Developing commercial real estate on reserves

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Government of Canada reintroduces legislation to help First Nations develop commercial real estate on reserves

Ottawa, Ontario (May 12, 2010)

The Honourable Chuck Strahl, Minister of Indian Affairs and Northern Development and Federal Interlocutor for Métis and Non-Status Indians, today reintroduced legislation to facilitate the development of major commercial real estate on reserve land when requested by the band.

"Our Government is committed to removing barriers to economic development on reserves," said Minister Strahl. "The proposed legislation will make it easier for First Nations to pursue large real estate projects on their land, opening the door to new opportunities in a potentially lucrative market."

The First Nations Certainty of Land Title Act would amend the First Nations Commercial and Industrial Development Act to permit the registration of on-reserve commercial real estate developments in a system that replicates the provincial land titles or registry system. First Nations that make use of the new legislative tool would ensure their on-reserve real estate developments benefit from greater certainty of land title, making the value of these properties comparable to similar properties off reserve land.

The Squamish Nation in British Columbia is a major proponent of the new bill. The First Nation is currently developing a proposal for new condominiums on reserve land in West Vancouver.

"The First Nations Certainty of Land Title Act will bring us one step closer to realizing our economic development goals, including the construction of new state-of-the-art condominiums on our land in West Vancouver," said Squamish Nation Chief Gibby Jacob. "The successful completion of this project will bring new investment in our community, improving the quality of life for all our members."

The First Nations Certainty of Land Title Act is optional legislation that is available to First Nations across Canada. In order for this legislation to apply, a First Nation would need to have a commercial or industrial proponent and a province willing to participate, as well as support from their community.

This initiative is in keeping with the Government's Federal Framework for Aboriginal Economic Development, which aims to increase opportunities for partnership-based economic development projects. An important step in reaching this goal is to enhance the value of Aboriginal assets by addressing legislative and regulatory barriers to Aboriginal economic development.

Backgrounder - First Nations Certainty of Land Title Act

The First Nations Certainty of Land Title Act amends the First Nations Commercial and Industrial Development Act,which wasdeveloped in consultation with five partnering First Nations: Squamish Nation in British Columbia, Fort McKay First Nation and Tsuu T'ina Nation in Alberta, Carry the Kettle First Nation in Saskatchewan, and Fort William First Nation in Ontario. The First Nations Commercial and Industrial Development Act came into force on April 1, 2006.

The First Nations Commercial and Industrial Development Act is optional legislation triggered only at the request of a First Nation. Federal regulations developed under the First Nations Commercial and Industrial Development Act apply only to a specific project and parcel of reserve land where there are gaps between federal and provincial regulations. It enables the federal government to replicate the necessary provincial laws and regulations to allow First Nations to move ahead with large-scale, complex commercial and industrial development projects on reserve. To be eligible, projects must identify a regulatory gap, have a commercial or industrial partner, and have a province willing to participate.

Commercial real estate: a new market for First Nations

The First Nations Certainty of Land Title Act will allow interested First Nations to explore new economic development opportunities on reserve land through the development of commercial real estate. To date, such projects have been hindered by lower values for on-reserve properties due to differences in the property rights regime on and off reserve land.

The First Nations Certainty of Land Title Act supports the development of commercial real estate by addressing these barriers. Specifically, the bill would permit the registration of project lands in a system that replicates the provincial land titles or registry system. The First Nations Certainty of Land Title Act is optional legislation that would be available to First Nations across Canada who have a commercial or industrial proponent and a province willing to participate.

In the new Federal Framework for Aboriginal Economic Development, the Government of Canada committed to increasing economic opportunities for First Nations by, among other things, modernizing land management regimes and enhancing the value of Aboriginal assets by addressing legislative and regulatory barriers that hinder economic development. Commercial real estate development on First Nation reserve lands represents an opportunity for First Nations to further participate in the Canadian economy.

Frequently Asked Questions - The First Nations Certainty of Land Title Act

What are the objectives of the First Nations Certainty of Land Title Act?

The First Nations Certainty of Land Title Act would allow interested First Nations to explore new economic development opportunities on reserve land through the development of commercial real estate. To date, such projects have been hindered by lower values for on-reserve properties due to differences in the property rights regime on and off reserve land.

Specifically, the bill would enable the creation of a system that would replicate the provincial land titles or registry system. The bill amends the First Nations Commercial and Industrial Development Act.

The First Nations Certainty of Land Title Act has been changed since it was first introduced on December 10, 2009. What is this change and why is it required?

Bill C-63, the First Nations Certainty of Land Title Act, was introduced and received first reading in the House of Commons on December 10, 2009. Following its introduction, the Government determined that text was inadvertently omitted from the proposed legislation. An amendment to section 7 of the First Nations Commercial and Industrial Development Act was required to ensure the integrity of the regulatory regime, a minor technical change was made to clause 5(1), and a transcription error in clause 6 was corrected. Other than these minor corrections, the reintroduced bill is identical to Bill C-63.

What is the First Nations Commercial and Industrial Development Act and why was it originally enacted?

The First Nations Commercial and Industrial Development Act came into force on April 1, 2006. Prior to the Act, First Nations planning large-scale and/or complex commercial and industrial development projects on reserve lands were hindered by a lack of adequate regulations. This caused jurisdictional uncertainty for both First Nations and industry proponents. The result is that some projects were difficult or impossible to approve, finance or finalize. The Act was developed to address the regulatory gap that existed between lands on and off a reserve.

What is a regulatory gap?

A “regulatory gap” is the absence of adequate laws (including regulations, monitoring and enforcement systems) to govern an activity on reserve land. Numerous reports have identified regulatory gaps as one of the key obstacles to Aboriginal economic development.

What are the differences between the property rights infrastructure on and off reserve land? What impacts do these differences have for property values?

Under the Indian Act, property rights on reserve land are maintained in a deeds-type registry, which cannot provide certainty of land title. Off reserves, land titles systems, maintained by the provinces allow property purchasers to buy with confidence, and the land title they hold is backed by some form of title assurance. Without this certainty of land title, on-reserve commercial real estate property would have a lesser value compared to similar property off the reserve.

How does the First Nations Certainty of Land Title Act relate to the Government's agenda to improve conditions on First Nation reserves?

The Government of Canada is committed to closing the gap in socio-economic conditions between First Nations and other Canadians. The First Nations Certainty of Land Title Act is in line with the Government's agenda, as outlined in the Federal Framework for Aboriginal Economic Development, to increase Aboriginal participation in the Canadian economy through partnership-based and opportunity-driven economic opportunities. The bill would accomplish this by enabling the development of a modern land management regime on reserves, thereby enhancing the value of Aboriginal assets.

Will the First Nations Certainty of Land Title Act apply to all First Nations?

The First Nations Certainty of Land Title Act is optional legislation that is available to all First Nations in Canada who have a private sector proponent and the support of the province. The bill amends the First Nations Commercial and Industrial Development Act (FNCIDA). Regulations developed under FNCIDA apply only to the specific project and specific parcel of reserve land identified in the regulations.

What are the economic benefits of the bill to First Nations and to all levels of government?

First Nations across Canada would benefit from optional legislation that facilitates on- reserve major commercial real estate projects. The development of a property rights regime seamless with that off-reserve would increase certainty of land title and ensure a level playing field between on- and off-reserve properties. The Squamish Nation in British Columbia has submitted a project proposal for a commercial real estate development on reserve land in West Vancouver that would provide them with new economic development opportunities.

The federal government would benefit from revenue derived from the Goods and Services Tax (GST) on unit sales. For provincial and municipal governments, the development of the condominium units would increase residential density, creating spinoff benefits for local businesses and services; create new jobs; and increase tax revenue. Local residents would also benefit from enhanced transportation and infrastructure planning.

How would the First Nation and the province be involved in the development and implementation of regulations resulting from this bill?

Regulations under the First Nations Commercial and Industrial Development Act are only considered once the federal government receives a request from the First Nation in the form of a Band Council Resolution. The substance of the proposed regulations would be developed by the federal government, the First Nation, and the province. The federal government will normally support such a proposal only if there is some indication of support from members of the First Nation community. If a regulation specifies that provincial officials will carry out administration and enforcement functions on behalf of the federal government, an agreement between the three parties must be signed before the regulations can be made.

What are the environmental implications of the bill?

The Canadian Environmental Assessment Act, the Canadian Environmental Protection Act, 1999 and other federal environmental legislation remain applicable so there are no additional environmental implications. If necessary, federal legislation can be supplemented by regulations. For some projects it may be desirable to replicate provincial regulations for industry-specific operations that contribute to environmental protection.