Indian allotment holders are not making enough money from their allotments. One way for tribal allotment holders to gain more economic income from their allotments is to organize a corporation under tribal law and collectively manage allotted lands in order to gain more income for allotment holders.
The Indian Reorganization Act (IRA) prevented loss of more land out of Indian control by ending the sale of Indian allotments in 1934. Allotted lands came under the management of Bureau of Indian Affairs trust, and were not returned to tribal ways of land distribution and management. Under many tribal traditions, land was allocated to families, bands, villages or other local forms of community. The people used the land for hunting, fishing, farming, and gathering.
Most contemporary Indian allotment holders do not directly manage or invest in their allotment land. Therefore most do not gain the economic return that non-Indian farmers gain when they farm allotments under BIA leasing arrangements. Indian allotment holders know they are not making maximum income from their lands, and accept the income generated from their allotment leases. Often the farmer who leases the land is seen as a source of income when times are tight, and can be solicited by allotment owners to provide emergency income in return for extending leasing contracts. The farmer benefits from a longer lease, and the tribal allotment owner benefits from access to funds when needed. Nevertheless, Indian landowners are aware that the farmers and business people who lease their allotments are making much more money than the Indian owners.
The failure of leasing as a business plan is clearly seen through the experience of the Agua Caliente Band of Mission Indians. Often considered a rich Indian tribe, because they lease land in the lucrative Palms Springs resort real estate market, the Agua Caliente, for the most part, have not gained enough from their leases to keep most of the tribe out of poverty.
In 1959, after decades of lobbying, the Agua Caliente secured a Congressional act that enabled the tribe to make 99-year leases for high value allotted and tribal land in downtown Palm Springs. Ninety-two percent of the land was held in individual allotments, and 8 percent was held by tribal government. Individual allotment owners made leases, and the tribe made a 99-year lease to outside investors, who built the Palm Springs Spa and Hotel, which opened in the early 1960s. After 35 years of leasing land starting in 1960, over 50 percent of the tribe remained in poverty in 1995.
Most income from the Indian-leased land accrued to non-Indian business and home investors. Only when the tribe began to buy back the leases and take management over and make investments in the land and business assets, did the Agua Caliente make income sufficient to significantly improve tribal community well being. With help of a $9 million loan from the BIA in 1992, the Agua Caliente bought the Palm Springs Spa and Hotel. In 1995 the tribe initiated gaming and subsequently built two casinos and an additional hotel, all of which became very profitable. The Agua Caliente gain greater economic benefit when they managed investments and businesses on their collective tribal land.
Individual tribal landholders can approximate the collective ownership of land by gathering the allotments under a tribal corporation where the individual landholders are shareholders. Putting the land under collective management allows for greater ability to get loans, if not in the private sector, then from the BIA loan programs, just like the Agua Caliente and the Mississippi Choctaw. The tribal corporate structure allows for the pooling of entrepreneurial talents, allows for economies of scale for farming on other businesses, and should yield greater income for tribal landholders above the current leasing arrangements. A corporation of tribal landholders could maximize economic income from reservation land and ensure greater benefits to the reservation community.