Application. Proposal for Development

A private developer has approached the McLeod Lake Indian Band Council about developing residential units on Sas Mighe IR32 located at Bear Lake, as shown in Map 1.  In the MLIB Land Use Plan, Sas Mighe IR32 is described, in part, as follows:

With access off the highway via Davie Lake Road, this site offers potential for highway commercial, residential, RV camping, cultural camps, tourism and agricultural uses such as a greenhouse or nursery.^[1]

According to preliminary designs, the development can provide up to 50 new housing units.

The Band is interested in the proposal because of two short-term needs.

1. The Band needs 25 housing units, preferably at Sas Mighe IR32, to meet the needs of its members.
2. The band is interested in developing commercial properties on or nearby Sas Mighe IR32. This development requires a $4 million up-front investment before it can be initiated.

The MLIB Land Code includes rules and procedures for granting property interest on Reserve lands, but does not detail which tenure types will be administered and where no individual member of McLeod Lake Indian Band has claimed or been granted rights to Sas Mighe IR32 land, interest in the subject area is held communally.  Currently, it is possible that a variety of tenures could be granted to facilitate the development of Bear Lake, with each tenure composed of different bundles of rights for the developer and the Band.

Map 1.  Sas Mighe IR32:  Land Use Designations

The developer, who is well versed in First Nations land tenure, has proposed three options for the Band Council to consider.  All options are feasible.

Reserve Land Exchange

The Framework Agreement allows for alienation of MLIB Reserve lands where compensation is provided in the form of other land that is to become First Nation reserve land.  Other compensation may include land that will not become First Nation Reserve land.  The developer has submitted a draft terms of reference, which would include compensation in the following forms:

• the whole of the Sas Mighe IR32 lands would be exchanged for new reserve lands within the McLeod Lake Tse’Khene traditional territory, which would be appropriate for general resource development, but not suitable for residential designations;
• a one-time settlement of $5 million; and,
• 25 potential housing units for Band members; either a member or the Band can purchase a unit (within a specified time period).

Long-term lease

The Band may negotiate a 99-year head lease for all or part of the Sas Mighe IR32 lands with the developer who may then issue leaseholds (subsidiary sub-leases) to potential renters.  The draft contract for a head lease involves:

• annual lease payments, set initially at $300,000 and subject to review at a future date, for all of the land to the MLIB; and
• 15 housing units available exclusively to the Band at no cost (i.e., the units do not need to be purchased by the Band; they will be given to the Band as part of the agreement).  The Band will determine how to make the units available to Band members.

Joint Venture

A joint investment in an $9 million residential/commercial venture between the developer and the MLIB.  This business venture would take the form of a corporation-to-corporation agreement between the developer and a one of MLIB’s existing corporations, with levels of ownership by each of the two parties to be determined.^[2]  The joint venture would operate under a head lease with MLIB.  Important stipulations include:

• an initial Band investment of $4.5 million;^[3]
• estimated return on the joint commercial investment of $300,000 annually from potential (not guaranteed) profits; and,
• 25 housing units being made available exclusively to Band members (at no additional cost).

Resources

In addition to MLIB’s Land Code and Land Use Plan, the Framework Agreement, and Indian Act, the following resources provide relevant information.

Land management

Indian and Northern Affairs Canada (2006). Land Management Manual. Ottawa, ON: Government of Canada.

Note: this manual is for First Nations operating under the Indian Act (i.e., without a Land Code).

Leases

Starkell, Bob C. (2006). Leases on Indian Reserves. Vancouver, B.C.: Bob C. Starkell Law Corporation.

Pushor Mitchell LLP (2008). The Development Process On First Nations Lands.

Joint ventures

Fraser, Sara Jane (2002). “Joint ventures as a sustainable development tool for First Nations,” The Journal of Aboriginal Economic Development 3(1):40-44.