First National expands Native American lending

MARTINSVILLE, NJ. - Rumors of the demise of funding for golf course development projects are greatly exaggerated, according to Jerry Sager, managing director at First National, who said the departure of some of the bigger names has led to that perception.

"I keep hearing that and I think it's focused because Bank of America left and Daimler Chrysler Credit quit and GMAC stopped doing [golf course loans]. I don't think that's fair," he said.

Along with First National, Sager said, other key lenders have been in the golf business for many years.

"Textron's certainly been around a long time and we've been doing golf course loans for 20 years. I don't think we've changed to the market at all," he said. "Quite frankly, I don't think Textron has either. I think we've both been quite consistent."

First National's board of directors recently approved a proposal to provide additional funds to finance golf projects on Native American soil. This move stems from the positive experience First National has had with Santa Clara Golf Services, which is constructing a course in Santa Fe, N.M. Working with Native American projects, Sager said, is a relatively new area of investment.

"That's a real breakthrough for us, and apparently for everyone else," he said.

Previously, lenders were skittish about lending for projects on Native American soil because of tribes' sovereign governments. Because of this structure, lending for these projects is the equivalent of lending for a project in another country.

"You are not lending to an United States entity, you're lending to a sovereign entity, so you are subject to whatever Indian law exists at that particular tribe," Sager said. "You're effectively lending to a non-United States entity, so you don't have simple fee title to the real estate. It's a whole different set of rules."

Sager said a number of factors have led to an increase in the number of inquiries for these types of projects in recent years.

"There are a lot more now than there were five years ago and certainly 10 years ago," he said. "The growth with casino development and destination resort development onto Native American lands has sparked golf development and of course golf course lending. It's a wonderful market and I think a wonderful opportunity for golf course developers to partner with Native Americans."

Based on its success with the Santa Clara project, Sager said, First National will continue to fund these types of projects in the future.

"It's been a very positive experience for us," he said. "The golf course is not open yet, although we have invested several million dollars. We said, `Now that we've got our feet in the water, let's get wet all the way up to our neck and do some more of these.'"

Copyright United Publications, Inc. May 2002
Provided by ProQuest Information and Learning Company. All rights Reserved