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Indian Nations Law Update - November 2012

November 12, 2012

Potawatomi Corporation Starts Construction on Milwaukee Data Center
Data Holdings, LLC a wholly owned subsidiary of Potawatomi Business Development Corporation, the business development arm of the Forest County Potawatomi Community (Tribe), has started construction on a 46,150 sq. ft. $36 million data center building on a portion of the Tribe's trust lands in Milwaukee, Wisconsin. The project is part of the Tribe's redevelopment of the property following the recent departure of its former tenant.

The Data Holdings facility will be a wholesale, Tier III-enhanced, carrier neutral data center. The center's office space and dedicated data suites will offer tenants a cost-effective, flexible, secure and highly reliable IT facility for primary data center and secondary disaster recovery data center needs. The facility, which is expected to be ready for occupancy April 1, 2013, is financed in part by a loan guaranteed by the Department of Interior's Indian Loan Guaranty Program administered by the Department of Interior's Division of Capital Investment within the Office of Indian Energy and Economic Development. Godfrey & Kahn has been privileged to represent the tribal corporations in connection with the project.

Energy Independence: Using Tribal Energy Consumption as an Asset
Tribes with casinos and other energy-intensive business facilities are generally experiencing significant and increasing costs for their electricity usage. This significant financial cost can, however, be turned into a potential benefit, by both promoting tribal energy independence and helping to meet tribal sustainability and cost-reduction goals.

Casinos and other large energy-using tribal commercial and industrial facilities often have relatively flat load profiles (that is, these facilities tend to use the same amount of energy seven days a week, 24 hours a day). This load profile often makes these facilities attractive sites for baseload renewable energy facilities, such as landfill gas, biogas, and other waste-to-energy facilities, as well as natural gas co-generation facilities. In addition, tribal casinos and other large energy-using facilities that are facing relatively high retail electricity prices can provide attractive energy pricing opportunities for developers of these energy facilities, even if that pricing includes a substantial reduction from the energy rates the tribes are presently paying or will pay in the future. This is because of the generally very significant difference between wholesale and retail electricity prices. Also, the ability of tribal casinos and other facilities to utilize waste heat to displace natural gas and/or to provide cooling can provide substantial additional value. Finally, a tribe's ability to control siting decisions on tribal trust land can often be substantially beneficial to renewable energy projects.

One strategy for ensuring that a tribe can receive the best offers for the siting of waste-to energy and other clean energy facilities is to conduct a competitive request for information (RFI) or request for proposals (RFP) process that targets developers and technologies that are likely best suited to meet the tribe's needs. Godfrey & Kahn has significant experience in developing renewable energy projects and in working with energy users to conduct RFI/RFP processes to help ensure that our clients receive the best possible renewable and other energy opportunities. An RFI/RFP process could make potential developers and technology providers aware of the beneficial attributes of the tribal site, including the size and characteristics of its electrical load, its ability to utilize otherwise waste heat from a generation facility, its ability to provide a site for a generation facility and other beneficial attributes. The RFI/RFP process could also require developers to disclose information that would help ensure that the tribe receives maximum benefits from the project, including reductions in current and future energy pricing, use of waste heat for the tribe's benefit, the ability to share in the value of tax credits, grants, and other incentives, the option to purchase the facility in the future for a reduced price, and other benefits.

For more information on how Godfrey & Kahn can assist your tribe in pursuing its energy independence and sustainability goals, please contact Brian Pierson, Godfrey & Kahn's Indian Nations Team Leader, at 414.287.9456, bpierson@gklaw.com or John Clancy, Godfrey & Kahn's Environmental and Energy Strategies Practice Group Leader, at 414.287.9256, jclancy@gklaw.com.

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