A new hotel and spa is set to go up at the Whitecap Dakota First Nation, just south of Saskatoon -- another sign that the relationship between the First Nation group and the federal government is moving forward.

Federal Aboriginal Affairs Minister John Duncan was on the reserve today for the third time in the past two weeks to unveil the $3-million funding announcement.

"Since there is a significant commitment from the federal government, I hope that it will generate confidence from the investment community and the province that this is a good project," said Duncan.

The good news comes after the First Nation group had trouble getting their finances together, after one of the partners wasn't able to commit to the $26.5-million project and local banks kept telling Whitecap First Nation chief Darcy Bear they weren't investing in hotels.

But Darcy remained persistent.

"We had to look at either we make up the shortfall or we find another partner," said Bear of the 161 room hotel.

"So we ended up coming forward and now we own 75 per cent of the project and our partner, the Muskoday First Nation, owns 25 per cent."

"Eventually the CEO of the Bank of Montreal flew into Saskatoon and he started looking at what is happening in our province and saw the economic growth, the activity and the high occupancy rates in Saskatoon," said Bear.

"They changed their attitude and said we're going to invest in this project, we're going to make an exception to the fact that they're not doing any hotels right now, but they're going to do this hotel."

Construction is set to begin this fall, and is expected to be completed by the summer of 2014.