1. Highly Fractionated Indian Land (HFIL) Loan Program
Intertribal Agricultural Council
Las Vegas, NV
December 5th-8th, 2016

2. NACDC Financial Services
Who We Are:
NACDC Financial Services is a Native CDFI (Certified Development Financial Institution) that was founded by Elouise Cobell in 2010
Elouise Cobell (recent presidential of freedom awardee) was the lead plantiff in Cobell vs. Salazar that led to the largest class action lawsuit ever won against the federal government- resulting in the land buy-back program
The Highly Fractionated Indian Land Loan Program is meant to augment the Land Buy-Back program allowing Native farmers and ranchers to consolidate and more effectively use their land

3. NACDC Financial Services
What We Do:
Our Programs
Ag outreach and Business of Indian Ag workshops
Credit builder loans and financial literacy classes
One-on-one credit counseling
Small business loans
One-on-one business plan technical assistance
Consumer loans
Native artist development and credit lines
Mini banks

4. NACDC Financial Services
1st Nationwide Intermediate Lender
Our Lending Record and Ag Background
0% default for loans on all 7 Montana reservations
Loan Fund Manager with 20 years experience in ag lending at Native American Bank
Staff with ag experience, understanding and background
Organization with track record of ag outreach on reservations and working with FSA and USDA on reservations across Montana

5. HFIL Loan Program What is Highly Fractionated Indian Land?
Reservation land with undivided ownership interests held by four or more individuals.
General Allotment Act of 1887 (aka Dawes Act) divided and allotted reservation land to individual tribal members.
When an individual passed away, title ownership was divided up amongst heirs.
Fractionated ownership grows exponentially with each passing generation.
Over 245,000 owners of 3 million fractionated land interests spanning 150 Indian reservations.

6. HFIL Loan Program
What does this mean for owners of allotted Indian land?
The ability of the owners to use land decreases as fractionation increases.
Locating owners for the use of the property becomes difficult.
Coordinating the use of the property nearly impossible.

7. HFIL Loan Program Initial Consideration
HFIL Loan Program was initially authorized by the Farm Bill.
Required the program to operate as a direct loan program (loans made directly to ultimate recipients).

8. HFIL Loan Program Initial Consideration (Cont’d) Tribal Consultation
14 sessions were held across the country to identify issues and address concerns.
Determined that a regulation would not result in a successful program.
Provision that directly tied the HFIL Loan Program to Bureau of Indian Affairs' (BIA) procedures was cited as the main issue; BIA title clearance process very complex.

9. HFIL Loan Program Initial Consideration (Cont’d)
Recommendations from Tribal Consultation
Should be a relending program instead.
Should be limited to purchasing land to continue agricultural use for the term of the loan.
Lenders must have knowledge and experience working with Indian Country and BIA.
# of lenders limited to no more than 2 lenders per year based upon limited available funds.

10. HFIL Loan Program New Authority
HFIL Loan Program is now authorized by the 2014 Farm Bill.
Final rule was published on December 1, 2015.
$10 million is authorized for FY2016.

11. HFIL Loan Program New Authority (Cont’d)
Program will provide revolving funds to eligible intermediary lenders.
Intermediary lenders will provide funds to Native American tribes, tribal entities, or member of either, to consolidate highly fractionated Indian land.

12. HFIL Loan Program New Authority (Cont’d)
Intermediary lenders and BIA are responsible for determining the processes and procedures needed to resolve the undivided interests in the land.
FSA provides oversight of the intermediary lender’s loan process and procedure, but will not provide oversight for the ultimate recipients.

13. HFIL Loan Program New Authority (Cont’d) Lender Eligibility
May be a bank, credit union, or other financial institution approved by USDA.
Must have the knowledge and experience of working with Indian Country and BIA.
Must have the legal authority for carrying out the proposed loan purposes, obtaining security, and repaying the proposed loan.
Must have adequate assurance of repayment of the loan based on fiscal and managerial capabilities.

14. HFIL Loan Program New Authority (Cont’d) Lender Requirements/Terms
Lender will complete a relending agreement (agreement will specify the plan for relending loan funds, proposed fees and charges to the ultimate recipient, and will provide maximum flexibility for the lender to work with its ultimate recipient).
Funds must be deposited into a revolving fund account.
Rate will be fixed and determined by the administrator.

15. HFIL Loan Program New Authority (Cont’d)
Ultimate Recipient Eligibility
Is a Native American tribe, tribal entity, or member of either that receives a loan from an intermediary lender’s revolving fund.
Must agree to use the land for agricultural purposes during the term of the loan.
Must comply with the requirements of the intermediary lender.
Must be able to purchase fractionated interests resulting in at least 51%.

16. HFIL Loan Program New Authority (Cont’d)
Ultimate Recipient Requirements/Terms
Use of funds very specific; purchase of HFIL and related expenses only.
Eligibility of the ultimate recipient is based on the lending agreement.
Rate charged by lender to ultimate recipient will be negotiated between the lender and recipient and should be the lowest rate sufficient to cover debt service and administrative costs.
Determined by lender; max 30 years.

17. NACDC Financial Services
Policies
Requirements for participation:
10% equity investment by owner in the form of cash or other assets
Collateral to be determined on a case-by-case basis
Business plan required for application
Financials and projections required (current financials used for FSA or bank loan can also be used)
Some financial literacy and business training may be required of less-experienced borrowers prior to loan approval

18. NACDC Financial Services
Policies
Terms of Loan:
Up to 30 years for land loans
Interest rates to be determined by loan committee with the following considerations :
Interest rates at Native American Bank on similar loans
Cost of capital for NACDC FS
Indirect costs to NACDC FS for loan administration
$100 application fee due prior to processing loan request
Closing fees are 2% of loan amount and can be payed by borrower at closing or added to loan amount

19. NACDC Financial Services
Process for Application
How to start the process:
Contact land-owners who are potential willing sellers
Have interested sellers contact the BIA
Create Buy-Sell agreement through BIA
Conduct appraisals as necessary
Fill out NACDC FS loan application
Wait for loan approval
Receive loan

20. Any Questions? Patty Gobert 406-338-2992 pagobert@3rivers.net
Or Matt Harrington
PO Box 3029
Browning, MT 59417