[Senate Hearing 108-673]
[From the U.S. Government Publishing Office]
S. Hrg. 108-673
NATIVE AMERICAN CAPITAL FORMATION AND ECONOMIC DEVELOPMENT ACT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
ON
S. 519
TO ESTABLISH A NATIVE AMERICAN-OWNED FINANCIAL ENTITY TO PROVIDE
FINANCIAL SERVICES TO INDIAN TRIBES, NATIVE AMERICAN ORGANIZATIONS, AND
NATIVE AMERICANS
__________
JULY 21, 2004
WASHINGTON, DC
U.S. GOVERNMENT PRINTING OFFICE
95-160 WASHINGTON : 2004
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON INDIAN AFFAIRS
BEN NIGHTHORSE CAMPBELL, Colorado, Chairman
DANIEL K. INOUYE, Hawaii, Vice Chairman
JOHN McCAIN, Arizona, KENT CONRAD, North Dakota
PETE V. DOMENICI, New Mexico HARRY REID, Nevada
CRAIG THOMAS, Wyoming DANIEL K. AKAKA, Hawaii
ORRIN G. HATCH, Utah BYRON L. DORGAN, North Dakota
JAMES M. INHOFE, Oklahoma TIM JOHNSON, South Dakota
GORDON SMITH, Oregon MARIA CANTWELL, Washington
LISA MURKOWSKI, Alaska
Paul Moorehead, Majority Staff Director/Chief Counsel
Patricia M. Zell, Minority Staff Director/Chief Counsel
(ii)
C O N T E N T S
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Page
S. 519, text of.................................................. 2
Statements:
Anderson, David W., assistant secretary, Indian Affairs,
Department of the Interior................................. 44
Apoliona, Haunani, chair, Board of Trustees, Office of
Hawaiian Affairs........................................... 61
Brown, Mark F., chairman, Mohegan Indian Tribe............... 51
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
chairman, Committee on Indian Affairs...................... 1
Carl, Chester, chairman, National American Indian Housing
Council.................................................... 58
Kitka, Julie, president, Alaska Federation of Natives........ 53
Murkowski, Hon. Lisa, U.S. Senator from Alaska............... 44
Spilde, Kate, Rancho Mirage, CA.............................. 62
Appendix
Prepared statements:
Anderson, David W. (with attachment)......................... 73
Apoliona, Haunani (with attachment).......................... 77
Brown, Mark F................................................
Carl, Chester (with attachment).............................. 85
Kitka, Julie.................................................
Liu, Michael, assistant secretary, Public and Indian Housing,
Department of Housing and Urban Development................ 75
Spilde, Kate................................................. 95
Additional material submitted for the record:
Richards, Sr., Howard D., chairman, Southern Ute Indian
Tribe, letter.............................................. 102
Stamps, Quanah Crossland, commissioner, Administration for
Native Americans, letter with responses to questions....... 105
NATIVE AMERICAN CAPITAL FORMATION AND ECONOMIC DEVELOPMENT ACT
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WEDNESDAY, JULY 21, 2004
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10:27 a.m. in
room 485, Russell Senate Building, Hon. Ben Nighthorse Campbell
(chairman of the committee) presiding.
Present: Senators Campbell, Domenici, Dorgan, Inouye,
Johnson, and Murkowski.
STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S.
SENATOR FROM COLORADO, CHAIRMAN, COMMITTEE ON
INDIAN AFFAIRS
The Chairman. The committee hearing this morning is on
legislation I introduced last year that would create the Native
American Development Corporation and carry out a number of
other functions.
The committee held a hearing on this legislation in April
2003. Yesterday, the committee held a forum of tribal leaders,
bankers and Indian development experts to discuss the generic
question of whether a tribally owned development corporation is
worthwhile to pursue. I believe it is very important and
worthwhile and necessary if Indian country and the U.S.
Government are serious about raising the standard of living in
Native America.
[Text of S. 519 follows:
The Chairman. Senator, did you have an opening statement
for this?
Senator Domenici. Mr. Chairman, I was going to ask, is the
Secretary coming to the meeting this afternoon?
The Chairman. Yes; apparently he is.
Senator Domenici. Thank you.
The Chairman. You bet.
Senator Murkowski, did you have an opening statement?
Senator Murkowski. Yes, Mr. Chairman.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM ALASKA
Senator Murkowski. I do want to just make a few brief
comments. I appreciate the hearing this morning, as well as the
forum yesterday afternoon on the problem of economic
development in our Indian communities.
It was several months ago, actually it was more than that,
but Julie Kitka who is the president of the Alaska Federation
of Natives, approached me about bringing the World Bank and the
International Development Banks to Alaska to see what our
Alaska Native community can learn from them about how to bring
the good jobs to remote places.
I have to tell you that there were a lot of skeptics, a lot
of people questioned what we could actually get from this.
Julie is going to be here this morning to tell us about what
happened at that conference, but I have to tell you it was a
standing room only crowd in one of Anchorage's largest
facilities. I do not want to steal her thunder, but I will tell
you that the skeptics were silenced. The conference was the
right thing to do at the right time.
Mr. Chairman, I think we know all too well that when we
lack economic opportunities in our villages, what we see is
despair, is lack of hope. It fuels self-destructive behaviors
such as alcohol, drug abuse, domestic violence, suicide. It
truly puts our Native people in peril. It is through economic
opportunities that we can break this cycle.
So I am pleased that we will be able to hear this morning
some of the outcome of that conference.
I do understand, Mr. Chairman, there is probably still a
fair amount of work to be done on S. 519 before it is ready for
consideration by the full committee, but I appreciate your
efforts, as I am sure do all of the people of our Native
communities throughout the country.
The Chairman. Thank you. We will now take the first panel
of one. That will be Dave Anderson, assistant secretary, Indian
Affairs, Department of the Interior. Thanks for appearing,
Dave, and thanks for also going to Montana and meeting with the
Montana-Wyoming tribal leaders and giving a terrific speech to
the young graduates of our Indian school in Lame Deer, MT.
STATEMENT OF DAVID W. ANDERSON, ASSISTANT SECRETARY FOR INDIAN
AFFAIRS, DEPARTMENT OF THE INTERIOR
Mr. Anderson. Thank you. I enjoyed being there.
Good morning, Mr. Chairman, Mr. Vice Chairman, and members
of the committee. I am David Anderson, assistant secretary for
Indian Affairs.
I want to thank you for the opportunity to present the
views of the Department of the Interior on S. 519, the Native
American Capital Formation and Economic Development Act of
2003. We understand that the committee will be significantly
amending S. 519. Therefore, our comments do not specifically
speak to the provisions, but rather address the concepts of the
bill.
The Department supports exploring creative approaches to
economic development in Indian country, and, specifically, we
are encouraged that this bill is being put together. I think
all of us understand that economic development on tribal
reservations poses many challenges. When I first came to the
Department, I think most of my meetings, initially, were just
day after day, many different tribes coming to my office. Every
one of them had just a slew of unmet needs or needs that they
were facing within Indian Country. One of the things that
really stuck out very clearly to me was the need for
significant economic development. I really believe that this
bill addresses this need, so I am very encouraged by it.
Because the access to capital in Indian country is
extremely limited. This shortage of capital represents one of
the primary barriers to comprehensive and lasting economic
development. In addition, there are few opportunities to
generate capital on Indian reservations. Studies show that
unemployment on or near Indian reservations commonly exceeds 50
percent and, in some areas, that figure jumps to over 90
percent. Unemployment in Indian country has placed more than
500,000 people who live on or near Indian reservations at or
below the poverty level.
These obstacles are further compounded by the rural
location of most Indian reservations. As a result of these
factors, Indian country accounts for many of the poorest areas
in the United States. I find that objectionable, that America's
first people would be on the bottom rung of all social and
economic problems that we face throughout Indian country.
Although poverty and joblessness pose great obstacles to
economic development and remote reservation settings, economic
development is not impossible. Increasingly, tribes continue to
overcome these obstacles and create growth in reservation
economies. Over the last few months, I have had an opportunity
to be able to travel throughout the United States and to visit
some of these tribes. We do have shining examples of tribes
that have succeeded in rural locations. Yesterday, I attended
the forum that you sponsored. I was very encouraged to be in
the midst of some tribal leaders, Philip Martin, the Oneidas,
and the Chickasaws, that have really succeeded economically.
It proves, and I really believe, that as Indian people that
we can stand up and we can be counted in the ranks of people
who succeed in economic development ventures.
Within the Bureau of Indian Affairs [BIA], we are working
with tribes to continue to discover creative and long-term
solutions to building sustainable tribal economies. Through the
recent reorganization of the BIA, the offices of Indian gaming
management, self-governance and self-determination were
elevated to the assistant secretary's office under the newly
created deputy assistant secretary for Policy and Economic
Development. By elevating these and other economic development
programs, the BIA will emphasize expanding reservation and
tribal community business opportunities and Indian employment.
With the creation of the new deputy assistant secretary, the
BIA hopes to maximize efficiency in assisting tribal economic
development.
One of my goals is something that I see that was severely
missing within the Department. As I said when I first came on
board, we had an Office of Indian Education. We have a law
enforcement department. We work with the trees and the fish.
But one of the things that we have been missing is really a
credible program that helps develop the economic development
policies, and helps coordinate other economic development
opportunities with other departments within the BIA. That is an
initiative I am making a priority within the BIA.
Another challenge the BIA is working to address is the
issue raised by many investors and private lenders regarding
the tribal legal infrastructure, and inadequate or nonexistent
legal and business codes. To address this issue, the BIA
included in its fiscal year 2005 budget request for $1 million
to help tribes develop tribal ordinances and commercial
business codes. We view this as a positive first step to help
encourage more capital investment on tribal lands.
The Department also encourages the use of self-governance
programs as a method of encouraging tribal economic
development. Through self-governance programs, the tribes
control administration of Federal programs to ensure the
programs meet the needs of individual tribes. For the tribes
that choose to engage in self-governance or self-determination
compacts and contracts, this direct control creates tailor-made
programs that lead to the creation of viable and stable
economies and tribal self-sufficiency. We will work to continue
with tribes to expand self-governance and self-determination as
a way to find creative solutions to economic development.
Currently, the BIA independently administers a program that
is addressing some of the financing needs in Indian country.
Since 1974, the BIA has successfully administered an Indian
Guaranty, Insured and Interest Subsidy Program. The mission of
this program is to stimulate an increase in Indian
entrepreneurship and employment through the establishment,
acquisition or expansion of Indian-owned economic enterprises.
The program guarantees loans up to $20 million from the private
sector to promote economic development of tribes, individual
Indians and Alaska Natives. The guaranteed and insured loan
portfolio currently totals $271 million.
With the enactment of the fiscal year 2005 budget request,
the program expects to leverage private sector financing of 65
new businesses and create 1,300 jobs on or near Indian
reservations. The guaranteed and insured loan program has
achieved a success rate of 93 percent in the number of
businesses, without default for all loans funded since fiscal
year 1992. From 1992 to the present, 719 loans have been
guaranteed and a total of only 51 loans have defaulted.
While the BIA loan program is successful and takes steps
toward addressing the needs in Indian country, it does not
fulfill every financing need. There is a gap between the small-
scale financing that the BIA can provide and funding required
for economic development projects. This is where I believe this
financing package we are looking at is really needed. Because I
really believe that as Indian people, we need to start thinking
bigger. We need to be dreaming bigger dreams for economic
development. I find it frustrating sometimes when I am in
budget meetings and here we are with the brain trust of Indian
country and we are arguing over millions of dollars, when we
should be discussing billions.
I believe that within the black community that they have a
goal of getting knowledgeable and qualified black people on the
boards of directors of major corporations throughout America.
As Indian people, we have yet to reach that level. This is why
this bill is so important because we need to be able to access
larger amounts of money. We need to be able to access capital
markets. I believe this is a very important step toward that.
I just wanted to quickly comment, I keep pushing this idea
out there that I believe, as Indian people, if we are going to
be economically self-sufficient, that we also become a nation
of homeowners. I think being able to access Indian people's
financing through home ownership helps build strong
communities, and we start learning the basic fundamentals of
investing. One of the things that I am working on is developing
leadership academies within the BIA, turning BIA schools into
leadership academies. As part of that concept, I want to start
teaching our students investing 101, how to save and invest
money.
When we start discussing concepts like the creation of
capital markets or being able to access capital markets through
the investment community, that we are going to be knowledgeable
in order to do that. So that the investing community, the
raising of investments for creating entrepreneurial economies,
that it will not be a foreign concept. Maybe we will not see
the fruits of this within this generation, but we are starting
to address it, thinking long term. Hopefully, my ideas with
leadership academies and creating investing 101 courses within
our school system will help begin to address a larger need that
we have throughout Indian country.
We welcome the opportunity to further work with this
committee regarding this bill. We are also willing to
participate in further discussions regarding other innovative
approaches to enhance economic development in Indian country. I
feel that some of my background in economic development would
be very well suited for this.
So I look forward to this bill and I look forward to
working with this committee.
Thank you.
[Prepared statement of Mr. Anderson appears in appendix.]
The Chairman. Thank you. I appreciate that.
You mentioned you have traveled extensively through Indian
country since your appointment, so I know you have probably
seen some really successful models and some common hurdles that
Indian country faces in its quest for economic development.
Could you mention a couple of hurdles you have come across?
Mr. Anderson. I think one of the hurdles that I personally
experienced is that while it is great to be able to create a
program of this nature, I think as Indian people, though, we
need to start stepping up. For example, we have never taught
success 101 in our schools. When I was chief executive officer
for my tribe, the Lac Courte Oreilles, we had a number of
businesses. We had a forest products company. We had a grocery
store. We had an auto center. We had a print shop. We had WOJB-
FM radio station.
For the most part, we were bleeding money like water going
through a sieve. Part of the problem that I recognized was if
we are going to be successful in business, we have to have, as
part of our mental framework, the understanding of success,
achievement and accomplishment. Because when you are faced with
communities, as I have mentioned earlier, where we have high
unemployment or high suicide rates, high dropout rates, high
substance abuse, the basic fundamental thinking of being
successful, is almost a foreign concept.
I think nationwide, throughout Indian country, we need to
start cultivating the mental health of our Indian people in the
areas of being successful in business.
We need Indian people that get up in the morning at 5 a.m.
that are cheerful and enthusiastic and passionate about being
successful. Sometimes when I am addressing these issues, it is
not just building another building, filling it full of
inventory, and hanging your sign out. We need to start
cultivating Indian people that think successfully, that are out
there being solution-conscious, not problem-conscious. When we
start doing that, I believe that a lot of our economic
development problems will be solved.
Again, I have seen tribes that have cultivated that
mentality and they are flourishing. We have successes as well
as areas that need improvement.
The Chairman. We have successes in my view, but they have
been uphill battles a lot of times because when you talk about
initiating the attitude of success, we are dealing with a
people who have been told for 100 years they cannot be
successful. You just cannot turn that around overnight. I think
many Indian tribes are recognizing that and working very hard
to promote that among their youngsters.
You probably have also seen some models that have been
successful. Would you like to mention if you see any common
thing in there that other tribes can use? I recognize there are
some in rural areas that do not have access to markets, for
instance, or others who do not have the same educational
background in their framework. But there must be something that
is emerging that could be used as a model for other tribes.
Mr. Anderson. I believe that what you are suggesting is
something that we are working on. We want to create a blue
ribbon panel, and I would be happy to work with this committee
in the formation of that, working with tribes like the Oneidas,
who have turned back BIA moneys and are now economically self-
sufficient. Philip Martin with the Mississippi Choctaws has
done an incredible job with their economic development and
their business ventures. I think in every case that you see is
that they have been able to successfully separate the business
engine of the tribe from the political arena of the tribe. I
think that is important.
I also believe that the tribes that are flourishing are the
ones that have been able to stabilize their tribal governments
and create a sense of security where if you sign a contract
with the tribe that an outside investing group or an outside
business knows that they will be able to succeed without some
sense of insecurity because a particular political group is in
power. I think being able to create a foundation for security
through knowing that if you do business with an Indian tribe,
that you are not going to be affected by the political changing
structure of the tribe.
The Chairman. You are perfectly right. Anybody that has
visited the old carpet factory at Crow or the electronics
factory of the Navajos recognizes why some investors are
reluctant to work with tribes when they know that there is an
unstable government.
I have some further questions I would like to put in
writing to you, but I think we will probably move along and ask
Senator Inouye if he has questions.
Senator Inouye. I am always encouraged to listen to the
testimony of Secretary Anderson. But Mr. Secretary, I would
have to be leaving because we just received a conference report
from the House on the defense appropriations, and we will try
to finish that up tomorrow. So I have been called to sign a few
papers and make decisions. So if you will excuse me, I would
like to submit questions in writing to you, sir.
And to all the other witnesses, Mr. Chairman, may I have
permission to submit my questions?
The Chairman. Yes; the other committee members may also do
the same.
Senator Inouye. I am especially saddened that I will not be
here to personally listen to the testimony of Haunani Apoliona,
the president and CEO of the Office of Hawaiian Affairs. I will
read your testimony.
The Chairman. She has probably talked to you on a good
number of times, face-to-face, I would imagine, Senator. You
know part of her testimony already by heart, I would guess.
Senator Murkowski, did you have questions of Secretary
Anderson?
Senator Murkowski. Just one very quick question. I
appreciate your focus on the culture of success and how we
build that. I also appreciate the chairman's concern that it is
difficult to do that in the short term. It is something that
has to be built. And of course, it needs to be built from our
young people on up. It needs to be part of their makeup. Have
you given any thought to how we can instill that culture of
success within our schools for our young native people? How do
we urge them to set high expectations for themselves and
others?
Mr. Anderson. I am glad you brought that up. By the way, I
am planning on being in Alaska the second or third week in
August to fulfill my promise to you of getting up there and
visiting Alaska.
Senator Murkowski. We look forward to having you.
Mr. Anderson. I am glad you brought that up because I
really believe that if we are going to be successful in
economic development as Indian people, it has to start with our
young people. We need to start cultivating the attitude of
success.
One of my initiatives are these leadership academies.
Because Bureau schools have always been almost secondary
schools of choice. One of the things that we are working on, in
fact this week we are convening a group of principals from the
BIA schools and we are starting the process of looking at
identifying key schools that we can use as prototypes to turn
into leadership academies.
What we are looking at doing is challenging the human mind,
the human body and the human spirit. I really believe that
people who say that we need to dummy-down the standards of our
children, that they cannot compete like other students, are
performing a disservice. I believe that is very bad thinking.
One of the things that I saw on CNN just a short while ago
was a feature that they did on an Asian school in Chinatown in
New York. If you were any well-to-do black person, you tried to
get your student in that school. If you were any well-to-do
Jewish person, you tried to get your student in that school.
The reason is they had the highest math scores, the highest
economic scores and the highest science scores.
Now, I am a believer that Indian children are not born into
this world with any less brain cells than these Asian students.
So what is the difference? It is parent expectations and
teacher expectations. One of my goals is to start, within our
school system, the framework for creating a success mentality,
that, as Indian people, we can achieve. It does not matter
where you have been. It does not matter what you have been
through. In this great country that we live in, if you have
dreams and if you are a young person, and you never, ever give
up and you are willing to work hard, that you can achieve your
dreams.
In our leadership academies, we want parents to be able to
sign contracts with the teachers and the students that they
will support those students getting homework. We want our
teachers to start carrying cell phones, that if these students
have any questions, that they can ask a teacher or a tutor. We
want to go so far that the only way you can graduate is if you
are accepted into college or a vo-tech school.
We look at creating a mentoring opportunity with local
businesses. We look at challenging the students with the ropes
challenge courses, with rock climbing, winter camping, but not
just sports. We look at including a health and nutrition aspect
as part of the school. Just 2 weeks ago, I addressed 1,500
students at the United National Indian Tribal Youth
Organization. One of the fortunate things was a lot of the
students were like this. I want to encourage throughout this
whole discussion that this is something that we start
addressing.
It is the success philosophy of what it takes. Because I
think throughout all of this, I have always heard that we have
to create the infrastructure. We have to create access to
capital formation. But fundamental before any of that, we need
to have the success and the willingness and the thinking to
want to achieve.
This is something that I have made a priority.
Understanding that, you know, I never realized this, but being
head of all our school system, we have the ability to create a
whole different model for our school systems. I want to see
success philosophies in every one of our schools, in our
cafeterias, in our gymnasiums.
These are just some of the ideas that I have had for
revamping what people consider the Bureau schools and to
turning them into leadership academies that are graduating
young people who will want to be successful in the arenas of
business.
Senator Murkowski. I like your ideas. We do not have the
Bureau schools in Alaska. Our native students are educated in
the public school system there. So I would encourage you to
work with us to bring this idea of the leadership academies to
Alaska to see how we might be able to partner with you or
benefit from the ideas that you are implementing in the lower-
48.
Mr. Anderson. Thank you.
Senator Murkowski. Thank you.
The Chairman. Thank you, Mr. Anderson. Some other committee
members will probably submit some of the questions in writing.
Thank you for your appearance.
Mr. Anderson. Thank you.
The Chairman. Our next panel will be Mark Brown, chairman
of the Mohegan Indian Tribe; Julie Kitka, president of the
Alaska Federation of Natives in Anchorage; Chester Carl,
chairman of the National American Indian Housing Council;
Haunani Apoliona, chair of the Board of Trustees of the Office
of Hawaiian Affairs; and Kate Spilde from Rancho Mirage, CA.
If you folks would take your seats at the table there.
Squeeze in and move the microphone around if we have not quite
enough microphones.
We will proceed in the order that I mentioned your names.
So Mark, nice to see you again. Why don't you go ahead and
proceed.
STATEMENT OF MARK F. BROWN, CHAIRMAN, MOHEGAN INDIAN TRIBE
Mr. Brown. Thank you, Chairman Campbell.
Chairman Campbell, members of the committee, I am Mark F.
Brown, chairman of the Mohegan Tribe. I am here to speak about
the importance of self-determination and self-reliance.
In Mohegan, we learn first-hand about true self-
determination and how very closely bound it is to tribal
economic development, economic development that would benefit
greatly by the concepts introduced in this bill. The two
concepts, first, removing legal and practical obstacles to
public and private investments in Indian country; and second,
identifying investment opportunities and matching available
capital resources with need.
Far too many times, the U.S. Government in trying to draft
something for Indian country drafts something that is all-
inclusive. But we are all sovereign nations. We have different
ways we approach things, and this is not a one-fits-all type of
situation.
Clearly, true self-determination comes from the inside out,
and the concepts within this bill will take care of that.
The Mohegan experience is a good example of a tribe who
could have benefitted from easy access to early capital. A
little more than a decade ago, the U.S. Government finally told
us what we knew our whole life, that we truly were a tribe.
From that point, we have moved forward. We found a business
partner with a proven record of destination resort success and
we entered the field of gaming. Many capital institutions were
not too comfortable dealing with a Native American tribe, so we
had to educate our prospective lenders on reliable, predictable
tribal laws and tribal government. We had to prove we were
about serious regulation. We hired a former head of the DEA,
assistant to the FBI, and then myself as a former police
officer. I am very critical about how we are about integrity.
With all these things in place, in 1995 the tribe went out
for financing to do a $300-million facility. We were the first
tribe to go to Wall Street. When we went there, we were able to
secure the financing we needed at an effective rate of 18
percent. It is not cheap money, but at that point in time it
was the only way we could get to the point we needed to be at
today. We had one of the most successful casinos nine miles to
our east, and we had to compete, so we had to do what we had to
do at that time.
A few years later, we decided to be totally self-determined
and break our ties with our managing partners. We decided to
move forward with an expansion phase. This required us to once
again go back to Wall Street. At that time, we were able to go
by ourselves with no one else and secure a rate of
approximately 8.3 percent.
More recently, we had a bond issuing, and that came in a
6.38-percent. This is rarely the case in any financing, let
alone in Indian country, but it can be done.
Now that our expansion is fully operational, Mohegan Sun is
where we believe it should be on the market. We are looking to
bring our expertise that we have gained to other areas and
other tribes. This effort will help diversify our assets. It
will also be improving the lives of other first Americans.
Nearly 2 years ago, I had an opportunity to meet with a
man, a father, a career soldier I had admired for many years.
That man told me that he and others in Washington wanted to see
if IGRA truly would help all tribes. His words were, prove to
me IGRA works; reach out and help other tribes. That man was
Senator John McCain. I took that to heart and we have a focus
and a goal.
We found our first relationship with the Menominee Tribe of
Wisconsin, a proud people who want only the best for their own
8,000 members. We now look for the same things that people
looked for in us. We are looking at secure, stable government.
We are looking for good community ties with the outlying area.
And we are also looking to see what the available capital will
be. This bill can probably help that aspect to come to
fruition.
Like any other corporation, we as Mohegan look at the
bottomline. But unlike a corporation, we are also a tribe. We
Mohegan have adopted a buy-American philosophy. Whenever
possible, that is Native American. We are encouraging any
future partners to do the same. We buy our lobsters from tribes
in Maine, our buffalo from tribes in the Midwest, and our
natural gas from tribes in the Southwest. Although these tribes
are not in gaming, they are working to provide for their people
through self-determined economic development, which again would
clearly benefit with S. 519.
S. 519 is a sound bill. We pledge to work with you and your
colleagues to support enactment of as much of it as can be
accomplished. We believe time is long overdue, and once again
thank you for your time. I will entertain any questions.
[Prepared statement of Mr. Brown appears in appendix.]
The Chairman. Thank you.
We will now go to Julie Kitka. Welcome, Julie.
STATEMENT OF JULIE KITKA, PRESIDENT, ALASKA FEDERATION OF
NATIVES
Ms. Kitka. Thank you, Mr. Chairman.
It is an honor for me to testify this morning. I appreciate
the invitation. I will try to be condensed in our testimony,
but I have a lot of information that I want to share with the
committee, so you, Mr. Chairman, please feel free to cut me off
if I go on too long.
First of all, before I respond to Senator Murkowski's
comments on reporting on the recent leadership forum that we
had on building knowledge-based economies, I first wanted to
inform you, Mr. Chairman and the committee, of why we are doing
what we are doing, and then I will get into sharing some of the
exciting things that we are involved with.
First off, we have just completed a 30-year trend analysis
on a whole lot of major indicators for our population. We are
working with the University of Alaska Institute of Social and
Economic Research, and we would be glad to provide the 30-year
trend analysis to the committee so that you can see both the
progress that has been made, as well as some of the challenges
that are still facing us.
Basically in a nutshell, the 30-year trend analysis shows
major signs of improved living conditions for our people.
Mortality is down. Total death rate is down. Life expectancy is
up. But when we look at the economic aspects of our people,
this is what we see, that native income has increased every
decade since 1960, even after taking into account inflation. In
the year 2000, real per capita incomes were four-times higher
than it was in the 1960's. But the growth rate in the 1990's
was only about 7 percent.
The second point is, native income remains far below that
of non-natives. In 2000, native per capita was less than one-
half of non-natives in our State.
The third point, one-half of our native families have
income below $30,000 a year. With our larger native families,
that means these incomes are supporting even more and more
people.
The fourth point is incomes are low in remote areas,
especially in the very remote areas which are populated by at
least 60 percent of Alaska Natives.
The fifth point, our most remote areas are also the places
of the highest living costs. Fuel costs, food costs, clothing
costs, if you name any cost, it is the highest in some of the
areas that have the lowest income.
The sixth point is Alaska Natives, we see much progress in
the last 30 years on poverty indicators. Thirty years ago, our
poverty rates for our people were in the mid to low, 60 percent
of our population was below the Federal poverty rate. We are
now down to about 20 percent poverty rate, which is a huge
improvement in the living conditions for our people in the last
30 years. But the disparity is still there as the improvements
are, because our poverty rate is now 20 percent compared to 7
percent of non-natives. Our people are three times more likely
to live in poverty than non-natives in our State.
We have also, another seventh finding is that families
headed by women are most likely to be poor in our State, and
basically 25 percent of all our native families in remote
villages live below the poverty level. So that is the reason
why we are putting a major emphasis on the economic arena, is
these very hard statistics, both of the success that has been
accomplished, and I think that the members of the Congress that
have spent their entire public careers over this span of time
in particular, our senators, Senator Stevens and others,
Senator Inouye, you know, 30-plus years in the Congress, have
much to be proud of when you look at these improved living
conditions.
So what we are looking at is how do we close the gap and
the disparity? How do we make that next major inroad into these
indicators that are not positive, and make progress for the
next generation of people?
I will put a caveat. One of the things that we have been
following a lot of things that have been going on
internationally. We feel very strongly in Alaska that we have
much to be grateful to for living in the United States. When
you look at one billion people in the world living below $1 a
day in income, and two billion people living below $2 a day,
you know, to say that you have these indicators with the
amounts of incomes in our families on that, it truly is
relative. We can do more with what we have, but we also need
government to be more responsive and put in place policies that
are more helpful to make that next inroad.
We are very strongly supportive of the Government's policy
on self-determination. We credit that as one of the major
changes over the last 30 years which has helped us greatly,
everything from Alaska Natives taking over the Indian Health
Service, where we are running our hospitals and our regional
hospitals and our clinics, and the whole system. Self-
determination on every level has contributed to the improved
living conditions. So members of Congress that have been
involved for a long time should be very proud of their efforts.
But we would like to focus on what we are looking at right
now and what are some of the observations that we have which we
think can make some great improvements. So I have given you the
``why'' of why we are focusing on that.
We also believe that we stand on the shoulders of the
people that have come before us. What I testify about or what
we prepare in reports or testimony is not coming out of a
vacuum. It is based on our own leadership in our state and many
generations of leaders that have tried to improve things for
our people. So I am just the next person in the long list of
people to convey to you our desires and wishes and what we want
to try to accomplish. So I do not want to make any more of our
comments other than that.
But basically, we feel very strongly that our people need a
sense of hope. We need to bring a sense of urgency to the
concerns that affect their daily lives, and not be lulled into
false security because of some of the successes that we have
had on many areas. So the urgency needs to continue and the
Congress needs to help us enact policies that bring the sense
of urgency to the ground at the village level.
We need the recognize that we do not work in isolation,
that we do have partnerships with the State. We do have
partnerships with the private sector. We need to build those
partnerships and we need to strengthen that. Government clearly
has a role in opening up our opportunities for greater private
sector expansion in our State, because we feel that with
greater economic growth, that the private sector can be an
engine for the Government polices that need to help set the
infrastructure and the ground for them to expand.
We also feel that expanding the private sector is essential
in our state to overcome what has been characterized as
distorted economies, economies which are primarily transfer
economies of transfer payments and government spending. We need
to open up greater opportunities for private sector involvement
in economic growth because of the jobs that they create.
You look at our population, we are about 20 percent of the
State of Alaska. We are about 125,000 people. We are projected
to double every 23 years. I think we have projected that in the
year 2020, we will be up to about 165,000 in the State, quite a
number out of State.
We are also seeing some very disturbing trends. Our people
are people of the land. Our people have lived in many parts of
the State for nearly 10,000 years. You can see continuous
occupancy in many of our communities for many, many thousands
of years. But the disturbing trend is that we are seeing the
migration from our villages and off the land into the regional
hubs and into the cities, looking for job opportunities,
looking for access to the health care for their families, and
education.
We have to, quite frankly, stem that trend. I am, for one,
very encouraging of people to explore all options for their
families and for their children, but to be having to relocate
off the land and go to a city and urban life because of lack of
economic opportunity, to me is a very big crime and it is
something that we need to partnership with the Congress and the
State to reverse that trend.
We are seeing trends as high as 40 percent of our
population moving off the land and into the cities. Again, you
look at it, and it is primarily lack of economic opportunities,
lack of the infrastructure that we need to increase the private
sector. That is one of the reasons we are very interested in
this bill is because we feel very strongly that we need another
tool in our arsenal to deal with the problems our people face.
That is an economic institution that has a broad scope to deal
with social development, cultural development, educational
development, economic development.
We think a development entity, whether or not it is a
development fund, a development bank, a development institution
could have that broad scope. We do not need any more
institutions which are silos that are just taking care of one
sector of our population or just one aspect. We need the broad
scope that can encompass education and economic development,
that can encompass encouraging the private sector and analyze
economic opportunities.
We really appreciate the consideration of the economic
diagnostic fund, the incubation fund, in addition to the
technical assistance fund on that. Because we cannot expect our
people in our communities to analyze economic opportunities and
make good choices if they do not have the tools to analyze the
opportunities in this global economy.
We very much recognize it is a global economy. So many
decisions that are made in the economic realm are outside of
our state and are outside of our country. We need to recognize
that. The Congress needs to give Native Americans the tools to
compete globally and not just compete against each other or
compete isolated in our own small areas.
We are also re-thinking Federal spending that is coming
into our state for our people, and re-thinking what can be done
to improve the effectiveness of the Federal resources that are
coming in. We have a number of recommendations that can be done
on that. Basically, what we are looking at is trying to do more
with what resources we have, to try to make it more effective.
We are finding that in some areas what we need is Federal
resources that will support the introduction of new ideas and
champions for new initiatives, not flooding the area with lots
of money, just the people that are interested and the
leadership in the areas that are interested in going forward
economically and socially and culturally, that they need the
support to make the changes.
We are very interested in systemic change. We are very
interested in growing success. If we see a successful program
or project which is effective in one village or effective in
five villages, we ought to have policies in place that grow
that to affect 25 villages and 100 villages. Success will breed
success. We have a lot of shining stars of things that work in
our state. The CDQ program is a prime example of a successful
economic policy decision that Congress helped enact, which in a
very short period of time created $40 million in new wealth. It
is now up to about $500 million in new wealth for those coastal
communities in vesting the local people with percentages of the
fish resources, and letting them engage in the marketplace on
that.
So there are successful models out there. We need to just
grow those ones.
Okay, now to the leadership forum we had. I said I will try
to keep my comments short on that because I am very
enthusiastic about that.
The Chairman. We have a vote in about 20 minutes, so we
have to move along, Julie. I hate to rush you.
Ms. Kitka. Okay. I will be very quick.
Basically, it was a very significant conference that was
held, with the help of our congressional delegation, Senator
Murkowski, Senator Stevens and Congressman Young. We thank them
very much.
We hosted a conference with Harvard University, the Center
for International Development, with the participation of the
World Bank, the Asian Development Bank and the Inter-American
Development Bank. We were very interested in sharing
experiences in success, and we definitely found that there was
common ground and areas to work together on building toward a
knowledge-based economy.
I really urge the committee to take a look at the whole
area of knowledge-based economies as far as native economies,
because we believe very strongly that that is a direction that
we need to move forward in. Basically, the 30-second version of
a knowledge-based economy is an economy that innovates within
itself, and that is willing and able to accept innovation
outside of the economy. I think if we can move in the direction
of supporting native economies to be able to create innovation
internally and use the mind and brainpower of our young people
in particular, we will make those breakthroughs that we need to
have.
Lastly, like I said I could probably go on for a long time
on this because we have a number of positive things that came
out. I will bring to your attention the World Bank's
development marketplace as a very innovative idea which we are
going to be implementing in the state. It is again putting
money behind innovative ideas and encouraging practical
solutions to problems. We are very excited about that.
But we would also like to urge the committee to work with
us on successful initiatives that the United States has used
abroad with the different multilateral institutions and the
development banks, and what the Bush administration has done in
the Millennium Challenge Account initiative, in which the
Congress has recently formed the Millennium Challenge
Corporation now headed up by Secretary Colin Powell.
This new entity and its mission, which manages currently
about $5 billion in assets, we believe that there is a role for
a domestic version of this, and this might be something that
could be considered as you are reworking this piece of
legislation, to take a look at the strengths on that. But that
recent initiative from the Bush Administration we believe has a
very strong component that could be used domestically,
especially with its emphasis on results-based management. I
think a results-based management approach is something that we
hear from OMB and everybody else that they want to see us move
forward on Federal resources.
There are some very innovative ways to do results-based
management, and it is something we are very much interested in
piloting in our state with some of the Federal resources that
come up there, because we think that the results-based
management will help us move from just building a health clinic
and saying how we are satisfied that we built a health clinic,
but being able to say now that we have a health clinic, we see
these health indicators going down; or building a school and
not only saying we built a school, but being able to say the
education of our children is going up.
So we commend those as examples of some new parameters and
policies that I think will be fruitful for the coming year.
With that, I will wrap up my testimony, and appreciate the
invitation to testify.
[Prepared statement of Ms. Kitka appears in appendix.]
The Chairman. I could not get to your last Alaska
Federation of Natives Conference. I am sorry I could not, but
staff did go up, as you know, and came back with some fine
reports about the event. They found it very educational and
informative. Thanks for inviting us.
We will now move to Chairman Carl.
STATEMENT OF CHESTER CARL, CHAIRMAN, NATIONAL AMERICAN INDIAN
HOUSING COUNCIL
Mr. Carl. Chairman Campbell, again it is an honor to come
before you. I would first like to thank you for all your
leadership these past few years. Certainly, being a member of
the Navajo Nation, and at one time being nominated for the
Indian Hall of Fame with you, was an honor again likewise. Of
course, Vice Chairman Inouye, his strong support these years,
and distinguished member Murkowski.
On behalf of the National American Indian Housing Council,
thank you for this opportunity to address you today.
Across this country, thousands of native families are
facing housing conditions similar to those of undeveloped
countries. The problem is accelerated by the remoteness, the
rural location of tribes, many of which have few economic
opportunities. As the mainstream American economy progresses,
development has not extended to native communities, in part
because of the land jurisdiction, but for many other reasons as
well.
One of those is the Federal policies. So today, we find
ourselves in a situation seeking ways to help tribes take
advantage of the private market and develop their own economies
without relying solely on Federal subsidy or gaming. I
understand the committee's purpose and this hearing is to
evaluate the creation of a tribally owned development
corporation that could assist in developing tribal economies.
I have learned much through my work with the Navajo Nation
and my long career as an Indian businessman. As a businessman,
the key to economic success is to utilize rules that are proven
to work to build capital and to take advantage of them in ways
that other successful businessmen do.
Although tribes are unique and their structure and culture,
I believe a solution to economic challenges can only come
through sound investment and business practices that integrate
tribal economies with the greater financial community. I
believe that capital growth through a development corporation
has the potential to stimulate tribal economies in ways that
could lead to less reliance on the Federal Government.
While some tribes have been successful in economic
community development, this resourcefulness is often lacking on
many American Indian reservations. It seems that over the
course of hundreds of years of dealing with Indian tribes, the
Federal Government has created unnaturally scarce resources of
physical infrastructure, financing vehicles, and most
important, land, all the things that make an economy function,
and replacing those functioning economics with a system of
Federal subsidy.
Many people have unfairly criticized tribes for not being
more successful in a market-based system, when the government
has in fact isolated them from that system. We must look at
some of the goals. Our first goal must be to continue to
eliminate the policies that hinder economic growth on
reservations in our Indian communities. For example, a tribal
member goes to a lender to get a mortgage loan and is approved,
pending title clearance of the land. Had the loan been on fee
land, the tribal member could expect to receive a title status
report in a matter of days. With trust or allotted land, it
takes many months to obtain a title status report.
While land title issues continue to be a major concern on
reservations, they are not the only impediment to development.
We are told that efforts are under way at BIA to address this
situation, but the problem was not created overnight and will
not be solved overnight.
The House Financial Services Committee, in response to
frustration voiced by tribes at a congressional field hearing,
is working with the National American Indian Housing Council to
develop legislation that would reinforce and more clearly
define the ability for tribes to choose to process land titles
in-house.
The inability to create effectively a registration tracking
system, one that would allow tribal members across the country
to engage in trade and mortgage borrowing that most of the rest
of us take for granted is an example of how an inadequate legal
infrastructure hampers economic development in Indian country.
Later on, I will propose an idea that I would like this
committee to seriously consider.
Lease recordation is only one of the challenges the tribes
face. Many businesses which have considered operating on the
reservation have not done so because of concerns with legal
infrastructure. In some cases, the concerns are valid, and in
others they are not. Regardless, any businessman that is going
to invest on tribal land needs to know that they can get market
rates back for their investment.
It is in diversification that our economy thrives, and I
can understand the value of having an Indian-owned bank that
can create and maintain relationships in communities that
facilitate interaction between potential consumers and the
institution itself. Likewise, creating an Indian government-
sponsored enterprise within this corporation to purchase loans
from such a bank would step up mortgage activity. But it should
not be to the exclusion of others.
Institutions like Fannie Mae connect Wall Street with
lenders and in doing so create a mechanism for investment
capital to actually make loans more plentiful and affordable.
We should find ways to connect the tremendous capital resources
of this country and the global economy of Indian country. More
important, all these large institutions need their feet put to
the fire in working in Indian lands. For example, we have been
working with Fannie Mae and Freddie Mac to establish a real
definite goal on how many mortgages they can process in Indian
country. To date, that has not happened.
As an alternative solution, we partner with them and other
agencies to come out with a goal of producing 100 mortgages on
either new construction or rehab in Indian country.
Programs with a single purpose could be seen as a
contributing factor to the failure of many programs designed to
assist tribes. Successful models such as Public Law 93-638
provide assistance, but also provide flexibility in
implementation.
Community development through private investments are key
for certain native-owned corporations and could allow tribes to
purchase assets and businesses and support housing. We know
that housing alone is not enough. Investment in housing is a
tremendous stimulus for American communities, but only when the
opportunities and legal infrastructure exists. Simple housing
alone just provides a roof. Housing development with a
manufactured housing plant, with a roofing business, with a
title plant, a hardware store, or building supply store
stimulates the local economy.
Home equity is one of the greatest builders of personal
wealth, and we must move from subsidized housing to home
ownership to allow tribal members to grow personal wealth. For
example, on Navajo, with our housing authority, we have
developed a self-insurance program. We have been able to
provide employment to seven people, but more importantly
establish $13 million in reserve from savings by managing our
own risk management program. We have developed a cabinet
company that has been able to gross close to $1 million in
sales a year, and continually for the last 6 years employs 30
people.
We have provided incomes through our mortgage program,
which is 100 percent guaranteed, by taking the NAHASDA grant
and putting that into construction financing and then taking
the home and refinancing it and using the mortgage proceeds to
provide additional income.
We have developed a manufacturing plant which is in the
process of being constructed, which will use fly ash to build
building materials which will return back to the housing
authority $28 million in 8 years.
So these are some of the examples of what we have done
within the Navajo housing authority. Additionally, we have
developed a modular home construction plant where we use
volunteer labor to produce a house for $35,000.
So as to providing some of the recommendations that this
committee has asked for, I believe there are some
recommendations I would like to provide which may be very
useful to this committee. While many in this room may not
immediately agree with my opinions, I believe personally that
for business purposes we need to really consider taking land
out of reservation trust land and putting it into fee land,
which would help tribes get mortgages or business leases
executed.
By doing so, you develop a market, even though the
individual lot may have cost $40,000 to develop and put water
and sewer and electrical connections to that land. But if the
land is worth $5,000, that is the market. At least you know
that would be the market. If it contains trust land under
lease, then there is no such way of knowing what that asset
would be worth. So you develop a market for that.
One example is with the Flexcrete plant, we had to relocate
off the reservation, but close to the reservation, simply
because we would not be able to expect return on our investment
in the property. So by purchasing land, we at least have a
fallback to recoup our investment in case the business went
under.
We have other recommendations that I would like to offer.
One of them is to as Secretary Anderson discussed, look at the
human resource aspect. One of the problems I see in these
businesses, is that as a number one challenge to economic
progress, a lack of human resources, not just the monetary
resources. There is a severe shortage of people in Indian
country who have business sense.
Most of our people operate under the welfare mentality. The
committee and the Congress has done very well in providing
self-determination provisions in a lot of the legislation.
However, we have not promoted that same self-determination to
Indian tribes, meaning that the Indian tribes themselves must
also look at developing self-determination provisions in their
own statutes and their own constitutions.
There is, however, the trust responsibility, but it only
provides for so much. In order for tribes to move forward, they
need to also look at a self-determination provision.
So looking again at the welfare mentality effectuated by
Federal policies, we need to be able to provide in the
legislation technical assistance that would allow internships
similar to what Indian Health Services does with doctors and
nurses, develop scholarships for our students to go into a
business environment, even an internship with some of the large
corporations, and bring that knowledge back to the reservation
at a salary which is competitive and not necessarily based on
the reservation pay scale.
The other recommendation I would like to also provide: This
committee is looking for an agency which this program can be
placed under. Although we do have our issues with Housing and
Urban Development, I believe that is one legislation that has
been a prime example of success being flexible, driven by
tribal leaders such as Chief Martin in negotiating rulemaking
to get a lot of regulations changed, which makes it more
tribally driven.
I believe that the proper agency may be HUD, but with some
minor twists. One of those may be to elevate the position of
Deputy Assistant Secretary to the Assistant Secretary's
position. Today, we find some of the policy decisions coming up
from the Assistant Secretary that do not necessarily agree with
Indian country, only because we do not have direct contact with
the Assistant Secretary.
Last, in closing, if we do not work to provide the
opportunity, the drain of resources from Indian communities,
not only the business investment, but the human investment, we
will not be able to meet the needs of our people down the road.
I commend this committee for taking the step to look at this
legislation to allow opportunities for Indian people.
I would again like to thank the members of this committee
for continued support of tribes for Indian housing programs and
all of the Indian tribes as well. I will be happy to answer any
questions.
Thank you very much.
[Prepared statement of Mr. Carl appears in appendix.]
The Chairman. Thank you. We will have some questions.
Ms. Apoliona.
STATEMENT OF HAUNANI APOLIONA, CHAIR, BOARD OF TRUSTEES, OFFICE
OF HAWAIIAN AFFAIRS
Ms. Apoliona. Mr. Chair, my name is Haunani Apoliona and I
am chairperson of the elected board of trustees of the Office
of Hawaiian Affairs.
I would just like to take a moment to acknowledge others
who have traveled with me from Hawaii from the Office of
Hawaiian Affairs: Trustee Stender, our administrator Clyde
Namuo and Chip McClellan, manager of our economic development
program. I would also like to acknowledge the presence of our
Washington, DC bureau, chief, Office of Hawaiian Affairs,
Martha Ross and two of her interns, Mana and Helen, who are
here this morning.
I would like to thank you for the opportunity to be present
to provide our comments on S. 519. We have basically one
suggested amendment, and that is in the findings sections of S.
519 the Congress defines Native Americans as either a member of
an Indian tribe or a Native Hawaiian. We ask that you consider
amending the definition in section four to use the definition
of Native Hawaiians that is found in S. 344, the Native
Hawaiian Government Reorganization Act of 2004.
We feel after reviewing S. 519 that it certainly will
provide the opportunity for productive economic development
policy and analysis that can and will result in improving the
material standard of living of all Native Americans to include
Native Hawaiians.
Development of unique programs, bringing the resources from
the Federal, State, and private sector together to create new
or expand existing industries, business and economic
development opportunities, establishing localized incubator and
entrepreneurial training programs, and providing policies and
institutional support to assure economic solvency for all
Native Americans will be and should be the major goals of this
program.
In the interests of time, I will ask that my 3-page
testimony be entered for the record. Once again, we want to
commend you, Chairman Campbell, for developing such an
important piece of legislation, and we do support continuing
your efforts, as well as supporting our Native Hawaiian
Government Reorganization Act of 2004.
The proposal in S. 519 will certainly complement the
economic self-determination for Native Hawaiians that we see in
the near future horizon as we go forward. We want to thank you
again for inviting Native Hawaiians to take a seat at this
table among our indigenous people.
Mahalo.
[Prepared statement of Ms. Apoliona appears in appendix.]
The Chairman. Thank you. Your complete testimony will be in
the record.
Ms. Spilde.
STATEMENT OF KATE SPILDE, RANCHO MIRAGE, CA
Ms. Spilde. Good morning, Mr. Chairman and distinguished
members of the committee. My name is Katherine Spilde and I am
currently a research fellow with the Kennedy School of
Government at Harvard University. I am honored to be here today
to participate in this discussion of the opportunities that
could potentially be realized through the creation of a
tribally owned development corporation. I will be very brief.
I want to commend the committee for undertaking the very
important task of addressing the needs for access to capital in
Indian country. I am particularly excited about the committee's
interest in creating a research component and economic data
repository that will address our lack of knowledge about the
economic needs and highlight the economic activities and best
practices of native communities.
While my written testimony provides more detailed
information about my research on Indian gaming and its
application to tribal economic development, I will limit my
remarks today to my support for the committee's interest in and
commitment to economic needs assessment and best practices in
Indian country as it is expressed in the concept of a tribally
owned development corporation.
While we know a great deal about the obstacles to economic
development in Indian country, including physical
infrastructure deficits and the lack of human capital, among
others, there is very little research that quantifies the
economic needs of native communities. This lack of quantifiable
data results in a lack of adequate representation to
governmental agencies and ultimately a lack of sufficient funds
to undertake meaningful development.
Of course, one reason for the lack of economic data on
native communities is the fact that there is no single agency
charged with assessing and then addressing economic needs.
Additionally, any economic figures that we do have access to,
such as the NIGC's gross gaming revenue figure, are not well
contextualized due to a lack of benchmarks. For example, just
last week the NIGC revealed that the national 2003 gross gaming
revenues for Indian gaming topped $16.7 billion. While this is
an impressive figure, we cannot definitively state how
sufficient or insufficient that revenue is with regard to
meeting the needs even of those tribes with gaming, which of
course represent only about one-third of all native
communities.
So even those agencies that do attempt a systematic needs
assessment find that one of the challenges is the lack of
meaningful benchmarks for comparisons between mainstream
America and Indian country. So while I realize that the
research component of this economic development corporation is
a small part of the overall concept, I believe that its
potential to contribute to our ability to make quantified
statements about economic needs in Indian country is one of its
most meaningful features.
Regardless of which form a development corporation may
take, I support the committee in its goal of creating a unified
economic development strategy that includes research into
economic needs and best practices of native communities among
its key features.
Thank you for the opportunity to present my ideas today.
[Prepared statement of Ms. Spilde appears in appendix.]
The Chairman. Thank you.
That was our call to vote so we are going to stand in
recess about 10 minutes while I run over there and back.
[Recess.]
The Chairman. The committee will be back in session. We
will continue. I would like to ask a few questions. Did all of
our witnesses come back, or did somebody have to leave? I guess
maybe they are all here.
Maybe just to start with Mark Brown. I was writing a few
notes, you mentioned that you had gone to Wall Street, three
different times, as I heard you say, and the first time you got
some access to capital for 18 percent and the next time it was
8 percent and the last time was 6 percent. Do you attribute
that to a reduction in prime, them trusting you more, or what
was it?
Mr. Brown. It is the trust. I think one thing we have
clearly seen is banks are hesitant to work with sovereign
nations because they look at that as, what does that mean, are
there controls, are there protections.
What we have done besides the facility itself proving
financially it can provide the needs of the leverage ratios, we
also as a tribe have shown that the government structure is in
such a way that it is secure and competent and it is going to
move forward.
The three questions I am asked every time, it has only been
three times, I go to Wall Street, they want to know how long my
term as chairman is, first, so they know that there is a
stability in government there. They want to know are our rolls
closed, looking at maybe some changing dynamics of the
leadership. And third, what is your per capita plan, and is
that stable. So with that, confidence that has built over the
last few times we have been down there.
Another key component is the personal contact. I am
constantly, consistently meeting with the bankers and so they
know who I am. So I represent the tribe. They get a comfort
level with me as an individual, and it also helps put that same
comfort level with the tribe. So I think it is important for
tribal leaders to be involved in these issues.
The Chairman. The last time I was up to visit you, it has
been quite some time ago, the new hotel and conference center
was not quite open. Has that been a success like your other
endeavors with the Mohegan Tribe?
Mr. Brown. Everything is complete, running, and it is nice
to say ahead of budget, so we are happy with it. It is working
very well.
The Chairman. S. 519 I think is important to gaming tribes.
Can you tell us why a concept like S. 519 is so important for
your particular tribe? Does it give you any advantage you do
not have now?
Mr. Brown. What it will do for us, as we reach out into
Indian country looking for it to help other tribes, maybe even
doing gaming ventures or other businesses, it allows us to
understand that there will be financial stability there,
financial resources for those tribes when they move forward. We
understand if we come to the table because of our track record,
that will give some strength to their borrowing power. But S.
519 will add that extra component so we can almost guarantee
that as we try to move other projects forward, there will be
resources.
The Chairman. And so far have you invested capital with
other tribes to develop facilities?
Mr. Brown. We are currently working with the Menominee
Tribe in Wisconsin, and that is working very well. We have also
been approached by other tribes. As far as we are concerned, if
we had that core competency, right now of course it is gaming,
and tribes want to look to do that, it is nice to know that the
Federal Government will also be assisting us in some way to get
tribes to where they are going to be economically self-
sufficient.
The Chairman. I am a big supporter of gaming, as you know.
I was here in 1988 when we wrote that bill. In fact in
retrospect, I guess we could have done a couple of things
differently, but I think it has been a tremendous success. But
I have this feeling, I have to tell you, Mark, that with
roughly 30 more on the drawing boards around the country, we
are going to reach a saturation point at some time. All tribes
are not going to be equally successful.
I note with interest that some of the forward-thinking
tribes are already starting to divest money into other things.
I think that is really smart to do. Are the Mohegans also doing
that?
Mr. Brown. What we are doing, we are dividing two
components. One will be gaming, which we would be doing and the
tribe itself is looking at diversification also. I think that
the gaming aspect, though, is also the residual effect or the
ripple effect of the other products that we buy from Native
American tribes. So we can actually help to assist in other
ways through that venue, too.
The Chairman. You made the observation in the past that
tribes who exercise their sovereignty, I guess that means sort
of selectively waive sovereignty, what did you mean by that?
That word ``sovereignty'' around here, you know, ears perk up
immediately with our tribal people.
Mr. Brown. Absolutely. There are tribes, and I have met
with tribes where they will not look to ever waive their
sovereign immunity even on a limited basis to do business.
Unfortunately, the mechanisms for conducting business have been
in place. It is up to us to find the ways that we as Indian
country can also participate.
If a tribe would not consider waiving its sovereign
immunity in a limited fashion, that can happen. The ability to
waive sovereign immunity is in a sense utilizing it. You are
using that tool, that ability. It is not giving it away. It is
utilizing it for what it is needed.
I think that is something that has to be looked at more
often, knowing and understanding it.
The Chairman. Waiving it would mean if you waived it, it
basically would mean if you had an investor and they lost money
through whatever reason, they would have an option to go to
court to sue to recover that money.
Mr. Brown. Absolutely.
The Chairman. Julie, if I can move on to you, you have
spoken often about the native cultures, how important they are
to the native economies. Could you explain to the committee
what role native cultures would play in the establishment of a
tribally owned development corporation, traditional cultures?
Ms. Kitka. Thank you, Mr. Chairman. That actually is an
example of a success that came out of this recent leadership
forum, out of both the Asian Development Bank and the Inter-
American Development Bank, which is a concept of development
with identity. They have found some of the best success that
they have had with indigenous people is where they strengthen
and enhance the culture. It gives the indigenous people an
economic edge.
One of the benefits we see of a development entity such as
what is in the bill is having a broad scope of cultural,
social, economic and educational development so that you can
mesh different aspects on that to be more effective in the
niche that you are working on.
Also, to respond to one of the benefits that we see of
this, we think it will provide what we describe as patient
money. Many of the economic opportunities are not viable on
commercial banks, and commercial banks will not go into them.
But if you had the ability to provide patient money, 30- and
40-year loans at zero percent interest with just a 1-percent
fee such as the Asian Development Bank does in some of their
areas that they need to stimulate economic growth, or you had
some very, very attractive rates on that, you will see economic
opportunities flourish in some areas that have been very
stubborn to create that.
The other benefit we see on this development identity is
for the Congress to vest it with the full faith and credit of
the United States. That is absolutely essential to this entity
to have, and I know that the Congress and the government is
very hesitant of doing that because it really makes it an
extremely valuable tool, but I would certainly insist that any
entity coming out that it have that ability because that is
what is going to allow it to raise money on the markets and
grow the amount of money of capital that it has.
The Chairman. You talked about rural villages in your
testimony. I can see how S. 519, just in my own mind, could
help with some of the things that Mr. Carl mentioned, like a
furniture factory or something of that nature. What would be
the benefit to some of these real isolated communities that are
in Alaska that might be 400 or 500 miles from the nearest
metropolitan area, if I can even use that word in Alaska. I
guess the biggest city is really Anchorage, and some of them
are, my gosh, 1,000 miles from Anchorage.
Ms. Kitka. We have had discussion of some of the benefits
if there was a pilot of the development entity in Alaska. One
of the first ideas that came out from one area was the idea of
underwriting at zero percent interest a loan to start a second-
hand clothing store where you could employ people to scout for
second-hand clothes, but actually run that, but how that would
translate in reducing the cost of living in villages where
people are so cash-poor that the idea of flying out of their
village into a regional hub, flying into Anchorage to buy
school clothes for their children and Nike tennis shoes and all
this stuff is cost prohibitive.
So that does not sound like a very attractive idea
investment thing, but if you translate in practical terms how
that will impact people on the ground and how that will allow
them to stretch their resources and give more options for a
very cash-poor community on that, that to me is an attractive
idea.
Also the idea of being able to do micro-loans, the $500
loans or the $1,500 or the $5,000 loans. That is a model that
is not used widely in our state. I think that that, especially
with our statistics on poverty, that most of them are headed by
women, the micro-loan programs around the world, primarily
actually a lot of them are geared toward women and they have
very strong track records on paying the micro-loans back.
The Chairman. In India particularly.
I would think, too, correct me if I am wrong, but with a
lot of the Native Alaskan villages, they are so isolated. In
one respect, it is a little bit like the Navajo Reservation.
Some of the people live a long way from anybody. Home crafts
have become a form of economic survivability. Micro-loans, it
would seem to me, would have a real advantage in that, where
people need the materials to carve or to make rugs or do
whatever, and then sell them either through a coop or through
some intermediary so they can be taken to the city.
Ms. Kitka. Yes; In fact, that one example that I used in my
testimony, the development marketplace, our first theme on that
in Alaska is going to be to support native artists in both the
marketing of their art as well as transmission of the skills
and the knowledge from one generation to the next.
I did want to add one other component you might consider in
your bill as you reformulate it. In our very limited knowledge
of these big multinationals like the Asian Development Bank and
the World Bank is we see that they are moving to position
themselves not as just financial entities, but as entities that
are considered knowledge management entities, so the technical
assistance that they provide, the information that they have on
successes and best practices is just as important as the
finance that they have. I would recommend if there is a Native
American development entity that it also position itself as a
knowledge management entity and have that dual role.
Like I said, I just notice from our limited observation. I
guess the importance of that to me is sometimes it is not a
matter of money, it is a matter of ideas. We need to encourage
the sharing of ideas and things that give our people hope. For
example, something that is going on in the Navajo Nation that
we in Alaska will not know about, but just the sharing of best
practices or information could be just the spark that takes off
in some area that had we not shared the information.
The Chairman. Chairman Carl, you stated there is a value in
having a native-owned bank. Some people I think view this S.
519 as we have gotten some feedback on it, as creating some
competition for native-owned banks. As I understand it, one of
the panels yesterday had some concerns that a tribal
development entity might or might not have a big impact on
native-owned banks. Do you have a feeling about that? It is
really some kind of an enhancement mechanism, not a competitive
mechanisms for native-owned banks.
Mr. Carl. Right. Mr. Chairman, I appreciate that question.
What we see is that competition breeds performance. In this
case, if there is another native corporation, then that would
provide competition to native-owned banks. But we also see if
we develop a narrow policy to have tribes rely on native-owned
corporations, native-owned banks, then it relieves the big
financial institutions such as Fannie Mae and Freddie Mac not
to perform separately on behalf of Indian country.
So we see that as an issue. In looking at this in broad
perspective, we need to be able to connect the native-owned
corporation, native-owned banks with the bigger institution,
again holding their feet in the fire to perform as well.
The Chairman. In your testimony, you gave an example of how
difficult it can be to put into place business rules and
regulations because of cultural reasons, traditional reasons.
That is certainly understandable. I can understand why they may
not want to pass certain business laws that they have some
concerns about it. Do you see these business laws such as the
Uniform Commercial Code as necessary to encourage private
sector capital development on reservations?
Mr. Carl. One of the policies that has placed Indian
country in the position it is today is the welfare mentality or
dependency state. Congress with the help of tribal leaders has
developed the self-determination act, which allows the
recognition of the trust responsibility on behalf of the
Federal Government, but at the same time you have to be able to
incorporate self-sufficiency into your program to leverage
financial institutions to meet the needs of people on the
reservation.
I believe that legislation has gone a long ways in
recognizing that dependency is not enough to meet the needs of
your people. So as a tribal leader, you have to go out and
develop legislation which would promote getting away from that
dependency. Part of those would be enactment of legislation
that includes not only the mortgage code, but the Uniform
Commercial Codes that will promote those types of activities.
Just for an example, taking the trust lands out of trust
and putting that into fee simple land. Right now, as an
individual Indian member of my tribe, I am restricted to one
homesite lease. That homesite lease really has no value other
than the lease that is held. So in this case, if you were to
promote capitalism, if I see another homesite lease that is fee
simple, if I have the capacity to buy that fee simple, then I
can buy it. I can develop that, or a business site at least. So
you promote Donald Trump activity on the reservation where you
really do not have any, other than having the casino tribes and
other tribes promote economic activity. You develop the wealth
of that individual Indian tribal member.
The Chairman. Well, we probably will not have to promote
Donald Trump. He is quite capable of doing it all by himself.
[Laughter.]
We have a delicate balance, of course, between trust
responsibility and what I sometimes call forced dependency
because traditional cultures did not want to be dependent on
anybody, and here they find themselves dependent on the Federal
Government.
Sometimes we have this head-on collision when we talk about
getting Indian people less dependent, sometimes they construe
that to mean, oh, then is that going to let the government off
the hook from trust responsibility? I do not think it should,
but certainly 150 years of mistakes the Federal Government has
made to literally make Indian people more and more dependent on
grants from the feds has not worked.
I was reminded yesterday by one of my staff, it is a little
bit like the old days where they got issuance of a beef
allowance and blankets and pots and pans or something of that
nature. Well, they are still getting sort of an allowance, only
now it is called commodities or it is called Federal grants or
it is something, but it is still a form of dependency. Until we
can allow tribes to develop their own resources and their own
skills, that is always going to be in the background.
It seems to me we have to make sure that we allow them to
get more independent, but at the same time not let the Federal
Government step back from its responsibilities under the
treaties.
In September 2000, we had a representative from Kayenta
Township testify on the Indian Tribal Development Consolidation
Act. That testimony was interesting. How is that Kayenta
Township doing?
Mr. Carl. Mr. Chairman, the Kayenta Township is the first
creative idea outside the box of allowing the local government,
in this case the chapter, to provide its own taxation, to
provide its own zoning laws and provide its own leasing option.
There have been many challenges to that, but I believe it has
been very successful.
Having to operate housing programs within that community, I
have to operate under their jurisdiction of government. It is a
new process, but it is also a form of self-sufficiency, being
able to look at ways to develop resources to meet the needs of
the community.
So having street lights on the reservation is a commodity
that is not necessarily found on the reservations, so if you
drive on a reservation most of the time at night it is very
dark. But in this case, they have been able, just for an
example, been able to put street lights on some of their
streets. I believe that model is successful.
The Chairman. You also stated that taking land out of trust
for business purposes may help tribes, not hurt them. Should we
do that strictly for businesses, such as shopping centers,
manufacturing and so on? Or should there be other reasons why
we should take it out of trust?
Mr. Carl. I believe it is still under control of the tribe
as a sovereign government. We have done business deals with
other outside entities, banks and so on through my housing
authority. We always rely on jurisdiction of the tribal court.
There are issues with licenses and stuff. We refer it to
arbitration. But the reality is so long as you have tribal
control, whether it be tribal court or some type of
jurisdiction of the tribe, if you have that set up, why not
look at a new way of doing business? Having land acquisition in
the outside world, just for example in the Durango area, 5
acres is worth now close to over $1 million. On the
reservation, it is not worth anything.
But even though it may cost some money to develop it, there
is still a market, however you cannot trade that market freely.
You still have to go back and terminate the lease, then you
have to go back through the tribe, through the BIA again to get
another lease approved. By the time you are done, you are 5
months or 2 years down the road in getting that transaction. If
you were to convert that into fee simple land, then you just
transact in fee simple land that belongs to an individual
within the tribal jurisdiction.
I know it is a new idea, but I think it is an idea based on
capitalism, based on whoever has the funds to create those type
of transactions.
The Chairman. Thank you.
Ms. Apoliona, you stated that the Office of Hawaiian
Affairs approved a 2000-07 strategic plan and the plan has a
two-part economic initiative impacting 7 percent of the Native
Hawaiian population, and the second goal was obtaining return
on investment goals. What types of economic activities has the
Office of Hawaiian Affairs been involved in in implementing
that plan?
Ms. Apoliona. We have and continue to administer a Native
Hawaiian revolving loan fund serving and providing capital to
Native Hawaiian first-time business owners and/or business
owners who want to expand their businesses. In years past, we
also have assisted in community-based economic development
projects in the State of Hawaii. That has been primarily the
extent of our service and support to Native Hawaiians who want
to move forward in economic development.
We currently are looking at a project on the island of Maui
that has been longstanding for a marketplace. It is in the
district of Hana and that has been looked at as an opportunity
for the community because it is a highly visited spot on the
island of Maui, and an opportunity for the community to
establish storefront businesses that can serve the people
traffic that comes as visitors to Hana.
There is much more certainly that we can be involved in,
and we see the opportunities that S. 519 may be able to provide
to be very complementary to some of the future objectives.
The Chairman. You are helping in housing. You mentioned the
Native Hawaiians, some of them, have been priced out of
conventional housing because the market is going up so fast.
Would S. 519 offer some support for Native Hawaiians, to
develop housing for Native Hawaiians?
Ms. Apoliona. Yes; providing always additional resources so
people can afford to stabilize their housing situation is key.
Certainly with some of the thoughts and concepts in S. 519,
that would help a lot.
The Chairman. Thank you.
We will probably have some further questions in writing.
Senator Inouye may have and some of the other committee members
may have also. But I certainly appreciate everybody appearing
today. I am sorry to keep you when I had to run out.
Julie reminded me of something, though. I was just musing
on the way over when I voted and came back. As you probably
know, Senator Inouye and I have worked for 18 years on the new
Museum of the American Indian. That was one of my first bills
and he took the lead on it here in the Senate when I was on the
House side. September 21, that whole week is the opening, as
you know.
We had a meeting the other night with Rick West, who is the
director, who told us they expect between 10,000 and 20,000
Native Americans to be in Washington during that time, more
than any time in the history of America, which is really
something. There is going to be a procession from the
Washington Monument to the building where we will do the
ribbon-cutting. We are of course encouraging people to wear
their native dress.
But I got to thinking when I saw Julie that September might
be pretty hot for a parka. [Laughter.]
The Chairman. Native Alaskan people may have a particularly
difficult time.
Ms. Kitka. We have summer parkas. [Laughter.]
The Chairman. You have summer parkas. Those of us who wear
buckskins are worried about just even the buckskins, how hot it
is going to be.
Ms. Apoliona. Senator, the Native Hawaiians coming from
Hawaii, we come really light, dress really light. And we will
be there on the Mall as well.
The Chairman. And you will be very comfortable, but those
of our friends from further north may be a little bit
uncomfortable, but it is going to be worth the trip and worth
the day, so we are really looking forward to seeing everybody.
Thank you for being here. This committee is adjourned.
[Whereupon, at 12:10 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
=======================================================================
Prepared Statement of David W. Anderson, Assistant Secretary, Indian
Affairs, Department of the Interior
Good morning, Mr. Chairman and members of the committee. I am David
Anderson, assistant secretary--Indian Affairs. Thank you for the
opportunity to present the views of the Department of the Interior on
S. 519, ``The Native American Capital Formation and Economic
Development Act of 2003.'' We understand the committee will be
significantly amending S. 519, therefore, our comments do not speak to
provisions of S. 519, but rather address the concepts of the bill. The
Department supports exploring creative approaches to economic
development in Indian country.
Economic development on tribal reservations poses many challenges.
Access to capital in Indian country is extremely limited. This shortage
of capital represents one of the primary barriers to comprehensive and
lasting economic development. In addition, there are few opportunities
to generate capital on Indian reservations. Studies show that
unemployment on or near Indian reservations commonly exceeds 50 percent
and in some areas that figure jumps to over 90 percent. Unemployment in
Indian country has placed more than 500,000 people who live on or near
Indian reservations at or below the poverty level. These obstacles are
further compounded by the rural location of most Indian reservations.
As a result of these factors, Indian country accounts for many of the
poorest areas in the United States.
Although poverty and joblessness pose great obstacles to economic
development in remote reservation settings, economic development is not
impossible. Increasingly, tribes continue to overcome these obstacles
and create growth in reservation economies.
The Bureau of Indian Affairs [BIA] is working with tribes to
continue discovering creative and long-term solutions to building
sustainable tribal economies. Through the recent reorganization of the
BIA, the offices of Indian Gaming Management, Self-Governance, and
Self-Determination were elevated to the Assistant Secretary's Office
under the newly created Deputy Assistant Secretary, Policy and Economic
Development. By elevating these and other economic programs, the BIA
will emphasize expanding reservation and tribal community business
opportunities and Indian employment. With the creation of the new
Deputy Assistant Secretary, the BIA hopes to maximize efficiency in
assisting tribal economic development.
Another challenge the BIA is working to address is the issue raised
by many investors and private lenders regarding tribal legal
infrastructure; inadequate or non-existent legal and business codes. To
address this issue, the BIA included in its 2005 budget request $1
million to help tribes develop tribal ordinances and commercial
business codes. We view this as a positive first step to help encourage
more capital investment on tribal lands.
The Department also encourages the use of self-governance programs
as a method of encouraging tribal economic development. Through self-
governance programs, the tribes control the administration of Federal
programs to ensure the programs meet the needs of the individual tribe.
For the tribes that choose to engage in self-governance or self-
determination compacts and contracts, this direct control creates
tailor-made programs that lead to the creation of viable and stable
economies and tribal self-sufficiency. We will continue to work with
tribes to expand self-governance and self-determination as a way to
find creative solutions to economic development.
Currently, the BIA independently administers a program that is
addressing some of the financing needs of Indian country. Since 1974,
the BIA has successfully administered an Indian Guaranty, Insured, and
Interest Subsidy Program. The mission of the program is to ``stimulate
and increase Indian entrepreneurship and employment through the
establishment, acquisition or expansion of Indian-owned economic
enterprises.'' The program guarantees loans up to $20 million dollars
from the private sector to promote economic development of tribes,
individual Indians and Alaska Natives. The guaranteed and insured loan
portfolio currently totals $271 million. With enactment of the fiscal
year 2005 Budget Request, the program expects to leverage private
sector financing of 65 new businesses and create 1,300 jobs on or near
Indian reservations. The guaranteed and insured loan program has
achieved a success rate of 93 percent in the number of businesses
without default for all loans funded since fiscal year 1992. From 1992
to the present, 719 loans have been guaranteed, and of that total only
51 loans have defaulted.
While the BIA loan program is successful and takes steps toward
addressing the need in Indian country, it does not fulfill every
financing need. There is a gap between the small scale financing the
BIA can provide and the funding required for other economic development
projects.
We would welcome the opportunity to further discuss our program.
Additionally, we are willing to participate in further discussions
regarding innovative approaches to enhance economic development in
Indian country. Thank you for the opportunity to participate in the
discussion today. I would be happy to answer any questions you may
have.
______
U.S. Department of the Interior,
Office of the Secretary,
Washington, DC, November 9, 2004.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate Washington, DC.
Dear Mr. Chairman: I am pleased to provide the responses prepared
by the Bureau of Indian Affairs to the questions submitted following
the July 21, 2004, hearing on S. 519, the ``Native American Capital
Formation and Economic Development Act of 2003.''
Thank you for the opportunity to provide this material to the
committee.
Sincerely,
Jane M. Lyder,
Legislative Counsel,
Office of Congressional and
Legislative Affairs.
Question 1. Where do you think the Tribal Development Corporation
[TDC] should be housed? Do you see such a corporation as a new private
entity or should it be public in nature, such as a new department or
Federal agency?
Answer. A Tribal Development Corporation, if created, should be
well-managed and accountable for results. We expect that the proposed
Tribal Development Corporation Study Group, created under the revised
version of S. 519, will consider what sort of form would be most
successful at ensuring these goals are met.
Question 2. At the Forum on Establishing a Tribally Owned
Development Corporation, you spoke about the need for project
development as the key to reservation economic development. Should
project development be the focus of the new tribal development
corporation?
Answer. Yes; project development, in the sense of locally
controlled private entrepreneurial business, should be a focus of a
Tribal Development Corporation.
Question 3. In your testimony on S. 519, you note that Tribal Self-
Governance has lead to the creation of stable and viable tribal
economies. Do you believe that the development of a tribal development
corporation would promote a similar stability? If so, how?
Answer. If created, a Tribal Development Corporation would help
promote stability. However, in order to promote stability and
viability, the Tribal Development Corporation would need to advocate
and support such basic economic development practices and institutional
internal controls such as risk assessment and ensuring best business
practices. A Tribal Development Corporation could also improve business
strategies and relationships.
Question 4. Would you comment specifically on the concepts
contained in title VI of S. 519?
Answer. Title VI of S. 519 provided for the authorization for
appropriations. Title VI of the bill also provided a waiver of the
matching funds requirements of the Riegle Community Development and
Regulatory Improvement Act of 1994 (12 U.S.C. 4707(e)). This title has
been struck from the amended version of the bill.
______
Prepared Statement of Michael Liu, Assistant Secretary, Public and
Indian Housing, Department of Housing and Urban Development
Chairman Campbell, Vice Chairman Inouye, and members of the
committee, I am pleased to submit this testimony for the record. I
welcome the opportunity to share with you the Department of Housing and
Urban Development's perspective on many of the concepts included in S.
519, the Native American Capital Formation and Economic Development Act
of 2003, which has been introduced by Chairman Campbell.
My name is Michael Liu, and I am the assistant secretary for Public
and Indian Housing [PIH]. PIH is responsible for the management,
operation and oversight of HUD's Native American programs. These
programs are available to 562 federally recognized, and a limited
number of State-recognized Indian tribes. We serve these tribes
directly, or through tribally designated housing entities [TDHEs], by
providing grants and loan guarantees designed to support affordable
housing, and community and economic development activities.
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.
I would like to express my appreciation for your continuing efforts
to improve the housing conditions of those who need it most. As you
have heard from previous testimony, much progress is being made and
tribes are taking advantage of new opportunities to improve the housing
conditions of the Native American families residing on Indian
reservations, on trust or restricted Indian land, and in Alaska Native
Villages. This momentum needs to be sustained as we continue to work
together toward creating a better living environment throughout Indian
country.
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 and our commitment to honoring this
fundamental precept in our work. Although the Administration has
concerns with some of the provisions in S. 519 as introduced, we are
pleased to have the opportunity--at the invitation or the chairman--to
work closely with the committee to bolster the effort to build capital
in the Native American community.''
Capital in Native America tends to come from four primary sources:
tribal financial resources, Federal guaranteed loans, grants and tax
credits, debt capital, and equity investors. The latter is woefully
inadequate for many reasons. Issues raised by investors and private
lenders include: The legal status of tribal lands; inadequate or non-
existent legal and business codes; insufficient understanding of issues
related to tribal sovereignty and sovereign immunity; a lack of
technical assistance resources; uncertainty related to leadership
changes in tribal governments, and a lack of financial institutions and
services on or in close proximity to Native American communities.
HUD is committed to exploring new opportunities to surmount
barriers to lending on tribal land and to facilitating access to
alternative sources of capital, financial services and technical
expertise. HUD's Office of Native American Programs [ONAP] is currently
working with tribal governments, TDHEs, and lenders to increase private
housing investments through the section 184 Indian Housing Loan
Guarantee Fund Program, and the title VI Tribal Housing Activities Loan
Guarantee Fund.
Many tribes and TDHEs, as well as other tribally affiliated
community and economic development organizations, use a project-by-
project approach to housing and economic development. There is a great
need to create a more comprehensive approach to the creation of
sustainable economies. There are clear roles that tribal governments,
Federal agencies and lending institutions can play in creating these
economies.
The promotion of capital development and economic growth for Native
American communities, through involvement of the private sector is in
harmony with our approach to meeting the needs of Indian country.
The proposed provision of technical assistance to Indian tribes,
financial institutions, and other organizations is an on-going part of
our efforts to increase mortgage lending to Native American
communities.
We have learned of many of the barriers through the work of a
number of Federal agencies inclusive of the USDA, BIA, the Community
Development Financial Institutions Fund and, most recently, the six
regional housing summits that HUD's Office of Native American Programs
is sponsoring for its tribal, public and private sector partners.
We recognize the need to increase the purchase of Native American
mortgage loans by the secondary market. We are already working with
several entities to increase participation; for example, the Federal
Home Loan Bank system and Fannie Mae. The creation of a new Corporation
raises several questions. The entity would be allowed to enter into
contracts, which could lead to the Federal Government being implicitly
responsible if the corporation was not able to fulfill its contractual
duties. While several objectives envisioned in the bill are positive,
they can be accomplished through existing Government programs.
In summary, we encourage the development of new and innovate
approaches to meeting the needs of Indian country that advance private
sector participation with tribal nations. We agree with many of the
findings as outlined in S. 519 and believe that much of the poor
performance of Native American economies correlates to the absence of
private capital and private financial institutions. We will continue to
work in partnership with tribal governments, Native American
organizations, the private sector, and other Government agencies to
support private investment and leveraging in Indian country. And, Mr.
Chairman, EIM is prepared to work with you to help overcome these
barriers to accessing capital in Indian country.
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