CROW – Risk and Reward
By Hannah Grover with Photos & Multimedia by Abigail Redfern
By now, the few acres should be more than a dry lot. Water from the well she dug should be pumping into RVs. The empty, sun-baked field should be lined with camping trailers as tourists explore the adjacent Chief Plenty Coups State Park.
The lot should not be a barren stretch of land.
Bernadette Smith has high hopes for the land, located near Pryor on the Crow Reservation.
In 2001, Smith secured the rights to use the land’s water via a well she drilled on her own. She then paid to install electricity that campers could tap into. She even secured a prized license designating her park as a limited liability company from the Crow Nation.
The unemployment rate on the Crow Reservation is 46.5 percent, according to the Bureau of Indian Affairs.
In all, Smith said she wiped out her savings, tens of thousands of dollars, on the project before it stalled indefinitely. That was more than a decade ago. The land and her investments have since languished, as Smith tried and failed to find any type of assistance to revive the RV park.
“It’s just land with a well on it, with electricity, and with a sewer tank,” Smith said.
Smith’s problems are similar to entrepreneurs throughout Indian Country. Navigating across tribal and federal borders has made business financing difficult. Although tribes, like the Crow, have launched programs to help, success rates vary depending on the resources available to potential business owners.
The problem that derailed Smith’s plan came when banks off the reservation refused to recognize her business, even with the Crow LLC designation.
The Apsaalooke Limited Liability Company Act, adapted by the Crow tribe in 2006, allows Tribal members to file for a tribal LLC. This designation is meant to meet both state and tribal business requirements and should be recognized across reservation borders. The Crow legislature hoped the LLC Act would help promote entrepreneurship and combat high unemployment rates.
Yolanda Good Voice, an economic development officer for the Crow Reservation, said the LLC program has a learning curve that people are still trying to navigate. Last year, about 100 individuals came to her to talk about starting a business and through the first quarter of 2012 she had helped 30 people.
There are two options for opening a business on the reservation: a sole proprietorship, in which a single individual owns an unincorporated business, or an LLC. Some people prefer the LLC because it is a hybrid between a corporation and a sole proprietorship, so it offers the best of both worlds.
Good Voice said the LLC also provides more protection than a sole proprietorship. Sole proprietors risk personal assets, including their homes to creditors or in legal disputes. An LLC protects personal assets, so long as personal assets are kept separate from business dealings.
The tribal LLC program is available to anyone living within the reservation boundaries, including non-tribal members.
However, Good Voice said the lack of codes and laws on the reservation has created problems for the tribal LLC program. She said she hopes the tribe can move forward and adopt more codes and laws for business.
Good Voice said the Crow tribe is playing catch up with off-reservation businesses.
“They’ve been doing it for 120 years, and want us to do it in 20,” Good Voice said.
However, despite the tribe’s best efforts, a Crow LLC isn’t equivalent to a Montana LLC designation. They’d have to apply for a state license, which is more costly.
Bernadette Smith filed for an LLC almost immediately after the tribal council approved the program.
“When the LLC Act was passed, I thought, ‘Well, this is one way to get into the business world,’” Smith said. But the finances needed to start the RV park just didn’t turn out the way she’d hoped.
She wiped out her savings to pay for the construction. She has been told that it will take at least half a million dollars to get the RV park running.
“I was pretty upset with myself for not making good choices, not figuring that out,” Smith said.
Smith didn’t have a business background or training on how to start and run a small business.
Once she got started, she encountered unforeseen challenges. She said everything was mind-boggling. She had to develop a logo and a business plan. She had to project into the future how much money she thought the RV park could earn. And no one was there to assist or advise her.
Although banks would be hesitant to dole out a business loan to an entrepreneur with admittedly little business experience, Smith thought the tribal LLC provided legitimacy to her venture and would have made the process easier. However, even considering her inexperience, Smith faced an uphill battle that tribal communities face across the nation.
Banks rarely grant sizeable business loans to individuals living on tribal lands, which are usually held in trust by the federal government. Individuals rarely own their land outright and therefore cannot use it as collateral to back loans of any type.
John Berg, the executive vice president of Heartland Financial, which runs a subsidiary bank, Rocky Mountain Bank, in Billings, said that lending to any start up company is high risk, especially if the companies are unsecured. In order to decrease the risk, the banks might take collateral, such as equity on homes.
However, without clear titles to their land, Crow business owners have no right to use their homes to back a loan.
Berg said that if the person seeking a loan is buying assets for the business, the banks can take these assets as collateral. This would have little to no benefit for Smith, who would invest any loan money directly into the land. Bernadette Smith’s brother, Rick Smith, has been successful despite the lack of recognition off the reservation. Rick owns a firework stand and ranch. He has an LLC that covers both his ranch and his fireworks stand. The fireworks stand employs eight Crow tribal members. But, when it comes to equipment for his ranch, Rick has to go off the reservation.
After getting a tribal LLC, he went into an auto parts store and asked to set up a charging account, which would allow him to buy now and pay later. At first, the store was willing to set one up with him. Then it found out his LLC was a tribal LLC. Two or three weeks later, he got a letter telling him he could have a cash-only account, but not the account he had hoped for.
“People want to get into business,” Rick said. “But they really can’t because they have so many obstacles in front of them and they just don’t want to overcome the obstacles.”
Good Voice said one of the main problems inhibiting business development on the reservation is a lack of rental space. While office space is readily available for rent off the reservation, in Indian Country people have to build their businesses from the ground up — an expensive investment considering zoning rights, infrastructure and actual construction costs.
However, for others, like Timmy Falls Down, the owner of Long Otter Cafe in Pryor, building from scratch didn’t mean going into a lot of debt.
The Long Otter Cafe first opened its door in 2011. Falls Down moved back to the reservation because his oldest son’s special educational needs were not being met in Billings. Even the private schools weren’t able to give the boy the personalized care that the family found in Pryor. But Falls Down needed to secure a financial plan to support his family on the reservation.
Falls Down turned to an assignment he completed in a business class at Rocky Mountain College. He had to design a small business and come up with the pricing based on the average household income of the selected area. He ended up drafting preliminary plans for the Long Otter Cafe.
Falls Down and his grandfather used to joke about starting up a coffee shop, cafe or grocery store in Pryor. The assignment earned him an A and, when his grandfather, who owns and operates a nearby guest ranch, saw the plans he agreed to loan him the money, interest-free, to start the cafe.
Falls Down’s family already had the land for the cafe. All they had to do was build the facilities, which originally consisted of a building the size of a large shed. There was no room to sit inside and customers would line up along the sidewalk while waiting to be served.
Business started slow for the Long Otter Cafe. But, Falls Down eventually turned that around. Since then he has expanded from a coffee shop to a full-fledged cafe providing affordable meals.
When the cafe saw more success, Falls Down ripped out a wall and built an addition. Now around 30 people can sit in the cafe and enjoy their meals.
“You do have to be a big dreamer and you do have to be a big talker, but you have to back that up,” Falls Down said. “You have to work really hard. You have to dream big and start small.”
Falls Down flipped on a switch. The “open” sign glowed red and green. Within a few minutes, the first customers started to show up, asking if the cafe was open. He greeted each customer by name and knew how they liked their food prepared. He even knew some orders in advance.
A couple customers asked for nacho supremes. Falls Down cut up a tomato and mixed it in a blender to make salsa while the meat cooked on the stove.
Customers hand him money — cash only. He says he’d like to get a card reader. But, it’s a tough sell to banks, he said. His only option right now would be to install a reader that charged the Long Otter Cafe a fee per number of swipes, which could get expensive.
Falls Down said he understood the bank’s hesitation and general reluctance to invest on the reservation. Bank managers just don’t know the rules on the reservation and whether they would have the authority to enforce debtors to follow through on their side of the agreements, he said.
Falls Down, who has so far managed to privately finance his business, knows that debt is not an option. He has managed to stock his cafe frugally.
When it came time to expand, Falls Down looked for used industrial equipment, like his stove, which he purchased from a cafe that had gone out of business in Lodge Grass. He then spent hours filing the grease off and repairing the contraption.
Falls Down managed to use the Apsaalooke LLC program to his advantage. The tribal designation helped legitimize the cafe owner to set up business accounts with food vendors and banks, he said.
There doesn’t seem to be as easy an answer for Smith’s stalled RV park. Still, she continues to hold onto her LLC license.
“I’m still trying to start a LLC business because that’s my children’s land and they can continue on with that after I’m dead and gone,” Smith said.
Bernadette also works as a rancher. She keeps her cows in a pasture near the unfinished RV park. But, she said she’d like to diversify as she gets older.
“Ranching supports itself,” Smith said. “That’s something to keep me busy. The RV park was going to be a business that would help the local economy.”
She said she thinks having the RV park there would bring in more money and more visitors. Perhaps the park could even have a resident artist. In addition to helping Pryor, she said Fat Buffalo Enterprises — the name of her business and a take on her childhood nickname — would keep her family busy. Her children would learn and help people.
“I firmly believe that there’ll always be tourists and a RV park would be one way to create jobs and provide a service,” Smith said.
She stood in the midst of the weeds, pointing to the landscape around them. The Pryor Mountains rise up on the horizon, still capped with a blanket of snow. She calls Pryor God’s country. Even after more than a decade, she remains optimistic. It’s just a matter of time, she believes, until the RV Park gets off its feet. The weeds will be replaced with grass. Then people will start coming.