An urban reserve that clearly demonstrates this is the Muskeg Lake Cree Nation Urban Reserve in Saskatoon. It started with raw land and no infrastructure. Today, the asset value of the land, infrastructure and buildings is approximately $18 million. It is obvious that this type of development and infrastructure could not occur on the parent reserve of the Muskeg Lake Cree Nation and continue to sustain itself due to its rural and isolated location.

A detailed description of entrepreneurial success and Aboriginal owned businesses is given below as part of the discussion on the potential for self-generating revenue on urban reserves.

Urban reserves provide job opportunities for aboriginals in urban settings. There are increasing employment rates for each of the nine urban reserves discussed above. This is especially true for the urban reserves that have casinos.

It is estimated that there are 1,356 individuals currently employed on the nine urban reserves described above. This number is expected to rise drastically within the next two years. Analysis was unable to determine explicitly if these jobs would have been created without the presence of urban reserves.

Urban reserves also offer a taxation benefit that can be an advantage in attracting a First Nations labour force. Status Indians do not lose their non-tax status with regards to federal income tax when they are working on reserve. Non-Status Indians do not have non-tax status either on or off reserve. This study was unable to determine whether this taxation benefit on an urban reserve accrues more to the employee, in the form of higher after-tax income, or to the employer, in lowering wage costs, or a combination of the two.

It is likely that urban reserves have more employment opportunities because rural reserves simply do not possess enough employment opportunities for their members of the employable community. Employment opportunities may also arise on urban reserves because of racial barriers that can be present in off-reserve locations.

The analysis of the nine urban reserves in this report estimates that at least 52 new businesses have been established since 1982. This number does not include businesses that have come and gone since the urban reserves were established and it does not include the number of businesses on the other 19 urban reserves in Saskatchewan.

Compared to business on rural reserves, the urban reserve offers numerous advantages. First Nation businesses in rural areas face barriers such as the remoteness of some of their communities from key markets and sources of financing. The mass of capital and resources critical to building a successful business can be difficult to find far from major population centres. As well, access to markets is more expensive and this affects the margins that firms in remote locations can expect, which in turn impacts their ability to attract capital. Some of the issues that are seen to affect access to capital include: lack of collateral, an inability to use assets on reserve as collateral, and a lack of local financial institutions. All of these challenges may enhance the likelihood of presenting an increased risk profile to lenders. ²⁷

A report by Industry Canada estimates that the population of Canadian Aboriginal business owners is growing by 7 percent per year. Aboriginal youth are approximately twice as likely as Canadian youth in general to become entrepreneurs. Aboriginal women are less than one half as likely to start a small or medium-sized enterprise (SME) as Canadian women in general. However, the number of SMEs owned by Aboriginal women is growing at a rate higher than any other group.²⁸ Urban reserves can contribute to these trends by eliminating some of the barriers facing First Nation businesses on rural reserves. For example, the presence of a local financial institution on an urban reserve, such as Peace Hills Trust on the Muskeg Lake Urban Reserve in Saskatoon, eliminates one of the issues that was identified as being a barrier to the success of aboriginal enterprises.

In the case studies presented earlier, urban reserves have used their urban location to provide a more positive environment that could contribute to a successful business or entrepreneur. However, the analysis does not conclude whether First Nation-owned businesses on urban reserves are more successful than those on rural reserves and whether First Nation-owned businesses on urban reserves are more successful than those in non-reserve urban areas.

The increase in employment opportunities, the number of First Nation-owned businesses, and in overall economic wealth on urban reserves could reduce the level or need for federal transfer payments to First Nations. However, the current research could not determine whether there are any obvious changes in the levels of federal government funding as a result of the establishment of urban reserves.

It is likely that the standard of living will be raised as a result of increased employment opportunities and increased revenue from First Nations owned businesses on urban reserves. Without an analysis of the base level of wealth or output associated with First Nations, the study was unable to determine whether the standard of living had changed.

This is not readily apparent from the research conducted. However, the Muskeg Lake Cree First Nation does direct revenues from their urban reserve to social service needs on the parent reserve.

First Nations associated with urban reserves tend to have more clearly defined governance structures. These First Nations are expected to dialogue on a government-to-government basis with municipal governments in the development and ongoing implementation of service agreements. These relationships are being developed at both the political and bureaucratic levels of the organization.

Urban reserves also encourage a more structured governance model. For example, zoning bylaws exist on all urban reserves, but they may not necessarily exist on rural reserves.

It is possible that urban reserves may draw human and financial resources away from rural reserves, no differently than in non-First Nation communities. One implication of this shift is the potential for social and economic problems to arise on parent reserves in rural areas.

An example of this is clearly seen on the Muskeg Lake urban reserve in Saskatoon. The diversity and large number of businesses, the presence of the aboriginal government businesses and the variety of occupations on this urban reserve creates an environment conducive to interaction and effective communication. This type of environment may not be present on all urban reserves, especially ones that are relatively small.

The Muskeg Lake urban reserve in Saskatoon is home to the corporate offices of the Federation of Saskatchewan Indian Nations (FSIN), the Saskatoon Tribal Council, and the Saskatchewan Indian Gaming Authority (SIGA). In Yorkton, the Sakimay First Nation urban reserve houses the offices for the Yorkton Tribal Council. In Prince Albert, there are administrative offices for the Peter Ballantyne Cree Nation, the Prince Albert Grand Council and the Saskatchewan Indian Equity Foundation on an urban reserve.

It appears that while aboriginal government offices are attracted to urban centres, the presence of an urban reserve provides an additional attraction to that urban community, which in turn, may increase the already growing population. It is well known that the major population trend of First Nations people is the move from rural communities to urban centres.

As discussed earlier in the Saskatoon situation, the City of Saskatoon has benefited from the establishment of an urban reserve. This establishment accelerated the development of serviced land. Thus, revenues to the City were similarly accelerated.

As well, development on the urban reserve provides for a higher tax base than if the land remained undeveloped. Finally, the level of revenue for Saskatoon on the urban reserve is higher. This occurs because Muskeg Lake has negotiated with the City to provide a grant (in lieu of taxes) equal to the commercial tax rate as opposed to the lower tax rate paid by the federal or provincial government on municipal-owned lands.

The relationship between the City of Saskatoon and the Muskeg Lake Cree First Nation provides an ideal model of how an urban reserve can be established without conflict or confrontation. From the beginning, the City of Saskatoon, the business community, and the public were generally supportive of the creation of this urban reserve. This positive relationship stemmed from the strong belief that the urban reserve is mutually beneficial. The development and implementation of the municipal services agreement and the working partnership between the parties allows them to meet their objectives cooperatively. This type of relationship also exists between the City of Yorkton and the Sakimay First Nation and between the City of Yorkton and the Kahkewistahaw First Nation.

On the contrary, the municipal city councils and citizens in Prince Albert and in Fort Qu'Appelle did not support the creation of urban reserves. In the late 1970s and early 1980s, Prince Albert city council responded to the initiative to create an urban reserve with opposition. They rallied for support of their organized opposition at the local, provincial, regional, and national levels.

There are three major reasons to account for the relations in Saskatoon and Yorkton compared to the relations in Prince Albert and Fort Qu'Appelle. First, municipal councils in Saskatoon and Yorkton believed that establishing urban reserves would result in economic development benefits that outweigh any potential concerns of coordinated governance. Second, city councils in Saskatoon and Yorkton had a high level of trust in the First Nation councils that they were negotiating with. Third, there was not a significant amount of public opposition towards the creation of urban reserves in Saskatoon and Yorkton. ³²

In general, any public opposition towards the development of urban reserves can be attributed to the misunderstanding of two main points. First of all, gaining formal reserve status means that the "land is under the jurisdiction of the First Nation council and it is the First Nation council or First Nation that has the authority to establish its own bylaws" and secondly, it means that "reserve bands are exempt from paying municipal taxes and school levies."³³

Opposition would arise amongst those members of the public who are unaware of the agreements and provisions that are made between the First Nation and the municipal government. It is necessary to understand that although the land is under the jurisdiction of the First Nation, both the First Nation and the municipal government enter into a compatibility agreement which addresses all issues of zoning bylaws, building codes and other municipal regulations. As discussed above, most agreements specify that land use and development will be the same as if the land were not reserve land. As well, municipal services agreements are created, stating that service charges will be paid in lieu of property taxes, although the charges are equal to the amount that would have been paid in property taxes had the land not been reserve land.

The development of urban reserves often requires the services of engineers, management consultants, legal counsel, and other business and planning consultants. This was true for the development of the Muskeg Lake urban reserve in Saskatoon. However, it is inconclusive as to whether all urban reserves required these professional services during their development.

For Saskatoon, the land that is currently owned by the Muskeg Lake Cree Nation was originally planned to be used for a correctional institution. The Federal government made this land available for purchase by one of the 28 First Nations who had outstanding land entitlements.

It is difficult to present any conclusions about whether or not urban reserves create any implications for the real estate market because urban reserves cannot transfer ownership to anyone but the federal government.