Lease Update from Lease Negotiating Team
Both parties, Shelter Bay Company (SBC) and the Swinomish Indian Tribal Community (SITC), have agreed in principle that the following are the key components of a new master lease and that the terms of these must be mutually agreed upon in order to reach a deal for a new master lease.
Term. In simple terms, this is the length of the lease.
Valuation. Of particular note is the fact that this will be based on “finished” subdivision. The original/current valuations have been based on raw land. The categorization of Shelter Bay as a “finished” subdivision is non-negotiable, and both parties are in agreement. However, the terms of ongoing valuation are TBD.
Rental rate/return. This is the rent that will be paid by SBC to SITC over the term of the lease. Under the current master lease, the rent is adjusted every 10 years. Original language in the lease called for adjustments based on valuations and arbitration. In 2023, the Shelter Bay board of directors approved using an adjustment based on an index. Both parties agree in principle but are negotiating both the means and the methods that will be used.
Infrastructure Reserve Fund. This is the commitment for SBC to maintain infrastructure through a capital reserve fund – which is in place today. Parties agree in principle.
Commitment to the maintenance of marina infrastructure. This is in place today. Parties agree in principle.
In December 2025, SBC received a proposal for these terms from SITC. In February, SBC sent a counter proposal to SITC, including to the terms of the lease and to the Transitional Rental Rate/Return. SITC has indicated that they are working on a response to SBC’s proposal.
Important to note: An extension of the current lease is not an option. The Department of the Interior (of which the Bureau of Indian Affairs is a part) will not consider extending the current master lease. Many of the current terms, such as valuation based on raw land, are outdated and no longer applicable, therefore a new master lease must be developed and agreed upon.
Maintaining two master leases is necessary because existing subleases remain tied to the current master lease through its expiration in 2044. As properties change hands, sublessees may elect to transition to a new lease structure over time, but Shelter Bay cannot require them to do so. This creates not only an administrative challenge but also a complication in establishing a new master lease with a fixed annual rental obligation, as Shelter Bay cannot legally obligate itself to pay rent on properties that remain subject to existing subleases and have not transitioned to the new lease.
It is our belief that the SITC has been, and continues to be, engaged and negotiating in good faith.
