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The Economic Beat of Warm Springs 

Innovation promises security on the reservation

Clockwise from the top left, 1. Gerald Danzuka. 2. The Deschutes River offers a picturesque, but isolated location for the Warm Springs Reservation. 3. Warm Springs Community action Team Executive Director Chris Watson stands in front of the Old Commissary Building. 4. The staff of the Warm Springs

Clockwise from the top left, 1. Gerald Danzuka. 2. The Deschutes River offers a picturesque, but isolated location for the Warm Springs Reservation. 3. Warm Springs Community action Team Executive Director Chris Watson stands in front of the Old Commissary Building. 4. The staff of the Warm Springs

Located a little more than an hour north of Bend, The Warm Springs Reservation consists of approximately 1,000 square miles of land. The area is serene, with the Deschutes River running through the middle—a perfect tranquil setting. But life hasn't always been easy here. With an estimated 6,500 people living on the reservation—and fewer than 65 small businesses to provide jobs, the reservation has faced tough times. Things are looking up, though, and there are plans to improve the economic opportunities on the reservation, with the goal of providing tribal members with jobs—or a way to own their own businesses.

In April, the lumber mill on the reservation announced its closure, putting more than 85 people out of work. Warm Springs Forest Product Industries was established by the Tribal Council in 1967, and has worked since then to provide jobs, education, and social benefits for community members. Recently, they decided to wind down operations because of "a reduced log supply, an aging physical plant, and a changing economy," the Tribe said in a news release, adding that the closure is "to protect the Tribe and its resources and to minimize the impact on individual tribal members."

The closure was just one of many factors working against those who live on the reservation. The isolation from the rest of the state, and the fact that many members don't own cars, makes it difficult to find jobs outside of their community. The closest city to the Warm Springs Reservation is Madras, which is 15 miles away and can be a treacherous drive in the winter.

Currently steps are being taken to change the situation and to utilize the talents and skills that exist among community members.

A Cannabis Future

The Confederated Tribes of Warm Springs is taking control of its future and looking to invest in the Tribe for years to come. The largest project is taking advantage of a new industry in Oregon—the cannabis industry. The Tribe announced last year a plan to launch a cannabis project, which has been moving forward quickly.

The project is the brainchild of the Tribe's economic development corporation, Warm Springs Ventures. The organization was started in 2002 "to develop jobs on the reservation, create revenues for the Tribe, and to diversify the economy, as well as to identify economic investments," according to Don Sampson, CEO of Warm Springs Ventures.

In December 2014, the Department of Justice released a policy guideline called the Wilkinson Memo that said tribes could engage in the cannabis industry as long as they followed certain guidelines and policies.

"We saw this as an opportunity," Sampson said, explaining that after the memo, numerous community members approached the organization about the possibilities.

In February 2015, the Board of Directors voted to recommend the idea to the Tribal Council, and over a 10-month period, the Tribe has been working with Gov. Kate Brown's office, the Oregon Attorney General, the U.S. Attorney's Office in Portland, the Bureau of Indian Affairs, and other agencies, to develop regulations to meet federal policy guidelines.

The Tribe has broken ground on its first cultivation facility, which will be around 36,000 square feet with funds from its own business investment revolving fund, as well as from an investment partner. The Tribe will also be teaming with a management company that will help to manage operations of the facility, including cultivation, extraction, and retail and wholesale sales.

"It will produce about 55 jobs on the facility which is very timely because of the closure of the mill," Sampson said. "We will produce another 30 jobs off the reservation at our retail stores. We are looking at locations including Portland, Salem, Eugene, and possibly Bend," as well as a few other locations for the future.

The Tribe will operate the retail stores, but will also plan to sell its product in other stores within Oregon. Those immediate 55 jobs will be important, especially as a way to replace some of the 85 jobs lost at the mill. In addition, the Tribe will also be offering important training for the employees because some of the jobs will be very technical, especially in the process of extraction.

"Basically our goal is that we will teach and train our tribal members to learn the business and over the next three years hope to be in a position to fully manage and operate it while our management partner will slowly phase out," Sampson said.

The project will not only offer jobs and training for tribal members, but the hope is that it will also offer support for the Tribe for years to come. According to Sampson, a casino earns around 40-45 percent profit margin (also known as EBITDA), but a cannabis operation will earn more like 80 percent.

"Our advantages are that our production costs are significantly lower than what you might find off the reservation," Sampson explained. "Also, we are a vertically integrated business, which means we control the different levels of the industry where there are markups or costs. So when we are cultivating and extracting and wholesaling and retailing, we are able to control those costs, so we are less at the whim of the market."

The Tribe will also have a regulating body (similar to the Oregon Liquor Control Commission) to make sure they are regulating their product to meet or exceed the standards of Oregon.

They are hoping to have the cultivation facility completed around October of this year, with their products in stores by January 2017.

"It's part of our long-term rebuilding plan over the next five to 10 years," Sampson explained. "We're confident once we get these profitable businesses started we can start providing dividends to the Tribe. "

Indianpreneurship

Luckily for motivated tribal members, there is the Warm Springs Community Action Team. A small staff of only three (plus an AmeriCorps Vista volunteer), the team provides training, and even grants to help individuals gain skills or education needed for their future.

The Community Action Team began in 2008 to promote economic development and community development on the reservation. Although the group's original goal was to end poverty on the reservation, Chris Watson, Warm Springs Community Action Team executive director, explained their new goal is to promote personal growth, "so that people could be more self-sufficient, so that they could do things that would enable them to support themselves, their families, and their community. It is a more positive way of thinking."

The organization is working to enable community members to improve their own lives through many avenues. Their main program is the Individual Development Accounts or IDA. Those accounts are a part of the Oregon IDA Initiative from the Oregon Office of Housing and Community Service and are funded by tax credits. The accounts are a matching program for lower income people who lack assets, but who want to build assets.

"The money has to be used for the purpose of assets, starting or expanding a small business, buying a home, or education," Watson explained.

The recipients can also renovate a house, purchase equipment for disability, or purchase equipment that enables them to get to work or school.

"We have a lot of people on the reservation that bought vehicles through our program," Watson said. "I am happy every time I see some of these cars driving by that I know people were able to get through our program."

The money doesn't come to the members for free. They have to take classes, depending on what they will use the funds for, and they also have to save money to receive money.

According to Watson, the match rate statewide tends to be three to one—for instance, for every dollar someone saves, three dollars goes into their account. However, in the Warm Springs Community Action Team's program, they have a five to one match rate—for every dollar the participant saves, they receive five.The classes they are taking are relevant to their goals. For instance, if they are starting a small business, they will take a financial skills class and one called "Indianpreneurship"—to help them learn how to start a business.

"It's not like we're just giving away money," Watson explained. "Instead, it's a way that people can build a skill set and can also save some of their own money to get assets to actually do something. And we're finding that it's really helping some individuals to help shape their lives."

The Warm Springs Community Action Team has taken the place of the Tribe's small business center, which closed in 2006. So far, around 50 people have graduated from the IDA program and there are currently 110 people enrolled.

"There are single moms with three kids that are able to get their kids to school and get to work, for example, because of this," Watson explained.

The heritage of the tribes on the reservation is a starting point for many businesses, and the IDA program is helping them get off the ground. For instance, a ceramic artist on the reservation already had purchased a spinning wheel, but with the program, she was able to buy 500 pounds of clay, carving tools, and kiln time. The program helped her launch a business, and is helping her share her talent worldwide. Although not everyone is an artist, there are many business opportunities which can also incorporate the culture and heritage of the Tribe.

"There was a guy who has a handyman service, there are people who are buying cattle, one guy did gopher trapping, people bought fishing boats, people are starting food carts as a result of this program," Watson explained. "It could be someone who bought a wood splitter and a chain saw and is fixing up their pickup truck so they can cut wood and then sell it. And that is a business endeavor for someone who is not working. And that adds money to a family's economy."

And while there are those looking to do what they can to support their family, there are also those who are looking to their skills and hoping to build something a little larger.

"There are people with bigger ideas that don't just want to buy a food cart, but buy some boats along with that and sell some Columbia River salmon in a food cart somewhere," he explained. "There is a wide range of business ideas and it's fun to see where they're all going."

The lack of business and job opportunities seen on the Warms Springs Reservation is not uncommon among reservations across the United States. But the Community Action Team is helping the community members realize their potential and what they can do with a little help.

"And that is the joy of this job—that we actually get to see people when they get into the program who think 'this is too good to be true.' And they start saving money and they start to realize it's getting matched, but it takes a while for them to get there," Watson explained. "Every time someone gets to the point where they have met their savings goal and then they are making that matched withdrawal where they are purchasing whatever capital assets they need for their business...every time that happens you can just see it in their face, you can see how happy they are."

Small Business Incubator / Artisans Co-Op

The Community Action Team is also working to start a small business incubator. The organization believes there are 14 retail businesses on the reservation and "maybe 50 others," according to Watson, but "the idea of having a small business incubator addresses one of the challenges small businesses confront here, which is no office space, no space, no buildings. And to put up a building is something that is not so easy to do."

The plan is to take an old building—the Old Commissary—which is more than 100 years old, and fix it up. According to Watson, the building is full of asbestos, lead-based paint, mold, feral cats and rodents, but it has potential.

The building would also house a new artisans co-op, which Watson said, "would enable at least the beginning of a more entrepreneurial culture here. There would be a place and space to gather, where social and cultural relations would intertwine. We hope it would serve as a place from which business could spring outwards."

Gerald Danzuka is the small business counselor and credit coach with the Warm Springs Community Action Team, and has been a part of the discussion on the artisan's co-op from the beginning. The discussion didn't start as a way to build an artisan's co-op, but was a discussion on how to build any co-op — and what industry should be their focus. Danzuka grew up raising cattle, and thought a beef co-op would be the best way to go. But the current needs of community members are what helped make their final decision.

"We sat down and said, 'What would benefit most now and what would benefit most later?' and based on all of our experience it came down to...we have the most experienced arts and crafts people, more bead workers, more drum makers. Those are really low-cost areas. So that was the logical way to go because it's something you can see."

Danzuka said the co-op would allow individual businesses to leverage their resources, including helping them with marketing to expand and to reach a larger audience.

"The co-op is really designed for expanding outward," he explained.

Danzuka has hopes of utilizing local events, such as the solar eclipse later this year, to help their artisans grow their businesses.

The business incubator and artisan's co-op would not only create a sense of community among community members, but would also enable them to learn how to sell their products.

"There is a lot of talent here and a lot of knowledge here," Watson explained. "And yes, it's true the educational attainment isn't as high here as it is in a lot of places off reservation. But there is a lot of ingenuity, a lot of people that have really innovative spirits, a lot of great ideas around business."

Watson estimates the reservation currently has around 25 percent of the jobs actually needed by the Tribe, and projects such as the IDA program, the artisan's co-op, and the cannabis operation is a way for the community members to change that. With the mill closure and other factors affecting the community members on the reservation, help is much needed. The idea of the initiatives, including the cannabis project, is to get that help to their community members as soon as possible.

"There are going to be some very critically needed revenues from this project to the Tribe and we think that will build over time," Sampson explained. "We think that in the first three years, we will be able to exceed the revenues of all the other enterprises combined. Very timely, much needed."

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