, training sessions and other
        means. According to the Department of Commerce, American Indian
        communities saw a 46 percent increase in international visitors
        from 2011 to 2012, including a 135 percent increase from China,
        73 percent increase from Australia and 60 percent increase from
        France.

        Develop International Tribal Tourism Outreach

           In 2013, for the 5th consecutive year, AIANTA
        participated in ITB, the world's leading travel trade show held
        annually in Berlin, Germany. AIANTA hosted tribes and tribal
        enterprises from across the United States at the heavily
        visited Brand USA Pavilion. The event attracted more than
        113,000 international tourism professionals, tour operators,
        travel agents, media, suppliers, buyers and destinations. At
        ITB 2011, AIANTA received the CBS (Cologne Business School)
        Best Exhibitor Award as 5th Best Exhibitor in the category of
        NGO's/Non-Profit Institutions.

           AIANTA collaborates with Brand USA to provide
        editorial content on Indian Country in the international travel
        guide Discover America, published in nine languages and
        distributed worldwide.

           AIANTA also participates in the U.S. Travel
        Association's annual IPW (formerly International Pow Wow), now
        in its 45th year. At IPW 2013, AIANTA conducted more than 40
        business meetings with journalists, tour operators and
        consultants from across the globe, with strongest interest from
        the U.S., France, Germany, Canada and Japan. Nearly 6,400
        delegates from the U.S. and 70 countries attended the event.

        Form and Nurture Partnerships

           AIANTA actively collaborates with a growing network
        of formal and informal, public and private partners.

           To give one example, AIANTA has partnered with the
        National Park Service (NPS) since 2010 to develop authentic
        interpretation of American Indian cultural heritage landscapes,
        economic opportunities for Native concessionaires and tribal
        tourism businesses, and training and career path opportunities
        for NPS Native employees.

           During the 150th anniversary of America's Civil War
        (2011-2015), AIANTA and BIA collaborated with NPS to publish
        the landmark handbook, American Indians and the Civil War.

           In 2012, AIANTA's partnership with NPS led to
        formalization of a groundbreaking MOU between AIANTA and the
        Department of the Interior, and all DOI bureaus/agencies, for
        the support and enhancement of American Indian tourism.

    AIANTA also actively collaborates with many private partners for:

           Development of a tribal tourism Destinations
        Website.

           Establishment of education and training, including
        certificate and degree programs in tribal tourism development
        with George Washington University.

           Technical assistance to tribes in developing their
        destinations, itineraries and customer service and for bringing
        authentic Native perspectives to tours that impact Indian
        Country with Tauck, Inc. a travel industry leader since 1925.

           International tribal tourism outreach with Brand USA

        Create Tools for Tribal Tourism Development and Marketing

           In 2013, AIANTA and the National Tribal Geographic
        Information Support Center are collaborating to create a state
        of the art destinations website for tribes, to be launched in
        2014.

           In conjunction with the web site, AIANTA is
        developing training modules in destinations development and
        marketing.

        Raise Public Awareness of the Significance of Tribal Tourism

           In 2013, AIANTA's public awareness efforts on behalf
        of tribal tourism resulted in 267,815,996 media impressions and
        60 countries reached via social media and the website.

National Tribal Tourism Leadership
    Today AIANTA is universally recognized as a national leader of the
tourism industry and is included in the President's National Travel and
Tourism Strategy. In 2013, the vice-president of AIANTA's board of
directors was appointed to serve on the Travel and Tourism Advisory
Board, established in 2003 to act as advisory body to the Secretary of
Commerce and the White House on matters relating to the travel and
tourism industry in the United States. Most recently, the president of
AIANTA's board was appointed to the Tourism Committee of the National
Congress of American Indians.
Request

   Based on the existing funding authority, BIA-DOT's history
        of funding the services delivered to tribes by AIANTA, and the
        effectiveness of those services, AIANTA respectfully requests
        that these programs and their funding stream be included in
        reauthorization of BIA-DOT, in the annual amount of $2 million.

   Sample reauthorization language:

        To be added:

         A tribal technical assistance center will be established under
        BIA-DOT and managed by the American Indian Alaska Native
        Tourism Association through a cooperative agreement to provide
        tourism and recreational travel training and technical
        assistance to American Indian tribal governments, enterprises
        andorganizations.
        Also:

        $2 million will be spent annually through BIA-DOT for the
        tourism program.
Appendix II--Statement in Support of the NATIVE Act by American Indian
   Alaska Native Tourism Association Board President Sherry L. Rupert
    The American Indian Alaska Native Tourism Association (AIANTA)
applauds Senator Brian Schatz, Chairman of the Senate Subcommittee on
Tourism, Competiveness and Innovation, for the introduction of the
Native American Tourism and Improving Visitor Experience (NATIVE) Act.
    AIANTA wholeheartedly supports the NATIVE Act, and the AIANTA Board
of Directors has endorsed it unanimously.
    The NATIVE Act will accelerate Native American tourism development
and increase international tourism to the U.S. According to the latest
available Department of Commerce figures, from 2011 to 2012, visitors
from overseas to Native American communities increased 46 percent. The
number of tribes pursuing tourism is increasing, along with the need
for tourism infrastructure and visitor services.
    Tourism can help many tribes and native communities become more
self-sufficient, create jobs and businesses, and protect tribal
heritage assets while sharing tribal culture with domestic and global
audiences.
    The NATIVE Act will make it possible for AIANTA to accelerate the
fulfillment of its mission to define, introduce, grow and sustain
American Indian, Alaska Native and Native Hawaiian tourism in
significant ways: expanding its tribal tourism education, training and
technical assistance programs, helping develop tourism resources such
as visitor asset inventories and tour itineraries, expanding its
international and national visitor outreach and assisting in the
development of tourism infrastructure to heighten visitor experience.

    The Chairman. Thank you, Ms. Rupert. We appreciate your
testimony.
    I am going to start with you, Mr. Davis. Your testimony
mentioned several programs that are currently authorized and
will be highly successful if properly funded. Could you
prioritize these programs at all? In other words, which one is
the best one?
    Mr. Davis. Thank you, Senator. Let me look through my notes
here really quickly. As far as the programs that we feel have
really had an impact in the community, I think the Buy Indian
Act has the most potential. That is why we are calling for
enforcement of the Buy Indian Act. I think if we increase the
Indian loan guaranty program it would increase activity in
Indian Country, economic development activity in Indian
Country, procurement opportunities through program that we run
and have run successfully for many years, the Procurement
Technical Assistance Center, in partnership with DOD, DLA, has
proven to grow.
    For example, yesterday in our RES D.C. event, $200 million
in contracting opportunities for American Indian businesses
through Lockheed Martin. It is something that we have the
opportunity to continue to grow that, and we are continuing to
support those programs and ask for them to continue to be
increased and paid attention to in funding out of this
Committee.
    The Chairman. Okay. I am going to go to you, Gerald. You
had talked about, in your testimony, successful experiences in
investing in Indian Country. Your testimony cites some bleak
statistics about how much is needed out there, how many folks
don't have access to financial institutions. A number of
witnesses today have talked about or written about poor
understanding by private investors when it comes to investing
in Indian Country. Do you have any ideas on how we can change
that?
    Mr. Sherman. I think we mentioned some of the things in
here that we would like to see that can be done here. The CDFI
Fund has been a big benefit to Native CDFIs in making their
programs a little more accessible in some ways and kind of
tweaking them I think will help us. For instance, the new
market tax credit program, we would like to see things done to
maximize the flow of capital to Indian Country. I think they
can look at providing leaders and reevaluate these applications
who have experience in Indian Country and who understand a
little bit more about it. If that is not possible, I think the
staff of the Native American component at the CDFI Fund is very
good and they have a good understanding and good relationship
with them.
    The CDFI Bond Guaranty program, which really would be a
really big benefit to providing long-term, low-cost money,
would work very well if they could find a way to make it better
for Indian Country.
    The Chairman. Thank you very much.
    I have a vote that is going to close in about four minutes.
Normally they extend them, and with my luck Harry would
actually close it in four minutes and I would miss it. I don't
want to do that.
    So I am going to have to gavel out, because I am not sure
any of the other members are coming back. I want to say thank
you, I want to apologize then I want to say thank you. This is
not the end of this discussion. Economic development is
critically important, private investment as well as Federal
investment in Indian Country is critically important, as we
move forward.
    I just want to say thank you to the witnesses for what you
do for economic development in Indian Country. All five of you
have an understanding of what the challenges are in Indian
Country and how to best meet those challenges. If we can
empower you, I think Indian Country will be a better place.
    Thank you all very much. This hearing is adjourned.
    [Whereupon, at 3:19 p.m., the hearing was adjourned.]
                            A P P E N D I X

   Prepared Statement of Hon. Brian Schatz, U.S. Senator from Hawaii
    I want to thank Chairman Tester and Vice Chairman Barrasso for
holding this important hearing today on the need to encourage greater
investment in Native communities and to enhance opportunities for
Native enterprise development.
    The diversity of our Native nations as well as the level of self-
determination they exercise in the United States is found nowhere else
in the world. Both domestic and international travelers have shown an
increasing interest and desire to learn more about our country's
indigenous cultures. Native communities have the opportunity to
showcase their culture and offer authentic and unique products and
services that both domestic and international consumers will value.
Native entrepreneurs and business owners have the capacity to
contribute significantly to America's economic growth, while also
improving the socio-economic conditions and advancing self-sufficiency
in American Indian, Alaska Native, and Native Hawaiian communities.
Federal efforts and programs that exist today must be maintained and
improved to enhance economic opportunities for Native communities.
    To illuminate the positive results of increased credit
accessibility and support for economic growth in Native communities, we
can look to the Small Business Administration (SBA) 8(a) Business
Development Program. Native participation in federal contracting
through the SBA 8(a) program has supported small businesses and
strengthened Native economies. New businesses that are created benefit
Native communities and jumpstart a positive cycle of capital flows.
Native communities may also find business incentives to preserve their
cultures, traditions, languages, and customary ways of life. In return,
Native enterprises have also provided quality services and products to
the Federal Government and to the commercial markets.
    I also understand that cultural and heritage assets are
particularly valuable in the tourism industry. The $180 billion tourism
industry is America's number one service export, and President Obama
has set a goal of attracting 100 million international visitors
annually by 2021. To advance this National Travel and Tourism Strategy,
expanding heritage and cultural tourism opportunities will spur
economic growth, create jobs, and increase tourism revenues. That is
why I have developed a draft Native American Tourism and Improving
Visitor Experience (NATIVE) Act. The NATIVE Act will empower Native
communities to share their culture and tell their own stories; enhance
and integrate Native American tourism into our national tourism
strategy; and increase coordination and collaboration between federal
tourism assets. In addition, new infrastructure needed to attract and
sustain tourism will elevate living standards in Native communities.
The unrealized potential for Native tourism will yield substantial
benefits to the U.S. economy and to Native communities.
    I look forward to continuing to work with the witnesses to advance
economic development, spur job creation, uplift Native communities and
help Native families build a better future for their children.
                                 ______

Prepared Statement of Rowena Akana, Trustee, Office of Hawaiian Affairs
Native American Tourism and Improving Visitor Experience (NATIVE) Act
    Thank you for allowing me to officer testimony on the proposed
Native American Tourism and Improving Visitor Experience (NATIVE) Act.
As a Native Hawaiian, I am in support of the NATIVE Act.
    I serve as one of nine elected trustees for the Office of Hawaiian
Affairs (OHA). OHA's mission is to advocate for our Native Hawaiian
beneficiaries and to malama (protect) Hawai'i's environmental resources
and cultural assets. We work to better the conditions of our Native
Hawaiian beneficiaries, to perpetuate Native Hawaiian culture, and to
protect Native Hawaiian entitlements. Our goal is to build a strong and
healthy Hawaiian nation, recognized both nationally and
internationally.
    For as long as I can remember, Hawaii has been marketed as a great
tourist destination. However, the marketing done by the State of Hawaii
features beautiful beaches, surf, Hula girls and other commercial
advertisement.
    This year, for the very first time, the Office of Hawaiian Affairs
will be focusing on marketing authentic Hawaiian experiences and using
Native Hawaiian vendors to promote economic development and enterprise
for Native Hawaiians.
    The idea is not new, however, because individual vendors did not
have the financial resources or the marketing expertise to promote
their businesses, the idea remained just an idea.
    Authentic Native Hawaiian activities such as exploring pristine
rainforests; identifying medicinal indigenous plants with healing
properties; and visiting the only royal palace in the Unites States
where our king and queen ruled the lands during the Kingdom of Hawaii
are just some of the ways that visitors can experience our true
Hawaiian history. There are many Native Hawaiian activities that
general visitors never get to visit. This is a shame since there is so
much more they can learn about Native Hawaiian culture, traditions and
practices.
    I believe that passing this piece of legislation is necessary to
accomplish the goals of all Native Americans to boost their economic
development objectives, while at the same time introducing the general
public to Native cultures, history, and practices.
                                 ______

   Prepared Statement of Mark Azure, President, Fort Belknap Indian
                           Community Council
  Tribal Online Lending: Strengthening Self-Sufficiency for Isolated
                                 Tribes
    The Fort Belknap Indian Community Council welcomes the opportunity
to submit this written testimony for the Senate Committee on Indian
Affairs (``Committee'') hearing record on the vitally important issue
of encouraging investment for economic development in Indian country.
    At your hearing on June 25, 2014, the Committee heard testimony on
the challenges and opportunities for economic development in Indian
country. On the Fort Belknap Indian Reservation we know that a self-
sufficient community is critical to a healthy economy, but the reality
is many Native communities continue to struggle with remoteness,
limited infrastructure, and access to capital. Our Tribe has worked to
foster economic growth despite these challenges. We have encouraged
economic development through strong leadership, collective goal setting
and visioning to successfully overcome these historic challenges. Our
hope is that the Tribe's testimony can highlight a successful economic
venture in Indian country that can be useful and informative to the
Committee.
Economic Development on Isolated Reservations
    The Fort Belknap Indian Reservation is geographically isolated. Our
homeland to both the Gros Ventre (Aaniiih) and the Assiniboine (Nakoda)
Tribes is located in North Central Montana, forty miles south of the
Canadian border and twenty miles north of the Missouri River, several
hours from the nearest metropolitan areas in Great Falls and Billings.
    The Fort Belknap Indian Reservation encompasses a large area
consisting of 675,147 acres. The main industry is agriculture,
consisting of small cattle ranches, raising alfalfa hay for feed and
larger dry land farms. Fort Belknap has a tribal membership of
approximately 7,000 enrolled members, with a median income of less than
$12,000 each.
    Like many isolated rural reservations, it is difficult to grow
local businesses sufficient to support the needs of our 7,000 tribal
members. In 2009, to encourage investment and strength self-sufficiency
opportunities, the Tribe created an economic development holding
company, the Island Mountain Development Group (IMDG).
    The IMDG is dedicated to serving the Gros Ventre and Assiniboine
Nations by creating a self-sustaining, local economy through the
creation of business opportunities, jobs, workplace training, positive
role models, and resource development. As such, the IMDG quest is to go
well beyond simply being able to open businesses and create jobs.
Rather, they must strengthen our communities by advancing the overall
well-being of our people. In the development of the Tribe's online
lending enterprises, we have found a successful economic development
venture that is sustainable and maximizes the assets of our community.
Ft. Belknap's Tribal Lending Operations
    Pursuant to tribal law, Ft. Belknap has developed online consumer
lending enterprises whereby we make small-denomination, short-term
installment loans to consumers around the country via the Internet. Our
lending businesses have become an important economic driver on the
Reservation.
    Ft. Belknap employs more than 30 full-time employees in our two
call center locations on the Reservation, which serve our online
lending businesses. Employees assist in loan verification and loan
processing. In this collaborative environment, they receive general
computer training, development of their customer service skills, and
support in life/work balance that allow them to prepare for a
successful future and further take their careers to the next level. Our
call centers focus their hiring directly from our tribal college. The
call centers are supported by dozens more IMDG employees who also have
roles in management, marketing, compliance and other areas essential to
running our online consumer lending portfolios. Our tribal employees
are excellent at what they do. They are empathetic, they are
professional, and they enjoy being able to help good people in
difficult situations.
    Similarly, our loyal customers are hard-working folks with
verifiable employment and bank accounts, and most important, a
demonstrated capacity to repay. The Tribe offers financial products
that our customers cannot access from traditional financial
institutions. We successfully serve an important market need. In fact,
the majority of our customers are unable to get loans from traditional
banks. As Indian people, we understand this frustration. In response,
the Tribe has created a good product that is designed to take chances
on higher-risk customers. Our customers are neither desperate nor
ignorant; they understand they are using an expensive form of
borrowing, but they chose the convenience of our services. As they
repay their small loans with us, our customers earn better and better
interest rates, and we help rebuild their credit ratings.
Tribal Online Lending = Essential Tribal Income
    The Tribe has discovered that e-commerce is one of the few
industries that can truly thrive on an isolated, rural reservation such
as ours. Today approximately 70 people are employed by IMDG overall,
with more than $1.4M annually in payroll paid to our local employees.
Approximately 20 percent of Ft. Belknap's revenue is now generated
through our government-owned companies. The Tribe has been able to take
the profits from our lending companies and reinvest them and diversify
our economy.
    The income has allowed us to create:

   Snake Butte Construction
   Smokehouse Grille and Trading Post
   Little River Smokehouse
   Fort Belknap Tourism
   Spirit Box Technologies
   Smokehouse Coffee House

    Funded entirely by our lending enterprises, we will be opening a
grocery co-op this summer in an area of the Ft. Belknap Reservation
that is a food desert.
Early Attacks Against Gaming--Same as Against Tribal Online Lending
    Nearly every economic endeavor that has proved viable for Indian
tribes comes under aggressive attack--tobacco, gas, gaming and now,
online lending. Gaming has been one of the few truly successful
economic development industries for Indian Country. Unfortunately that
success has not reached most of the more rural and isolated
reservations, such as Ft. Belknap. Gaming is a local population-based
industry. Therefore, most of that revenue is generated by tribes
located closer to urban populations. For more geographically-isolated
tribes like Ft. Belknap, large income-producing gaming operations are
not realistic.
    Almost all the same arguments made against Indian gaming 25 years
ago are the same arguments that are being made against online lending
today:

   Tribes are trying to skirt state laws.

   Tribes are avoiding state taxes.

   The industry is unsavory; Tribes need to be protected.

   Finance partners make all the money; Tribes will never reap
        the benefits.

   The industry takes advantage of people of limited economic
        means who cannot be trusted to make their own decisions.

    All of the arguments are wrong. Today, Tribes have proven every
argument hollow.
    Tribes are fully capable of choosing our business partners and
making smart business deals. As is universally true, almost no business
starts up in Indian Country without borrowing from outside sources or
building capacity with outside partners. However, as with the gaming
industry, we are gaining that experience and expertise through strong,
smart partnerships.
    Tribes are fully capable of regulating our own industries. And most
importantly, Tribes are not avoiding state laws; we are implementing
tribal laws. Tribes are fully capable of running our own businesses,
regulating our own commerce, and being fair to consumers.
    Ft. Belknap Tribal regulations require: meaningful underwriting
(including verifiable employment and bank account and demonstrated
ability to repay); compliance with Ft. Belknap's own strict consumer
protection requirements; and compliance with all federal laws. While
there is no federal interest rate regulation, there are more than a
dozen other federal laws with which our businesses must comply,
required to do so by tribal law.
Conclusion
    Fort Belknap Indian Community Council is working to improve the
economic conditions for our people and create jobs in our communities.
E-commerce and online lending offers us a glimmer of hope that
strengthens our self-sufficiency. While each Tribal community is
unique, our Tribe believes we have a success story to share with others
looking to spur economic development in Indian country.
    For your information, there is an article from the April 2014 issue
of The Federal Lawyer (http://www.bestlawyers.com/Downloads/Articles/
4218--1.pdf) which sets forth a lot of the legal and historical
background for our online businesses. I hope you will read it and will
want to learn more. I also hope I might have the chance in the future
to tell you more about our online lending businesses and all the good
they are doing for our customers and for our humble Ft. Belknap Indian
Community.
    Thank you for your consideration of my testimony and find below
three recommended actions for the Committee's further consideration.
Recommendations
    (1)  Conduct SCIA Hearing to Discuss Tribal Online Lending and
Learn More about This Important Opportunity for Indian Country

    (2)  Acknowledge and Encourage Tribal Lending Best Practices and
Regulatory Development

    (3)  Acknowledge and Encourage the Tribal Lending Industry's Access
to National Banking System and Payment-Processing Network