    [Senate Hearing 107-289]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 107-289

       IMPLEMENTATION OF THE NATIVE AMERICAN HOUSING ASSISTANCE AND SELF-
                               DETERMINATION ACT

    =======================================================================

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON INDIAN AFFAIRS
                              UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                    S. 1210

        TO REAUTHORIZE THE NATIVE AMERICAN HOUSING ASSISTANCE AND SELF-
                           DETERMINATION ACT OF 1996

                                   __________

                               FEBRUARY 13, 2002
                                 WASHINGTON, DC

    77-784              U.S. GOVERNMENT PRINTING OFFICE
                                WASHINGTON : 2002
    ____________________________________________________________________________
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                          COMMITTEE ON INDIAN AFFAIRS

                       DANIEL K. INOUYE, Hawaii, Chairman

                BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

    FRANK MURKOWSKI, Alaska              KENT CONRAD, North Dakota
    JOHN McCAIN, Arizona,                HARRY REID, Nevada
    PETE V. DOMENICI, New Mexico         DANIEL K. AKAKA, Hawaii
    CRAIG THOMAS, Wyoming                PAUL WELLSTONE, Minnesota
    ORRIN G. HATCH, Utah                 BYRON L. DORGAN, North Dakota
    JAMES M. INHOFE, Oklahoma            TIM JOHNSON, South Dakota
                                         MARIA CANTWELL, Washington

            Patricia M. Zell, Majority Staff Director/Chief Counsel

             Paul Moorehead, Minority Staff Director/Chief Counsel

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page
    S. 1210, text of.................................................     2
    Statements:
        Begaye, Kelsey, president, Navajo Nation.....................    17
        Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
          vice chairman, Committee on Indian Affairs.................     4
        Cantwell, Hon. Maria, U.S. Senator from Washington...........     6
        Carl, Chester, president, National American Indian Housing
          Council....................................................    28
        Garcia, Joe, first vice president, National Congress of
          American Indians...........................................    31
        Gauthier, Robert, executive director, Salish-Kootenai Housing
          Authority..................................................    22
        Inouye, Hon. Daniel K., U.S. Senator from Hawaii, chairman,
          Committee on Indian Affairs................................     1
        Johnson, Hon. Tim, U.S. Senator from South Dakota............     5
        Liu, Michael, assistant secretary, Office of Public and
          Indian Housing, Department of Housing and Urban Development     6

                                    Appendix

    Prepared statements:
        Adams, Gus, executive director, Baranof Island Housing
          Authority..................................................    69
        Begaye, Kelsey (with attachment).............................    43
        Bush, Phil, Nevada/California Indian Housing Association and
          the Southwest Indian Housing Association...................    41
        Cantwell, Hon. Maria, U.S. Senator from Washington...........    39
        Capoeman-Baller, Pearl, president, Quinault Indian Nation....    73
        Carl, Chester................................................    65
        Conrad, Hon. Kent, U.S. Senator from North Dakota............    39
        Gauthier, Robert (with attachments)..........................    69
        Garcia, Joe (with attachments)...............................    82
        Johnson, Hon. Tim, U.S. Senator from South Dakota............    40
        Liu, Michael (with attachments)..............................    45
        Pauma-Yuima Band of Mission Indians..........................    64
        Pueblo of Acoma Housing Authority............................    76
        Pyle, Gregory E., chairman, Choctaw Nation, Oklahoma.........    72
        Smith, Chadwick, principal chief, Cherokee Nation............    42
    Additional material submitted for the record:
        New Mexico Indian Housing Entities Position Paper............    64

       IMPLEMENTATION OF THE NATIVE AMERICAN HOUSING ASSISTANCE AND SELF-
                               DETERMINATION ACT

                                  ----------

                          WEDNESDAY, FEBRUARY 13, 2002

                                           U.S. Senate,
                                   Committee on Indian Affairs,
                                                        Washington, DC.
        The committee met, pursuant to other business, at 2:05 p.m.
    in room 485, Senate Russell Building, Hon. Daniel K. Inouye
    (chairman of the committee), presiding.
        Present: Senators Inouye, Campbell, Cantwell, and Johnson.

     STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII,
                 CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

        The Chairman. The committee now meets to receive testimony
    on the implementation of the Native American Housing Assistance
    and Self-Determination Act.
        Although the act has been in place for only a few years,
    tribal governments and their designated housing authorities
    have identified the circumstances in which the act seems to be
    working well, and where the act may need amendment. The
    Inspector General conducted a review of the implementation of
    the act and made some recommendations as to how the Department
    might better assist tribes in assuring that the programs
    authorized by the act are administered with maximum efficiency
    and effectiveness.
        The Inspector General's report emphasized the value of
    training and technical assistance, but unfortunately the
    President's budget request calls for a $2-million reduction in
    funds devoted to training and technical assistance.
        There seems to be a dispute between the Department and
    tribal governments as to whether the act's requirement of
    negotiated rulemaking applies not only to the initial
    promulgation of regulations, but to the subsequent additions or
    amendments to the regulations. Some tribes are experiencing
    problems with section 184 loan guarantees, and small tribes
    have an especially difficult challenge with operating programs
    under the Act, given the smaller allocation of funds they
    receive.
        These are just some of the issues that we anticipate
    hearing from the witnesses who will present testimony to the
    committee today.
        [Text of S. 1210 follows:]

        The Chairman. So without further ado, may I call upon a
    gentleman that we came to know well in Hawaii, and who appears
    before the committee today for the first time in his capacity
    as assistant secretary for Public and Indian Housing, Michael
    Liu.
        Before we do that, may I recognize the vice chairman of
    this committee, Senator Campbell.

     STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM
          COLORADO, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

        Senator Campbell. Before we hear from Mr. Liu, Mr.
    Chairman, thank you for holding this hearing on the
    implementation of NAHASDA.
        I believe that the bill has had a profound effect on the
    ability of the tribes to implement housing plans tailored to
    local needs, rather than having Federal officials make all
    those decisions. The act is due for reauthorization this year,
    and I was very happy to join with you, Mr. Chairman, in
    introducing the reauthorization last year. There were, as you
    mentioned, a few problems that I think that we will be able to
    iron out with this bill.
        In the years since NAHASDA was enacted, the number of
    housing units built has increased substantially. The block
    grant approach of the NAHASDA: First, respects tribal
    sovereignty in decisionmaking; second, provides tribes with
    flexibility in housing plans; and third, eliminates unnecessary
    red tape and obstacles to housing construction in Native
    communities.
        Though the NAHASDA has worked well, it is only now getting
    off the ground, and I believe its best days lie ahead. I am
    hopeful, Mr. Chairman, with the support of the tribes and the
    Administration, we can effect a long-term change and view
    housing not just as an item for annual appropriations, but as
    an engine of economic growth in Indian communities.
        As the recent Native American Lending Study released by the
    Community Development Financial Institution shows, there are
    great needs in Native communities for capital and liquidity.
    Those unmet needs are holding back the growth of Indian
    economies. The ``National Mortgage News'' has reported a
    quantifiable pent-up mortgage demand in Indian country of close
    to $2.7 billion. One of our goals ought to be to encourage home
    ownership in Indian communities as a way to bring stability,
    equity and economic growth to those communities.
        I believe we have that opportunity with this
    reauthorization bill, and I look forward to working with both
    the Department and with the tribes in seeking innovative ways
    to finance housing and homeownership, and new and creative ways
    to encourage economic growth throughout Indian lands.
        The Chickasaw Nation, Mr. Chairman, of Oklahoma, to use one
    example, has done just this in a partnership with both Freddie
    Mac and Fannie Mae. We ought to be looking for ways to
    replicate that success.
        With that, Mr. Chairman, I ask unanimous consent to insert
    into the hearing record both the news article I referenced, as
    well as the executive summary of the Native American Lending
    Study prepared by the CDFI.
        The Chairman. Without objection, so ordered.
        [Referenced documents appear in appendix.]
        Senator Campbell. Thank you, Mr. Chairman.
        The Chairman. Senator Johnson.

     STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM SOUTH DAKOTA

        Senator Johnson. Thank you, Chairman Inouye and Vice
    Chairman Campbell, members of the committee.
        I am pleased to be here today to receive testimony on the
    reauthorization of the Indian housing block grant. For over 5
    years, tribes in Alaska Native villages have been living
    through the experimentation of using block grants to provide
    housing assistance to Native Americans. The Native American
    Housing Assistance and Self-Determination Act has proven to be
    a vast improvement over the prior way that housing was provided
    to tribes in some respects, and frankly a failure in some other
    respects.
        We are here today to further review the program so that the
    proper improvements may in fact be made.
        It remains clear that Congress needs to further clarify the
    consultation process that is pivotal to the government-to-
    government relationship that exists between tribes, villages,
    rancherias and the Federal Government. Tribes should be
    afforded a thorough and meaningful consultation process when
    the Federal Government attempts to change the regulations
    governing specific Native American programs.
        Only once has this been seen by the tribes throughout the
    past 5 years on housing issues. There remains a lot of
    discussion between the Department of Housing and Urban
    Development and Native peoples of this Nation on what was the
    actual intention, and I can say that the Administration must
    consult with tribes as part of its Federal obligation to them.
        Throughout my 16 years of service in Congress, I have been
    dismayed by the living conditions of our first Americans. On
    numerous occasions, it has been documented that Native
    Americans have the worst housing conditions in the United
    States. There is rampant overcrowding, homelessness and
    crumbling housing stock. In my home State of South Dakota, we
    see some of the worst conditions overall. There is anywhere
    from 50 to 80 percent unemployment on many of our 9 Indian
    reservations, and according to the Housing Assistance Council,
    South Dakota contains 10 counties that are inhabited by 30 to
    65 percent of persons below poverty. Nine of these counties are
    fully contained or directly adjacent to reservations.
        The Federal Government has both treaty and trust
    obligations to provide basic services. This has been far from
    the case in most instances, including in housing. I appreciate
    this opportunity to continue to shape the face of Indian
    housing and further improve access to safe and decent housing
    for Native people throughout our Nation.
        Mr. Chairman, I thank you for holding this important
    hearing and look forward to receiving the testimony of our
    witnesses today. I am pleased that joining us today are
    representatives of the Sisseton-Wahpeton Housing Authority, and
    pleased that we could have a South Dakota presence at our
    hearing today.
        Thank you, Mr. Chairman.
        The Chairman. Thank you very much, sir.
        Senator Cantwell.

     STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM WASHINGTON

        Senator Cantwell. Thank you, Mr. Chairman.
        Sorry I missed our executive session on S. 1851. So I think
    I voted by proxy on that, but would like to be on record in
    support of that legislation.
        I think what I will do in the interest of time is enter
    this statement in the record about today's important hearing.
        The Chairman. Without objection it will be made part of the
    record.
        [Prepared statement of Senator Cantwell appears in
    appendix.]
        The Chairman. And now, Secretary Liu. Welcome, sir.

    STATEMENT OF MICHAEL LIU, ASSISTANT SECRETARY, OFFICE OF PUBLIC
    AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

        Mr. Liu. Thank you very much, Mr. Chairman. Thank you for
    the greeting and aloha.
        Mr. Vice Chairman and members of the committee, thank you
    for inviting me to provide comments on the implementation of
    the Native American Housing Assistance and Self-Determination
    Act of 1996. My name is Michael Liu and I am HUD's assistant
    secretary for Public and Indian Housing. I am responsible for
    the management, operation and oversight of HUD's Native
    American programs. These programs are available to 582
    federally recognized, and a limited number of State-recognized
    Indian tribes. We serve these tribes directly or through their
    tribally designated housing entities by providing grants and
    loan guarantees designed to support affordable housing
    activities and viable community and economic development.
        Our clientele is diverse. They are located on Indian
    reservations, in Alaska Native villages, and in other
    traditional Indian areas, and with the latest amendments to
    NAHASDA, now Native Hawaiians.
        It is a pleasure to appear before you, and I would like to
    express my appreciation for your continuing efforts to improve
    the housing conditions of American Indians and Alaska Native
    peoples. Although progress is being made, more needs to be
    done. At the outset, let me reaffirm the Department of Housing
    and Urban Development's support for the principle of
    government-to-government relations with Indian tribes. HUD is
    committed to honoring these fundamental precepts in our work
    with American Indians and Alaska Natives.
        In general, NAHASDA is a success. It has been successful in
    changing the way Indian tribes conduct their housing business.
    Tribes and their tribally designated housing entities are no
    longer mired in a regulatory morass of competitive categorical
    programs, many with redundant requirements. Today, tribes
    submit an annual Indian housing plan. Once it is reviewed for
    compliance with the appropriate requirements, recipients can
    draw on their funds to engage in the eligible affordable
    housing activities they have outlined in their IHP.
        They can also choose to supplement their Indian housing
    block grant, IHBG, funds with the title 6 tribal housing
    activities loan guarantee program. At the end of a grant year,
    results are reported in the annual performance report. We then
    conduct monitoring and oversight remotely, with periodic on-
    site visits. Training and technical assistance is available
    both from HUD and our partners through a variety of media.
        You will hear testimony that improvements needs to be made
    both to the program and to our management of it. We will work
    with our clients, and we are listening to their suggestions on
    how to improve the program. As an example, we met last July in
    St. Paul, MN for several days of tribal consultation. Some
    tribal leaders expressed their dissatisfaction with how we wish
    to implement certain aspects of the most recent NAHASDA
    amendments. We listened and affirmed that many of those
    amendments could be implemented after consultation in a time-
    efficient manner.
        In other instances, such as revision of the IHBG allocation
    formula, we believe it is necessary to establish a full
    negotiated rulemaking committee.
        I believe that although we may disagree on certain
    procedural matters, we do not disagree that this program
    provides unprecedented fundamental improvements in the way
    tribes, TDHE's, plan and execute their housing programs and
    projects. The direct results of these improvements are more
    homes for low-income Native American families.
        An often-recurring topic is tribal consultation. The
    Department has had a tribal consultation policy since June 26,
    1994. In 1998 and again in 2000, executive orders on tribal
    consultation were issued. To ensure compliance with them, the
    Department developed revised draft consultation policies. We
    first engaged in consultation with tribes on a draft of our
    proposed policy in March 1999. At the request of tribes, we
    subsequently rescinded the draft policy, revised it again, and
    reissued it in July of 1999. From September 1999 to February
    2000, we sponsored eight regional consultation sessions and a
    final national consultation session in Washington, DC on the
    policy.
        We continued to discuss it with tribal leaders into the
    fall of 2000, when the most recent executive order was issued.
    The White House staff convened meetings to set direction and
    ensure consistency across all Federal agencies on the tribal
    consultation policies.
        We had further discussions with tribal leaders and within
    the Department, culminating in the issuance of the Department's
    revised tribal government-to-government consultation policy,
    which was signed by Secretary Martinez on June 28, 2001. The
    Secretary's policy contains a new and important provision: the
    authority to create an advisory committee made up of tribal
    leaders to advise on how to proceed with tribal consultation
    matters.
        Another subject of related concern is that of negotiated
    rulemaking. On December 27, 2000, amendments to NAHASDA were
    signed into law. Early in calendar year 2001, HUD again held a
    series of eight regional consultation sessions for the express
    purpose of obtaining tribal priorities and proposed solutions
    to issues surrounding the implementation of NAHASDA, including
    on how to proceed with implementing the amendments. Every
    written and oral comment received from all sessions was
    collated and distributed to every tribe and TDHE in the
    country. We asked tribes to comment on these sessions and on
    the written materials, and we asked our clients to establish 10
    priority national issues for discussion at a subsequent
    national tribal consultation session which was held July 2001
    in St. Paul, MN.
        Indian housing leaders are aware that our tribal
    consultation policy provides for the use of a broad array of
    mechanisms, from tribal, regional and national forums, to
    notice and comment rulemaking, to the negotiated rulemaking,
    depending on the nature of the issue to be discussed, the need
    for rapid response, and other factors.
        Many tribal leaders participated in discussions on how to
    implement both the amendments and the 10 national priority
    issues. A number of attendees were opposed to implementation of
    any regulatory change without negotiated rulemaking. Others
    offered suggestions across the entire range of consultation
    possibilities in the policy.
        In response to the comments we received in St. Paul, the
    Office of Native American Programs constructed a consultation
    document with suggested methodologies to implement all of the
    NAHASDA amendments. We mailed the document to all tribal and
    Indian housing leaders on November 28, 2001, asking for their
    comments by the end of December. At the request of the Native
    American Indian Housing Council and others, we subsequently
    extended the deadline for comments to February 11, 2002. Our
    next steps are to review those comments and provide feedback on
    how we will proceed.
        A good example of this process is the NAHASDA amendment
    concerning the establishment of tribally determined wage rates
    in lieu of Davis-Bacon wage rates. Consensus was reached in the
    consultation work group that it should be implemented as
    quickly as possible. The November 28, 2001 tribal consultation
    document states that a regulatory change is required, and that
    the Department will engage in tribal consultation on that
    regulation.
        The Office of Native American programs has been working
    with HUD's Office of General Counsel and the Office of Labor
    Relations to develop a draft regulation. All written and oral
    comments received at the regional and national consultation
    sessions were considered when drafting the proposed regulation.
    A draft will be released very soon asking for tribal feedback.
    And should the committee so desire, we will keep you informed
    of our progress on this and all tribal consultation matters.
        In regard to the formula allocation and negotiated
    rulemaking committee, the NAHASDA's Indian housing block grant
    program regulations provide that the allocation formula shall
    be reviewed within 5 years after issuance, which would be this
    coming March 2003. The recent NAHASDA amendments make several
    changes to the formula. HUD believes that this is an
    appropriate time to begin the review of the formula, both to
    implement the statutory changes and to hear from our clients
    about whether they believe other revisions should be made.
        We also believe that pursuant to HUD's tribal consultation
    policy, the formula allocation issue is of sufficient magnitude
    to require negotiated rulemaking. In July 2001, we published a
    Federal Register notice requesting nominations and establishing
    the minimum qualification criteria for membership on that
    committee. We received 44 nominations. Approximately one-half
    of the nominees were missing one or more pieces of required
    information. So to give nominees every opportunity to comply,
    in November 2002 we wrote to all nominees, informing those that
    had provided all the necessary information that their
    applications were complete, and notifying others that they were
    missing one or more pieces of required information.
        To date, we have received replies from approximately one-
    third of those deficient applications. There may be good reason
    for this. As the committee and all of us in this room know all
    too well, after September 11 our mail service has experienced
    significant delays. For example, one nominee mailed his reply
    to us on December 12 and we just received it on January 23. As
    a result, we are being extremely flexible about accepting
    additional information.
        We are also preparing for publication of a followup Federal
    Register notice announcing the names of the successful
    nominees. It is important to note that they remain nominees. No
    committee members have yet been selected. We did not receive,
    in our estimation, a broad enough geographic distribution of
    nominees. Therefore, the next notice will give tribes another
    chance to add to the list of potential participants.
        If a nominee is not listed in the notice, it means that
    they either did not reply to the request for additional
    information or the information they provided was not
    sufficient. They may also reapply under that notice. Once the
    second round of nominees have been submitted, the Department
    will again review each nominee's information to ensure it is
    complete, notify those with deficient applications, as well as
    those with complete applications, and then make final
    decisions. We will solicit the participation of our partners in
    the selection process.
        I have a great deal of more information about our program
    that I would like to share with you, but of course time is
    running short. I would like to just make two final points. On
    Native Hawaiian housing, I am very excited about a recent
    development--the passage of legislation creating a new title 8
    under NAHASDA that I referenced to in my opening comments. We
    may now serve those Native Hawaiian families who are eligible
    to reside on Hawaiian homelands with two new programs: A Native
    Hawaiian housing block grant program, and the Native Hawaiian
    housing loan guarantee section 184(a) program.
        In President Bush's fiscal year 2003 budget proposal, we
    have requested funding of $10 million and $1 million
    respectively under accounts completely separate from NAHASDA's
    Indian housing block grant in the section 184 Indian Housing
    Loan Guarantee Fund. I am pleased to inform you, Mr. Chairman
    and members of the committee, that the Department will soon
    publish an interim rule for public comment. Current year
    appropriations can be released for use following the submission
    of the appropriate housing plan as described in the interim
    regulation.
        Finally, let me state for the record that the Department
    supports the passage of S.R. 1210 and H.R. 1873--bills that
    would reauthorize NAHASDA.
        Thank you, Mr. Chairman.
        The Chairman. Thank you very much, Mr. Secretary.
        If I may, I would like to ask a few questions. NAHASDA
    requires HUD to develop and promulgate regulations following
    negotiated rulemaking procedures. However, we have been advised
    that the Department has taken the position that the negotiated
    rulemaking requirements of the act do not apply to any
    amendments or additions to NAHASDA regulations. Number one, is
    that the case? If so, what is the source of authority for the
    Department's position?
        Mr. Liu. According to an opinion by our General Counsel's
    office, sir, section 106 of NAHASDA, quote, under regulations,
    provides in subsection (a), transition requirements from the
    1937 Housing Act. Subsection (b) provides that a negotiating
    rulemaking committee be established to develop proposed
    regulations to implement the act. And it is our Office of
    General Counsel's opinion, and they have consistently,
    apparently, since the time of the enactment of NAHASDA, has
    advised us that the requirements of section 106 are legally
    satisfied with the proposed regulations that were issued for
    public comment.
        To the extent, however, that the Department, of course, has
    discretion to work with the tribes and other interested parties
    in regard to negotiated rulemaking for further development of
    regulations attendant to further amendments to NAHASDA, I stand
    open to work with the tribes in that regard. I think, as I
    mentioned to them in comments I made before them in a speech
    yesterday morning, I think what we can do and should do is get
    to more specific language related to the concern over the word
    ``all.'' Let's get a consensus definition of what we mean by
    ``all.''
        And perhaps we need to also balance our concerns about the
    process, depending on the need to get guidance out and the
    complexity. There are certain things where there is general
    consensus on. For instance, the tribally determined wage issue
    relative to Davis-Bacon. And if there is that consensus, there
    may be different forms of negotiated rulemaking where we can
    put things on a fast track, and then for more complex and more
    substantive issues, for instance the allocation formula for the
    IHBG, we can have a negotiated rulemaking which is certainly
    more full and more developed as we move forward.
        So I stand ready, sir, to discuss and dialog with the
    tribes to develop a workable consensus and solution to the
    concerns about negotiated rulemaking.
        The Chairman. Are you also suggesting amendments to the act
    itself?
        Mr. Liu. Not at this time, not at this time.
        The Chairman. Because there is much tribal opposition to
    the position that was taken in refusing to follow negotiated
    rulemaking procedures. But you are open to the suggestion?
        Mr. Liu. Yes, sir.
        The Chairman. We have been advised by many tribes of their
    frustration with the inconsistent way in which HUD handles
    tribal environmental review requirements. For example, they
    tell us that when the Department conducts an environmental
    review, HUD will waive its technical errors. But when tribes
    conduct their own environmental reviews, HUD has refused to
    waive any technical errors. How do you explain this, sir?
        Mr. Liu. The statutory provision which provides for tribes
    to assume the Secretary's environmental decisionmaking--that's
    done in NAHASDA section 105--includes very specific procedural
    requirements. There is no corresponding statutory requirement
    for the Department. Prior to the enactment of the NAHASDA
    amendments in December 2000, the Department was not authorized
    by law to waive technical errors made by tribes in conducting
    environmental reviews.
        The environmental waiver provisions of Public Law 106-538
    have been administratively implemented by the Department for
    tribal recipients. Prior to December 27, 2000, the Department
    had developed procedures for HUD to assume environmental
    responsibility when a tribe made technical errors in the
    environmental review process that did not adversely affect the
    environment.
        While the process for converting responsibility from a
    tribe to the Department was time consuming, 12 conversions were
    made to avoid mandated statutory remedies for purely technical
    reasons. There are a number of tribes who actually benefitted
    from that waiver process which was in place at that point in
    time. A few of them include the Nome Eskimo Community, the
    Menominee Indian Tribe of Wisconsin, the Lummi Tribe, the Sac
    and Fox Tribe of Oklahoma. There are host of others.
        But currently, with the new provisions under NAHASDA which
    does provide for secretarial waiver authority, we fully intend
    and our working on a set of regulations to implement that
    waiver possibility.
        So the bottomline, sir, is that both before December 27,
    2000 we had worked to provide a mechanism to deal with this
    issue, which was a statutory sort of disconnect. And now
    currently, with that resolution having come to bear with the
    December 27, 2000 amendments, we are in very good shape to work
    with the tribes to deal with this issue.
        The Chairman. So you don't think that the tribal concerns
    are valid?
        Mr. Liu. Perhaps I think there is more current information
    available which deals with those concerns and addressed those
    issues.
        The Chairman. If the tribes insist that the concerns are
    not fully resolved, would you be amenable to certain amendments
    to the act to carry this out?
        Mr. Liu. Either amendments or administrative procedures,
    new regulations to assist to resolve the issue.
        The Chairman. Several Indian organizations have expressed
    concern that HUD is considering reclassifying the Deputy
    Assistant Secretary of Native American Programs from Senior
    Executive Service to a GS-15 career position, which requires
    only one year of experience. Does this mean that the Department
    is downgrading the Deputy Assistant Secretary to a GS-15?
        Mr. Liu. Mr. Chairman, the position has always been
    officially authorized on budget plans, both before and with
    this Administration as a GS-15. With the past Administration,
    it was at a SES level. The current classification by no means
    in any way should not be taken as a signal that we are
    downgrading what we consider a very important position. From a
    management and resource standpoint, we believe that at a GS-15,
    and we fully expect to get qualified candidates that will
    qualify for the highest grade, the highest step, that at
    $120,000, which is what their base pay would be, in addition
    with approximately $30,000 in benefits, at $150,000
    compensation package, that we can attract very well qualified
    individuals for this position.
        Also, by way of information, the 1-year requirement deals
    with specialized experience which is an Office of Personnel
    Management requirement. But we have the ability to look for the
    quality of experience, which makes it very unlikely that anyone
    with just one year of specialized experience to qualify for the
    position.
        For the Senior Executive Service, we would be locked into
    that same requirement. It is against Office of Personnel
    Management rules and regulations to require a longer than 1-
    year requirement for specialized experience. Where we get
    beyond that is looking at the quality of experience that the
    person brings in the application process, and we certainly will
    be looking for people with both specific program experience,
    financial experience, and management experience to deal with
    the heavy responsibilities that the position carries.
        The Chairman. Don't you believe that taking away a title
    might be interpreted by many as a downgrade?
        Mr. Liu. I would hope that it would not be, Mr. Chairman,
    and we will strive--I will personally make the effort to assure
    the tribes that the person selected for this position has every
    available access to my office. I will be definitely fully
    engaged in the issues that come before the Office of Native
    American Programs. I think that I perhaps bring some more
    specific background and experience with sovereignty issues than
    perhaps prior Assistant Secretaries, which certainly I think
    will assist us in making sure that these issues gain the
    attention that it needs with the Secretary and the
    Administration.
        The Chairman. Well, I just hope that the message that we
    send will not be a negative one, because on one hand, we speak
    of the critical need for housing in Indian country, and then we
    take away a position for Native Americans. I hope you will give
    this matter another look-see.
        Mr. Liu. Yes, sir.
        The Chairman. Several tribes have complained that the
    Office of Native American Programs [ONAP], regional offices are
    severely understaffed, resulting in little or no guidance or
    technical assistance from HUD staff. What are your plans for
    providing adequate funding to hire and train field employees?
        Mr. Liu. Mr. Chairman, within the next year I can assure
    you that there will be increase of staffing levels to the
    Offices of Indian Housing. It is part of the Secretary's
    overall initiative to ensure that our field offices throughout
    HUD are better staffed than they have been.
        As you know, the HUD field offices have taken significant
    cuts in staffing over the past 5 and 6 years, and we are going
    to attempt to do our best to rectify that within the
    constraints that we have, of course, with resources.
        Specifically to the Office of Native American Programs, we
    have a number of training programs and documentations of them.
    For instance, we have the NAHASDA essentials of Indian housing,
    planning and annual performance reporting--training courses
    which were developed to address the needs of both grantees and
    ONAP staff. These sessions include days of training just for
    ONAP staff to go over internal processing issues.
        ONAP staff also have the ability to attend training
    sessions offered by ONAP in the area of financial management,
    leveraging, environmental review, and there are a host of
    others. Grants management and grants evaluation staff have been
    trained on the business processes developed for each major
    program area. Staff submit individual requests for training and
    as long as the request is job-related, the request is approved.
        I am also involved now in developing a field office
    directive which will allow field staff, under the direction of
    their field office director, to demarcate specific days,
    anywhere from 2 to 4 days, where staff will have the ability to
    devote to training. I do believe this is an issue where we can
    do better and we will.
        The Chairman. Does the President's budget request provide
    sufficient funds for your office to carryout this training
    program?
        Mr. Liu. Yes; it will, Mr. Chairman. We feel that we can
    make much better use of the resources that we have in keeping
    closer attention to the costs of our training. We also intend
    to utilize greater interactive types of training that connect
    the use of telephones and the Internet in developing the
    ability to reach out both to our staff and to tribes in rural
    areas.
        I personally have experience with these systems, when I was
    with the Federal Home Loan Bank of Chicago, in reaching through
    training and community development programs to many rural areas
    in the innermost and northern-most areas of Wisconsin, to the
    southern-most portions of Illinois--very effective, very user-
    friendly, and I think something that can be of great assistance
    to both HUD and our clients.
        The Chairman. I have one more question before I recognize
    our vice chairman. Several tribes have advised the committee
    that the ONAP field offices provide conflicting advice and
    counsel on how to comply with NAHASDA. Have you heard about
    this?
        Mr. Liu. Mr. Chairman, I would be very concerned if there
    are examples of that. I think the possibility for that
    occurring in any national program is certainly there. Staff
    indicates that they think that it is a rare occasion, but I am
    definitely open to hearing of any specific examples where that
    is occurring. If I hear about it, I want to fix it.
        The Chairman. We will provide you with examples, sir.
        Mr. Liu. Thank you very much.
        The Chairman. Senator Campbell.
        Senator Campbell. Thank you, Mr. Chairman.
        I certainly want to associate my comments with yours, and
    tell you, Mr. Liu, I think you are doing a pretty darn good job
    considering the problems with 9-11 and the mail and the fact
    that you have to deal with 561 Federal tribes and a number of
    State tribes, too. That is not easy getting information out and
    getting information back. I recognize that.
        Mr. Liu. Thank you.
        Senator Campbell. But as Senator Inouye has said, we have
    received some feedback from the tribes that in their view,
    negotiated rulemaking also includes amendments, which often are
    not negotiated, but just done through a notice and comment
    rulemaking.
        I would encourage you to err on the side of patience, that
    many tribes can't come to those eight regional conferences that
    you told us about. They can't get there for whatever reason. We
    often hear from tribes that they simply were not informed.
    Well, maybe they weren't and maybe it just got lost in this
    terrible problem we have had with the mail or something else,
    but I would hope that you would recognize that it takes a lot
    of time to get the word out through any community when we are
    doing rules and regs.
        Let me also add my voice to the Chairman's about the Office
    of Native American Programs. I don't care how you see that
    within the Administration. You might see it by saying, well,
    that is not really a downgrade to reduce the office to a GS-15.
    Maybe it is not a reduction. We are going to get some qualified
    people. You mentioned that they will have all the credentials
    to be able to do that. But I can tell you how it will be read
    in Indian country. It will be read very simply as a de-emphasis
    on the importance of their priorities, and I would encourage
    you not to do that. I think it would be very badly received in
    Indian country if the office director was reduced to a GS-15.
        Let me maybe just ask a couple of questions. I am certainly
    interested, as many of the members here, in broadening the
    housing arena to be more of a developmental discussion. Is
    there a plan now for any cross-agency cooperation to attack the
    housing and development together?
        Mr. Liu. Yes, Senator; there is discussions that are in the
    planning stages with both USDA, with the BIA, with the GSE's--I
    think you mentioned them in your comments--to change the
    discussion, or at least to create another discussion so that it
    is developmentally oriented, because I think the name of the
    game ultimately is getting units built that are of the
    standards that we should all expect in the ground and over the
    heads of people who need them.
        I personally have a strong interest in both the 184 Program
    and the title 6 program to make them work, because I believe
    that through a much stronger outreach effort to the private
    sector financial institutions, done in collaboration with other
    Federal agencies that have related programs, that we can make
    significant inroads in revealing to the private sector that
    there is a real demand and real business to be had on Indian
    lands. I sincerely believe that and I think we can make that
    happen.
        Senator Campbell. May I also recommend that you work with
    the Department of Veterans' Affairs. I don't know if you have
    or not, but a few years ago you may know that we passed a bill
    in Congress to give the same opportunities to Indian veterans
    living on reservations that their non-Indian counterparts have
    in the private sector, in getting a home financed. They now--
    tribes--can sign a memorandum of understanding with the
    Department of Veterans' Affairs to do that.
        I happened to see Secretary Principal couple of months ago
    and I mentioned that to him, and he said they were very
    interested in promoting more housing for Indian people through
    that agreement, in the agreement they could reach with the
    tribes. It was interesting because 2 years after we passed that
    bill, we held a hearing on the effectiveness of that act. As I
    remember, only three Indian veterans nationwide had availed
    themselves to housing under that agreement that their tribe
    could have signed with the Department of Veterans' Affairs.
        So I would hope that you would also include them in your
    discussions in trying to get more housing for Indian people.
        Let me ask you a couple of other things here before the
    Chairman goes on with his questioning. One deals with tax-
    exempt bonds. There is legislation that has been introduced, S.
    660, to liberalize the use of tax-exempt bonds by tribes to
    raise capital in the private markets. Does HUD support the
    concept of that bill?
        Mr. Liu. On its face, Senator, Mr. Vice Chairman, I think
    the concept is one that we can and should explore. We are
    looking at bond financing in many areas of HUD. I think it is
    one that needs to be explored even further.
        In the public housing side, we have certainly gone very far
    in working with public housing authorities to develop their
    abilities to raise money on the markets through bonds. And I
    think there is certainly that potential with the Office of
    Native American Programs.
        Senator Campbell. I agree. I think it has huge potential.
        Maybe one specific case--Secretarial waivers on local
    cooperative agreements--the Narragansett Tribe of Rhode Island
    has informed the committee that it has petitioned for a waiver
    of the Local Cooperation Agreement under the 2000 NAHASDA
    amendments. Could you tell the committee the status of that
    particular petition by the Narragansetts?
        Mr. Liu. I don't know the specific status at this time,
    sir, but we certainly we will get back an answer to you.
        Senator Campbell. Could you find that and get that to the
    committee?
        Mr. Liu. Yes.
        Senator Campbell. Do you know how many such waivers the
    Department has processed?
        Mr. Liu. I don't believe we have processed any at this
    stage.
        Senator Campbell. I see. All right. Thank you.
        Thank you, Mr. Chairman. I have no further questions.
        The Chairman. Thank you.
        Mr. Secretary, as you have indicated, NAHASDA has been
    amended to include block grants to provide housing assistance
    to low-income Native Hawaiians. Is the Department going to
    establish a position in the HUD office in Hawaii to administer
    this?
        Mr. Liu. Yes, sir.
        The Chairman. When can we count on that?
        Mr. Liu. I hope that it can be done before the end of the
    spring. Since I took that position, that has been a priority
    issue for me. I am looking at it, of course, with the new
    responsibilities out there.
        Senator Campbell. May I ask the witness, Mr. Chairman--are
    you from Hawaii, Mr. Liu?
        Mr. Liu. Yes, sir.
        Senator Campbell. Then no excuses, right? [Laughter.]
        Mr. Liu. No excuses.
        The Chairman. We will be following up.
        This is a question from Senator Conrad. During the last
    year, three tribes in North Dakota faced a severe crisis when
    over 200 homes on the Turtle Mountain Reservation were found to
    be filled with deadly toxic black mold. These homes had been
    acquired from the Air Force and moved to the reservation. Toxic
    black mold was also found in homes on the Spirit Lake
    Reservation and the Three Affiliated Tribes of the Fort
    Berthold Reservation. Senator Conrad worked to find a way to
    replace the uninhabitable homes. He discovered that unlike
    public housing that maintains an emergency housing reserve, no
    emergency funding is available for Native American housing. The
    Senator would like to know your thoughts on whether the act
    should be amended to provide authority for an emergency reserve
    fund to address these types of housing emergencies.
        Mr. Liu. Mr. Chairman, this issue in fact came up during
    the consultation process in St. Paul, MN and I believe in other
    forums. The fact of the situation is that the tribes did not
    come to consensus on whether or not there should be a set aside
    for emergency purposes within the block grant program. There
    were varying views discussed and rationales for that.
    Currently, tribes can amend their plans to deal with
    emergencies so that there is an ability to get allocations
    through that mechanism.
        Also, we have traditionally set aside through the Indian
    CDBG Program, the Indian Community Development Block Grant
    Program, $2 million annually as a set-aside for emergency
    situation. And in fact, I believe that the Turtle Mountain
    situation was addressed with a specific $350,000 grant from
    that $2 million allocation. Then, of course, there was a
    special set-aside later by legislation to deal with the issue
    on a larger scale.
        Certainly, through the negotiated rulemaking that will be
    taking place in regards to the allocation formula, should it be
    the desire of the tribes through that process, through
    discussions to concur on whether or not there should be an
    emergency fund, I certainly, the Department certainly could
    work with that concept.
        The Chairman. Are you satisfied that the problems that
    Senator Conrad has cited have been resolved by the funding that
    you have cited?
        Mr. Liu. My understanding, and based on reports on
    monitoring and what is happening out there is that, for now,
    that there is adequate funding to deal with the initial work
    which needs to be done to address those issues. But if there is
    more, that may need to be done, or if there is another
    mechanism by which funds are believed to be needed to deal with
    that issue, again, I think through negotiated rulemaking,
    through a consensus process with all the tribes involved, we
    certainly stand ready to work with them, if that's the
    direction that they want to go into.
        The Chairman. Are these homes that were described--are they
    habitable now?
        Mr. Liu. I believe some of them are, but there is still
    work that needs to be done on others. The work is not complete.
        The Chairman. And we have adequate funds to carry this out?
        Mr. Liu. At this stage, I am told that we do, but there is,
    I believe, there could be more, depending on the level of
    additional mold which may be found upon further investigation.
        The Chairman. Tribes have expressed the desire that ONAP
    provide on-site training sessions to supplement its training
    sessions held in cities like Seattle, Denver, Phoenix,
    Minneapolis, Boise, Oklahoma City, because many of the tribes
    don't have adequate funds to have their people travel to these
    big cities for scheduled training sessions. Do you have
    capabilities for on-site training?
        Mr. Liu. Yes; we do Mr. Chairman. In fact, we have provided
    on-site training on a regular basis. As I mentioned to you, we
    will be implementing a plan before the end of the fiscal year,
    and definitely before the end of the calendar year, the ability
    for us to reach the hard-to-reach areas through an interactive
    method using PC and a telephone. We think that we can, in
    addition to the traditional one-on-one at the request of a
    tribe, to sending people out to deal with these issues, we
    think that we can, on an even more effective basis, provide the
    kind of technical assistance which might be needed on a request
    basis.
        The Chairman. Under HUD's lead-based paint program, you
    provide grants. Can Indian tribes apply for these grants for
    the black mold poisoning?
        Mr. Liu. We are in the process of investigating that issue,
    but I believe that they can. I don't believe that there is any
    bar to tribes applying for those grants. They come under the
    Healthy Homes Initiative, under our lead-based unit in HUD. And
    I do not believe that there is any bar to tribes applying for
    them. But I need to double-check just to make sure that that is
    absolutely correct.
        The Chairman. In order to expedite matters, would you
    suggest that these tribes submit applications now?
        Mr. Liu. I am not sure of the timing of the MELFA, but I
    think they should prepare because I believe the MELFA should be
    out within probably the next 30 to 60 days for all of HUD's
    major programs.
        The Chairman. I thank you very much, Mr. Secretary. You
    have been very helpful, sir.
        Mr. Liu. Thank you, Mr. Chairman, Mr. Vice Chairman.
        The Chairman. Our next witness is the president of the
    Navajo Nation of Window Rock, AZ, Kelsey Begaye.
        Mr. President, once again welcome to the committee.
        Mr. Begaye. Thank you.

       STATEMENT OF HON. KELSEY BEGAYE, PRESIDENT, NAVAJO NATION

        Mr. Begaye. Good afternoon, Mr. Chairman, Mr. Vice
    Chairman, also members of the committee.
        Thank you for allowing me to speak to you today about
    Indian housing. I am Navajo Nation President Kelsey Begaye. On
    behalf of the Navajo Nation, I will present Navajo Nation's
    approaches to solving our critical housing needs, and our
    recommendations regarding the reauthorization of NAHASDA that
    will assist in our continuing efforts.
        The Navajo Nation values the work of Congress, what
    Congress has done to address Indian housing needs with the
    passage of NAHASDA in 1996. This committee's continued support
    is needed with the reauthorization of NAHASDA. Providing
    adequate housing to the Navajo people is one of the priorities
    of my administration. While Federal assistance is important to
    Indian housing efforts, as part of our economic development
    efforts I believe that Navajo Nation must pursue
    nongovernmental financial assistance and must leverage existing
    Federal funds to meet our housing needs.
        In addition to meeting basic human needs, housing
    development activities also provide meaningful employment
    opportunities to the Navajo people. The National Association of
    Home Builders estimates that the construction of 1,000 new
    homes generates 2,448 full-time jobs in construction and also
    in construction-related industries. By contributing to the
    Navajo Nation's workforce, housing development advances Navajo
    self-sufficiency. In support of this effort, I have encouraged
    the creation of a private housing market within the Navajo
    Nation. With my active support, the Navajo Housing Authority,
    NHA, has embarked upon an ambitious program that lays the
    foundation of such a market.
        For example, NHA has implemented procedures that will aid
    in the prompt recordation of titles and acquisitions of land
    for development. NHA has negotiated new master leases with the
    BIA that will allow private financing of Navajo homes. They
    have completed an appraisal of every NHA housing unit to
    provide financing institutions with sufficient information to
    improve montages. And NHA has established a mortgage guaranty
    program that will allow Navajos to finally buy a home for
    themselves.
        In addition, I have directed the consolidation of the
    Navajo Nation's housing programs to facilitate the prompt
    development of housing and streamline the delivery of housing
    services to thereby reduce housing program costs.
        I believe this demonstrates that the Navajo Nation is being
    proactive in addressing our desperate housing need and
    aggressively pursuing nongovernment private financing to
    supplement Federal assistance.
        To ensure adequate housing for all Americans, the
    reauthorization of NAHASDA with certain important amendments is
    necessary. I respectfully request the support of this committee
    to amend NAHASDA in a manner that will strengthen tribal self-
    determination and the Navajo Nation's effort to cure our
    housing needs that will contribute to the advancement of Navajo
    self-sufficiency.
        You will find the Navajo Nation's recommendations in more
    detail in our submitted written testimony. We believe that our
    recommendations, if adopted, will reaffirm the Government's
    commitment to address and increase Indian home ownership.
        To strengthen the Federal policy of tribal self-
    determination and self-government, we recommend that NAHASDA be
    amended to allow more flexibility to Indian tribes that
    administer NAHASDA programs and to undertake Indian housing
    initiatives and activities. In fact, NAHASDA contains
    congressional findings that mirror the policy of tribal self-
    determination and self-government. These findings should be
    reaffirmed.
        As well, it is important that HUD respects and fulfills the
    United States government-to-government relationships with
    Indian tribes. Tribal consultation is an important component of
    this relationship, and is a process of utmost importance to the
    Navajo Nation and other tribes. Consultation is a process that
    allows Indian people to be a part of the decisionmaking process
    that ultimately affects the destiny of our people.
        NAHASDA in its current form requires a negotiated
    rulemaking process. HUD has misinterpreted section 106 of
    NAHASDA and has taken the position that the negotiated
    rulemaking is only a one-time process. I request that this
    committee reaffirm and make clear to HUD that the negotiated
    rulemaking process is an ongoing requirement for promulgating
    and modifying all NAHASDA regulations.
        It is not right for HUD to misinterpret a statutory
    obligation in order to avoid meaningful negotiated rulemaking.
    When enacting NAHASDA, Congress, along with Indian tribes,
    understood the importance of tribal contributions in the
    decisionmaking process of addressing Indian housing needs. By
    consultation, negotiated rulemaking is an important component
    of our government-to-government relationship, and to the future
    of mutual respect between our nations.
        In closing, I have always viewed Federal funding as a hand-
    up and not as a hand-out. To continue our success in addressing
    the deplorable housing needs of Navajo Nation and in Indian
    country, the Navajo Nation supports the reauthorization of
    NAHASDA with amendments that will clearly guide HUD and Indian
    tribes to implement Indian housing programs in a manner that
    truly respects and affirms Indian self-determination and self-
    governance.
        Once more, Mr. Chairman, Mr. Vice Chairman, committee
    members, thank you.
        [Prepared statement of Mr. Begaye appears in appendix.]
        The Chairman. Mr. President, I thank you very much.
        About 12 years ago, I had the opportunity to visit Navajo
    land. At that time, in the briefings that I received from the
    staff of your government, we learned startling statistics. For
    example, at that time less than 20 percent of Navajo families
    had telephones in their homes; about less than one-half had
    running water. What is the situation today?
        Mr. Begaye. Mr. Chairman, Mr. Vice Chairman, members of the
    committee, the need for housing is so present and evident. The
    need for infrastructure is also evident. However, the Navajo
    Nation has taken steps. We are looking at a comprehensive
    infrastructure development plan to present to the Navajo Nation
    Council, and in doing so hopefully getting support from our own
    tribe and other funding sources.
        The Chairman. You also had another problem that even with
    the available housing, there were too many occupants per house,
    such as five people sharing a bedroom. Is that still the
    situation?
        Mr. Begaye. Yes, sir; it is still there because for Navajos
    and I imagine other Indian tribes, we tend to care for other
    relatives and other families that live with us, and an
    overcrowding situation is still present. However, we are trying
    to address that in the consolidation plan.
        The Chairman. You have indicated a problem that really
    angers me and saddens me, that there are those who are engaging
    in predatory lending practices. Is this still going on?
        Mr. Begaye. Sir, in my testimony, I mention the mortgaging
    process. We are trying to address that problem through that
    process, and when we get that in place, I imagine some of the
    problems that are existing in those areas will be addressed.
        The Chairman. Are there many Indians who are cheated out of
    their hard-earned money?
        Mr. Begaye. Yes; there are.
        The Chairman. What can we do about that? Is there something
    we can do?
        Mr. Begaye. I believe that our trips to Washington, DC and
    also our dialog with people like yourself and the vice chairman
    and committee members is one way, and also through an
    educational process with our own Native people I believe will
    help.
        The Chairman. Are these people who are responsible being
    criminally charged for their practices?
        Mr. Begaye. In some cases, they are. In some cases, it is
    sad to see that those things, they tend to get away with those
    activities.
        The Chairman. Could you keep us apprised as to your
    progress in this, because I hate to see these veterans get
    cheated out of their money.
        Mr. Begaye. Yes; I will, sir. As we move forward with the
    new initiatives with the consolidation plan, we will also make
    sure that there are applicable laws that apply to situations
    such as you describe.
        The Chairman. You have suggested that the Department is
    always asking for environmental reviews, even for minor
    renovations, but funds are not made available for this. Are the
    environmental review requirements the same for new housing as
    well as for renovations?
        Mr. Begaye. The problem with the environmental assessments
    and other activities related are usually due to because of
    unfunded mandates that go along with the housing policies
    handed down.
        The Chairman. Do you think this matter is something that
    this committee should be interested in?
        Mr. Begaye. I would appreciate the committee looking into
    it, sir.
        The Chairman. You have testified that stimulating
    investment in tribal communities is essential for tribes to
    achieve sustainability without Federal subsidy. And
    particularly, you recognize the need to establish incentives
    for tribal investors. What sort of incentives would you
    recommend?
        Mr. Begaye. As we move forward with the consolidation plan
    and our plan to promote montages on Navajo Nation, we are
    hoping that the banks will be more responsive if we have a
    solid plan in place for mortgaging, and that is what we are
    doing at this time.
        The Chairman. You have no specific incentive plans?
        Mr. Begaye. Not at this time, as I sit here. No, we are
    working on it and some that will come down the pipe soon.
        The Chairman. If you do, will you share it with us, sir?
        Mr. Begaye. Yes, I will, sir.
        The Chairman. Mr. Vice Chairman.
        Senator Campbell. Thank you, Mr. Chairman.
        President Begaye, as you know, I don't live very far from
    the Navajo Reservation in the Four Corners area. I have a lot
    of friends and people who do business on the Navajo
    Reservation, and may I commend you on what I hear from them
    that in your tenure as president, especially the efforts at
    regulatory reform and you have made the Navajo Nation more
    business-friendly.
        Of course, with increased business, you have increased
    opportunities and some of those opportunities are very good.
    Then in the case of predatory lending and other things, some of
    those opportunities are bad. So I also commend you on trying to
    make sure that the opportunities that have come through your
    efforts for the Navajo people are policed and carefully watched
    for those people who would abuse the system.
        Since NAHASDA passed in 1997, could you tell the committee
    how many units of housing the Navajo Nation has built? And how
    does it compare with the number of units that were built before
    NAHASDA?
        Mr. Begaye. I believe before 1996, we were looking at at
    least 2,400 units, or 100 units, I'm sorry. And right now we
    are up to 2,400 units.
        Senator Campbell. It was about 100 units before?
        Mr. Begaye. Yes, sir.
        Senator Campbell. And the activities that are funded under
    NAHASDA, are there other activities also done besides actual
    building? What percentage of it goes to actual housing
    construction?
        Mr. Begaye. Right now, we also are working with the tax
    credit.
        Senator Campbell. Tax credit?
        Mr. Begaye. Yes; and the percentage that goes back--the
    other one would be the drug elimination funds, which I
    understand might be cut. And that is another very important
    funding.
        Senator Campbell. Drug elimination?
        Mr. Begaye. Drug elimination funds.
        Senator Campbell. Yes; that's extremely important to me,
    and you might be able to offset that through money that we
    appropriate through the Treasury Department, because I know
    they are very concerned about drug use on reservations.
        Mr. Begaye. That's right, sir--a number of concerns, too,
    because through my efforts, Navajo Nation was looking at 10
    Boys and Girls Club sites on Navajo Nation. We were able to get
    five, and if the funding for the drug elimination is zeroed
    out, then that means we don't get the other five.
        Senator Campbell. I see. Well, hopefully we can try to
    correct that as we move through the appropriation process.
        You talked about predatory lending. Does the tribe perform
    credit counseling to people that are going to borrow money?
        Mr. Begaye. That is all built into the present system that
    we are on right now with the NHA, and of course that will
    continue.
        Senator Campbell. And let me ask you about consolidated
    funding. This session, I introduced S. 343, which was modeled
    after the Indian Self-Determination Act, to authorize tribes to
    consolidate Federal economic development funds and services.
    Does the Navajo Tribe support that legislation, or have you had
    time to look at it?
        Mr. Begaye. We support that legislation and it is something
    that we are willing to work with.
        Senator Campbell. Okay. Thank you.
        I have no further questions, Mr. Chairman.
        The Chairman. I can assure you that any bill that the vice
    chairman introduces is worthy of consideration.
        Senator Campbell. Thank you very much. [Laughter.]
        The Chairman. And I thank you, Mr. President.
        Mr. Begaye. Yes, sir; thank you.
        The Chairman. You have been very helpful.
        And now may I call upon the executive director of the
    Salish-Kootenai Housing Authority of Pablo, Montana, Robert
    Gauthier.
        Is that how you pronounce your name?
        Mr. Gauthier. My compliments, Mr. Chairman. Your memory
    serves you well.

       STATEMENT OF ROBERT GAUTHIER, EXECUTIVE DIRECTOR, SALISH-
                       KOOTENAI HOUSING AUTHORITY

        Mr. Gauthier. It is an honor to be here, Mr. Chairman, Mr.
    Vice Chairman, members of the committee and staff, because I am
    here to report on what I think is an exciting time in Indian
    country. While I will not downplay the huge unmet need that we
    are still facing, there is much good news that is to be
    reported.
        I would also, Mr. Chairman, like to acknowledge the staff
    of this committee, both current staff members and past staff
    members because they have worked tirelessly on your behalf. I
    am always amazed at the insight they have and the helpfulness
    and the encouragement they have given us. It is certain that we
    would not be where we are without their good work.
        I would like to also compliment you for your vision,
    leadership and willingness to partner with us to achieve many
    of the dreams that we talked about more than 10 years ago when
    this committee sponsored the National Commission on American
    Indian and Alaska Native and Native Hawaiian Housing. I think
    that Commission, it's work and it's report, and the support by
    this committee for that report, set into change many of the
    programs that we have developed since that report was received,
    now over 10 years ago.
        For example, the funding, Mr. Chairman, that you assured us
    would be protected while we worked to assure new programs for
    Native Hawaiians, you have kept your word. Those funds have not
    been lessened. We now have, this year a proposed $646 million
    NAHASDA block grant, significantly more funding than we had 10
    years ago. I am happy to report one of the agencies that we met
    with during the Commission's work in the early 1990's, Rural
    Development, Farmers Home Administration, has answered the call
    and the challenge that we gave them. This year, they provided
    nearly $150 million to Indians through their programs. They are
    promising more. That is a significant improvement in our
    ability to get our job done.
        It was reported recently that last year there were $50
    million in tax credit projects on reservations--over 1,000 new
    units utilizing a resource that was never dreamed of prior to
    recent events. The Federal Loan Home Banks now call us. They
    are interested in projects. They are interested in title 6. I
    think we are very early in what is likely to happen with good
    planning and good partners.
        The tribes themselves are committing new dollars, unlike we
    have ever seen before, because NAHASDA encouraged and invited
    the tribes to take charge of their housing programs, which is
    right. And they are now seeing how they fit into the overall
    economic development and well-being of their tribal members.
    More tribal dollars than ever before are being invested in
    housing and infrastructure.
        And most importantly, and without this group, we will never
    have success, and that is the individual initiative of hard-
    working, dedicated Indian people across this country who are
    willing to step up and pay for their own houses, if given the
    opportunity. Our job is to make sure they have that
    opportunity. I think together we are going to get that done.
        I have quite a few specific recommendations that are listed
    in my testimony that I would like the committee to consider. By
    and large, I think, given the overwhelming task of changing
    from a program like the 1937 Housing Act, that was never
    designed for reservations, to NAHASDA, everybody has done a
    commendable job.
        There are problems. We have been at odds with HUD on
    further negotiations of the regulations. But I would just ask,
    if we wouldn't have negotiated the original regulations and the
    48 tribal unpaid negotiators who spent over 200 hours trying to
    come up with the best regulations we could, I am asking how
    successful this program would be? I am suggesting maybe that it
    would not be as well-received and as--it wouldn't be creating
    as much excitement as it is if there wouldn't have been
    negotiated rulemaking. So I think HUD should welcome that
    continued input. I was pleased to hear Assistant Secretary
    Liu's comments this morning.
        Just one issue that I think is worth mentioning. There have
    been a couple of instances where HUD has taken a very rigorous
    interpretation of the statute and regulation. One is their
    interpretation that no economic development of any kind can
    take place when NAHASDA dollars are involved. That, in my
    opinion, kind of defeats one of the things we hope to do, and
    that is to give the tribes a little money to bring to the table
    when they sit down to do business. Because of HUD's position,
    we have not been able to do mixed-use housing, a lot of the
    innovative housing delivery systems that are taking place
    everywhere else. We would like to have that relax some.
        And the other thing is HUD has taken a rigid interpretation
    of eligible participants. They say that unless an eligible
    Indian lives in assisted housing, they cannot participate in
    NAHASDA's programs. I, for the life of me, cannot figure out
    from where that interpretation comes.
        Basically what they are saying is if a child wants to come
    and play on a baseball field built on a reservation with
    NAHASDA funds, if they live in a HUD-funded unit they are
    eligible to use it, but if they happen to live in a tar paper
    shack with their grandma and grandpa, they can't. So I think we
    need a little bit more attention to that interpretation.
        But other than that, my comments are attached and I welcome
    any questions the committee might have.
        [Prepared statement of Mr. Gauthier appears in appendix.]
        The Chairman. Mr. Gauthier, I thank you very much. It was
    heartwarming to learn that there are success stories involved.
        Do you think that your successes in securing funds, other
    than those available under NAHASDA, could be duplicated in
    other tribes?
        Mr. Gauthier. Oh, I think they are. Everyday when I pick up
    Indian Country News or one of the other Indian newsletters, I
    read about new and innovative things that are happening. I
    think there is going to be a groundswell of innovation now that
    tribes are learning from each other. It takes a little while to
    pollinate.
        This morning, one of our tribal leaders told us a story
    about planting a fruit tree, and it takes a little while for
    that tree to take root and start bearing fruit. It has been a
    relatively short time since NAHASDA hit the ground. I heard one
    HUD official tell a national audience that before NAHASDA,
    6,000 units were produced nationwide for Indians, and three
    short years later, nearly 20,000 units were produced. I think
    that is an indication of early success, but I think it is just
    the tip of the iceberg of the kind of success that we can all
    expect with reauthorization.
        The Chairman. You have been averaging about 50 homes per
    year.
        Mr. Gauthier. That is correct, sir.
        The Chairman. Of that number, just a few come from NAHASDA
    funds.
        Mr. Gauthier. That is correct.
        The Chairman. What percentage of that 50?
        Mr. Gauthier. Ten percent. We built five with NAHASDA
    funds.
         Senator Inouye. So 45 out of the 50 are from other funds?
        Mr. Gauthier. That is correct, sir.
        The Chairman. And generally what sort of funds are we
    speaking of?
        Mr. Gauthier. Well, we have done four tax credit projects
    we have done one each year since NAHASDA was implemented. We
    have done a title 6 loan, which in essence is a NAHASDA
    project, but it didn't use any direct NAHASDA funds because it
    is set up in such a way that it is self-servicing. We have done
    an awful lot of individual mortgages, using non-restricted
    funds that the Housing Authority received from proceeds of sale
    of Mutual Help units for down payment assistance for our tribal
    families. We are doing about 20 of those a year.
        The Chairman. I brought up the matter of predatory
    practices in lending in Navajo Land. Have you experienced that
    in Pablo?
        Mr. Gauthier. Well, I will tell you, they always make a
    joke that the fastest growing business on the Flathead
    Reservation are pawn shops. I think Indian people by and large
    don't have access to the credit other communities have, and
    they are perfect candidates. When you need money, you've got to
    pay what the market demands. And there are not very many
    options for a lot of tribes. And we experience, even though we
    are a fairly prosperous tribe with one of the lower rates of
    unemployment, particularly in the Plains area, but a lot of our
    members have suffered through really horrible lending
    practices. We try to educate them, but it is a slow process.
        The Chairman. You have indicated that section 601(b) of the
    act, which requires a tribe to certify that it was unable to
    secure timely financing, could have unintended consequences in
    having to pay above-market rates. Do you have any suggestions
    how this unintended consequence can be avoided?
        Mr. Gauthier. Well, I would suggest that that requirement
    be removed, because if you can get credit at three or four
    points higher than what you would get with a guaranteed loan,
    it will a lot of times make the project not financially
    feasible. NAHASDA does not have any subsidies. So if we are
    building low rent units, we have to have the lowest price
    possible, because unless you commit part of the money received
    in a block grant to subsidize those low rent units for very
    poor families, you are going to be out of money. If you
    continue to build low rent units without figuring out a way to
    support them with the block grant, you are not going to be able
    to build any more new units.
        Under the 1937 act, we had the PFS factor which assured
    subsidy to meet the low rent shortages. We don't anymore.
        The Chairman. You are suggesting that we should consider
    repealing 601(b)?
        Mr. Gauthier. I think it could be reworded, Mr. Chairman,
    slightly to accommodate that issue.
        The Chairman. May I ask you to work with my staff here?
        Mr. Gauthier. I would be honored, sir.
        The Chairman. Thank you.
        Mr. Vice Chairman.
        Senator Campbell. Thank you, Mr. Chairman.
        I have a couple of questions for you, just in passing. You
    mentioned pawn shops, Mr. Gauthier. You know, that ought to be
    something we deal with sometime in this committee--the history
    of it and how Indian people use it.
        But I know that there are some good stories about them and
    bad stories about them, but I have some Navajo friends who, as
    an example, who live way out with no burglar alarms and not
    good security in their houses that actually use the pawn shops
    like a bank. It is where they redeem their jewelry when they
    want to use it again, but they find it safer leaving it there
    than it is leaving it at home. So there is probably an up-side
    and a down-side. But there were so many down-sides some years
    ago, as you probably know, the law was changed and now they are
    federally licensed and regulated, or supposed to be if they are
    working on reservations with Indian people.
        Let me also commend you at the terrific model that your
    tribe has done. The 50 houses, and you indicated only five are
    done with NAHASDA money and the other 45 done with other
    funds--I think that is wonderful. There is a story in there
    that we ought to be able to use or do something with through
    changes in NAHASDA through legislation or in other Federal
    laws, or at least by using that as a model that other tribes
    could copy. If you have any suggestions, if there is something
    we ought to do legislatively, I certainly would appreciate some
    advice so that we can improve this bill.
        The CDFI recently published its Native American Lending
    Study, as you know, outlining the steps that need to be taken
    to improve the access to credit in Indian communities. What
    steps do you believe the Federal Government and the tribes can
    do to improve that situation?
        Mr. Gauthier. My answer might surprise you, Mr. Vice
    Chairman, but we have had a tremendous response from the
    Federal agencies, particularly rural development. They have
    lending programs that are perfectly suited for Native people.
    They have the 502 Program that most of us were not aware of
    that will give a one percent loan for 37 years. They have a
    515-Program that will be a 50-year 1 percent loan with subsidy.
    It is not used in Indian country. We are starting to use them.
        But the problem that we are having is while the local rural
    development personnel are well educated as to our issues, when
    we send something to their internal attorneys, things go to
    hell--excuse my language. We cannot seem to get--it bogs down
    when it gets beyond the local level. We have lease approved
    locally. It dies, it disappears, it doesn't get out of there.
    Right now, we are waiting on 10 self-help units in Elmo. It is
    a remote community on a reservation. The Housing Authority has
    been helping with the bridge financing, and we are waiting for
    Rural Development to take those loans out and we are
    guaranteeing them. But they have a problem with the very same
    lease process, where the Housing Authority takes the lease from
    the tribe then subleases it to the participants, that we used
    with HUD to build over 1,000 units at Flathead. But for some
    reason, their attorneys want to totally reinvent the wheel.
        So while the families--and let me tell you, out of the 10
    families, 8 of them are single-mother heads of household and
    are building their own homes. And they are working like crazy
    in the dead of winter in Montana to have these homes ready for
    their families, and yet we are having that sort of problem.
        If there was some way that we could have those people who
    make decisions on Indians share, you know, tie into a common
    educational process, I think it would expedite the availability
    of mortgage money on reservations.
        Senator Campbell. Well, you brought up two problems we face
    all the time. We put things in place, and number one, it often
    gets tangled up in bureaucratic red tape; or number two, the
    information does not filter out to the tribes so they know what
    they can avail themselves to, and the training to be able to
    avail themselves to it, too. I know it is not an easy thing to
    do.
        You seem to have a wonderful relationship with your banks.
    How did you do that? Did Doug Allard have a connection with all
    those banks up there in Flathead, or what?
        Mr. Gauthier. I think he's got most of the money in them.
    [Laughter.]
        Senator Campbell. I think so, too.
        Mr. Gauthier. I will share the inquiry with him.
        Senator Campbell. Good.
        Mr. Gauthier. You know, we have a very unique reservation
    and tribe. Our tribe is blessed with some outstanding leaders.
    I know the chairman and our late chairman, Mickey Pablo, were
    great friends. And our tribal leadership had the vision to set
    up a revolving loan program more than 40 years ago that now has
    $40 million in trust land loans--mortgages. So the people on
    our reservation that need mortgage loans, they don't come to
    the Housing Authority. My job is much easier because I only
    have to deal with the families that are income-eligible, that
    qualify for the programs, and not all the programs that have
    the ability to pay a mortgage. So our bank is more familiar
    with lending. We have on our reservation six separate
    institutions, which is very unusual. And due to some of the
    work we did early, and the work of the Commission, I was
    invited to serve on the Federal Home Loan Bank of Seattle's
    board as a community interest director.
        Senator Campbell. Your own personal banking experience
    probably has helped them, because I know banks. Man, you must
    have a very fine repayment rate because if they don't get
    repaid for a while, they are tougher to get money out of.
        Thank you, Mr. Chairman, I appreciate the opportunity.
        The Chairman. Thank you.
        I just have one more question. You have indicated that
    section 184, the Loan Guarantee Program, is somehow not being
    received too well by tribes. Can you tell us why?
        Mr. Gauthier. Well, I would like to go back again to the
    good work of Congressman Doug Bereuter back in the early
    1990's, again during the time of the Commission, and one of his
    staff members, Joe Pigg, who said we could help by giving you a
    product that would give a lot of confidence to lenders that
    wanted to loan money on Trust land. And the concept of section
    184 was to have a high tolerance for default, because at that
    time every house we built in Indian country was just built.
    There was no leverage. If Congress appropriated enough money
    for 100 units, we built 100 units.
        So we figured if we could leverage that even one time to
    200 units and one-half the loans failed--50 percent failed--we
    still were breaking even. That was the idea behind section 184,
    is to try to have a high tolerance, give a guarantee that was
    very easy to use for lenders, but eventually it founds its way
    basically to--I mean, it's got some great components. But the
    underwriting very much resembles other FHA loans. And it is
    very cumbersome.
        For example, I know there is at least one person from Rocky
    Boy here. They had a lady that returned to their reservation
    who taught school in California. She and her husband were
    interested in building a house and inquired about a mortgage.
    The bank said no, but there is a 184 Program. So the applied
    for it, and it took 1\1/2\ years and a three-ring binder that
    thick--now, this was a couple of years ago, and they have made
    some improvements, but at that time, it took 1\1/2\ years and a
    binder that thick to finally get that loan approved.
        They had to do their own environmental certifications, for
    example. I mean, it could be much simpler if we had a little--I
    mean, as far as I know, the default rate in 184 is similar to
    downtown Scottsdale. There is not much tolerance for people to
    learn to make mistakes. I think there are some ways we could
    loosen it up and get more mortgages made, in my opinion.
        The Chairman. Would this take an amendment to the law?
        Mr. Gauthier. Well, there were some specific
    recommendations on credit that I had in my testimony that I
    think could be done by HUD if they chose to, without any
    statutory change, Mr. Chairman.
        The Chairman. Once again, I join my vice chairman in
    thanking you, Mr. Gauthier.
        And now may I call upon the president of the National
    American Indian Housing Council, Chester Carl, and the first
    vice president of the National Congress of American Indians of
    San Juan Pueblo, Joe Garcia.
        Mr. Carl and Mr. Garcia, welcome, sir.
        Mr. Carl. Thank you very much.
        The Chairman. Please proceed sir.

    STATEMENT OF CHESTER CARL, PRESIDENT, NATIONAL AMERICAN INDIAN
                            HOUSING COUNCIL

        Mr. Carl. Mr. Chairman and Mr. Vice Chairman and honorable
    committee, on behalf of the Coalition for Indian Housing
    Development and its sister organization, the National American
    Indian Housing Council, I would like to again express my
    appreciation, Chairman Inouye and also Vice Chairman Campbell
    and other members of this committee, for holding this hearing.
        In listening to the questions, I feel like you are more
    educated than me providing this testimony. However, I would
    also, again like to take this opportunity to also thank you on
    behalf of the entire organization, the people that are behind
    me here in the audience, for having this Committee put a lot of
    effort into Indian housing issues.
        The Native American Housing Assistance Self-Determination
    Act of 1996 is still a young program. But we have already,
    according to the testimony, seen a lot of its potential. Beyond
    my capacity as chairman of the Coalition and also National
    American Indian Housing Council, I am also a housing
    administrator. It has been unquestionable that NAHASDA-funded
    programs have been successful in providing better housing. It
    is a program that has tripled production in its first year, and
    increases number every year.
        This is the result of a major effort and parallel efforts
    to implement private financing and also efforts to address
    economic development. I have seen the same success that I have
    seen on my reservation also in other reservations.
        NAHASDA addresses the specific needs of tribes and has gone
    far in defining the government-to-government relationship
    between Indian tribes and the United States Government. Based
    on this unique relationship, NAHASDA outlines ambitious goals
    to provide tribes the tools to be more creative, while also
    encouraging flexibility for providing housing services to
    tribal members.
        Today, I speak to you as chairman of the Coalition for
    Indian Housing and Development, a new voice for Indian housing,
    but also a voice for community development, and that also
    includes economic development. The few examples of some of the
    flexibility I am sure this Committee has heard about is the
    Apache Dawn Project at Whiteriver, White Mountain, AZ. This
    tribe is using bond issuance to leverage with NAHASDA to
    finance their community. But more importantly, they also are
    using the lumber from the local sawmill to build the community,
    and that is the way it should be.
        Tribes across the country are using NAHASDA funds to
    leverage with mortgage programs. The Chickasaw Nation, I
    believe the committee has mentioned, includes other nations
    such as the Oneidas, the Red Lake in Minnesota, and the very
    small Pueblo in New Mexico, Santo Domingo. You could not be
    more proud of them. They were part of the umbrella housing
    authority organization and have been able to break away through
    self-determination; been able to use tax credits to develop
    housing projects to serve their community.
        The act requires tribes to accomplish clearly stated goals
    to reduce housing needs. It further encourages the involvement
    of private entities, rather than simply spending Federal
    funding. Unfortunately, as the years passed since enactment,
    these lofty goals appear to have been limited by the continued
    burdensome oversight of HUD. The creation of HUD impediments
    are not authorized by NAHASDA, and sometimes other agencies
    refusing to accept the goals of NAHASDA, discourages a lot of
    this development.
        The Coalition for Indian Housing Development respectfully
    requests Congress to reaffirm its commitment to NAHASDA, and
    tribal sovereignty through reauthorization.
        My constituents, the membership that I represent, requests
    Congress to make the following changes in the act. One, earlier
    discussed, the negotiated rulemaking--we hope this committee
    takes the lead role to clarify the statute to remove any
    ambiguity or discretion on the part of HUD to engage in
    serious, meaningful negotiated rulemaking with tribal
    organizations on all rules and regulations promulgated pursuant
    to NAHASDA. We have heard some promises by the Secretary.
        I think HUD is afraid the tribes will engage in long,
    meaningless negotiations, but that is not so. The initial
    negotiation that took place to develop the rules for NAHASDA,
    it took us 90 days to develop a draft. With nothing in front of
    us, it took us 90 days. It took a year and a half for HUD to
    clear the rules. I think that is important to remember.
        Many of us do not want to spend time away from our
    families, spend long hours sitting day after day with HUD to
    negotiate. That is not the intent. I think our intent is not to
    run HUD, but assist HUD in developing regulations that will
    allow us to develop a better governing document.
        The TDHE members that the assistant secretary spoke to was
    a decision that was made by HUD. One of the problems that he
    speaks to is many tribes not responding. But he didn't tell you
    the criteria the tribal leaders had to meet was to define
    themselves as representing small to medium to large tribes.
    Where did that definition come from? We don't know. The other
    criteria, Mr. Chairman, if you were to ask to serve on this
    committee, you have to have served a minimum of 2 years as a
    board commissioner of an Indian Housing Authority. Any tribal
    leader that is out there fighting on behalf of its housing
    issues or other issues don't meet that criteria. This is
    foolish, and that is the reason that the Secretary is not able
    to meet the needs of the negotiated rulemaking requirements,
    and to further revisit the formula for NAHASDA funding.
        The other issue that I would like to also bring to the
    committee's attention is the issue that also requires technical
    amendment. That has to do with program income. We urge the
    enactment of a technical amendment to NAHASDA that would allow
    more flexibility in determining program income. Currently, HUD
    views any income or revenues, no matter how remotely related to
    the expenditure of Federal funds, as program income. The tribes
    are required to track program income and financially account
    for these funds without any sunset, meaning it has to be
    tracked until eternity.
        This not part of an accounting function anywhere we find.
    This also causes a severe disincentive for Indian Housing
    Authorities and TDHE tribal governments from exploring creative
    and imaginative housing and finance initiatives. They have also
    imposed a requirement to have tribes use all its reserve funds
    before they can draw down on any funds from NAHASDA. This
    hinders any private financing opportunities. In order for the
    tribes to duplicate what Mr. Gauthier explained in able to
    paint a very good balance sheet to allow private financing to
    come onto your reservation, it will not be done if these type
    of restrictions remain with HUD.
        Some of the other issues that I believe that the secretary
    spoke to is very, very important--the training that he spoke
    to, Mr. Chairman. We find that the tribes do not have an
    opportunity to consult on the appropriation. As a result, in
    the past 5 years, set-asides have been taken from NAHASDA for
    special projects, without any consultation. Often, these set-
    asides are not successfully implemented. For example, HUD has
    been able to receive over $5 million each year for set-asides
    for TA and training. Yet, we still see the lack of technical
    assistance that is received on the reservation.
        It is also very disheartening to see millions spent on HUD
    conferences where many tribes cannot even afford to go. It is
    true that our organization is also receiving this money to
    provide training for technical assistance, but much of this
    training is provided free of cost. In the case of technical
    assistance, we go directly to the tribes.
        We urge this committee again also to review the funding of
    these NAHASDA set-asides to ensure that we are providing the
    best product out there.
        I also would ask this committee to look at those programs
    in these set-asides that are no being implemented. For example,
    the 184 program--we believe there are some answers there; the
    title 6 program. We would like to see perhaps the committee
    explore the option to bring those moneys directly into the
    block grant formula, rather than having those moneys be
    captured by HUD or by Congress further on down the road.
        In conclusion, I appreciate the committee's attention in
    addressing important issues that hinder not only economic
    development, but also housing development opportunities on
    Indian reservations. We are confident that together our efforts
    will result in direct benefits to American Indians and Alaska
    Natives.
        Indian housing is at a critical stage, with many of the
    housing problems that have long plagued Indian communities
    still unresolved, including the press conference that we had
    yesterday on overcrowding. The passage of NAHASDA has given
    tribes incredible opportunities, and with adequate funding and
    proper implementation, NAHASDA can be the most important tool
    in building sustainable and healthy communities in Indian
    country.
        Thank you very much.
        [Prepared statement of Mr. Carl appears in appendix.]
        The Chairman. I thank you very much, Mr. Carl.
        Vice President Garcia.

        STATEMENT OF JOE GARCIA, FIRST VICE PRESIDENT, NATIONAL
                      CONGRESS OF AMERICAN INDIANS

        Mr. Garcia. With all due respect, sir, I request to speak
    before you this afternoon. The request is granted? Thank you.
        Good afternoon. On behalf of the executive committee and
    members of the National Congress of American Indians, I would
    like to thank you, Chairman Inouye, Vice Chairman Campbell and
    other distinguished members of the committee for this
    opportunity to speak today on the subject of housing,
    especially now at a time when so much attention has been paid
    to the trust reform and the BIA. It is good that you take the
    time to listen to us.
        My name is Mark of the Misty Lake, better known as Joe
    Garcia. I come from San Juan Pueblo, a little Pueblo in
    northern New Mexico. With NAHASDA, we have been able to do a
    lot more than we have ever been able to do in just the recent
    years. And so that is testimony enough for me to understand the
    importance of NAHASDA and its impact in Indian country.
        I will speak today a little bit about some of the issues.
    Some are old issues, some are continuous issues, and some
    issues you have iterated and reiterated today numerous times.
    But nonetheless, hopefully this testimonial is just
    reinforcement to the fact that they do exist, the problems do
    exist, issues do exist.
        The future of Indian housing dramatically changed on
    October 26, 1996 when Congress enacted Public Law 104-330,
    entitled the Native American Housing Assistance and Self-
    Determination Act of 1996. Some of those most important changes
    for Indian housing, as opposed to the 1937 Housing Act,
    included establishing the trust responsibility with Native
    Americans, to include affordable and healthy homes; separating
    Indian housing from public housing within the Department of
    Housing and Urban Development; replacing several individual
    housing grant programs with one block grant to tribes or their
    tribally designated housing entities; allocating appropriated
    funds based on a single formula, eliminating the competition
    among housing authorities for scarce housing resources;
    providing much greater flexibility for development of
    affordable housing activities at the community level; requiring
    enabling regulations to be promulgated through a negotiated
    rulemaking process with the tribes. Those two latter ones are
    ones that we really need to build on, and I will touch upon
    those in a few seconds.
        In 1998, technical amendments provided some clarification
    of the act, as well as amendments passed late in 2000. These
    later provisions included a Davis-Bacon wage rate preemption
    for tribes, an environmental waiver, local cooperation
    agreement improvements, along with other important provisions.
        Tribal authority and responsibility--perhaps the most
    fundamental change to Native American and Alaska Native housing
    following the advent of NAHASDA is HUD's relationship with
    tribes. As beneficiary of the Federal Housing Program,
    federally recognized tribes exercise their authority throughout
    the NAHASDA process, seeking true self-determination that the
    act emphasizes from the title, all the way through the statute.
        Illustrating the self-determination aspect of NAHASDA, each
    NAHASDA recipient is responsible for the following--three basic
    ones. Tribes possess the power to decide who the recipient of
    the NAHASDA program will be, either themselves or their
    tribally designated housing authority. Each recipient must then
    submit an Indian housing plan that certifies approval of each
    involved, in the case of more than one tribe being served by
    the recipient. Those plans are so important. That is what
    delineates part of the continuance and the consistency for how
    successful the housing programs can be.
        The essential part of the housing program was to provide
    affordable housing activities that can be drawn from a list of
    eligible activities, including development, modernization,
    management, crime prevention, planning and leveraging. Tribes
    can draw from these activities to formulate a housing program
    tailored to their specific needs. Therein lies one of the major
    points of NAHASDA and how much more successful it can be, is to
    allow for these kinds of flexibilities within the program. You
    have heard some testimony today on some of those successes.
    There are numerous others in the country, including my little
    Pueblo. This is what allows us to move forward.
        On the government-to-government relationship, in so many
    ways NAHASDA set the stage for increased freedom for tribes and
    created an atmosphere where self-determination and tribal
    sovereignty could flourish. Unfortunately, these good
    intentions of Congress still have not made their way into HUD's
    day-to-day administration of the program. For too many years,
    HUD was the puppeteer for tribes in their housing programs, so
    it is understandable that there continues through this period
    of transition adjustments that must be made as far as self-
    determination is concerned. And so we have to do away with that
    mentality to allow for NAHASDA to be an even further success.
        NAHASDA has allowed for this negotiated rulemaking
    procedure to be put in place. I am proud to say that I was one
    of the committee members. I served as Governor of San Juan
    Pueblo in 1997, and I said to the delegation this morning that
    those individuals, including the resource people, that served
    to make the negotiated rulemaking a success, and to make
    NAHASDA a partial success, should be given a medal of honor for
    what they endured, the pain, the sacrifices they made to make
    it work. That is testimony in itself that the negotiated
    rulemaking ought to continue and that it needs to be mandated
    of HUD. Because if we don't do that, it is one entity calling
    the shots, and I think that is detrimental to Indian country.
    It is important that that be mandated, and that HUD be required
    to adhere to it.
        Only then can we see success, because this is a solution
    not for us here. It is good that we are here, but I think what
    is most important is the people back home. For those of you who
    have visited Indian country, you cannot really appreciate what
    we speak of here unless you have made some visits. And Senator
    Inouye and Chairman Campbell, I know you have been out there.
    And so I know that you can appreciate what we speak of.
        So there are numerous other issues that we need to speak
    of, but all have been mentioned. I will touch lightly only on
    the position that has been open and the downgrading, as I see
    it, of that one specific position. I think that position would
    not carry political weight to address all of the numerous high
    level issues that is required of such a position. So I would
    suggest and recommend that HUD reconsider--not only reconsider,
    but to maybe be mandated that that position of high level be
    restored.
        With all of that, I have my written testimony submitted. If
    there are any questions, I will be glad to answer them if I
    can, and I again thank you for the opportunity. I do represent
    NCAI, and the myriad of Indian Tribes and Nations throughout
    the country, especially those people in need back home.
        Thank you for the time.
        [Prepared statement of Mr. Garcia appears in appendix.]
        The Chairman. I thank you very much, sir. The full text of
    your testimony will be made part of the record.
        Mr. Carl, in your testimony, you have touched upon multiple
    environmental reviews that Housing Authorities must complete,
    often having to address differing requirements. On an average,
    how many environmental reviews are associated with the
    construction of one unit?
        Mr. Carl. Presiding chair, in my testimony you will find
    that our concern is the multiple requirement from different
    agencies. If the environmental review is done by BIA, if it is
    done quite some time ago, rather than moving forward and
    approving that environmental review, HUD will require a total
    new environmental review. On any activity that involves,
    whether it be renovation, even just replacing the roofing of a
    house if it leaks, it requires not only the State, asbestos
    abatement also, but environmental review reports. Further, HUD
    has to approve the environmental review.
        The Chairman. What kind of costs are we talking about--
    money and time?
        Mr. Carl. On each environmental review that we conduct,
    each cost, each house, each unit averages anywhere between
    $450-$500 to conduct environmental review studies.
        The Chairman. $500 for one unit?
        Mr. Carl. For one unit. Mr. Chairman, you also have to
    understand that many of Indian country does not have mapping
    for flood plains. There is really no information to
    substantiate the requirements of environmental review. So there
    are a lot of research that has to take place into specific
    areas where environmental review has to be conducted.
        The Chairman. Have you discussed this matter with HUD or
    EPA, on your suggestion that one environmental review should
    suffice?
        Mr. Carl. Mr. Chairman, I believe in an attempt to consult
    with HUD, an attempt to prioritize issues that are important to
    the tribe, often the issues that are not important becomes
    priority for HUD to consult with the tribes. So that is the
    very reason why I believe the tribes are very adamant about
    mandating a negotiated rulemaking provision in the statute that
    mandates HUD to sit at the table with the tribal input to
    determine what should be prioritized, not only for negotiated
    rulemaking, but also for consultation.
        The Chairman. Mr. Garcia, you spoke of the position being
    downgraded. The position of NCAI is against that?
        Mr. Garcia. Yes, sir; I believe we would be. It is
    important, as you ask the pressing question yourself this
    afternoon, that in Indian country, that is what it would
    resemble. But not only that, in terms of function, when you
    look at the levels of authority and levels of responsibility of
    those particular positions, the authority would not be there,
    the responsibility would not be there, and certainly the
    political clout that is required to address and work with the
    other number of agencies that is required would not be there.
    So in a sense, it is not only a downgrade, I think it is
    undermining the entire position and where Indian housing is.
        The Chairman. I can assure you we will do our best to see
    that your position is upheld.
        Small tribes have advised the committee, as you have, that
    they have problems because they receive smaller block grants,
    insufficient funds to hire or administer housing problems. Do
    you have any suggested amendments to NAHASDA or to regulations
    that would address the problems of small tribes?
        Mr. Garcia. Mr. Chairman, I think that is a long-term
    solution, but part of the solution when we were fighting the
    formula, and I worked on the sub-group, I was cochair on the
    subgroup for the formula, and one of the issues that faced us
    is the formula, the way it was written, that in the onset we
    simply used a simplified formula. Thereby, if you look at the
    smaller tribes, they were just by default in their status in
    the numbers of land-base and number of units and number of
    tribal members, they fell at the lower end. I think that that
    needs to be readdressed.
        For negotiated rulemaking, that would be one particular
    area that is a critical area that needs to be addressed. I
    believe that we can come to some creative solutions, unique
    solutions on how we can address that. But not having a
    mechanism, a conduit in place, a system in place to address
    that, we can't begin to fix it.
        And so, that is only one area--the formula is one area.
    There are a myriad of other areas within the NAHASDA that need
    correction, but it is like the example that I gave, Mr.
    Chairman, this morning about this little fruit tree.
        The Chairman. Will you get together with the staff to work
    out recommendations?
        Mr. Garcia. Yes, sir.
        The Chairman. Because on the reauthorization, if we need to
    make changes, this is the opportunity we have.
        Mr. Garcia. Okay. Thank you, sir.
        The Chairman. Now, speaking of negotiated rulemaking, both
    of you concur that it should apply to amendments and not just
    the original rule. Is that correct?
        Mr. Carl. Presiding chair, we believe that HUD
    misinterpreted the intent of the law. As I recall the writing
    of NAHASDA, Senator John McCain very strongly insisted on
    having a negotiated rulemaking provision. We believe that any
    rules that are going to be developed, whether it be amendment
    of the rule, it should be done through negotiated rulemaking.
        The Chairman. Is that the official position of NCAI?
        Mr. Garcia. I agree, Your Honor.
        The Chairman. Do you have a resolution to that effect?
        Mr. Garcia. I believe we do, although I don't remember the
    resolution number. There is one in place.
        The Chairman. Can you send us a copy so we can use that in
    our discussions here?
        Mr. Garcia. Yes, sir; we will.
        The Chairman. Also, I presume you have a resolution on the
    assistant secretary's position?
        Mr. Garcia. I believe there is too, on that one, and there
    is also a letter addressing that.
        The Chairman. We would appreciate that.
        We have been advised that over 200 tribal leaders walked
    out of HUD's Homeownership Summit in St. Paul last July to
    protest HUD's implementation of its tribal consultation policy.
    That group prepared a position paper explaining the reasons for
    the protest. Were you involved in that? Do you know anything
    about this protest?
        Mr. Garcia. I was not involved in it, no, sir. I am not
    aware.
        The Chairman. Mr. Carl are you aware of this protest?
        Mr. Carl. Yes; I am. In fact, I was also asked by HUD to
    cochair the meeting that took place. The tribal consultation
    negotiated rulemaking has a very long history. Secretary Cuomo
    in his position as secretary gave a commitment to the tribes,
    and his commitment was this: If you can develop a policy on
    consultation and negotiated rulemaking, HUD will support it.
    The secretary, I am sure, was not advised very well, because
    tribes--he was probably advised tribes tend to fight among
    themselves and never agree on anything.
        The tribes took this as a challenge, and met in Las Vegas,
    over 150 tribal representatives. We developed a draft. It was
    presented to HUD. In February 2000, the tribe presented this
    policy. That policy had 48 tribal members as part of the
    negotiated rulemaking team. And the tribe made a determination
    who would represent them on this negotiated rulemaking team.
        And it also provided how different consultation would be
    done. For example, the formula negotiated rulemaking could be
    done in a smaller group, but it would be represented back to
    the 48 members. So when the 48 member was presented to
    Secretary Cuomo, HUD informed the tribes that they could not
    accept that proposal.
        So the tribes felt like their only avenue to get back to
    the table to discuss a lot of these implementation issues was
    to the consultation policy. The consultation policy that was
    presented to HUD basically said, HUD, we determine what will be
    discussed and presented. Tribes, you may have some input, but
    in the long run, HUD determines which is to do. And the tribe
    had major problems with that. So for that reason, the tribes
    felt like it was not productive to continue dialogues, but
    rather make a very respectful protest of that presentation of
    that policy.
        The Chairman. Do you believe that the attitude has changed
    since then?
        Mr. Carl. We had strong hopes for this Republican
    administration. We understand that Assistant Secretary Liu has
    just been in office a couple of months. We are somewhat hopeful
    at some of his responses, but I think it will take the work of
    this committee to get to where we can actually sit down with
    HUD.
        The Chairman. We have been led to understand that ONAP does
    not have uniform policies dealing with all tribes in all
    regions. They seem to have policies that differ from region to
    region. Is that correct?
        Mr. Garcia. I missed the last part, sir.
        The Chairman. We have been led to understand that the
    Office of Native American Programs does not have uniform
    policies for dealing with all tribes in all regions. In other
    words, they have different policies in different regions. Is
    that correct?
        Mr. Garcia. Sir, I think the policies--there may be some
    policies in place. It may be the interpretation. While we
    stress at some level that the decisions should be able to be
    made over at the regional levels, that should be done. However,
    there should be some consistency in how those decisions are
    made and what policies are being looked at. So that is an
    issue.
        Mr. Carl. Mr. Chairman, if I may just add on to the Vice
    President's comment, when we sat down to negotiate with HUD,
    pre-NAHASDA HUD approved everything, even your operating
    budget, even how much your staff salaries would be. It went as
    far as HUD approving your contractors, your housing design, and
    how much the house would cost, so from that mentality to an
    abrupt change with negotiated rulemaking where we had to
    discuss these very same issues with HUD staff that are present.
    A lot of the field staff were not present at that negotiated
    rulemaking. The rationale, the pretext on why the tribes were
    wanting things done in a certain way was not provided to the
    HUD staff.
        So there is a lot of misinterpretation. There is a lack of
    guidance, uniform guidance to be provided to staff. So you get
    a lot of the old mentality of ``mother may I'' type attitude
    from certain staff of HUD. As a result, HUD imposes
    restrictions that are not even part of the regulatory
    requirement. For some of us tribes, we are outspoken. We know
    the rationale behind some of those regulations, but there are
    many tribes that are afraid to break ties with the relationship
    we have with HUD staff. So for that reason, a lot of time
    tribes tend to try to comply.
        The Chairman. If I may, I will submit to both of you
    questions of some technical nature that may require some
    research. May I do that?
        Mr. Carl. You certainly can. We will be more than honored
    to address a lot of those issues you may submit to us.
        The Chairman. In working on the reauthorization bill, there
    are times when amendments are not necessary, but it is always
    important that we put the right matters in the committee
    report, because the committee report oftentimes is often looked
    to, to determine legislative intent. And so there are some
    changes that you have recommended which may not require an
    amendment to the law, but may require some urging on the part
    of the committee on the policies that are enunciated by the
    agency. So if you have any suggestions you let us know.
        So with that, may I thank both of you and thank all the
    other witnesses for sharing your wisdom with us. We will take
    them seriously as we proceed in the matter of the
    reauthorization of NAHASDA.
        Mr. Garcia. Thank you.
        Mr. Carl. Thank you very much.
        The Chairman. With your help, I think we can do it. Thank
    you very much.
        [Whereupon, at 4:05 p.m., the committee was adjourned, to
    reconvene at the call of the Chair.]
    =======================================================================

                                A P P E N D I X

                                  ----------

                  Additional Material Submitted for the Record

    =======================================================================

    Prepared Statement of Hon. Maria Cantwell, U.S. Senator from Washington

        Mr. Chairman, thank you for the opportunity to meet today to
    discuss the Native American Housing Assistance and Self-Determination
    Act.
        Congress passed the Native American Housing Assistance and Self-
    Determination Act (NAHASDA) in 1996 in order to strengthen Federal
    housing assistance for tribal communities. Unfortunately, tribal
    communities suffer disproportionately from substandard housing
    conditions, such as overcrowding, lack of plumbing and electricity, or
    lack of any housing at all. Indeed, the success of NAHASDA is critical
    to many low-income Native Americans. As we reauthorize this legislation
    for another 5-year period, it is important that we assess the
    implementation of NAHASDA to identify what has worked well for tribes
    and what aspects need to be improved upon.
        HUD's Office of the Inspector General has examined the first 3
    years of the implementation of NAHASDA and reported its findings in
    August 2001. This study found that, overall, tribes have successfully
    implemented NAHASDA. However, the report also identified several
    concerns about the workings of NAHASDA on both the Federal and tribal
    levels.
        I am also aware that many tribes have expressed serious concern
    that HUD has not adequately consulted tribes when making regulatory
    changes to NAHASDA. While tribes believe that a negotiated rulemaking
    process should be used anytime changes are made to NAHASDA regulations,
    it is my understanding that HUD has taken the position that the
    requirements of NAHASDA were met when HUD included tribes in the
    original adoption of regulations.
        NAHASDA was designed to help tribes with their housing needs while
    also promoting tribal self-determination. Indian Housing Block Grants
    are awarded directly to tribes to allow tribes to maintain authority
    over both the design and implementation of housing programs for members
    of their communities in need of housing assistance. I believe that it
    is important to address how we can promote negotiation between HUD and
    tribes in order to respect the government-to-government relationship
    between tribes and the United States.
        Mr. Chairman, 29 tribes in Washington State rely on Indian Housing
    Block Grants through NAHASDA to provide for low-income tribal members.
    I am eager to participate in a forum where we can discuss both the
    strengths and weaknesses of the implementation of NAHASDA to help
    tribes effectively meet the housing needs of their communities while
    respecting tribal self-governance.
                                     ______

       Prepared Statement of Kent Conrad, U.S. Senator from North Dakota

        Mr. Chairman, thank you for holding this oversight hearing to
    discuss the implementation of the Native American Housing Assistance
    and Self-Determination Act, commonly known as NAHASDA.
        Native Americans face some of the worst housing conditions in the
    United States, and overcrowding is common. In North Dakota, where
    winter daytime temperatures generally do not rise above freezing--and
    in fact are often sub-zero--a person who lacks solid, well-insulated
    housing is at risk of serious injury and possibly even death. Yet we
    are asking many Indian people in North Dakota and throughout the United
    States to make due with substandard housing.
        I am pleased that in 1996, Congress passed NAHASDA, which allows
    tribal housing authorities greater autonomy to design housing plans
    that suit their needs. NAHASDA block grants are a more efficient way of
    providing funding for housing in Indian country. As the title of the
    1996 act indicates, self-determination is a core principle of the law.
    NAHASDA points to local control and local solutions to address the
    housing crisis facing so many in Indian country.
        As this committee works on the reauthorization of NAHASDA, one area
    that should be examined is whether an emergency reserve fund should be
    created. This past year it was discovered that over 200 homes on the
    Turtle Mountain Reservation in my State of North Dakota were infested
    with black mold, caused by the extraordinarily wet conditions in that
    part of the State.
        Black mold can be life-threatening, especially to the very young
    and the very old with respiratory problems. It has caused very serious
    health problems to those occupying these houses on the reservation. In
    fact, two children have already died in these homes. Many of the homes
    are simply uninhabitable due to the extreme mold infestation in the
    basements, walls, ceilings, and insulation. Other tribes in North
    Dakota, including the Spirit Lake Nation and the Three Affiliated
    Tribes at Fort Berthold, are also battling mold-infested homes.
        As we worked to find a way to replace the homes impacted at Turtle
    Mountain, we discovered that there is no emergency fund for Native
    American housing, as there is for public housing. As a result, we had
    to secure funding to address this emergency through other means.
        It is my hope that we can address some of the issues, like the lack
    of an emergency fund, that have become apparent as NAHASDA has been
    implemented and make this good law even better. I look forward to the
    testimony of today's witnesses, and thank them for being here.
                                     ______

     Prepared Statement of Hon. Tim Johnson, U.S. Senator from South Dakota

        Chairman Inouye, Vice-Chairman Campbell, members of the committee,
    and witnesses. I am pleased to be here today to receive the testimony
    on the Reauthorization of the Indian Housing Block Grant.
        For over 5 years, tribes and Alaska Native Villages have been
    living through the experimentation of using Block Grants to provide
    housing assistance to Native Americans. The Native American Housing
    Assistance and Self-Determination Act has proven to be a vast
    improvement over the prior way that housing assistance was provided to
    Tribes in some respects, and a complete failure on others. We are here
    today to further review this program so that the proper improvements
    may be made.
        It remains clear that Congress needs to further clarify the
    consultation process that is pivotal to the government-to-government
    relationship that exists between tribes, villages, rancherias, and the
    Federal Government. Tribes should be afforded a thorough and meaningful
    consultation process when the Federal Government attempts to change the
    regulations governing Native specific programs. Only once has this been
    seen by the tribes throughout the past 5 years on housing issues. There
    remains much discussion between the Department of Housing and Urban
    Development and Native peoples of this great Nation on what was the
    actual intention. I will tell you now that the Administration must
    consult with tribes as part of its Federal obligation to them.
        Throughout my 16 years of service in Congress, I have been dismayed
    by the living conditions of our First Americans. On numerous occasions,
    it has been documented that Native Americans have the worst housing
    conditions in the United States. There is rampant overcrowding,
    homelessness, and crumbling housing stock. In South Dakota we see some
    of the worst conditions overall. There is anywhere between 50-80
    percent unemployment on many of South Dakotas nine Indian Reservations.
    According to the Housing Assistance Council, South Dakota contains 10
    counties that are inhabited by 30-65 percent of persons below poverty.
    Nine of these counties are fully contained or directly adjacent to
    reservations.
        The Federal Government has the treaty obligation to provide basic
    services to tribes. This has been far from the case in most instances--
    including Housing. I appreciate the opportunity to continue to shape
    the face of Indian housing, and further improve access to safe, and
    decent housing for our Native people. The Federal Government must end
    the practice of treating our First Americans as Third Class Citizens.
        Mr. Chairman I thank you for holding this important hearing, I look
    forward to receiving the testimony of our witnesses today. I ask
    unanimous consent that my statement be included in the record, and I
    will submit questions in writing.
                                     ______

       Prepared Statement of Phil Bush, Nevada/California Indian Housing
            Association and the Southwest Indian Housing Association

        Thank you Chairman Inouye, Vice Chairman Campbell, and other
    distinguished members of the committee for the opportunity to submit
    this written testimony as part of the record for the February 13, 2002,
    hearing on the Native American Housing Assistance and Self-
    Determination Act.
        As President of the Southwest Indian Housing Association (SWIHA)
    and as Chairman of the Nevada-California Indian Housing Association
    (Nevada Cal), I want to provide the committee with a perspective on the
    implementation of NAHASDA which you did not hear from the witnesses who
    testified before you on February 13. Nevada Cal, as its name implies,
    represents tribes in California and Nevada who are committed to
    providing adequate housing for their memberships. SWIHA represents
    tribes in California, Nevada, Arizona, New Mexico, and West Texas.
        Most of the federally recognized Indian tribes who belong to Nevada
    Cal and many of the tribes who belong to SWIHA are smaller tribes who
    receive less than $350,000 per year under the needs component of the
    NAHASDA funding formula. As you know, the regulations adopted to
    implement the statutory allocation formula in NAHASDA established two
    components: One component to provide for the maintenance of the
    existing housing constructed with Federal funding under the National
    Housing Act; the other component to meet the continuing unmet need for
    housing in Indian country.
        You have heard from the other witnesses that NAHASDA established a
    new era in Indian housing which respects the role of tribal governments
    and has allowed tribes more flexibility to provide housing to low
    income Indian families. We at Nevada Cal and SWIHA agree that NAHASDA
    is a vast improvement over the previous Indian housing program and we
    strongly support its reauthorization.
        When the needs component of the funding formula emerged from the
    negotiated rulemaking used to establish NAHASDA's implementing
    regulations, it included a floor or minimum level of funding. Under
    those regulations, no tribe would receive less than $50,000 in the
    first year and no less than $25,000 for the next 4 years. That minimum
    funding level ends in fiscal year 2002. The smaller tribes
    unsuccessfully advocated for a larger minimum grant during negotiated
    rulemaking. The last 4 years have convinced them that an adequate
    minimum level of funding is essential to make the promise of NAHASDA
    available to all tribes and has taught them that $25,000 is not
    adequate.
        For fiscal year 2002, 172 of the 583 federally recognized tribes in
    the United States will receive approximately $307 million or over 86
    percent of the slightly more than $356 million available for allocation
    under the needs component of the NAHASDA funding formula. That leaves
    $49 million or less than 14 percent for the remaining 410 potentially
    eligible tribes. Of those, over 100 will receive less than $50,000
    under the needs component of the formula.
        Unless a realistic minimum level of funding is established for
    block grants under NAHASDA, grants to smaller tribes will produce no
    tangible improvement in the abysmal housing conditions in which their
    members currently live.
        The cost to develop housing in Indian country is expensive, because
    those costs include the extensive infrastructure development that is
    frequently necessary to provide water, sanitation facilities, road
    access and electricity to the newly constructed houses and, of course,
    because Federal law requires the payment of prevailing wages to all
    workers involved in the construction of those houses. In California,
    for example, HUD has established the allowable ``total development
    cost'' or ``TDC'' for one home at more than $190,000.
        In addition, NAHASDA requires tribes to comply with extensive
    regulatory requirements in the administration of block grant funds.
    They must submit annual Indian Housing Plans, performance reports, and
    independent audits. They must comply with the National Environmental
    Policy Act before they can draw down and use block grant funds and they
    must adopt accounting and procurement systems that meet Federal
    standards. NAHASDA currently limits these administrative expenses to 20
    percent of the annual block grant.
        For a tribe which receives the minimum grant of $25,000 this year,
    it cannot spend more than $5,000 to comply with all of these regulatory
    requirements but will have only $20,000 to provide housing benefits to
    its low income tribal members. Even if that tribe were to take
    advantage of the federally guaranteed loan opportunities afforded by
    title VI of NAHASDA, it could borrow no more than $125,000, less than
    the cost of one house.
        No other strategies we are aware of can mitigate an inadequate
    minimum grant level. If, for example, tribes were to join together into
    multi-tribal housing organizations, they might achieve some economies
    of scale that may reduce the percentage of their grants spent on
    administration. However, no economies of scale can make a $25,000- or
    even a $50,000-grant adequate to provide meaningful housing benefits to
    tribal members.
        Based on our experience during the first 5 years of NAHASDA, Nevada
    Cal and SWIHA recommend that the Committee introduce as part of its
    reauthorization an amendment to NAHASDA that mandates an adequate
    minimum for block grants under the act. We are prepared to work with
    committee members on the development of that amendment and its passage.
                                     ______

      Prepared Statement Chadwick Smith, Principal Chief, Cherokee Nation

        Chairman Inouye, Vice Chairman Campbell and other members of the
    committee:
        Please accept the gratitude of the citizens of the Cherokee Nation
    in your continuing support for Indian housing programs. The Native
    American Housing Assistance and Self-Determination of 1996 (NAHASDA)
    has allowed our Nation to create its own programs designed by and for
    our citizens. It has allowed us to develop programs involving self-
    help, the development of the private housing market, and opportunities
    to leverage other funds in order to multiply the resources available to
    our citizens. Our ability under NAHASDA to control additional assets
    has also allowed us to monitor, develop, and implement efforts to
    improve self sufficiency, provide housing counseling, and to protect
    our citizens against practices such as predatory lending. We have been
    able to access private bank financing, the Low Income Housing Tax
    Credit process, the Federal Home Loan Bank's Affordable Housing
    Programs, USDA programs, and other sources of financing to house our
    citizens.
        We greatly appreciate your support of the reauthorization and
    continued funding of NAHASDA.
        The Cherokee Nation wishes to express its continuing concern over
    the issue of negotiated rulemaking. We realize our view may be contrary
    to most of what the committee has been hearing. We have been involved
    from the beginning of the attempt to formulate a new consultation
    policy with the Department of Housing and Urban Development. We are
    concerned that subjecting all changes to NAHASDA regulations to the
    negotiated rulemaking process creates an inefficient, potentially
    bureaucratic, process to routine, noncontroversial issues. There are
    numerous technical changes that could and in our opinion should have
    been made to NAHASDA as long as 2 years ago which have been held up
    because of the continued insistence that everything needs to go through
    negotiated rulemaking. Although we fiercely protect our sovereignty
    when necessary, we also take a practical view of properly serving our
    citizens in the most efficient manner possible. We believe that the
    Department of HUD has been extremely cooperative in attempting to
    promote a balance between consultation in the form of negotiated
    rulemaking on controversial issues, such as formula allocation, and
    other less formal means of consultation on the more numerous
    ``routine'' issues. We urge you to review the November 28, 2001
    ``Tribal Consultation Document: Implementation of Statutory Changes to
    NAHASDA'' produced by the Department of HUD that, in our opinion, is
    such a balanced document that we didn't even feel the necessity of
    responding to it. At this point in time, we urge the Committee to allow
    Secretary Martinez, Assistant Secretary Liu, and the Office of Native
    American Programs to implement a consultation policy for all of HUD's
    Indian programs, not just NAHASDA, that promotes a balanced, effective,
    respectful, and timely process that helps us to reach our main goal
    with the housing funds: Creating housing opportunities for our needy
    citizens. In short, there is no legislative change necessary regarding
    consultation, negotiated rulemaking, etc. at this time.
        On another matter, we would like for you to review the process by
    which the Indian Housing Drug Elimination Program was discontinued. As
    you know, Indian tribes had a $12 million set-aside out of the Public
    Housing Drug Elimination Program (PHDEP). When the PHDEP was
    eliminated, public housing's Capital Fund was increased to include drug
    elimination activities. Nothing got increased for Indian housing.
    Please review the possibility of increasing NAHASDA/Indian Housing
    Block Grant or even the Indian Community Development Grant program by
    the $12 million set-aside in the same manner that public housing was
    treated. The Cherokee Nation utilized DEP funding for resident
    empowerment and law enforcement activities. Now we have to expend
    approximately $700,000 a year out of NAHASDA/IHBG funds in order not to
    lay off personnel and continue our drug elimination programs.
        Thank you again for advocating for Indian Country. The Cherokee
    Nation would be privileged to testify in any hearings on NAHASDA issues
    in the future.
                                     ______

        Prepared Statement of Kelsey A. Begaye, President, Navajo Nation

        Thank you Chairman Inouye, Vice Chairman Campbell, and other
    distinguished members of the committee for the opportunity to speak to
    you today about Indian housing. As President of the Navajo Nation, I
    present to you the Navajo Nation's recommendations regarding the
    reauthorization of NAHASDA and housing issues facing the Navajo Nation.
    The Navajo Nation values the work Congress has done to address Indian
    housing needs with the passage of the Native American Housing
    Assistance and Self-Determination Act of 1996 (NAHASDA), and its
    reauthorization will reaffirm the government's commitment to address
    and increase Indian homeownership.
        As you are aware from many hearings covering Indian housing issues,
    tribes and Congress have had little success on curing the housing
    problems in Indian Country, despite the work done by both. In fact, the
    Navajo Nation discussed this issue in our Legislative Priorities for
    the 107th Congress written testimony. This testimony addressed many
    overall issues including, ``Promoting Homeownership in Indian
    Country.'' The Navajo Nation especially appreciates the work of the
    Senate Committee on Indian Affairs (SCIA) and we look forward to
    working with you on the reauthorization and finding viable solutions to
    overcome housing barriers.
        Last summer, SCIA Minority Staff Director, Paul Moorehead traveled
    to the western part of the Navajo Nation. He saw for himself that the
    Navajo Nation is mostly rural and lacks basic infrastructure in many
    parts. Added to the rural conditions, in the Navajo and Hopi region,
    are the restrictions that the Bennett Freeze imposes upon building new
    homes or to make improvements to existing improvements. Mr. Moorehead
    may himself be able to tell you about the great need and desire that
    the Navajo people have in trying to obtain the American dream of
    homeownership. I would like to thank Mr. Moorehead for his visit and I
    would also like to invite members of this committee and its staff to
    also visit the Navajo Nation.
        The National American Indian Housing Council (NAIHC) estimates that
    40 percent of Native Americans live in overcrowded or physically
    inadequate housing conditions, as compared to 6 percent of the general
    population, and 33 percent of Native American households are considered
    very-low income, compared to 24 percent nationally. Fifty-six percent
    (56 percent) of our approximate 250,000 Navajo members live below the
    poverty level. We estimate that 20,000 to 30,000 new housing units are
    needed immediately on the Navajo Nation. Nationwide, NAIHC estimates
    that 200,000 new housing units are needed. These are waiting list
    numbers and do not take into account actual need, which would include
    those tribal members and families continually moving back to
    reservations as a result of economic hardship or other needs.
        As conveyed in the Navajo Nation written testimony on Legislative
    Priorities for the 107th Congress, we support the development of a
    comprehensive Federal Indian funding policy that examines the amount of
    available funds for programs and services for which Indian Nations are
    eligible, the mechanisms for distribution and the funding management
    requirements. Formal consultation with tribal governments in the
    analysis development is also essential, provided that consultation is
    well defined to ensure success in the development of a comprehensive
    and meaningful Indian funding policy that supports tribal self-
    government and self-determination while fulfilling the obligations the
    United States has undertaken to Indian people.
        We believe that by involving the Navajo Nation and other Indian
    Nations in the formulation of annual Federal budget proposals, true
    government-to-government consultation is achieved. Tribal involvement
    in the budget process creates better dialog between Federal agents and
    tribal representatives, resulting in a better understanding by Federal
    agencies of the unique budgetary needs of tribal governments.
    Consultation allows tribal governments to participate in important
    decisionmaking activities that directly impact their own communities.
    And, direct input from tribal governments promotes and respects Indian
    self-determination.
        The NAHASDA legislation obligates HUD to follow a Federal statutory
    negotiated rulemaking process when developing regulations to implement
    NAHASDA. HUD has taken a position that this is only a one-time process
    to be used for the establishment of implementing regulations. The
    Navajo Nation opposes HUD's position because it is not in accordance
    with the statutory provision and the congressional findings of NAHASDA,
    that this is an on-going requirement that HUD must follow on all new
    regulations. The Navajo Nation requests your support to strengthen the
    government-to-government relationship with HUD and to encourage them to
    follow this policy.
        To implement the original intent of Congress for the HUD Negotiated
    Rulemaking process, HUD must consult with all federally recognized
    tribes, including the make up of the representatives to the Negotiated
    Rulemaking Committee. Upon the selection of the Negotiated Rulemaking
    Committee, the Navajo Nation requests that Congress provide HUD the
    appropriate funding in order to achieve the objectives of NAHASDA and
    the tribal consultation policy.
        As you are very aware, in President Bush's fiscal year 2003 budget
    request, there is major focus on Homeland Security and the war against
    terrorism. The Navajo Nation understands that this is not the Senate
    Appropriation's Committee, but would like to bring to your attention
    the great need to support domestic security within the United States,
    which must include the indigenous homelands of Indian Country. The
    President is asking for billions of dollars to secure and rebuild
    Afghanistan, which is a noble cause, but as reported in the 2000 U.S.
    Department of Energy study, 37 percent of Navajo homes lack
    electricity. In addition, 77 percent of Navajo homes lack plumbing, 76
    percent lack telephone service, and 72 percent lack kitchen facilities.
    The lack of basic utility infrastructure is common across Indian
    Country. In your work, please keep in mind that tribal communities are
    in need and should also be considered.
        The Navajo Nation is concerned about the current environmental
    review process. This process requires tribes to utilize a large amount
    of NAHASDA funding to conduct environmental review for minor housing
    renovation. While environmental review is important and necessary, this
    requirement makes it difficult for tribes to further stretch an already
    inadequate amount of NAHASDA funding. The Navajo Nation knows that
    further coordination of the Environmental Protection Agency, HUD, and
    other Federal agencies could alleviate these problems.
        The National Environmental Protection Act requires that a lead
    agency be designated when there are multiple funding agencies. This
    allows for only one environmental review process to occur. Agencies
    requiring multiple independent environmental assessments will only
    hinder construction progress. This NEPA process not only makes sense,
    but also saves time and money and therefore should be supported.
        The Navajo Nation is concerned about the current vacancy of the
    head of HUD's Native American Program as well as the downgrading of the
    position from SES designation to a GS-15 position. This position also
    has the additional responsibility of not only overseeing the Native
    American Program, but also the new Native Hawaiian Homeland program.
        The Navajo Nation recommends that this position should be raised to
    an Assistant Secretary for Indian Affairs at HUD. This elevation is
    warranted because of the government-to-government relationship and the
    importance of providing adequate and safe housing for Indian Country.
    The principles of tribal sovereignty and the government-to-government
    relationship between tribes and the Federal Government place Indian
    housing in its own category, needing its own authority and direct
    contact with the Secretary.
        The Navajo Nation continues to experience considerable delays in
    obtaining approval by the Bureau of Indian Affairs (BIA) on title
    conveyances. The Navajo Nation and BIA have attempted to implement a
    process that would facilitate a prompt review and approval of title
    conveyances. There are several hundred title conveyances, however,
    pending within the BIA Navajo Regional Office.
        One current example creating unnecessary delays is that once the
    parties agreed on the appropriate conveyance form, the BIA refused to
    approve conveyances because the conveyance document was printed in
    maroon ink. The document printed with this color ink readily identifies
    it as an original document. The BIA objects because the maroon ink
    makes it more difficult to transfer it to microfiche records. This
    bureaucracy does not ease the difficulty of securing approval of title
    conveyances. Certainly, there is a simple solution to this problem. The
    Navajo Nation requests the Committee's support in obtaining the
    cooperation of the BIA to promptly approve title conveyances.
        One way to achieve sustainability without Federal subsidy is to
    stimulate investment in tribal communities. Unfortunately, barriers
    exist which deter private investors. Although non-tribal investors can
    help to revitalize these communities, tribes would like most to create
    incentives for tribal investors to help their communities from the
    inside.
        For example, implementing substantial tax incentives, such as a
    capital gains tax exemption, would encourage tribal members to invest
    in managed rental properties on reservations. Given the right
    environment, inside investment will significantly support self-
    sustainability on Indian reservations.
        Along these lines of stimulating private growth in communities is
    halting predatory lending practices. Although a problem in most all
    low-income communities, Native American communities suffer acutely from
    exploitation by lenders because there is an almost complete absence of
    other options, even for people who can afford competitive loans. An
    extensive outreach by HUD and Veterans Housing would help eliminate
    Indian Country's reliance on unscrupulous lenders.
        Another recommendation is to revisit the Community Reinvestment Act
    (CRA) and how it is applied in Indian Country. Currently, banks are
    able to meet their CRA requirements without actually going into rural
    America. Perhaps there is some way to make Indian Country a component
    of the CRA, which would require greater scrutiny by lenders. Regulators
    should act to hold lenders accountable for more rural areas.
        With respect to the Navajo Nation, I have actively supported NHA's
    efforts to create a private housing market within the Navajo Nation.
    NHA has implemented procedures that will aid in the prompt recordation
    of titles and acquisition of land for housing development. They have
    negotiated new master leases with the BIA that will encourage private
    financing of Navajo homes. They completed an appraisal of every NHA
    housing unit to provide financial institutions with sufficient
    information to approve mortgages. And, NHA also established a mortgage
    guarantee program.
        In addition, I have directed the consolidation of the Navajo
    Nation's housing programs to facilitate the prompt development of
    housing and streamlining the delivery of housing services and reduce
    housing program costs. I believe this demonstrates that the Navajo
    Nation is being proactive in addressing our desperate housing need and
    aggressively pursuing non-governmental private financing to supplement
    Federal funding.
        In closing, I would like to reiterate the importance of consulting
    with tribes on how to implement NAHASDA, as well as allowing us the
    freedom to work with the program without excessive oversight and
    restriction. The dilemma we face is the lack of support at the agency
    level for tribal sovereignty. The lack of consultation significantly
    hinders Indian housing development opportunities. Without at least, an
    open door policy to communicate, the Indian housing tragedy will
    continue despite laws passed by this and future Congresses. Thank you
    for your attention and I welcome any questions you may have.
        [Resolutions follow:]

    IGRAU-234-01
    Resolution of the Intergovernmental Relations Committee of the Navajo
        Nation Council
    Approving the Navajo Nation's Written Testimony to the Senate Committee
        on Indian Affairs on the Goals and Priorities of the Navajo Nation
        for the 107th Congress

    NHA-3354-2002
    Resolution of the Navajo Housing Authority
    Recommending to Congress the Adoption of Certain Legislative
        Initiatives and Appropriations of Adequate Funds for Indian Housing
        Programs

    IGRN-246-99
    Resolution of the Intergovernmental Relations Committee of the Navajo
        Nation Council
    Approving the Navajo Nation's Written Position on Establishing a Tribal
        Consultation Policy With the U.S. Department of Housing and Urban
        Development (HUD) to Serve the Purpose of a Direct Partnership on
        Housing Issues and Related Matters
                                     ______

       Prepared Statement of Michael Liu, Assistant Secretary, Office of
     Public and Indian Housing, Department of Housing and Urban Development

        Mr. Chairman, Mr. Vice Chairman, and members of the committee,
    thank you for inviting me to provide comments on the implementation of
    the Native American Housing Assistance and Self-Determination Act of
    1996 (NAHASDA).
        My name is Michael Liu, and I am HUD's Assistant Secretary for
    Public and Indian Housing. I am responsible for the management,
    operation and oversight of HUD's Native American programs. These
    programs are available to over 550 federally recognized, and a limited
    number of State-recognized Indian tribes. We serve these tribes
    directly, or through their tribally designated housing entities (TDHE),
    by providing grants and loan guarantees designed to support affordable
    housing activities and viable community and economic development. Our
    clientele is diverse; they are located on Indian reservations, in
    Alaska Native Villages, and in other traditional Indian areas.
        In addition to those duties, my jurisdiction encompasses the public
    housing program, which aids the nation's 3,000-plus public housing
    agencies in providing housing and housing-related assistance to low-
    income families.
        It is a pleasure to appear before you, and I would like to express
    my appreciation for your continuing efforts to improve the housing
    conditions of American Indian and Alaska Native peoples. Although
    progress is being made to improve the housing conditions of Native
    American families residing on Indian reservations, on trust or
    restricted Indian lands and in Alaska Native Villages, much more needs
    to be done.
        At the outset, let me reaffirm the Department of Housing and Urban
    Development's support for the principle of government-to-government
    relations with Indian tribes. Section 2, ``Fundamental Principles,'' of
    Executive Order No. 13175, ``Consultation and Coordination with Indian
    Tribal Governments,'' states:
            The United States has a unique legal relationship with Indian
            tribal governments as set forth in the Constitution of the
            United States, treaties, statutes, executive orders, and court
            decisions. Since the formation of the Union, the United States
            has recognized Indian tribes as domestic dependent nations
            under its protection. The Federal Government has enacted
            numerous statutes and promulgated numerous regulations that
            establish and define a trust relationship with Indian tribes.
            Our Nation, under the law of the United States, in accordance
            with treaties, statutes, executive orders, and judicial
            decisions, has recognized the right of Indian tribes to self-
            government. As domestic dependent nations, Indian tribes
            exercise inherent sovereign powers over their members and
            territory. The United States continues to work with Indian
            tribes on a government-to-government basis to address issues
            concerning Indian tribal self-government, trust resources, and
            Indian tribal treaty and other rights.
        HUD is committed to honoring these fundamental precepts in our work
    with American Indians and Alaska Natives.
        NAHASDA has been successful in changing the way Indian tribes
    conduct their housing business. Tribes and their tribally designated
    housing entities (TDHE) are no longer mired in a regulatory morass,
    complying with multiple, competitive, categorical programs, many with
    redundant requirements.
        Today, tribes or their TDHEs submit an annual Indian Housing Plan
    (IHP). Once it is reviewed for compliance with the appropriate
    requirements, recipients can draw on their funds to engage in the
    eligible affordable housing activities they have outlined in their IHP.
    If they choose, they can use the Title VI Tribal Housing Activities
    Loan Guarantee Program to supplement their Indian Housing Block Grant
    (IHBG) funds.
        At the end of a grant year, results are reported in the Annual
    Performance Report. We conduct monitoring and oversight remotely, with
    periodic onsite visits. Training and technical assistance is available
    both from HUD and our partners through a variety of media.
        You will hear testimony that improvements need to be made, both to
    the program and to our management of it. We will work with our clients,
    and we are listening to their suggestions on how to improve the
    program. As an example, we met last July in Saint Paul, Minnesota for
    several days of tribal consultation. Some tribal leaders expressed
    their dissatisfaction with how we wished to implement certain aspects
    of the most recent NAHASDA amendments. We listened, and affirmed that
    many of those amendments could be implemented, after consultation, by
    administrative means through a Public and Indian Housing Notice, rather
    than by other, more time-consuming methods. In other instances, such as
    revision of the IHBG allocation formula, we determined that it was
    necessary to establish a negotiated rulemaking committee for that
    specific purpose.
        I believe that although we may disagree on certain procedural
    matters, we do not disagree that this program provides unprecedented,
    fundamental improvements in how tribes and TDHEs plan and execute their
    housing programs and projects. The results of those improvements are
    more homes for low-income Native American families.
        The Department has had a Tribal Consultation Policy since June 26,
    1994. The Policy was put in place in response to an April 29, 1994
    Presidential Memorandum to Heads of Federal Agencies on ``Government to
    Government Relations with Native American Tribal Governments.'' HUD has
    honored the spirit and the intent of that policy.
        On May 14, 1998, Executive Order (EO) No. 13084 was issued on the
    same subject. To ensure compliance with that EO, the Department
    developed revised draft consultation policies. We first engaged in
    consultation with tribes on a draft of our proposed policy in March,
    1999. At the request of tribes, we subsequently rescinded the draft
    policy, revised it again, and reissued it in July 1999. From September
    1999 to February 2000, we sponsored eight regional consultation
    sessions and a final national consultation session in Washington, DC on
    the policy. We continued to discuss it with tribal leaders into the
    Fall of 2000, when another, similar EO, No. 13175 (November 6, 2000)
    was issued. Meetings were held among all Federal agencies and White
    House staff to set direction and ensure consistency for the Federal-
    tribal consultation policies. Further discussions were held with tribal
    leaders and within the Department, culminating in the issuance of the
    Department's revised Tribal Government-to-Government Consultation
    Policy, which was signed by Secretary Martinez on June 28, 2001.
        The Secretary's revised policy contains a new and important
    provision, the authority to create an advisory committee made up of
    tribal leaders to provide advice on how to proceed with tribal
    consultation matters. Discussions are underway on establishment of that
    advisory committee, and I will be making some announcements regarding
    the committee in the near future.
        On December 27, 2000, amendments to NAHASDA were signed into law.
    Early in calendar year 2001, HUD again held a series of eight regional
    consultation sessions for the express purpose of hearing tribal
    priorities and proposed solutions to issues surrounding the
    implementation of NAHASDA, including how to proceed with implementing
    the amendments. All written and oral comments received from all
    sessions were then collated and distributed to every tribe and TDHE in
    the country. We asked tribes to comment on those sessions and on the
    written materials, and we asked our clients to establish 10 priority
    national issues for discussion at a subsequent national tribal
    consultation session, which was held in July 2001 in St. Paul,
    Minnesota.
        Indian housing leaders are aware that our tribal consultation
    policy provides for the use of a broad array of mechanisms, from
    tribal, regional and national forums to notice-and-comment rulemaking
    to negotiated rulemaking, depending on the nature of the issue to be
    discussed, the need for rapid response, and other factors.
        Many tribal leaders participated in discussions on how to implement
    both the amendments and the 10 national priority issues. A number of
    attendees were opposed to any implementation of any regulatory change
    without negotiated rulemaking. Others offered suggestions across the
    entire range of consultation possibilities that are available under the
    policy.
        In response to the comments we received in St. Paul, the Office of
    Native American Programs constructed a consultation document with
    suggested methodologies to implement all the NAHASDA amendments. We
    mailed the document to all tribal and Indian housing leaders on
    November 28, 2001, asking for their comments by the end of December. At
    the request of the National American Indian Housing Council and others,
    we subsequently extended the deadline for comments to February 11,
    2002. Our next steps include reviewing those comments and providing
    feedback on how we will proceed.
        A good example is the NAHASDA amendment concerning the
    establishment of tribally determined wage rates in lieu of Davis-Bacon
    wage rates. Consensus was reached at the St. Paul consultation session
    on this subject. Participants agreed that it should be implemented as
    quickly as possible. The November 28, 2001 Tribal Consultation Document
    states that a regulatory change is required, and that the Department
    will engage in tribal consultation on that regulation. The Office of
    Native American Programs has been working with HUD's Office of General
    Counsel and the Office of Labor Relations to develop a draft
    regulation. All written and oral comments received at the regional and
    national consultation sessions were considered when drafting the
    proposed regulation. The draft will be released soon, asking for tribal
    feedback.
        Should the committee so desire, we will keep you informed of our
    progress on this and all other tribal consultation matters.
        NAHASDA's Indian Housing Block Grant Program regulations provide,
    in 24 CFR 1000.306, that the IHBG allocation formula shall be reviewed
    within 5 years after issuance, which would be in March 2003. Recent
    statutory amendments to NAHASDA make several changes to the formula.
    HUD believes that this is an appropriate time to begin review of the
    formula, both to implement the statutory changes and to hear from our
    clients about whether they believe other revisions should be made. We
    also believe that, pursuant to HUD's Tribal Consultation Policy, the
    formula allocation issue is of sufficient magnitude to require
    negotiated rulemaking.
        In July 2001, we published a Federal Register Notice requesting
    nominations and establishing the minimum qualification criteria for
    membership on that committee. We received 44 nominations. Approximately
    one-half of the nominees were missing one or more pieces of required
    information. To give nominees every opportunity to comply, in November
    2001, we wrote to all nominees, informing those that had provided all
    the necessary information that they would be considered, and notifying
    others that they were missing one or more of the items required. To
    date, we have received replies from approximately one-third of those
    with deficient applications.
        There may be good reason for this. As the committee is all too
    aware, after September 11, our mail service has experienced significant
    delays. For example, one nominee mailed his reply to us on December 12.
    We received it on January 23. As a result, we are being extremely
    flexible on accepting information. We are also preparing for
    publication a follow-up Federal Register Notice, announcing the names
    of the successful nominees. It is important to note that they remain
    nominees; no committee members have been selected yet. We did not
    receive, in our estimation, a broad enough geographic distribution of
    nominees. Therefore, this notice will give tribes another opportunity
    to add to the list of potential participants. If a nominee is not
    listed in the next notice, it means that they either did not reply to
    the request for additional information, or the information they
    provided was insufficient. They may also reapply under that notice.
    Once the second round of nominees has been submitted, the Department
    will again review each nominee's information to ensure it is complete,
    notify those with deficient applications as well as those with complete
    applications, and then make final decisions. We will solicit the
    assistance of our partners in the selection process.
        The Office of Native American Programs (ONAP) has developed an
    internal review process that ensures that the Indian Housing Plans
    (IHP) submitted by recipients for the Indian Housing Block Grant (IHBG)
    Program are reviewed in accordance with section 103 of NAHASDA. In the
    4 years since the award of the first grant under this innovative
    program, HUD has successfully managed this new block grant by funding
    368 recipients representing 552 tribes in Fiscal Year (FY) 1998; 356
    recipients representing 527 tribes in fiscal year 1999; 364 recipients
    servicing 528 tribes in fiscal year 2000; and 307 recipients serving
    531 Indian tribes in fiscal year 2001. In fiscal year 2002, there are a
    total of 583 potential tribal grantees eligible for a total of
    $641,122,812. This represents a substantial increase in the number of
    clients that ONAP has assisted since the transition from the programs
    administered under the United States Housing Act of 1937. Under the
    1937 Housing Act, ONAP provided assistance to only approximately 200
    Indian Housing Authorities.
        NAHASDA encourages tribes to develop and operate affordable and
    innovative housing programs based on local needs. Housing needs most
    often addressed in the IHPs are new housing construction,
    rehabilitation and modernization of existing housing stock,
    infrastructure to support affordable housing, crime prevention, elderly
    homes, congregate housing and housing counseling. NAHASDA has also
    provided tribes with the ability to develop new affordable housing
    efforts that were not eligible under the 1937 act, including down-
    payment and other mortgage assistance programs, transitional housing,
    spousal abuse shelters and revolving loan funds. The result has been an
    increase in housing opportunities for many eligible tribal families
    throughout the country. NAHASDA is also being used in many cases to
    leverage funds for affordable housing.
        In addition to the review of plans, ONAP administers the IHBG
    formula developed by the Negotiated Rulemaking Committee to allocate
    NAHASDA funds. Each year, ONAP reviews over 120 challenges and
    corrections to the NAHASDA funding formula. Since FY1999, ONAP has
    worked diligently to address formula challenges and corrections for the
    purpose of correcting the data used in developing the formula
    allocation for each tribe.
        ONAP has established a toll-free hotline so that tribes and TDHEs
    can receive immediate assistance with formula allocation questions and
    problems.
        As mentioned earlier, ONAP will be convening a negotiated
    rulemaking committee this year to re-examine the formula, pursuant to
    the requirements contained in 24 CFR 1000.306. This regulation states
    that the IHBG formula can be modified by developing a set of measurable
    and verifiable data directly related to Indian and Alaska Native
    housing needs; determining if NAHASDA units should be included under
    Formula Current Assisted Stock (FCAS) or other changes that may be
    needed with respect to funding under the FCAS component of the formula;
    and/or, reducing the Section 8 units by the same percentage that the
    current assisted rental stock has diminished since September 30, 1999.
    The goal of the committee will be to determine if the formula should be
    modified, and if so, how.
        The NAHASDA regulations authorize a recipient to invest grant
    amounts in securities and other obligations of the United States for
    the purposes of carrying out affordable housing activities. This
    provision was negotiated with tribes during the rulemaking process and
    can be an important component of a tribe's IHBG Program. However, we
    have found that many recipients have not taken advantage of this
    flexible regulatory provision.
        In fiscal year 1998, the first year of the program, a recipient
    could invest up to 50 percent of its IHBG annual grant formula amount
    (minus the operating subsidy element of the FCAS component of the
    formula). In fiscal year 2001, a recipient could invest 100 percent of
    this amount.
        In order to invest, recipients only need to demonstrate that there
    are no unresolved significant and material audit findings or exceptions
    in the most recent audit and that it is either a self-governance tribe
    or it has the administrative capacity and controls to manage the
    investment.
        From fiscal year 1998 through fiscal year 2001, $1.48 billion was
    available for investment. To date, 42 recipients have been approved for
    investments with a total request of $272.3 million, or 18 percent of
    the amount eligible for investment. There were 10 disapprovals for
    various reasons.
        We continue to encourage recipients to take advantage of this
    opportunity to invest funds in order to provide affordable housing to
    their members.
        The Department views the responsibility for program oversight as
    critical to the success of NAHASDA. The responsibility is not the
    Department's alone but is shared with all tribal governments. The Act
    and the program regulations require tribes to periodically review their
    programs for compliance with the requirements of the Act and to report
    to its constituents and HUD on their performance. HUD has developed a
    self-monitoring guidebook and is providing training programs to assist
    tribes in addressing this responsibility. HUD reviews of a tribe's
    performance are targeted toward the design and implementation of the
    tribe's self-monitoring program. Where a quality self-monitoring
    program is in place, we are assured that a tribe is complying with the
    requirements of the Act.
        The Department has spent a good deal of time and energy developing
    a monitoring process that both meets the oversight responsibilities of
    the Federal Government and is sensitive to our special relationship
    with tribal governments. Using Annual Performance Report information
    provided by grant recipients, audit reports, and internal reports on
    the expenditure of grant funds, an Overall Assessment Report is
    prepared for each participating tribe. This Report is provided to the
    tribal leadership and summarizes the strengths and weaknesses of the
    tribe's housing program implementation. This is primarily a feedback
    tool that provides information to tribal decisionmakers on what is
    working and what improvements are needed in their housing delivery
    system.
        To identify tribal housing programs for onsite monitoring by HUD
    staff, a risk-based approach has been developed. Using the information
    gathered through the Overall Assessment process, the Department
    identifies those grant recipients who pose the highest risk of loss of
    grant funds or failure to meet the requirements of the Act. Upon
    completion of onsite monitoring, a report is issued to the tribal
    government, which provides recommendations for addressing statutory or
    regulatory violations. Where appropriate, HUD provides technical
    assistance to the tribe to correct identified deficiencies. Since the
    beginning of calendar year 2000, 167 review reports have been issued
    covering approximately 45 percent of IHBG recipients.
        On-site monitoring results indicate that, for the most part, tribes
    are establishing housing programs that meet the needs of their tribal
    members and that are complying with program requirements. Because
    NAHASDA changed the responsible entity for housing grants to the tribal
    government, and with the expansion of grant recipients to include many
    tribes who had not previously received HUD assistance, performance
    issues occur at a higher incidence than may exist as the program
    matures.
        In analyzing the findings contained in monitoring review reports,
    by far the most prevalent issue is the establishment of financial
    systems, fiscal management, and internal controls. The second and third
    most frequent performance deficiencies are in the areas of procurement/
    contract administration and the adoption and implementation of required
    admissions, occupancy, and management policies. Tribes are addressing
    these issues with HUD assistance or through third-party contractors.
    Since the inception of NAHASDA, HUD has found it necessary to initiate
    the sanctions process for nine grant recipients, and has imposed
    sanctions for three tribes.
        A pressing concern for the Department is the high number of tribes
    that have chosen not to complete and submit to their tribal members and
    HUD an Annual Performance Report as required by the Act. Currently,
    there are 108 grant recipients or approximately 29 percent of all
    participants who are 60 days or more past the end of their reporting
    period who have not submitted a complete and accurate APR. A number of
    grant recipients have not prepared an APR for several years. The impact
    of this failure to provide required reports is a lack of information to
    evaluate program performance for these grant recipients and, for the
    program as a whole, an inability to develop complete, meaningful
    accomplishment data for Congress or the Department. The Department has
    stopped funding to five tribes and is processing sanctions for a number
    of additional tribes. HUD continues to look for solutions, but it is
    unlikely that this performance issue will be resolved without a higher
    level of compliance by tribal governments.
        In August, 2001, the HUD Inspector General for Audit (IG) issued a
    report on the implementation of NAHASDA. The report supported a number
    of the performance issues identified in our monitoring of recipient
    performance and provided reasonable recommendations for addressing the
    identified problems. Findings of the report included over-reporting by
    tribes of existing housing stock resulting in excessive funding formula
    amounts; a lack of understanding by recipients of program requirements;
    failure to adopt and implement required policies; inadequate financial
    management practices, and failure to obtain financial audits. HUD and
    the IG have agreed upon actions to be taken to resolve these issues and
    expect to complete the actions within calendar year 2002.
        The passage of NAHASDA and its implementation through the program
    regulations developed by the Negotiated Rulemaking Committee challenged
    tribes and ONAP staff to create a new atmosphere of consultation and
    coordination. Asking tribes to adopt procedures to become the direct
    housing provider was vastly different from their prior role as an
    indirect oversight entity. More intensive, hands-on training was needed
    for ONAP staff, tribes and their housing entities to meet those
    challenges. ONAP is in the final stages of accomplishing these
    objectives and is preparing to move into the second stage of its
    training and technical assistance plan. On-site technical assistance
    will be provided on a larger scale to assist those grantees that are
    experiencing problems in one or more facets of the implementation of
    NAHASDA and/or other grant programs.
        In the past year, the following training sessions have been held
    for grantees, ONAP staff, and other interested parties:
        NAHASDA Essentials (a basic course on the Indian Housing Block
    Grant program)
            Indian Housing Plan Preparation and Submission
            Annual Performance Report Preparation and Submission
            Board and Tribal Roles and Responsibilities
            Mold Prevention
            Environmental Review Requirements
            Construction Contract Management
            Financial Management
            Basic Financing and Leveraging
            Advanced Financing and Leveraging
            Procurement
            Grants Monitoring Business Processes
            Indian Community Development Block Grant
            Homeownership Summit Seminars
        In fiscal years 2000 and 2001, ONAP continued to work on improving
    the IHP review requirements and opening further channels of
    communication between our staff and our grant recipients. Additional
    staff training is scheduled for April 2002. We continually work with
    staff to ensure that the 60-day statutory deadline for IHP review is
    met.
        There was continued outreach and training to increase homeownership
    opportunities in Indian Country, including the issuance of the final
    report of the One-Stop Mortgage Center Initiative in Indian Country in
    October 2000, which represents the recommendations of the task force
    partners. ONAP staff also continue to participate in conferences around
    the country to promote the Section 184 Loan Guarantee Program.
        Under the title VI program, the contractor completed their
    activities to provide direct technical assistance and capacity building
    to NAHASDA grantees. As a result of this outreach, six title VI
    projects have been approved through October 2001. ONAP will provide
    training sessions on this program during fiscal year 2002.
        Staff training opportunities were expanded significantly, utilizing
    some innovative training vehicles. By accessing training through the
    Internet and video and audio libraries, individual development at all
    grade and skill levels has been made available to ONAP staff.
        A Tribal Technical Assistance and Training (TTAT) Center has been
    established on the Internet to provide a central location for tribes
    and TDHEs to request technical assistance in program planning,
    development, and management. The TTAT Center maintains a training
    calendar and provides training and technical assistance products. We
    also have an information clearinghouse to disseminate crime prevention
    and public safety materials.
        ONAP has also developed many technical assistance products that
    have been made available to grant recipients on the Internet or through
    distribution of CD-ROMs. Some of the latest products include:
            Mold Prevention and Detection: A Guide for Housing Authorities
            in Indian Country: A resource guide with the procedures for
            addressing mold and moisture problems in the home, with survey
            information gathered from tribal housing entities and
            occupants. The guide offers advice on addressing mold
            conditions and identifying partners to help resolve this
            problem.
            Self-Monitoring Assessment Guidebook: A guidebook providing
            IHBG recipients with guidance on conducting self-monitoring
            compliance assessments as required under NAHASDA. In addition,
            the material goes beyond providing guidance on complying with
            the requirements, it includes suggestions and recommended
            management practices to make the grantee's IHBG activities
            successful and sustainable.
            ONAP Online Training Modules: A web-based training tool that
            allows users to learn whenever they want, at their own pace.
            The online training currently includes basic level modules on
            housing finance, procurement, homeownership, financial
            management, construction management, and property management.
            Three additional topics and an upgraded system should be
            released this spring.
            The Guide to Creating a Nonprofit Homeownership Entity: A
            resource guide for launching a nonprofit with the mission of
            promoting homeownership opportunities. The guide leads the user
            through the planning stages, the legal creation of an entity,
            the application process for Internal Revenue Service 501(c)(3)
            status, the development of the organization, and program
            operations.
        Based on a survey of technical assistance needs identified by
    ONAP's Area Offices, ONAP has begun providing intensive onsite
    technical assistance to tribes and TDHEs. The focus of the technical
    assistance is concentrated in the following major areas:
            Mold and Moisture Prevention
            Internal Controls
            Housing Management
            Financial Management
            Occupancy
            Procurement and Contracting
            Environmental Reviews
            Public Safety
            Grant and Program Administration
        In addition, ONAP will continue to develop and provide training
    sessions to improve grantee performance and understanding:
            Self-Monitoring
            Conversion to GAAP Accounting
            Homeownership (Section 184) in Indian Country
            Economic Development in Indian Country
            Mold and Moisture Prevention and Remediation
            NAHASDA Essentials
            Indian Housing Plan Preparation and Submission
            Annual Performance Report Preparation and Submission
            Environmental Review Requirements
        ONAP continues to hold an annual Homeownership Summit, publish
    quarterly issues of ONAP's newsletter Dream Catcher, and add to and
    improve our Internet presence with the website Codetalk.
        The last 18 months have seen the first loans guaranteed under the
    title VI program. This initiative allows better tribal access to
    capital markets to provide infrastructure and affordable housing. Over
    $14 million in guarantees have been provided by banking partners to
    Native American communities.
        These loans have provided much-needed rental housing to remote
    Alaska Native Villages and funded an ambitious master-planned community
    for the Catawba Indian Nation of South Carolina. The Salish & Kootenai
    Tribe of Montana purchased an existing mobile home park and completed
    upgrades to its water and sewage system. The Native American-owned
    Chippewa Valley Bank assisted the Lac Courte Oreilles Band with a 40-
    unit project that combined HUD's title VI guarantee with grants from
    the Federal Home Loan Bank of Chicago.
        The Federal Home Loan Bank (FHLB) of Seattle committed in September
    2001 to purchase HUD-guaranteed title VI loans from its member banks.
    Partnering with the ONAP Office of Loan Guarantee, FHLB staff produced
    letters and information packets for their member banks and held
    meetings, in conjunction with ONAP, in Wyoming and Alaska. The Seattle
    Bank's region is home to half of the tribes in the United States and
    their strong statement of support will continue to assist HUD's effort
    to provide financing to tribes and tribal organizations under the title
    VI Program.
        These innovative strategies can be replicated by lending and tribal
    partners to further improve the housing conditions for American Indian
    and Alaska Native peoples.
        I am very excited about the recent passage of legislation creating
    a new title VIII under NAHASDA. We may now serve those Native Hawaiian
    families who are eligible to reside on the Hawaiian Home Lands with two
    new programs: The Native Hawaiian Housing Block Grant Program and the
    Native Hawaiian Housing Loan Guarantee (Section 184A) Program. In
    President Bush's fiscal year 2003 Budget, we have requested funding of
    $10 million and $1 million respectively, under accounts completely
    separate from NAHASDA's Indian Housing Block Grant and the Section 184
    Indian Housing Loan Guarantee Fund. I am pleased to inform you that the
    Department will soon publish an interim rule for public comment.
    Current-year grants can be released for use following the submission of
    the appropriate Housing Plan.
        Finally, let me state for the record that this Department supports
    the passage of S. 1210 and H.R. 1873, bills which would reauthorize
    NAHASDA.
        This concludes my prepared remarks. I would be happy to answer any
    questions you may have.
        [Questions with responses follow:]

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                                     ______

               New Mexico Indian Housing Entities Position Paper

        Mescalero Apache Housing Authority, Zuni Pueblo Housing Authority,
    Jicarilla Apache Housing Authority, Northern Pueblos Housing Authority
    [Picuris, Tesuque, San Ildefonso], Rio Grande Pueblos Housing Authority
    [Sandia, Santa Ana], San Felipe Pueblo Housing Authority, and Isleta
    Housing Authority.
        The above housing entities, representing 10 of New Mexico's 22
    tribes, offer this Position Paper to describe their primary housing
    concerns, in order of priority.
        1. Appropriations 2003. Appropriations must be adequate to
    effectively address housing needs in Indian country. We support an
    appropriation of $1.1 billion in the Federal Fiscal Year (FFY) 2003
    budget. Data generated by National American Indian Housing Council
    supports that this is the minimum amount necessary to begin to address
    Indian housing needs.
        2. Tribal Consultation. Executive Order 13175 requires all Federal
    agencies to ``establish regular and meaningful consultation and
    collaboration'' with tribes. HUD's own Tribal Government to Government
    Consultation Policy requires HUD to identify and seek tribal input and
    to consider such input a necessary and integral part of HUD's
    decisionmaking. This has not occurred in the past and is not currently
    happening. Collaboration requires mutual not unilateral decisionmaking,
    and consultation is not just a technicality for HUD to endure. It is a
    federally mandated requirement for HUD to treat tribal input
    respectfully, to learn from the tribal input, and to adjust its
    procedures, attitude, and guidances accordingly.
        3. Fair Treatment For Small Tribes. A Baseline Funding; 24 CFR Part
    1000, Implementation of the Native American Housing Assistance and Self
    Determination Act of 1996; Final Rule allows for funding for the tribes
    in 1997 at $50,000.00 and $25,000 for the next 4 years. This funding
    level is severely inadequate to allow a tribe to meet the reporting
    requirements of NAHASDA, much less to acquire land and develop decent
    safe and sanitary homes for tribal members. NAHASDA should be modified
    to allow for not less than $350,000 annual base funding under the need
    component of the formula for each federally recognized tribe. This will
    allow tribes to begin meeting their housing needs. Any increase in
    appropriations from the current level should be used to fund increases
    for small and minimally funded tribes to achieve base line funding.
        B. Small Tribe Definition. The small tribe definition was removed
    from NAHASDA without consultation with or notice to the tribes, and
    should be restored. As a result, small tribes must comply with the same
    reporting requirements as larger tribes, despite limited funds. 24 CFR
    Part 1000 caps the administration costs at 20 percent, which does not
    allow minimally funded tribes adequate funds for staffing and operating
    an office, let alone complying with the various additional NAHASDA
    Requirements. Unless and until the small tribe definition is restored,
    HUD should approve the requests for adjustment of the administrative
    cap.
        4. Negotiated Rulemaking. NAHASDA mandates that HUD follow a
    Federal statutory negotiated rulemaking process in developing the
    regulations that implement NAHASDA. HUD has taken the position that
    this is a one time only mandate, while tribes and TDHE's believe it to
    be an on-going mandate. The above New Mexico tribes support legislation
    clarifying the on-going nature of the mandate. In addition, the above
    tribes are predominately ``small tribe'' that typically do not have the
    financial resources to travel to negotiated rulemaking and tribal
    consultation sessions that are scheduled in locations that are
    convenient to HUD, rather than convenient to us in New Mexico. We need
    additional funds to provide a special subsidy to travel to tribal
    consultation and rulemaking meetings.
                                     ______

           Prepared Statement of Pauma-Yuima Band of Mission Indians

        Thank you Chairman Inouye, Vice Chairman Campbell, and the Senate
    Committee on Indian Affairs for the opportunity to submit testimony
    regarding the implementation of the Native American Housing Assistance
    and Self-Determination Act (NAHASDA).
        California Indian Legal Services,\1\ on behalf of our client, the
    Pauma-Yuima Band of Mission Indians, submits the following testimony to
    the Senate Committee on Indian Affairs concerning necessary
    improvements to the implementation of the Native American Housing
    Assistance and Self-Determination Act and in support of its
    reauthorization.
    ---------------------------------------------------------------------------
        \1\ CILS is the oldest and largest tribally controlled law firm in
    the United States. Founded by California Indian leaders in 1967, CILS
    maintains 6 offices in California and Washington, DC, and represents,
    at any given point in time, 60 California tribes. Over the years, CILS
    has also represented many intertribal housing authorities as well as
    single tribe housing authorities. CILS attorneys have worked closely
    with the Indian housing community for many years and has unparalleled
    experience working with small tribes in California.
    ---------------------------------------------------------------------------
        The Pauma-Yuima Band is located in northern San Diego County and
    has approximately 200 members. The Pauma and Yuima Indian Reservations
    are not large, covering less than 5,500 acres As such, Pauma is
    representative of many of the tribes found in California and throughout
    the Nation in that it does not have either a large landbase or a large
    population. However, because of decades of underfunding, in comparison
    to other regions, livable housing on the Pauma and Yuima Reservations
    was in critically short supply when NAHASDA was enacted.\2\ Although
    NAHASDA has improved the Federal Government's role in helping the
    Pauma-Yuima Band provide decent housing for its members, the lack of
    base level funding for all tribes has made this goal, the primary
    purpose of NAHASDA, elusive. Because of the size of the reservation and
    the number of members, the Tribe does not receive sufficient funds to
    construct anywhere near the number of units needed to ensure adequate
    housing for the reservation community.
    ---------------------------------------------------------------------------
        \2\ In a series of reports commissioned by Congress resulting in
    publication in 1997, housing was identified as a critical need. These
    reports prepared by the Advisory Council on California Indian Policy
    found that for many years funding for Indian housing in California had
    been disproportionately less than the funding for Indian housing
    elsewhere, which makes for poor housing stock indeed. (ACCIP Reports,
    Community Services, table 7, page 33 et seq.) The congressionally
    commissioned reports detail the sordid history of this and many other
    inequities and do not need to be repeated here. However, this is an
    opportunity for Congress to undertake action that finally would repair
    some of the damage inflicted on the California Indian community.
    ---------------------------------------------------------------------------
        Beyond ameliorating decades of underfunding, Pauma's struggle to
    address its housing problems are exacerbated by the very high cost of
    housing found in the surrounding communities and the relatively high
    cost of grant administration for small tribes. Funding under current
    NAHASDA formulas is not likely to ever allow Pauma to construct new
    housing at a rate approaching the growth of its population, let alone
    meet its current shortages caused by decades of underfunding. We
    strongly believe that for NAHASDA to have meaning to improve the lives
    of Pauma's members and their families, and importantly, to hold out
    some hope to those that have spent years on tribal housing waiting
    lists that they will eventually have a decent place to live, Congress
    should establish or require base level funding for all tribes with
    housing shortages. At a minimum, all such tribes, including the Pauma-
    Yuima Band, should receive funding that would allow the construction of
    at least two new homes each year. Even that modest rate of construction
    will certainly not meet the housing needs of most small tribes, but
    will be a dramatic advance over the current situation, and a signal to
    those living in structures that most Americans could not conceive of,
    that there is hope.
        Moreover, by providing base level funding, not only will there be
    meaningful progress toward meeting the housing needs of small tribes
    and furthering the goals of NAHASDA, but base level funding will
    improve the efficiency and efficacy of Federal housing dollars. As the
    Committee is well aware, there is and should be a certain level of
    professionalism and accountability in all tribal housing programs. This
    mandates a certain level of expenditure for administrative and other
    costs. When small tribes receive very little money for the construction
    or rehabilitation of housing, those administrative costs can become
    disproportionately large relative to the amount of Federal funds
    available for construction. The establishment of reasonable base
    funding will ensure a better balance of use of Federal funding.
        Last, the Pauma-Yuima Band supports the reauthorization of the
    NAHASDA and asks that the Committee and Congress reaffirm the Federal
    Government's trust relationship with all of Indian Country. In
    reauthorizing the NAHASDA, Congress should also clarify to the
    Department of Housing and Urban Development that the government-to-
    government relationship between and among our nations is fostered and
    strengthened through negotiated rulemaking and truly meaningful
    consultation as Chairman Inouye recognizes and often emphasizes that
    the best solutions for Indian Country are made in Indian Country by
    Indian people.
        Thank you again for this opportunity to submit testimony to inform
    your decision and policymaking. Please do not hesitate to contact us
    with any questions or for further information and discussion.
                                     ______

      Prepared Statement of Chester Carl, Chairman, Coalition for Indian
                            Housing and Development

        On behalf of the Coalition for Indian Housing and Development, and
    its sister organization, the National American Indian Housing Council,
    I would like to thank Chairman Inouye, Vice Chairman Campbell, and
    other members of the committee for holding this hearing today. I would
    also like to take this opportunity to express my appreciation, and that
    of the entire organization, for the work this committee has put into
    supporting Indian housing issues.
        The Native American Housing Assistance and Self-Determination Act
    is still a young program, but already we are seeing its potential.
    Beyond my capacity as Chairman of CIFID and NAIHC, I am also CEO of the
    Navajo Housing Authority. It is unquestionable that NAHASDA-funded
    programs on the Navajo reservation have been successful in providing
    better housing for Navajo families. It is a program that has tripled
    production in its first year with increasing numbers in each year of
    funding. This is the result of a major effort from the Navajo Nation in
    parallel efforts to implement private financing and economic
    development. I have seen the same in many other Indian communities
    across the country.
        NAHASDA addresses the specific needs of tribes and has gone far in
    defining the government-to-government relationship between Indian
    tribes and the United States Government. Based on this unique
    relationship, NAHASDA outlines ambitious goals to provide tribes the
    tools to be more creative while also encouraging flexibility in
    providing housing services to tribal members. The act prompts tribes to
    accomplish clearly stated goals to reduce the housing need and to open
    the housing market to neglected people. It further encourages the
    involvement of private entities rather than simply spending Federal
    funding. Unfortunately, as the years have passed since enactment, these
    lofty goals appear to have been limited by the continuing burdensome
    oversight of HUD, the creation of HUD impediments not authorized by
    NAHASDA, and inadequate appropriations.
        The Coalition for Indian Housing and Development respectfully
    requests Congress to reaffirm its commitment to NAHASDA and tribal
    sovereignty through reauthorization. It is vitally important, however,
    that Congress include in its reauthorization language clear guidance to
    HUD and Federal agencies that implementation of Indian housing programs
    be conducted in a manner that unequivocally supports tribal self-
    government.
        In August 2001, the HUD Inspector General released its report on a
    nationwide audit of NAHASDA [2001-SE-107-0002]. The purpose of the
    audit, as stated, was ``to determine if NAHASDA recipient performance
    is consistent with the Indian Housing Plan and if the Housing Entities
    efficiently, effectively, and economically provide affordable
    housing.'' The general outcome of the audit is that, ``Overall, tribes
    have successfully implemented NAHASDA.'' The audit goes on, however, to
    say that the audit discovered ``significant concerns that HUD needs to
    address.'' By and large, the rest of the audit discusses how poor
    management by HUD's Office of Native American Programs [ONAP] has
    resulted in problems in implementation. ONAP's response is that NAHASDA
    places accountability on the tribes, not on ONAP, and that ONAP's role
    is one of monitoring and dealing with noncompliance.
        CIHD agrees that this is what ONAP's role should be, but we
    disagree that is what they are now doing. First of all, we would like
    to see HUD develop uniform policies and treatment for tribes of all
    regions. Second, we agree NAHASDA places accountability on the tribes
    and we willingly accept that burden, but despite its implication to the
    contrary, ONAP inefficiently over-regulates the program.
        We support the findings of the OIG Report and will do our best to
    aid in making the necessary changes. We hope that the committee will
    take the report as a guide in working with HUD to more effectively
    implement NAHASDA.
        There are several specific areas where we would like to make
    recommendations for statutory amendments to NAHASDA. The first is in
    dealing with program income.
        CIHD urges the enactment of a technical amendment to NAHASDA that
    would allow more flexibility in defining program income. Currently, HUD
    views any income or revenues, no matter how remotely related to the
    expenditure of Federal funds, as program income. The tribes are
    required to track program income and financially account for these
    funds without any sunset and further there is not an accounting
    function that supports this requirement. This causes a severe
    disincentive for Indian Housing Authorities, TDHE's and tribal
    governments from exploring creative and imaginative housing and finance
    initiatives.
        To illustrate, the Navajo Nation is implementing a mortgage concept
    program in the place of the traditional HUD Mutual Help homeowner
    program. Our aim is to use NAHASDA funds for a portion of construction
    financing and assist families in obtaining a conventional mortgage to
    repay construction costs including the NAHASDA portion. It is
    undisputed that Federal restrictions often cause lengthy delays in
    construction and increase construction costs. It should be our goal to
    ensure that the maximum amount of funding be defined as unrestricted
    which in turn will reduce the cost of housing. In other words, once
    NAHASDA funds have served their initial purpose, and an IHA, Indian
    nation or TDHE is able to generate revenues or income in subsequent
    transactions, those funds should lose their Federal character and be
    unrestricted.
        NAHASDA was intended to enable Indian tribes to administer housing
    programs consistent with self-determination and self-governance.
    Accordingly, NAHASDA funds should be considered seed money for tribal
    housing programs. Current HUD restrictions serve no other purpose than,
    to hinder future development.
        NAHASDA legislation obligates HUD to follow a Federal statutory
    negotiated rulemaking process in developing regulations to implement
    NAHASDA. HUD has taken the position that this is only a one-time
    requirement to be used for the establishment of implementing
    regulations. CIHD believes that in accordance with the statutory
    provision and the Congressional findings of NAHASDA, this is an on-
    going requirement for all new regulations.
        Consistent with tribal self-determination and self-governance,
    tribes proposed the use of the negotiated rulemaking process with the
    appointment of 48 tribal representatives, not 18 as in the HUD plan,
    for the purpose of reworking the NAHASDA distribution formula. The
    negotiated rulemaking process requires appointment of an adequate
    number of representatives that reflect a broad spectrum of Indian
    tribes. With over 550 federally recognized Indian tribes in the United
    States, 18 representatives picked by HUD is inadequate and is
    inconsistent with the government-to-government relationship.
        Furthermore, HUD is appointing tribal representatives based on
    criteria that are not defined, such as the definition of a small tribe
    or the definition of a geographic area. The tribe's chosen selection
    process, using 48 tribal representatives should be used in any future
    negotiated rulemaking effort.
        CIHD requests the inclusion of an amendment to NAHASDA that clearly
    states negotiated rulemaking be used for all new NAHASDA regulations.
    The negotiated rulemaking successfully worked with the development of
    new rules when a draft of NAHASDA regulations were produced in ninety
    (90) days, but it took HUD almost 1 year to clear the rules.
        It is my understanding that today's focus is not so much whether to
    reauthorize NAHASDA, but to focus on how NAHASDA is being implemented
    and what improvements can be made. With that in mind, I submit the
    following concerns.
        In July 2001, tribal representatives and HUD officials met in St.
    Paul, MN, for the purpose of consulting with HUD on issues related to
    NAHASDA. Although CIHD appreciates HUD's effort to develop a
    Consultation Policy, we find the policy does not support the intent of
    NAHASDA and marks a backward step in our efforts to address Indian
    housing needs. The HUD policy essentially says that HUD will decide
    what issues will be subject to consultation with tribes, and provides
    for what appears to be minimal input from tribes on the issues. HUD
    alone will consider proposed solutions and they will decide how to
    develop or implement new policy or regulations. This is directly
    contrary to the wishes of the tribes and significantly weakens the
    progress made by tribes in convincing the Administration to in fact
    strengthen the consultation process, as indicated in Executive Order
    13084.
        The intent of NAHASDA, as outlined in 25 U.S.C. 4101, requires
    that, ``Federal assistance to meet these responsibilities should be
    provided in a manner that recognizes the right of Indian self-
    determination by making such assistance available directly to Indian
    tribes or Tribally Designated Entities under the authorities similar to
    those accorded Indian tribes in Public Law 93-638.'' HUD, in its
    internal decisionmaking and consultation approach, has not supported
    the above intent, but rather continues to micro-manage tribal housing
    programs.
        The executive order dated November 6, 2000, requires all Federal
    agencies to ``establish regular and meaningful consultation and
    collaboration'' with tribes, and to ``grant Indian tribal governments
    the maximum administrative discretion possible'' with respect to
    Federal statutes and regulations administered by tribal governments.
    The order further encourages tribes to establish their own standards
    and policies to achieve program objectives, but most important to CIHD,
    the concept of negotiated rulemaking is encouraged. In contrast, HUD's
    use of consultation is contrary to these fundamental principles.
        CIHD requests coordination of environmental review requirements
    among Federal agencies by establishing a lead agency. We submit that
    NEPA requires the Federal agencies to designate a lead agency when
    there are multiple funding agencies and that the other agencies are
    required to accept that agency's environmental review process. We feel
    this is an important issue because projects requiring multiple
    environmental assessments because of multiple funding sources hinder
    construction progress.
        Another problem in this area is cost. HUD should receive additional
    funding to conduct environmental reviews within the HUD budget. Large
    amounts of NAHASDA funding are being expended for this purpose, even
    for minor renovation to housing units. This unfunded mandate should be
    eliminated or properly funded.
        When the HUD Office of Native American Programs was established
    with a Deputy Assistant Secretary responsible for all Indian housing
    programs at HUD, the former HUD Secretary found the position warranted
    a Senior Executive Service ranking, even though it was authorized as a
    GS-15 position. Recently this position was advertised as a GS-15 career
    position with requirement of only 1 year of experience. CIHD views this
    as a downgrade in the position, even though it was originally a GS-15.
    Meanwhile, this position has been given additional responsibility for
    conducting government-to-government relations as well as oversight of
    the new Native Hawaiian Housing Block Grant program.
        CIHD believes the DAS position should be raised to an Assistant
    Secretary position. The unique nature of Indian housing as opposed to
    public housing, as well as the need to work with the principles of
    tribal sovereignty and the government-to-government relationship, place
    Indian housing in its own category needing the authority to have direct
    contact with the Secretary.
        I would also like to address the issue of staffing in the regional
    HUD ONAP offices. Tribes receive little or no guidance and technical
    assistance from HUD field staff because they claim they are severely
    under-staffed. Although it has been a problem for some time and is no
    secret to anyone, HUD has made no effort to fully staff these offices
    with trained, competent employees.
        For the past 5 years, set-asides have been taken from NAHASDA for
    special HUD programs without any consultation with tribes. Often the
    set-asides are not successfully implemented or the programs duplicate
    other existing programs. Such is the case for $5 million set aside each
    year for HUD to provide technical assistance and training for tribes.
    It is disheartening to see $5 million spent on HUD conferences many
    tribes cannot afford to attend when this money could have been spent
    providing shelter to an Indian family. We are simply not seeing enough
    training and technical assistance benefit to justify this cost. It is
    true that NAIHC also receives funding for training and technical
    assistance, but much of this is provided free of cost, and in the case
    of technical assistance we go to the tribe rather than having the tribe
    come to us.
        CIHD urges Congress to review the funding of these NAHASDA set-
    asides to determine whether they are necessary and if the unused funds
    may be carried over to the current funding year for immediate use in
    affordable housing activities.
        The Section 184 Loan Guarantee Program must be streamlined. Tribes
    have found the program too complex and families often experience delays
    in trying to comply with requirements such as the environmental
    reviews. We are now seeing cuts in the program, as with the President's
    fiscal year 2003 budget, because it is not being used. The solution is
    making the program more user-friendly.
        Most Native Americans historically have not had access to credit,
    or at least to credit that is acceptable in practice off the
    reservation. Some of CIHD's recommendations are to accept down payment
    from any source, allow outstanding collections to be converted to a
    payment program, and include this in the debt ratio. Also, allow
    families to participate as long as judgments are paid and other
    derogatory issues are current in the last 6 months, and provide a
    lease-to-own option where twelve months of satisfactory payment may be
    converted to a mortgage. This option may also include participation of
    families who have a high debt ratio. For example, open Section 184
    participation for families at 65 percent debt ration in a lease-to-own
    program and have families qualify for a mortgage at 48 percent debt
    ratio. The section 184 program may be further improved by allowing
    underwriting for multiple State jurisdictional areas rather than the
    restriction to one State.
        HUD recently modified the Annual Performance Report [APR] format
    for NAHASDA. The report format, however, is still not consistent with
    the requirements of the Indian Housing Plan [IHP]. Further modification
    is required to have the APR report on the actual progress of the
    tribe's goals as set in the IHP. Furthermore, the report format should
    be in simple terms that can be understood by the public and the tribal
    leadership. The report in its current form is complex and can only be
    understood by people that work with the program every day.
        In conclusion, we appreciate the committee's attention in
    addressing these important issues that hinder economic and housing
    development opportunities on Indian reservations. We are confident that
    together our efforts will result in direct benefits to the American
    Indian nations.
        Indian housing is at a crucial stage, with many of the housing
    problems that have long plagued Indian communities still unresolved.
    The passage of NAHASDA has given tribes incredible opportunities, and
    with adequate funding and proper implementation, NAHASDA can be the
    most important tool in building sustainable, healthy communities in
    Indian country.
        I am pleased to answer any questions you may have.
                                     ______

      Prepared Statement of Gus Adams, Executive Director, Baranof Island
                               Housing Authority

        The Baranof Island Housing Authority strongly endorses a statutory
    amendment to NAHASDA that would allow more flexibility in defining
    program income. We strongly support Chester Carl's testimony before the
    Senate Committee on Indian Affairs on February 13, 2002.
        Mr. Carl is the Executive Director of the largest Indian Housing
    Authority in the country. BIHA is the smallest Housing Authority in
    Alaska and that our highest priority and major concern in the
    reauthorization of NAHASDA is to support a technical amendment to
    NAHASDA that would allow more flexibility in defining program income.
        BIHA has demonstrated that we can build reserves while meeting the
    HUD guidelines to provide affordable housing, and that these reserves
    should be used, or better yet, leveraged to provide additional
    affordable housing.
        Realistically it appears Congress will not be able to provide the
    necessary increases to meet the unmet housing needs in Indian Country.
    Consistent with self-determination and self governance, there should be
    no barriers in allowing Housing Authorities who use sound and efficient
    management practices to maximize the use of HUD funds to help meet
    these unmet housing needs.
        The existing NAHASDA rules hinder BIHA in expanding our housing
    services.
        If you feel I can be of any possible assistance during the mark-up
    of the bill, please feel free to contact me.
                                     ______

     Prepared Statement of Robert Gauthier, Executive Director, Salish and
                           Kootenai Housing Authority

        It is a pleasure to appear before you today to report on an
    exciting time in Indian country and to request your continued support
    of the present Federal approach to Indian Housing.
        I would like to begin by thanking Chairman Inouye, Vice Chairman
    Campbell and the other members of the committee for inviting us here
    today, but also for your unwavering support of Indian housing. I would
    also like to acknowledge the staff of the committee both present and
    past. They really get things done. I have had the pleasure of getting
    to know some of them in their efforts to better understand Indian
    housing and I must say they inspire and encourage us in Indian country.
    We are grateful to them.
        The Senate Indian Affairs Committee's vision, leadership and
    willingness to partner with us has allowed us to achieve many of the
    dreams we jointly shared just over 10 short years ago. When this
    Committee created THE NATIONAL COMMISSION ON AMERICAN INDIAN, ALASKA
    NATIVE AND NATIVE HAWAIIAN HOUSING, the wheels of change were set into
    motion. Thirty-five specific recommendations plus various agency
    recommendations were made by this Commission. I am proud to appear here
    today and witness with you the progress in Indian housing that found
    its roots in those initiatives.
        Congratulations, Senator Inouye, on your role in successfully
    developing and funding new housing opportunities through the Native
    Hawaiian Housing Block Grant based on NAHASDA. You have kept your word
    to us. Badly needed funding for underserved Hawaiians has not come at
    the expense of other Native housing programs. In fact, funding through
    HUD for NAHASDA has nearly met the Commission's 1992 recommendation of
    $690 Million per year. Funding for fiscal year 2002 was $648 million.
    If we could get the other Federal Government partners to meet their
    recommended funding levels, we could make even more progress. Bureau of
    Indian Affairs Housing Improvement funds have not increased, nor has
    Indian Health Service 121 funding. This is in spite of increased demand
    due to the success of NAHASDA
        We are now finishing the 5th year of the NATIVE AMERICAN HOUSING
    AND SELF DETERMINATION ACT. I have witnessed more positive change in
    Indian housing over that time period than I would have imagined when
    the law was adopted. It is not only my opinion that NAHASDA is working.
    At a recent United Native American Housing Association [UNAHA] meeting,
    31 one members of the Great Plains tribes were surveyed as to their
    impression of NAHASDA and whether the act was meeting its intended
    purpose. While some of the tribes are still adjusting to the changes
    brought by the act, without exception every single member expressed
    their support for the new delivery system and voiced unanimous support
    for its reauthorization. Furthermore, NAHASDA is generating exactly the
    kind of interest from equity partners, banks and other Federal agencies
    that was intended.
        For the first time ever, Indians are discussing financing options,
    tax credit pros and cons, qualifying for Rural Housing self-help
    funding and integrating infrastructure questions. At Salish & Kootenai,
    we have averaged fifty units a year of new construction with only a
    handful funded through the NAHASDA block grant. We actually see the
    light at the end of the tunnel because NAHASDA is meeting the intent of
    Congress in ways we only dreamed of. Giving tribes a little equity and
    a lot of autonomy will continue to pay huge dividends. We encourage you
    to reauthorize NAHASDA and consider a few minor changes to make the law
    work even better. With you permission I would offer the following
    suggestions.
        There are a couple of key areas within NAHASDA under title VI and
    VII that could be amended to result in greater access to working
    capital, enhance self-determination and increase home ownership among
    Native Americans.
        One important component of the home ownership equation is the
    availability of mortgage financing that promotes affordable housing.
    State and local government agencies utilize tax-exempt financing as a
    primary tool to fund housing in underserved markets. Indian country
    does not enjoy that same benefit because of provisions in section 7871
    of the IRS Code. Senator John McCain's bill, S. 660, addresses several
    of the key issues that must be amended to facilitate broader
    application of tax-exempt financing. These proposed changes are
    consistent with existing provisions set forth under NAHASDA.
        Another area that deserves attention is the HUD Section 184
    Program. This program has tremendous potential; however it continues to
    receive a lukewarm reception. Unfortunately, because of low use, the
    President has chosen to cut both Section 184 and Title VI funding in
    his fiscal year 2003 budget. We would like to see these numbers return
    to previous funding levels, but first we must facilitate better access
    to the programs.
        Proposed Amendments to Title VI of NAHASDA. Sec. 601. Authority
    Subparagraph (a) Authority--this provision defines the terms of the
    guarantee created under title VI. The intent of this program is to
    improve access to the capital markets for tribal communities. However,
    section 7871 of the IRS Code has a ``Federal guarantee'' prohibition
    that prevents tribes from accessing tax exempt financing using the
    title VI guarantee. This application of the Federal guarantee would
    reduce borrowing costs for tribes. In addition, the cost associated
    with this increased tax exempt bonding authorization would be limited
    and defined by the annual appropriation for title VI.
        Sec. 601. Authority and Requirements Subparagraph (b) Lack of
    Financing Elsewhere--this provision states that a tribe must certify
    that a Federal guarantee is necessary to complete the transaction in a
    timely manner. This certification places an unnecessary burden on the
    tribes. This requirement could have the unintended consequence of a
    tribe making application with a lender to finance the proposed activity
    and receive an approval at an above market rate. Does the increased
    cost of funds constitute enough reason for the Title VI Guarantee to
    become applicable? The policy does not appear to be warranted.
        Proposed Amendments to Title VII. Sec. 701. Loan Guarantee for
    Indian Housing Subparagraph (k) GNMA Authority--The GNMA provision
    creates the mechanism to issue housing bonds under this section of the
    code. The tribe is the applicant on the underlying mortgages and the
    occupants must rent/lease the units for 10 years from the issuance date
    before they can actually assume the existing mortgage or purchase the
    home from the tribe. If Section 7871 of the IRS Code were amended to
    allow tax exempt financing for ``private activity bonds'' using this
    provision of NAHASDA, individual families could obtain mortgage
    financing at a lower rate of interest using bond proceeds. The costs of
    this new authorization would be limited to the annual appropriation for
    HUD Section 184 Program. This proposed amendment provides a defined
    mechanism through which home ownership can be realized without placing
    undue financial burden on the Federal budget and would function outside
    state volume caps. A residual benefit associated with this amendment
    would mean new life for the HUD Section 184 Program.
        Another characteristic of the HUD Section 184 that should be
    visited is the requirement for mortgage guarantee on individual loans.
    The 184 Program would benefit if it had the ability to underwrite and
    offer pool insurance for a number of mortgages from a common borrower
    that is, the tribe or TDHE. By underwriting the credit risk of a pool
    and requiring a reserve account to offset losses beyond historic 184
    experiences, ONAP could offer a viable program with broader appeal.
        Another suggestion for improving the Section 184 program would
    require another approach to evaluation of the credit of applicants. We
    believe that Native Americans have historically not had access to
    credit and often the credit they have had access to is onerous if not
    illegal. Some 65 percent of the credit issued to Native Americans carry
    terms that would not be acceptable off the Reservation. Therefore, we
    suggest the following changes:
        With down payment from any source of 10 percent or greater:
        1. Collection-allowed if converted to payment program-in writing-
    payment to be included in ratios.
        2. Judgments-must be paid.
        3. Other derogatory credit must be current for the past 3 months.
        4. Open credit must be included in ratios.
        Applicants with down payments less than 10 percent should be
    allowed to make all past derogatory credit count as good as long as it
    is current for 3 months or more.
        Bankruptcy is acceptable if discharged 12 months or longer.
        Lease to own-12 months of on time home payments will qualify for
    acceptable credit. All open credit must be included in ratios.
        We believe that 184 underwriting has moved closer and closer to FHA
    underwriting which was not the original intent of the program. (I was
    there) We need to loosen up and accept more realistic underwriting
    standards.
        Sec. 202. ELIGIBLE AFFORDABLE HOUSING ACTIVITIES. Currently reads:
    ``Affordable housing activities under this title are activities, in
    accordance with the requirements of this title, to develop or to
    support affordable housing for rental or homeownership, or to provide
    housing services with respect to affordable housing, through the
    following activities:''
        This language has been interpreted by HUD to limit all NAHASDA
    resources to residents of affordable housing. They say that if a
    poverty level Indian child living in a tar-paper shack wants to play
    baseball on a Housing Authority sponsored team, he would have to be
    charged! If his mother wanted credit counseling to qualify for
    homeownership, and the counseling was paid for with NAHASDA funds, she
    must pay. If she lived in a HUD funded unit however, she would not be
    charged! I don't believe this was the intent of Congress and if we
    changed the wording of Sec. 202 to read as follows we could solve this
    problem:
        Should read: ``Affordable housing activities under this title are
    activities, in accordance with the requirements of this title, to
    develop or to support affordable housing for rental or homeownership,
    or to provide housing services for eligible families, living in
    affordable housing units or not, through the following activities:''
        In closing, I think it is a testament to the progress of NAHASDA
    that we are able to elevate the Indian housing discussion to the level
    we are at today. As I indicated before, those of us who were here
    before NAHASDA understand the power of the tool we now have to work
    with. Our intent is to become ever less reliant on Federal funding for
    our housing programs, and I am sure that is what the Congress and
    Administration want as well. I believe that if we can move in the
    direction of alternate financing, utilizing section 184, title VI, tax
    exempt bonds, and other ways of leveraging NAHASDA, we will have come
    closer to hitting the mark this Committee set out to reach in 1990.
        Thank you for your consideration of these suggestions and I welcome
    any questions you may have.

                       Follow-up Questions with Responses

        Amendments to Affordable Housing Activities. You suggested changing
    the wording of Section 202 to allow affordable housing activities to be
    provided to eligible low-income families regardless of whether they
    reside in NAHASDA-funded housing.
        Question 1: Do you know whether the Department would support
    expanding the scope of NAHASDA-funded activities in the manner you
    propose?
        Answer 1: HUD has indicated that they would very likely support
    such a change to allow housing services to eligible families who may
    not already live in NAHASDA-assisted homes.
        Suggested amended language would read: ``Affordable housing
    activities under this title are activities, in accordance with the
    requirements of this title, to develop or to support affordable housing
    for rental or homeownership, or to provide housing services with
    respect to affordable housing for eligible families, living in
    affordable housing units or not, through the following activities:''
    Amendments to Federal Guarantees for Financing Tribal Housing You
    support amending section 601(b) of NAHASDA because it could have the
    unintended consequence of a tribe obtaining loan approval but only at
    an above-market rate, whereas if they could receive no financing, then
    they would qualify for the loan guarantee.
        Question 2: Could you please provide us with suggestions of how
    this problem might be addressed?
        Answer 2: The problem could be solved by simply removing the
    requirement under title VI that says you must be denied other financing
    before being able to take advantage of title VI funding.
        The amendment would strike section 601 (b) of title VI and re-
    designate section 601 (c) as 601 (b). This amendment has been provided
    to the Indian Affairs Committee staff for review.
                                     ______

      Prepared Statement of Gregory E. Pyle, Chairman, Choctaw Nation of
                                    Oklahoma

        Mr. Chairman, Mr. Vice Chairman, members of the committee, tribal
    leaders and distinguished witnesses and guests. My name is Gregory E.
    Pyle, and I am chairman of the Choctaw Nation of Oklahoma. We are the
    third largest Indian tribe in the United States, and have run our own
    housing program since 1966, Our program encompasses in excess of 3,500
    units, and serves over 5,000 tribal members annually. We operate at a
    level of more than $20 million per year. Today, we want to give you our
    recommendations for improving the Native American Housing Programs
    provided by the tribes.
        We support the positions on reauthorization put forward by the
    Coalition for Indian Housing and Development. Specifically:
        --through implementation of the Native American Housing Assistance
    and Self-Determination Act [NAHASDA], we have been able to provide
    more, desperately needed housing assistance for low-income Native
    Americans than at any other time in our history. However, there still
    remains an enormous need for housing assistance throughout Indian
    country. To continue to address this need, I strongly urge you to
    support the reauthorization of NAHASDA, currently before the committee
    as S. 1210, for an additional 5 years with amendments to refine and
    enhance the act.
        As was noted above, there is much in the realm of Indian Housing
    yet to be done. I strongly urge you, in the reauthorization and in your
    work with your colleagues on the appropriations panels, to secure
    additional appropriations for NAHASDA. Studies conducted by national
    organizations identify the level of housing assistance needs throughout
    Indian country to exceed $1.1 billion annually. Therefore, we need an
    increase on the resources currently going to this program. I
    respectfully ask you to support an increase of $350 million to be
    targeted to this activity over the next 5 years.
        I encourage you to amend section 106 of the NAHASDA to require that
    the Department of Housing and Urban Development use Negotiated
    Rulemaking when developing, modifying, and promulgating any regulations
    for NAHASDA. This is a practice now in general use with Education and
    other Self-Determination programs, and will allow tribes to exercise
    Self-Determination through true government-to-government relations. I
    believe this was, and is, Congress' true intent for this program.
        For the Choctaw Tribe, I wish to submit several other ideas for
    your consideration. I believe that NAHASDA should be amended to
    designate maintenance of adequate operating reserve accounts as an
    eligible activity, and to state that program income shall be identified
    in, and expended according to, an individual tribe's Indian housing
    plan.
        Also. section 4131(b)(4) allows tribes to establish tribal
    preference for services provided by a tribe. However, the funding for
    the tribal jurisdictions are based on the total number of Indian
    individuals who live within the jurisdiction. This creates, in some
    cases, a situation where an individual may attract funding for a tribal
    program, but, due to the tribal preference policy, may receive no
    services from that program. This may be in spite of the fact that their
    own tribe may be very close to their place of residence, and may be
    more that able to provide services to that individual. I believe that a
    tribe should be allowed to establish tribal preference for its members
    in setting up a program, but that if another tribe is willing to serve
    its own members residing within the other tribe's jurisdiction, that
    the act should provide a mechanism to allow such services. Indian
    people not served by the tribe within whose jurisdiction they reside
    should be counted toward the base for the tribe who will provide
    services. In other words, if such a tribe chooses not to provide equal
    services to all Indian people residing within its jurisdiction, then
    the excluded population should be allowed to be counted for funding by
    their own tribe in order for their own tribe to be able to provide
    access to needed services. We have developed language for this issue,
    and will share it with you during the next several weeks.
        NAHASDA stresses not only Self-Determination but also Self-
    Sufficiency of tribes and individual tribal members through economic
    development. I believe that amendments to NAHASDA may be necessary to
    refine and amplify that intent in the act. Specifically in regard to
    model activities, the guidelines for approval should be given as much
    latitude and flexibility as possible to include job creation. In many
    of our economically depressed areas, the solution to affordable housing
    and Self-Sufficiency is adequate incomes through employment instead of
    public assistance. Some minor changes to the provision on model
    activities will allow greater lee-way to tribes in setting up such
    economic development programs, including programs which will lead to
    job creation in fields associated with housing. We are transmitting
    these amendments.
        Additionally, I ask you to consider supporting through the
    Appropriations Committees and process the increase of Community
    Development Block Grant funding by $70 million over the next 5 years,
    reinstatement of the Drug Elimination funding, full funding for Rural
    Housing and Economic Development Programs, and an increase in the
    Indian Health Service appropriations--through the Interior Subcommittee
    of Appropriations--of $180 million per year for Sanitation Facilities
    Construction. I realize that these issues pertain to the funding and
    not authorization of the NAHASDA program, but I know how instrumental
    you have been in the past in securing funding for the programs you
    establish, and ask for your assistance for this year.
        In closing, I would like to say that the passage of NAHASDA has
    allowed tribes enormous opportunities. With adequate funding, and your
    reauthorization of its programs, NAHASDA can be one of the most
    successful expressions of Self-Determination for tribes to address the
    housing needs of our low-oncome members.
        Thank you for your consideration of these recommendations and your
    attention in addressing these concerns. If I can be of any further
    assistance or can answer any questions, please do not hesitate to
    contact me.
                                     ______

    Prepared Statement of Pearl Capoeman-Baller, President, Quinault Indian
                                     Nation

        On behalf of the Quinault Indian Nation/Quinault Housing Authority,
    I would like to thank Chairman Inouye, Vice Chairman Campbell and other
    distinguished members of this committee for convening this oversight
    hearing on the Implementation of the Native American Housing Assistance
    and Self-Determination Act of 1996 [NAHASDA]. We join many tribes in
    supporting NAHASDA and want very much to see it continue. However,
    inasmuch as this legislation will be reauthorized this year, the Nation
    has prepared testimony of our views on its strengths and weaknesses
    during implementation at the tribal level.
        The Quinault Indian Nation, an allotted reservation, is located on
    the northern coast of Washington State on the Olympic Peninsula. We are
    blessed to be surrounded by many natural resources, but providing some
    basic needs, such as housing, to our 2,400 enrolled members, continues
    to elude us. While we have built many homes for our people with the
    assistance of the Federal Government, we have never been able to meet
    the continuing increasing need,
        Indian housing, as we once knew it, changed when Congress enacted
    Public Law 104-330, the Native American Housing and Self-Determination
    Act of 1996 [NAHASDA]. Compared to the 1937 Housing Act, these changes
    included:
        Placing the trust and moral responsibility on Native Americans to
    get affordable housing services to the neediest of their Native
    Communities;
        Separating Indian housing from Public housing within the U.S.
    Department of Housing and Urban Development, recognizing the unique
    differences of land,, tradition and culture;
        Replacing several Indian housing grant programs with one block
    grant to tribes or their tribally designated housing entities [TDHES];
        Allocating appropriated funds based on a single formula,
    eliminating the competition among tribes for scarce housing resources;
        Providing greater flexibility for the development of ``affordable
    housing activities'' allowing for creative financing and leveraging of
    financing;
        Requiring and enabling regulations to be promulgated through a
    negotiated rulemaking process on a government-to-government level; and,
        Recognizing the need for economic growth on tribal lands.
        With the enactment of NAHASDA, tribal designated housing entities
    were able to operate in a manner that better addressed the needs of the
    community. However, during the negotiated rulemaking process, tribal
    representatives were unwavering in their efforts to try and provide
    Indian housing authorities with regulations that would enable them to
    operate with the flexibility and design of public housing authorities.
        The intent of Congress was very clear in the NAHASDA legislation.
    It was intended to enable tribes to administer housing programs
    consistent with self-determination and self-governance. The separation
    from public housing was to foster the expansion and growth by allowing
    us to administer this program and in doing so to make it more effective
    and efficient. In doing so, we would be able to open doors to other
    ventures and partnerships with community development financial
    institutions [CDFIs] such as Fannie Mae and Freddie Mac, which would
    help to generate non-Federal dollars leading to greater investment
    capacity and minimize the paternal scrutiny of the Federal Government.
        For tribes, the transition to NAHASDA has been tedious and
    burdensome because HUD has not been willing to accept or acknowledge
    the changes that came with the act. The legislation was passed in 1996
    and went into effect in October 1997; the final regulations were
    published in March 1998 with amendments in late 2000. And, the statute
    mandates that all regulations required under NAHASDA be issued
    according to a negotiated rulemaking procedure. Yet, HUD still disputes
    this provision and argues that it was only applicable to the initial
    regulations and that the Department does not have to consult with
    tribes on future regulations.
        It is obvious, that Congress needs to make sure that the
    reauthorization statute is written as ``remedial'' as allowable so that
    the Department will not be able to define terms as it sees fit to
    better serve its purposes. The lack of a government-to-government
    relationship, whether during consultation or basic overall respect,
    will continue to undermine the intent of Congress under NAHASDA.
        The NAHASDA statute specifically requires the Department of Health
    and Human Services to utilize the negotiated rulemaking committee in
    the development of regulations. Tribal governments have been involved
    on other negotiated rulemaking committees such as TEA-21 and Self-
    Governance. However, this is the first time that a Department has
    imposed limitations on the involvement of tribes in this process. It is
    a mockery that HUD chooses to ignore the value of consulting with
    tribes when regulations are amended or when statutes expire and
    reauthorization is imminent.
        Public Law 104-330 [NAHASDA] is evidence that Congress is convinced
    that tribes have the right to administer their own housing programs.
    However, burdensome paternalistic government Notices, Circulars and
    Policies continues to stymie the future of expanding the potential of
    Indian housing programs. NAHASDA allows for Economic Development, HUD
    does not, and threatens to hold up the tribes plan if included. An
    example: The need for a laundromat on the reservation. If 70 percent of
    an Indian village is 50 percent to 80 percent of median income, tribal
    members lack transportation to the nearest laundromat which is 50 miles
    away. HUD determines this activity to be Economic Development and
    requires that the tribe prepare an additional plan, which will then
    have to be reviewed by their Denver office. Why?
        The negotiated rulemaking process is a Federal statutorily mandate
    process which has been used both in the development of regulations for
    TEA-21/Indian Reservation Roads [Department of Transportation and the
    Department of the Interior/Bureau of Indian Affairs] and Self-
    Governance--titles IV and V [Department of the Interior/Bureau of
    Indian Affairs and the Department of Health and Human Services/Indian
    Health Service]. Within both of these venues, there has been a common
    thread that has helped with government-to-government relations. Both
    agencies established an Advisory Committee to provide information and
    advice regarding a wide variety of issues that may or may not require
    resolution. Each of the Advisory Committees is provided support from a
    technical work group whenever situations warrant further research and
    review to carryout a policy issue for the Advisory Committee. The
    Advisory Committee and the technical workgroup, are comprised of both
    tribal and Federal representatives.
        The Nation recommends that such an Advisory Committee be
    established within the Office of the Assistant Secretary for Public and
    Indian Housing [ASPIH]. The purpose will be to provide advice and
    assistance to the ASPIH on issues and concerns pertaining to NAHASDA,
    as well as other tribal programs as needed.
        With just over 1 year remaining on the time allowed by the statute
    to conduct the negotiated rulemaking, HUD should consult with tribes
    and immediately proceed with establishing the negotiated rulemaking
    committee from the list of nominees submitted and begin a timely review
    of the Indian Housing Block Grant formula issues.
        Drug Elimination Grant, The Quinault Indian Nation requests that
    funding for this program be added to the Indian Housing Block Grant,
    and that tribes develop an annual plan on how they intend to attack
    this plague. The Quinault Indian Nation, through the housing entity,
    included Crime Prevention and Intervention in their annual plan. The
    tribe's cultural approach to intervening with illegal activity is
    questioned by HUD every year. Youth activities may only benefit from
    Quinault Housing Authority residents. It is not cultural or tribal
    tradition to turn anyone away when they are in need of help, especially
    youth. Unlike urban public housing, in an inner city, Indian housing
    affects our entire villages. Therefore we are allowing any child, who
    so desires, to participate in housing authority sponsored events. But
    HUD says no.
        Oversight and Monitoring. It is the Quinault Indian Nation's
    opinion that the existing 50-plus page monitoring review checklist,
    developed by the Northwest Office of Native American Programs, is a
    time consuming in depth investigative audit. The Northwest HUD Office
    in Seattle is impinging on tribal sovereignty and self-determination.
    The Quinault Housing Authority files a financial audit annually with
    HUD. A recommendation would be to develop language in the A-133 Audit
    requirement supplemental, that our Independent Financial Auditor would
    audit, review and report the specific information to HUD. Should we
    receive Findings or Material Weaknesses in our Independent Financial
    Audit report, this would then prompt a HUD on-site review and or audit.
        NAHASDA Title VI & 184 Loan Guarantee. Tribes are finding that
    these programs are not tribal user-friendly. The 184 Loan Guarantee
    worked in 1994, but the Northwest Tribes developed interim lending
    guidelines for this program, with the assistance of lending
    institutions, the Bureau of Indian Affairs and HUD. The program worked
    for all who participated. One year later HUD changed the guidelines to
    conform to FHA lending guidelines and we have had only one approved
    loan guarantee since. We recommend that the original interim lending
    guidelines be revived. The 184 Loan Guarantee Program presently is not
    eligible for re-finance. Our people were unable to take advantage of
    the lower interest rates that the rest of the country enjoyed. The
    Quinault Indian Nation requested a waiver from the Secretary and was
    denied given the reason that this rule required negotiated rulemaking.
    In addition the lenders increased the interest percentage by almost
    three points for this program. The 184 Loan Guarantee Program has great
    potential but Indians are unable to achieve a mortgage on trust lands,.
    and it will take a while for Tribal members to understand the
    intricacies of how mortgages work.
        Title VI. This program is an excellent idea. We recommend that
    tribes be able to use t1iis program for economic development, community
    facilities such as health clinics, hospitals, assisted living
    facilities, et cetera. A major issue of concern to the Nation is that
    NAHASDA was authorized for 5 years, and if NAHASDA is not reauthorized
    or funds appropriated, how would tribes repay the loan?
        Income Targeting. The Quinault Indian Nation's moral obligations
    are to those most in need. However, to have a balanced society of
    people, we must build our villages and communities to address and
    accommodate all of the socio-economic factors. Tribes must be able to
    build healthy, balanced communities. Because Indians are unable to
    obtain mortgages on trust lands, tribal members lack the credit history
    to qualify for a standard mortgage. We must be able to find a way to
    assist our people in obtaining mortgages, without becoming illegal.
        Tribes need to have access to funds for mortgage lending that
    relies on section 184 loan guarantees on Indian trust lands.
        Again, on behalf of the Quinault Indian Nation/Quinault Housing
    Authority, thank you for holding this hearing.

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