HO-CHUNK, INC.
a Wholly-Owned Tribally Chartered Holding Company
of the
Winnebago Tribe of Nebraska
Its Mission, Structure, and Development Plan
September 16, 1994
HO-CHUNK, INC
The following is a summary of Ho-Chunk, Inc.'s mission, structure, and development plan.
Ho-Chunk Inc.'s Mission
The Winnebago Tribal Council ("Tribal Council") understands that the Winnebago Tribe of Nebraska ("Tribe") is entering into a new phase of economic development. Tribal business operations are growing in sophistication and in the amount of attention they require. In order to allow Tribal business enterprises to be developed and operated more efficiently, the Tribal Council has established Ho-Chunk, Inc., a Tribally-Chartered corporation which is wholly-owned by the Tribe. Ho-Chunk, Inc. was established so that Tribal business operations would be free from political influence and outside of the bureaucratic process of the government.
Ho-Chunk, Inc.'s immediate mission is a simple one. To use the Tribe's various economic and legal advantages to develop and operate successful Tribally-owned business enterprises, and to provide jobs and opportunities for Tribal members. Such businesses will be developed both on and off the Winnebago reservation.
The long-term mission of Ho-Chunk, Inc. is to provide the Tribe with a large enough income stream from its business operations so that the Tribe may reach total economic self-sufficiency.
Ho-Chunk Inc.'s Structure
Ho-Chunk Inc., is incorporated under Winnebago Tribal Law. It is wholly-owned by the Winnebago Tribe of Nebraska. Ho-Chunk, Inc. is operated by a Board of Directors ("Board"), who are appointed by the Tribal Council. The Board hires a Chief Executive Officer ("CEO"). The CEO is responsible for hiring the staff of Ho-Chunk Inc. and its subsidiaries.
The Board consists of five members. In order to ensure that the long-term objectives of the Tribe are being fully considered and to enhance the communication between the Board and the Tribal Council, two members of the Board are to be Tribal Council members. To ensure community involvement, the third member of the Board shall be a tribal member. The fourth and fifth members of the Board shall be outside experts and not necessarily tribal members.
Roles and Responsibilities
1.Tribal Council: As the body ultimately responsible for tribal governance, the Tribal Council must oversee the development corporation. The Tribal Council duties include the following:
i.Formulation of a long term development plan for Ho-Chunk, Inc;
ii.Appoint the Board of Directors; and
iii.Approve annual operating plans.
2.Board of Directors: The primary task of the board is to oversee the operations of the corporation, and to make sure that those operations reflect the strategic interests and objectives of the Tribe. The Board will generally not be involved in the day-to-day decision making process, but will act in an advisory role to the corporation. The Board of Directors duties include the following:
i.Selection of the CEO;
ii.Reporting to the Tribal Council, including: an annual operation plan, including budgets; annual audit statements; an annual report describing progress against corporate goals in the past year; quarterly corporate balance sheets and profit and loss statements;
iii.In conjunction with the CEO, develop the operation plan;
iv. Oversight authority over the CEO; and
v.Rule and Policy Making for the corporation.
3.Chief Executive Officer: The CEO is the focal point of responsibility and accountability. The CEO has the flexibility to make quick and efficient business decisions, while at the same time assuring the corporate operations respect the broad guidelines set by the Board of Directors and the Tribal Council. The CEO's responsibilities include the following:
i.Management:
a.Day-to-day business management;
b.Hiring corporate staff;
c.Development and implementation of operating policies and procedures;
d.Development of the annual plan of operation (including, budgets, sales estimates, and expense and revenue projections); and
e.Accounting for corporate funds.
ii.Subsidiary Management:
a.Develop and monitor the operations of the subsidiary corporations;
b.Selection of subsidiary management personnel.
iii.Development Planning: Within the Board of Directors and Tribe's stated development goals, the CEO must seek out and initiate planning for new business development.
4.Subsidiary Managers: The CEO hires a manager to operate each subsidiary or business operation. Such a manager operates under the supervision of the CEO. The subsidiary manager is responsible for the day-to-day operation of the individual enterprise, and is authorized to make operating decisions in a manner consistent with the overall corporate operation plan.
The Development Plan
The Tribal Council recognizes that some Tribal business enterprises have been not been as successful as they could have been due a lack of experience in developing and operating sophisticated business ventures. The following is an outline of a plan designed to allow the staff of Ho-Chunk, Inc. to gain some valuable experience while developing small-scale businesses. The ultimate goal is to have a highly trained and experienced staff so that after a few years of operation, Ho-Chunk, Inc. will gradually develop and operate more sophisticated businesses. The Tribal Council feels that this slow managed approach to growth is the best way to ensure that Ho-Chunk, Inc. succeeds.
The Short-Term Plan
(2-3 years)
The following is a description of the goals in each specific area:
Ho-Chunk's Corporate Staff:
The first objective of Ho-Chunk, Inc. is to seek out highly qualified Native Americans and Winnebago Tribal Members to manage the corporation. Indian preference will be in effect, but it will not prevent the CEO from hiring a non-Indian if their particular expertise is needed. The management staff is obligated to train the Native American staff so that they may ultimately operate the corporation.
For entry-level positions, the goal is to identify tribal members with college educations or those with significant experience and to offer them the chance to develop their business skills. If the person has not completed their college education, they should be presently working towards completion. A Tribal member internship program should also be established. The ultimate goal is to provide meaningful jobs for our Tribal members so that they may return to live and work on the reservation.
The CEO will hire a manager to operate each new business. Every effort will be made to hire a qualified Tribal member. If no Tribal members are currently qualified or available, a member will be identified as a management trainee.
Initial Development Plan
Ho-Chunk, Inc.'s staff will seek out small-scale business enterprises. At least initially, the ideal business arrangement will be with a well-known franchiser. Ho-Chunk, Inc. will be able to take advantage of the franchiser's expertise in regards to site selection, development, construction, training and operating the business. Due to the relative inexperience of Ho-Chunk's staff, such relationships with franchisers will be crucial in the initial stages of operation.
In order to maximize Ho-Chunk, Inc.'s profit potential, the development projects will largely be located in the surrounding cities, such as Omaha or Sioux City. Whenever economically feasible the Tribal business will be located on the reservation. However, due to the limited population base on the reservation, the Tribal Council recognizes that a majority of the business may be located off-reservation.
The corporation will develop and operate businesses without necessarily having any overt sign to the public that the business is Tribally owned. Subject to the general goals of Ho-Chunk, Inc., each business will be largely autonomous. However, all profits of each enterprise will flow back to Ho-Chunk, Inc.
Source of Capital
The Tribal Council recognizes that Ho-Chunk, Inc. needs the flexibility to operate in an efficient manner. Part of that flexibility requires that Ho-Chunk, Inc. be given funds which they can use to fulfill the long-term goals of the Tribe. Without an independent source of funding Ho-Chunk, Inc. would need Tribal Council approval for each acquisition it makes. This would contradict the very reason for Ho-Chunk, Inc.'s existence--that is a flexible corporate organization that is free of political interference and outside of the bureaucratic process. For the above reasons, the Tribal Council has allocated twenty (20) percent of the net profits from the Tribe's gaming operation for the exclusive use of Ho-Chunk, Inc. The corporation does not have free reign to dispose of the funds as it sees fit. All of Ho-Chunk, Inc.'s projects must be within the stated goals of the Tribal Council and the approved annual operating plan.
Acquisition Financing
While a percentage of the net profits from the Tribe's gaming operation is being allocated to Ho-Chunk, Inc., every effort should be made to develop projects without incurring a large amount of long-term debt. If possible the cost of the development should be paid while the project is being developed. There are several reasons for pursing such a strategy. The first reason relates to Ho-Chunk, Inc.'s tax status. Since it will likely not pay taxes on the majority of its income, normal tax deductions such as depreciation and interest paid on debt will have a very limited positive effect on the net profitability of each enterprise. Secondly, if Ho-Chunk, Inc. owns all of the assets, a financier will not be able to dictate how to operate Ho-Chunk, Inc. or its particular businesses. Lastly, the Tribal Council recognizes that the current level of success of the Tribe's gaming operation may not be able to be maintained. If the Tribe's gaming revenues are substantially diminished then Ho-Chunk, Inc. will be able to leverage its current assets to maintain its growth rate. Such leveraging would not be possible if the majority of Ho-Chunk, Inc.'s assets had a large amount of outstanding debt.
Reinvestment of Profits
At present, the Tribe has sufficient revenues to operate the current government and to implement significant new governmental programs. As a result, the income generated from Ho-Chunk, Inc. is not immediately needed by the Tribal government. In order to maximize Ho-Chunk, Inc.'s ability to fulfill its long-term goal--total economic self-sufficiency for the Tribe--the initial profits from the corporation will be reinvested back into Ho-Chunk, Inc. When the Tribe reaches the position where it needs the revenues from Ho-Chunk, Inc., the profits can be given over to the Tribe. Also, the profits of each subsidiary shall automatically flow back to Ho-Chunk, Inc., who will determine how to allocate the additional revenues.
Economic and Legal Advantages
Ho-Chunk, Inc. will use the Tribe's economic and legal advantages to further its economic and social goals. For example, the corporation could place off reservation development into trust status and allow the business to enjoy the benefits that trust status offers. The Tribal businesses could also offer Indian preference in employment. Also, the Tribe could create a favorable regulatory environment for Ho-Chunk, Inc. or use its regulatory power to assist in certain types of development projects.
Governmental Functions
The Tribal Council recognizes that Ho-Chunk, Inc. is designed to be a for profit corporation and that although it is wholly-owned by the Tribe, certain government development projects are outside its scope of responsibility. Governmental and corporate goals may necessarily conflict on occasion and the long-term mission of Ho-Chunk, Inc. should not be impeded by developing projects better suited for government development and operation. For example, if Ho-Chunk, Inc. were to build houses on the reservation, it would do so to make a reasonable profit, not to subsidize Tribal housing development. The Tribal government or one of its agencies is better suited to build subsidized housing because it is better able to take advantage of existing federal and state programs.
A Typical Development Project
The following is an example of how a project would be developed. The staff would identify a business which it wishes to purchase or develop on or off the reservation: i.e. a franchised fast-food restaurant in Sioux City. The staff would acquire a suitable piece of property or assign property which it already owns. (Ho-Chunk, Inc. will continually be pursing ideal development sites). The CEO would present the idea to the Board for its approval. If approved by the Board, the corporate staff would be responsible for the development and operation of the business. If the development is done with a franchiser, the staff could rely upon its particular expertise where appropriate. Also, the land could be placed into trust status and, thereby, avoid local taxation and allow the corporation to extend Indian preference in its employment practices.
Extended Development Plan
As the staff of Ho-Chunk, Inc. gains experience, its reliance on outside franchisers for development assistance will no longer be a priority. Also, the level of sophistication and the amount of corporate assets used for a particular development project will be raised.
As stated earlier, during the initial development stages Ho-Chunk, Inc. will attempt to develop its business without incurring any long-term debt. However, as Ho-Chunk, Inc. expands it may need to incur some debt to be able to finance certain projects.
Once Ho-Chunk, Inc. is well-established, the profits or a percentage of the profits of the operation could begin flowing back to the Tribal government or be transferred into the Tribal government's investment fund.