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Saturday, 18 March 2017 05:30

EXPLORING THE TRIBAL ADVANTAGE: How non-tribal companies can benefit from working with West Michigan tribes

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In 2013, former Accu-Mold President Dave Martin, right, sold his manufacturing and engineering company to Mno-Bmadsen, the business development arm of the Pokagon Band of Potawatomi that’s led by Troy Clay, left. Now, Mno-Bmadsen hopes to certify Accu-Mold as a Native-owned business under the SBA’s 8(a) program. In 2013, former Accu-Mold President Dave Martin, right, sold his manufacturing and engineering company to Mno-Bmadsen, the business development arm of the Pokagon Band of Potawatomi that’s led by Troy Clay, left. Now, Mno-Bmadsen hopes to certify Accu-Mold as a Native-owned business under the SBA’s 8(a) program. MIBIZ FILE PHOTO

Because Native American tribes are sovereign nations, they’re tax-exempt and have their own statutes and regulations, although they must follow federal law. Tribally owned firms also are exempt from state and federal income taxes.

Those are the kind of “tribal advantages” that Native American economic development organizations hope to leverage with investments across West Michigan.

[RELATED: OPEN FOR BUSINESS: Tribes invest in economic diversification via M&A, real estate deals]

For example, companies that locate in Migizi Economic Development Co.’s 14,000-square-foot Arnold J. Sowmick Sr. Plaza in Mount Pleasant pay no property taxes or personal property taxes, and would need to follow “minimal tribal zoning restrictions” instead of local or state regulations, according to CEO Robert Juckniess.

Tribally chartered businesses can claim sovereign immunity from lawsuits, but the “line is always moving” as to whether those benefits extend to cases where the entity has non-tribal partners, said Fred Schubkegel, a partner at Varnum LLP in Kalamazoo.

Another often cited benefit: Businesses that partner with an entity majority-owned by the tribe could qualify for federal set-asides under the Small Business Administration’s 8(a) program. However, Schubkegel acknowledged that “people think that’s of more value than it is in the market.”

“It’s a darn hard thing to do to qualify for that,” he said. “It’s a slower process and the (non-tribal) business partner can’t have control. If you do it right and if you trust your business partner, if you have the right documents and you know what your return is going to be, things go well. You just have to go in with your eyes open.”

Only 14 businesses based in Michigan have an active 8(a) designation, according to a search of the SBA’s online database.

Dowagiac-based Mno-Bmadsen, the economic development arm of the Pokagon Band of Potawatomi, is going through the certification process for Accu-Mold LLC, a manufacturing company it acquired in 2013, according to President and CEO Troy Clay. With that certification, the company hopes to secure federal contracts and spin out work to other local firms, broadening the impact the tribe can have on the local community.

“The tribe in effect can draw in a lot of contracts through set-asides for Native American businesses,” Clay said. “Once you open that door and you start working with the Lockheeds and others, that’s just not going to affect Accu-Mold. We wouldn’t be able to grow enough. We’re going to work with others to handle those contracts and perform that work.”

Read 389 times Last modified on Friday, 24 March 2017 08:22
Joe Boomgaard

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