PHOENIX — On the Navajos' high desert near the towering buttes of Monument Valley, Pete Deswood Jr. is overseeing some startling changes in American Indian country.

Bulldozers are clearing the way for a $45 million housing subdivision with upscale features. The drywall is being hung on a new, burnished stone post office, a project that had waited in the wings 10 years through traditional tribal channels. Trucks wheel with great regularity into a new waste-transfer station.

And Deswood, manager of Kayenta Township, isn't through with his assault on the red tape and bureaucracy that has hampered development on American Indian reservations for decades.

He talks up the idea of transferring titles to lots within township boundaries on the reservation to non-Indians as long as the buyers are willing to agree to live locally and swear off land speculation.

Kayenta Township began levying a local 2.5 percent sales tax nearly three years ago, the only American Indian community to do so. The township is prepared to set another precedent soon: selling tax-exempt bonds for municipal projects. This after the Navajo Tribal Council relented in January and granted the township the authority.

"We're seeing a very intriguing thing going on here," said Stephen Cornell, director of the University of Arizona's Udall Center. "This is an actual devolution of power to the local level. And this looks like something that can be replicated throughout Indian country."

The township has had a stream of visitors from other Indian reservations looking to use it as a model for development. Deswood also travels extensively, extolling his vision of local control, open public meetings and running Kayenta like an off-reservation town.

It's a slippery slope, Deswood acknowledges.

A decade ago, the Navajo community of Chinle tried to become the first incorporated American Indian community in the state. The Navajo Nation quashed the movement, saying it was an infringement on its rights as a sovereign nation to control the future of its communities.

Kayenta took a different route.

Town leaders aggressively pursued the initiative in the mid-1980s when the Navajo tribal government embarked on a program to increase local control. Local ranchers in the Kayenta area gave up their grazing rights and allowed 5.5 square miles to be used for a township.

The township idea sputtered along, more an idea than reality, for a number of years. Then in 1996, the township was granted taxing authority and a year later began collecting the 2.5 percent sales tax.

The five-member Township Council won more power when the tribe concluded in a legal opinion that leases for business sites need be approved only by the local governing body. It was a momentous decision because historically, approval of business leases was a cumbersome process involving review by numerous tribal boards and the federal Bureau of Indian Affairs.

The township has local detractors, most notably officials of the Kayenta chapter, the regional governing body in this northern portion of the Navajo Nation near the Utah border.

The chapter adopted a resolution this month for the Tribal Council to transfer all governmental functions to the chapter.

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"The bottom line is that this is all about dollars and not helping people. They are building all these houses around here that our children will never have the income to buy," said Rose Yazzie, secretary of the Kayenta chapter. "We've had people go to them for help when they've had frozen pipes in their home or needed firewood, and they do nothing for them."

Deswood said the township has no interest in providing handouts; the chapters have been doing that for years.

The tax money is needed for a variety of pressing matters that affect the community, including street lights on the main drag, where six people have been killed in traffic accidents during the past two years. Also needed, he said: a juvenile detention center for substance abusers and a truck to pick up trash.

"To many of the bureaucrats on this reservation, we are this monster out here growing, and they have no idea how to deal with it," Deswood said. "But the answer to that is simple. Give towns their freedom."

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