[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.]
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                            A P P E N D I X

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              Additional Material Submitted for the Record

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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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