[Senate Hearing 112-753]
[From the U.S. Government Publishing Office]
S. Hrg. 112-753
HOUSING PARTNERSHIPS IN INDIAN COUNTRY
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
ON
EXAMINING WAYS TO ADDRESS THE HOUSING CRISIS IN INDIAN COUNTRY, AND HOW
TRIBES ARE LEVERAGING THEIR PROGRAMS WITH OTHER FEDERAL AND PRIVATE
RESOURCES TO EFFECTIVELY CREATE MORE HOUSING OPPORTUNITIES IN INDIAN
COUNTRY
__________
JULY 24, 2012
__________
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
TIM JOHNSON, South Dakota, Chairman
JACK REED, Rhode Island RICHARD C. SHELBY, Alabama
CHARLES E. SCHUMER, New York MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii JIM DeMINT, South Carolina
SHERROD BROWN, Ohio DAVID VITTER, Louisiana
JON TESTER, Montana MIKE JOHANNS, Nebraska
HERB KOHL, Wisconsin PATRICK J. TOOMEY, Pennsylvania
MARK R. WARNER, Virginia MARK KIRK, Illinois
JEFF MERKLEY, Oregon JERRY MORAN, Kansas
MICHAEL F. BENNET, Colorado ROGER F. WICKER, Mississippi
KAY HAGAN, North Carolina
Dwight Fettig, Staff Director
William D. Duhnke, Republican Staff Director
Charles Yi, Chief Counsel
Laura Swanson, Policy Director
Beth Cooper, Professional Staff Member
Adam Healy, Professional Staff Member
Erin Barry Fuhrer, Professional Staff Member
Dawn Ratliff, Chief Clerk
Riker Vermilye, Hearing Clerk
Shelvin Simmons, IT Director
Jim Crowell, Editor
(ii)
C O N T E N T S
----------
TUESDAY, JULY 24, 2012
Page
Opening statement of Chairman Johnson............................ 1
Opening statements, comments, or prepared statements of:
Senator Akaka................................................ 2
WITNESSES
Cheryl A. Causley, Executive Director, Bay Mills Housing
Authority, on behalf of the National American Indian Housing
Council........................................................ 3
Prepared statement........................................... 18
David W. Bland, Chairman, Travois, Inc........................... 5
Prepared statement........................................... 23
Additional Material Supplied for the Record
Prepared statement of Chancey C. Kittson, Executive Director,
Blackfeet Housing.............................................. 26
(iii)
HOUSING PARTNERSHIPS IN INDIAN COUNTRY
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TUESDAY, JULY 24, 2012
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10:05 a.m. in room SD-538, Dirksen
Senate Office Building, Hon. Tim Johnson, Chairman of the
Committee, presiding.
OPENING STATEMENT OF CHAIRMAN TIM JOHNSON
Chairman Johnson. Good morning. I call this hearing to
order.
Today the Committee will continue examining ways to address
the housing crisis in Indian Country. In my home State of South
Dakota and on reservations across the country, the lack of
safe, stable, high-quality housing is a constant worry for many
families. As I stated at our last hearing on this issue,
families in Indian Country face tremendous challenges. Native
Americans are almost twice as likely to live in poverty as the
rest of the population and nearly three times as likely to live
in overcrowded conditions. This is unacceptable, and we must
continue working together to address this inequity.
Today's hearing follows the hearing I held earlier this
year that focused on how HUD, USDA, BIA, and IHS coordinate
efforts and programs to help tribes meet their critical housing
needs. I am pleased to see the White House is conducting a
similar meeting this week with tribal leaders and agencies in
order to continue efforts to make sure Federal programs are
working as efficiently as possible. It is important that all
Federal agencies engage with tribes in ongoing government-to-
government consultation to fulfill our treaty and trust
responsibilities. I am also pleased that HUD Assistant
Secretary for Public and Indian Housing Sandra Henriquez will
be attending the grand opening of the new Oglala Lakota Housing
Authority office on Pine Ridge with me next month.
We have also recently made progress in other areas. Just
last week, the Senate unanimously passed the Helping Expedite
and Advance Responsible Tribal Homeownership, or HEARTH Act,
sending it to the President for his signature. I was an
original cosponsor of this important legislation to make it
easier for tribes to lease their lands for housing, economic
development, and other activities without having to work
through the slow BIA process for each individual surface land
lease. For too long, I have heard stories from tribal leaders
about ongoing BIA delays in approving leases, which made
economic development and building housing slow and difficult.
In addition, the Native American Housing Assistance and
Self-Determination Act of 1996 is the foundation for addressing
the critical housing needs in Indian Country. NAHASDA is due
for reauthorization next year, and I look forward to engaging
tribes on any improvements that may be necessary.
Unfortunately, because Federal resources do not come close
to meeting the immense demand for housing assistance in Indian
Country, tribes must also be creative in leveraging resources.
I have called this hearing to learn more about what kinds of
partnerships tribes have built, how these partnerships leverage
Federal resources, and what obstacles tribes may face in
leveraging their funds and entering into partnerships.
I have invited all of you to testify here today because of
the important work you do in helping address the housing
challenges in Indian Country. Waiting lists for housing
assistance are long, many Federal programs are complicated to
use, and it takes a lot of planning and coordination to be able
to leverage scarce Federal resources. Despite these enormous
challenges, I am constantly impressed by the dedication and
commitment tribal housing authority directors and their staffs
put into housing projects on their reservations.
Senator Akaka, do you wish to make a brief opening
statement?
STATEMENT OF SENATOR DANIEL K. AKAKA
Senator Akaka. Thank you very much, Mr. Chairman, for
holding this hearing. As the Chairman of the Committee on
Indian Affairs, I am pleased that this Committee is taking a
serious look at the housing needs of Native communities and the
partnerships that help to meet them.
The United States has a unique trust responsibility to
recognize Native peoples, and Congress has a duty to ensure
that the trust responsibility is upheld and the goal of self-
sufficiency is advanced consistently. I look forward to the
testimony today. Tribes and Native housing providers such as
tribally designated housing entities and the Department of
Hawaiian Home Lands have much to share in the way of successful
strategies being implemented throughout the Nation.
The Hawaiian Homes Commission Act is a Federal land trust
established to return Native Hawaiians to the land to promote
self-sufficiency as a condition of statehood. It is
administered by the State of Hawaii Department of Hawaiian Home
Lands, or we call it DHHL. DHHL has successfully partnered with
the private sector to increase access to affordable housing on
Hawaiian home lands and implement strategies that raise the
discretionary income of Native Hawaiian families. I would like
to highlight some of the innovative things they are doing
through some of their partnerships.
DHHL has partnered to create more self-help housing
opportunities for low-income families, something that is
vitally important to moving people from the wait list of 26,000
to the land and to homeownership. DHHL also created the Home
Ownership Assistance Program, or HOAP, to connect Native
Hawaiians with home buyer education and financial literacy
counselors who can assist them in credit repair and becoming
mortgage ready.
DHHL has partnered with local nonprofits and even the
electric company to encourage the use of solar panels in homes,
resulting in lower energy costs for homeowners.
These savings certainly help families have the resources
necessary to stay in their homes.
I want to thank our panelists very much for being here
today and for your testimonies to the Committee today.
Mr. Chairman, I thank you for allowing me to share a little
time with the successful partnerships happening in our trust
lands in Hawaii. Thank you very much, Mr. Chairman.
Chairman Johnson. Thank you, Senator Akaka.
I just want to remind my colleagues that the record will be
open for the next 7 days for opening statements and any other
materials you would like to submit. Now I will briefly
introduce our witnesses.
Cheryl Causley is Executive Director of the Bay Mills
Housing Authority in Michigan and is testifying as the Chair of
the National American Indian Housing Council.
David Bland is the Founder and Chairman of Travois, a
consulting firm that works with American Indian tribes to use a
variety of tools to develop low-income housing.
Unfortunately, due to unexpected circumstances, Mr. Kittson
and Mr. Kirk were unable to make it to today's hearing.
We welcome Ms. Causley and Mr. Bland here today and look
forward to their testimony about this important issue. Ms.
Causley, you may proceed.
STATEMENT OF CHERYL A. CAUSLEY, EXECUTIVE DIRECTOR, BAY MILLS
HOUSING AUTHORITY, ON BEHALF OF THE NATIONAL AMERICAN INDIAN
HOUSING COUNCIL
Ms. Causley. Thank you. Good morning, Chairman Johnson,
Senator Akaka, and distinguished Members of the Senate
Committee on Banking, Housing, and Urban Affairs. I would like
to thank you for holding this hearing to discuss partnerships
to provide affordable housing in Indian Country. My name is
Cheryl Causley. I am an enrolled member and director of housing
for the Bay Mills Tribe of Chippewa Indians. I appear before
you today in my capacity as Chairwoman of the National American
Indian Housing Council.
Founded in 1974, NAIHC's primary mission is to support
tribal housing entities in their efforts to provide safe,
decent, affordable, and culturally appropriate housing for
Native people.
When NAHASDA was enacted, it was envisioned that tribes
could leverage their HUD funds with additional funding sources.
We often discuss our challenges in providing housing, but today
we are grateful to highlight our innovation and partnerships.
Last month, I had the honor to attend a special open house
celebrating the Marcel Peacock family who became proud
homeowners because of the efforts of the Winnebago Tribe in
Nebraska and its partners. They created a successful
homeownership program. The photo here is a picture of Marcel
Peacock and Clarissa Hoffman in front of their newly
constructed three-bedroom home. Marcel and his family of five
had been renting for 4 years and finally became homeowners in
April of 2012.
On the day of the open house, I spoke with many people
involved in this project. I learned from Tribal Chairman John
Black Hawk that the tribe itself put forth $1 million to
provide 20 families with $50,000 in downpayment assistance.
The tribal housing organization offered family
homeownership education and credit counseling. Also, the
tribe's own construction company gave families discounted rates
to further reduce the cost of the home.
Representatives from USDA also shared that they granted
$60,000 through the Rural Housing Direct Loan Program while
HUD's Rural Housing and Economic Development Program provided
further funding.
The Winnebago project highlights how tribal, Federal,
public, and private partners all came together to put a Native
family into a newly built home. The tribe took a strong
approach to providing housing when there were almost no
homeownership opportunities. The project helped generate local
business and employment, established relationships with tribal
and Federal agencies, and most of all, it helped inspire other
Winnebago families to pursue homeownership.
In another part of Indian Country, a nonprofit organization
called the Yukon-Koyukuk Elder Assisted Living Consortium
developed an Elder Assisted Living Facility in Galena, Alaska.
Completed in 2011, the $7.8 million facility was created by
five federally recognized Alaska Native tribes. Through this
development, the elders from these tribes can remain close to
their families, friends, and culture while they receive top-
quality housing and health care. Utilizing new market tax
credits financing, it will also allow the facility to purchase
medical supplies, provide working capital to fund operations,
install solar panels and wood-based heating systems--energy
efficiency measures that are critically important in a remote
region with high energy costs.
Tribal housing program throughout Indian Country are
encouraged to leverage their NAHASDA funding and to secure
additional funding sources, such as tax credits, to combine
multiple funding streams from various agencies. However, even
basic compliance requirements vary from program to program, and
overall this burdensome process of using mixed funding is
administratively inefficient. At times, this limits the tribes'
ability to access multiple programs when trying to build one
significant project.
A solution is for the Federal Government to launch a
concerted effort to align program criteria for Federal housing
programs. We need the core Federal agencies such as HUD, USDA,
BIA, and IHS to have a uniform process for like-minded
programs.
These agencies should also create agreements that will
allow the tribe to complete a single appraisal or environmental
review instead of requiring multiple assessments to meet
varying program standards. NAIHC often hears that certain
Federal programs that are administered by State are not
providing equal access, like tax credits and some USDA
programs.
Thank you all for organizing this hearing and providing
NAIHC an opportunity to highlight solutions that help meet the
overwhelming housing needs in tribal communities. Your
continued support is truly, truly appreciated,.
I would be happy to try and answer any of your questions.
Thank you very much.
Chairman Johnson. Thank you, Ms. Causley.
Mr. Bland, please proceed.
STATEMENT OF DAVID W. BLAND, CHAIRMAN, TRAVOIS, INC.
Mr. Bland. Good morning, Chairman Johnson, Senator Akaka.
It is an honor to appear before you today. Thank you for
drawing attention to the ways private and public partnerships
improve housing in Indian Country. My name is David Bland, and
I am the founder and chairman of Travois, a financial
consulting firm that assists American Indians, Alaska Natives,
and Native Hawaiians with affordable housing and economic
development.
While we still have a long way to go before all indigenous
people in the United States have safe, decent and affordable
housing, I believe we have made significant strides in
improving housing conditions since 1996. Thanks to your
efforts, Chairman Johnson, and the passage of the Native
American Housing Assistance and Self-Determination Act, and now
with the passage of the HEARTH Act, tribes and tribally
designated housing entities have begun to leverage this
funding, seeing ever more private capital coming to the
reservations, specifically through the use of the low-income
housing tax credit program.
Since 1995, our company has helped to secure more than $450
million in private equity for Indian Country through 158
separate partnerships, resulting in more than 4,200 units worth
more than $627 million. Unfortunately, this is a tiny portion
of how much housing is needed, but we are proud of what the
tribes and Travois have been able to do together.
This success would not have been possible without the
perseverance of countless tribal housing authority executive
directors such as Ms. Causley, their housing board members,
councils and dedicated staff, who work very hard to educate
Federal funding agencies, State allocating agencies, and
investors on the unique nature of tax credit transactions in
Indian Country. This process has been slow and at times very
difficult.
When I started Travois in 1995, 9 years after the
establishment of the low-income housing tax credit program,
only a single tribal project had utilized the tax credit
program. I knew that the housing tax credit program generated
90 percent of all affordable housing nationwide, and I could
not understand why this program had not been put to better use
in Indian Country. Through my research, I discovered several
barriers to success, many of which we have overcome, but some
of these challenges remain today.
We have developed several ways to work around these initial
challenges. First, we structure all of our housing projects
with soft debt in which an investor typically provides 80
percent of the total project cost with an equity investment and
the TDHE provides about 20 percent as debt, typically through
the NAHASDA program. This allows TDHEs to charge very low
rents, in line with what their tribal members can afford--and
means the project has essentially no foreclosure risk.
Second, many investors were initially reluctant to work in
Indian Country based on a mostly erroneous understanding of
tribal law. We have worked to devise an alternative dispute
resolution mechanism acceptable to both tribes and investors,
usually including a limited waiver of sovereign immunity solely
for the project and dispute resolution enforcement in tribal
court rather than State court.
Third, and perhaps most vexing, many State allocating
agencies, the agencies that control the distribution of tax
credits, simply misunderstood Indian Housing programs and were
reluctant to award housing tax credits for tribal projects. We
worked very hard to develop relationships with the States and
demonstrate the overwhelming need for affordable housing in
Indian Country, and now many States include preferential points
for tribal developments. Notably, Arizona has a tribal set-
aside guaranteeing at least two tribal projects will be funded
every year. We have come a long way since that first project,
and thousands of affordable housing units have been built or
rehabilitated thanks to the tax credit program.
Unfortunately, several challenges remain. We can divide
these challenges broadly into two categories: a growing
emphasis on urban areas by a variety of funding programs and a
lack of investment interest by the majority of players in the
housing tax credit market.
First, we have seen State allocating agencies decrease
scoring opportunities for rural housing and increase
opportunities for projects in urban areas more likely to be
considered job centers. Given how the country is still
struggling to jump-start the economy, the goal seems to make
sense at first glance, but in our opinion, it indicates a lack
of understanding of the truly desperate need and state of
housing on Indian reservations.
A case in point: In the last year, many States have changed
their qualified allocation plans to give preferential scoring
for projects that are in-fill developments; located near
transit stops, libraries, grocery stores, and the like; or near
large employers. This, combined with a reduction in
preservation and rural housing set-asides, results in the near
elimination of tribal projects from tax credit competition. We
are very concerned that this lack of consultation with tribal
leaders and a disregard for the neediest populations will set
Indian Country back yet again and reverse the positive trends
we have seen recently.
Second, investor interest in Indian Country, while growing
substantially, has always lagged behind interest in other areas
of the country. We have had great success finding investors for
our New Markets Tax Credit-funded projects, but housing tax
credit projects depend on a limited number of investors with a
small appetite. We believe much of this stems from a reluctance
of big banks to invest outside of their Community Reinvestment
Act footprint. While this CRA-created market distortion is a
problem for all of rural America and results in lower equity
pricing for their projects, it is a particular problem for
Indian Country given that many reservations are a many-hours'
drive from the nearest bank. Indian Country is largely
unbanked, and as a result too few commercial banks see Indian
Country as a desirable CRA investment opportunity.
Some modest changes to the way the CRA is administered
could result in millions more in investments for Indian
Country.
Finally, despite the challenges that we still face, the
housing tax credit program is incredibly valuable to Indian
Country. Every year the tax credit industry announces the
Charles Edson Award for Excellence in Affordable Housing. For
the first time ever, a housing project in Indian Country was
named the top rural housing project in the United States. That
was with the Colville Reservation housing project on Buttercup
Lane in Washington State. This project is intended for eventual
tenant ownership, so this project, while providing affordable
family housing, will also create homeowners. This is a shining
example of what can be done through public-private
partnerships, and we are thrilled to have played a part in its
development.
Mr. Chairman, we have submitted to the Committee a written
statement that goes into far more detail on some of these
issues. And while this concludes my prepared statement, I am
happy to answer any questions you may have. Thank you very
much.
Chairman Johnson. Thank you both for your testimony.
We will now begin asking questions of our witnesses. Will
the clerk please put 5 minutes on the clock for each Member for
their questions?
I am hopeful that the recent passage of the HEARTH Act will
help tribes more quickly approve trust land leases. Ms.
Causley, how have BIA delays in improving trust land leases
negatively impacted housing construction and economic
development in Indian Country?
Ms. Causley. The delays to process the lease ran a gamut,
depending on where you were located at. In my area, the BIA
office actually was very, very good. Small tribes. That was one
of the reasons. You know, not too big of a service area, so 2
months. But it went as far as 2 and 3 years in some places. I
believe it was the Navajo tribe, for instance, had a Wal-Mart
that actually wanted to come in and build in their area. Well,
it took so many years to get that approval through that they
lost interest.
As a homeowner that tried to get my first mortgage, you
know, even with a couple of months, you should have seen what
it did to my bank rate.
So in a fluctuating market, should one of your tenants
actually go out and then they hear, well, I am sorry, they do
not have anything this month, they do not have anything this
month, and when it lags out for all of those months, it is
devastating.
Chairman Johnson. Mr. Bland, you have been working for many
years to build partnerships between tribes and investors to
develop affordable housing, leveraging Federal and other
resources. What assurances do investors need before they will
provide capital for economic development or housing projects in
Indian Country?
Mr. Bland. Thank you, Mr. Chairman. The investors require a
gamut of guarantees. In the last 15 years or so, we have worked
to equalize the guarantees that they require in the private
market outside of Indian Country with what they will accept in
Indian Country. For example, on a typical non-Indian Country
housing project, a project will receive title insurance. On a
project done on trust land, it is next to impossible to receive
a title insurance policy. And so in lieu of that, we have
succeeded in getting tribes to provide title guarantees
backstopped by the tribe itself, and investors have agreed that
that is acceptable.
The other guarantees are performance-related guarantees
that mirror what private investors would require outside, and
this is one of the areas where we feel that we have made great
strides that the investors who now are willing to invest in
Indian Country are willing to accept a similar set of financial
guarantees. They do not expect personal financial guarantees,
of course, as they would outside of Indian Country. So we think
that is an area of great success.
I might just add on, if I can, Mr. Chairman, to what Ms.
Causley said with respect to the BIA and the acceptance of the
title work, the title status reports, certified title status
reports and so forth. We had a tragic set of circumstances back
12 years ago--excuse me, 8 years ago with the Navajo
reservation where they had $16 million worth of equity
committed to the projects for three separate projects, and
because of the delay in receiving the title status reports and
the lease approvals from the BIA, those projects went away. All
$16 million was rescinded. It was just absolutely tragic.
Chairman Johnson. I often hear positive comments about
NAHASDA from tribal leaders because of its flexibility and the
leverage opportunities available. I would like to hear from
both of you about how we can ensure these funds are leveraged
with other Federal and private funds in order to provide the
most housing assistance possible. Are there statutory
impediments that make leveraging funds or agency collaboration
more difficult?
Ms. Causley, let us begin with you.
Ms. Causley. As I spoke about in my testimony earlier,
depending on which agency we seek to get funding from, the
application process is different. The environmental review
process is the one that really, really ticks our--makes it
difficult. Let us just put it that way. If we could have the
three or four agencies get together and work and have one set
environmental review process, it would make it so much easier
to take our like-minded programs, and we know all this stuff
that is unnecessary. And I really believe that there should be
a tribal advisory board and ask the tribes what the impediments
are and have them work with these agencies. Our tribal leaders
determine where they want to spend their money. When it comes
down to IHS restrictions, they should be able to decide what
they want done with their own funds, that sovereignty, and they
should be questioned as to what impediments they are coming
across.
So I actually think that would solve a lot of problems,
some tri-party agreements between our agencies and an advisory
group, sir.
Chairman Johnson. Very good.
Mr. Bland?
Mr. Bland. Mr. Chairman, in our experience we have found
that NAHASDA is actually quite flexible. It is probably the
most flexible program that we have ever dealt with, with
respect to leveraging private equity with the tribes.
On the New Markets Tax Credit side, however, the USDA has a
variety of funding programs and the Education Department has a
variety of funding programs for tribal colleges, for example,
and they have restrictions where you cannot use the USDA
grants, for example, as leveraged debt in a New Markets
transaction. And you want to do that because that boosts the
amount of equity that you can get from an investor.
We have requested from the USDA a simple letter of
explanation. We do not believe that there is anything that
prohibits the utilization of a USDA grant, for example, as
leveraged debt in a New Markets transaction. But there is
nothing that explicitly allows it, and as a result, attorneys
who write the tax opinions for New Markets transactions simply
will not--they will not sign off on a transaction like that. So
that is a simple area where a USDA grant, no additional funds
from the Federal Government, but their simple categorization as
leveraged debt would then, in fact, leverage additional private
equity.
On the housing side, Cheryl is correct. The diversity of
compliance requirements is an incredible headache for our
tribal partners. On the one hand, the environmental assessment
that is required by HUD or other Federal agencies is typically
very concerned with the effect that human beings are going to
have on the landscape, on wildlife, and so forth; whereas, the
so-called Phase 1 environmental assessment that private
developers seek is the exact opposite. What impact is the land
going to have on human beings? Are there toxic substances,
underground petroleum distillates that are leaking into the
ground and the groundwater? And these two do not match, and so
you have to have two separate environmentals done with
completely different divergent concerns. If we could have
regulations that matched, that would be very, very helpful.
Chairman Johnson. Senator Akaka.
Senator Akaka. Thank you very much, Mr. Chairman.
Ms. Causley, Director Causley, and Chairman Bland, thank
you very much for your expertise and what you have been doing
for the Native people of this country.
Ms. Causley, the National American Indian Housing Council's
membership includes all three recognized Native groups:
American Indians, Alaska Natives, and Native Hawaiians. Can you
tell the Committee how important reauthorizing Title VIII, the
Native Hawaiian provision of NAHASDA, is to your membership and
to the Native Hawaiian community's ability to ensure adequate
housing is available?
Ms. Causley. The reauthorization of that act and NAHASDA is
extremely important to all of our membership. As for the
Hawaiians, if that is not reauthorized, they are going--they
will not have housing, basically. It is of vital importance to
the Hawaiians.
Senator Akaka. Well, you cannot make it any more clear than
that. Thank you very much.
Ms. Causley, can you describe the effect that stagnant
funding levels under NAHASDA are having on the ability to
create sufficient housing solutions in Native communities?
Ms. Causley. Since 1996, not only stagnant, it does not
even--we are not even funded to a level that will take in mind
inflation. So we are going backwards.
We right now are struggling just to take care of our
existing stock, not even looking at our increased tribal
membership. You come into my area, and it is like 60 percent of
the membership are under the age of 20. How am I going to find
houses for them when I do not have enough money to take care of
what I have?
It is a wonderful, wonderful program, but we need to have
the money to let us make it successful. And also we are
fighting right now where in my instance I am putting like five
houses out a year. That is all I can afford. That is making a
small dent, but there is no provision within NAHASDA right now
to maintain that house.
So, unfortunately, those are some of the things that we
have to--definitely we have to deal with inflation, and we have
to deal with the new houses built with NAHASDA funds to find
enough funding to at least maintain those, because it would be
a tremendous disservice to not maintain what you knew we built.
Mr. Bland. Senator, may I comment on that as well?
Senator Akaka. Yes, Mr. Bland?
Mr. Bland. One of the provisions that I have always felt is
extremely odd with NAHASDA is that as you convey your mutual
help units, they are lost to your current assisted stock, and
the tribes lose money. Yet they are compelled, both ethically
and legislatively, to convey their mutual help units.
But as Cheryl said, if you use your money, you are a good
steward of the NAHASDA allocation and you build new units,
whether you have done it with the tax credit program or simply
with the dollar-for-dollar use of NAHASDA funds, you cannot add
that to your stock, so a tribe is faced unilaterally with
always seeing a decline in their NAHASDA allocation
statutorily. To me, it seems to make no sense whatsoever that a
tribe is penalized for doing what it needs to do, which is to
convey the mutual help units, build new units, and then not
have an allocation sufficient to maintain those units. To me,
it is an anomaly that I have never understood.
Senator Akaka. Thank you.
Chairman Bland, do you have any specific recommendations
that would encourage more private sector partnerships with
public sector agencies like tribes and housing authorities to
meet the housing needs of American Indians, Alaska Natives, and
Native Hawaiians?
Mr. Bland. Yes, sir, I do. In particular with Native
Hawaiians, there is a rule colloquially known as the ``general
public use rule,'' where under the low-income housing tax
credit program a unit must be available to the general public.
And as a result, when Native Hawaiian trust lands--my
understanding is that only Native Hawaiians can occupy that,
and that is in violation of the general public use rule, and as
a result they cannot access the low-income housing tax credit
program.
I think a simple waiver of that general public use rule for
Native Hawaiian trust lands would make a huge difference in
opening up millions of dollars of tax credit-financed equity,
private equity, to Native Hawaiians.
On Indian Country in general, a simple--to me a simple
solution, although it is nothing simple, and we have tried for
years to talk to the banking regulators, particularly the
Office of the Comptroller of the Currency. The Community
Reinvestment Act is a wonderful law that has encouraged a great
deal of investment nationally, but it also has an effect of
distorting much of the marketplace where banks that wish to
invest and get CRA credit on their examinations seek out those
areas that they deem the regulators will give them more credit
for. If they have more bank branches on an Indian reservation--
excuse me, outside of an Indian reservation, they will get more
CRA credit in their examination for investing in that area.
We have recommended that if banks could get equal credit
for investing in an underserved, unbanked area, as they would
if they invest in their own primary assessment area, then that
would funnel millions of dollars of commercial bank investments
into Indian reservations and Native Hawaiian homelands. It is
analogous to what happened with the Gulf Opportunity Zone where
banks were afforded that kind of CRA examination credit
immediately, without respect to what they were doing in their
primary assessment area. And if we could have that for Indian
Country with an acknowledgment, an understanding that there is
a true crisis, an absolute crisis, as Senator Johnson, you,
Senator Akaka, and Senator Tester all know in Indian Country
that there is an absolute crisis of affordable housing on
Indian reservations.
Senator Akaka. Thank you very much.
Mr. Chairman, I have a few questions that I will ask in a
second round.
Chairman Johnson. We will proceed with a second round if
time allows.
Senator Tester.
Senator Tester. Thank you, Mr. Chairman. I want to thank
both the panelists for being here today. I have just a couple
questions.
I look at this from Montana's perspective with our tribes,
and I do not know that it is affordable housing. I think it is
housing, period. There are a lot of challenges out there. Let
us just put it that way.
I guess I would start out by saying a lot of times banks
will not loan in Indian Country because it is trust land, and
that--in order to be able to have secure loans, there needs to
be some land ownership there on the trust land. That is my
perspective. I want to get your perspective on that. How big of
a deterrent is trust land versus privately owned land to
building a house in Indian Country a deterrent for banks to
loan, or is it? Either one of you go ahead.
Mr. Bland. Senator, yes, I agree completely. It is not
just--I misspoke. It is not just a crisis in affordable
housing. It is a crisis in housing.
It goes beyond, I believe, Senator, the issue of trust
ground. When I was with the Federal Reserve Bank in
Minneapolis, I remember distinctly, I remember like it was
yesterday, meeting with a banker--and, unfortunately, it was a
banker from South Dakota, Senator Johnson--who said to me that
he could not make a loan to an Indian because they would not
like him in the eye; and when he shook his hand, he gave him a
soft handshake. That was to me appalling, and I have heard that
several times.
I have heard one particular anecdote so many times that it
has become a rural myth where in this case another banker said
to me that they could not make a loan on an Indian reservation
because they knew a story of a man who took a chain saw and cut
a hole in the bathroom wall of his house so that his horse
could stick his head through and drink out of the tub. Now, I
have heard about that about the Red Lake Reservation in
Minnesota where horses are not exactly a common occurrence. I
have heard it about Pine Ridge. I have heard it about Navajo.
And I have never seen it happen.
But those are the kinds of attitudes that too many small--
typically, small bankers have, and these personal impediments
to lending.
Trust land is an issue, but there are programs--the 184
program that provides a guarantee on trust ground. There are
ways that banks can make loans on trust ground. I believe it is
the personal impediments that are the hardest thing to
overcome, Senator.
Senator Tester. OK. That is a good point.
Did you have anything you wanted to add to that, Cheryl?
Ms. Causley. The use of such things as the 184 loan
actually takes work on the bank's part. The problem is there
are not too many bankers that are actually even aware of how to
go do a 184 on trust land.
Senator Tester. OK.
Ms. Causley. It is a huge impediment.
Senator Tester. OK. If you were going to name your top
three things that you would do if you were sitting in this
chair here to help encourage more housing in Indian Country,
what would they be? If you were in Senator Akaka's or Senator
Johnson's or my chair, what would you be advocating for to get
more housing built in Indian Country?
Ms. Causley. More money, more training for our tribes.
Senator Tester. In what way? What kind of training?
Ms. Causley. They need technical assistance. We do a
wonderful job in NAIHC, but every time that there is a new
program or there is a new opportunity, someone has to teach
them that so they have the capacity, you know.
Senator Tester. So training as far as the programs that are
available from the Federal----
Ms. Causley. Capacity building for the tribes, because you
also have to have court systems in place. The tribes need to
have certain things also to make them successful, and less
restriction, tri-party agreements basically within those four
major agencies that we are working with, and set-asides, State
set-asides. I do not know how many of them they will not--you
know what rural development is like in Montana, but they are
wonderful in Michigan. I mean, we use them--but I actually had
to take the gentleman from
Washington, D.C., bring him to Michigan and say, ``Hey,
guys, this is your boss.'' You know? And then they started
working with us, and now it works wonderfully. But in Montana,
we are fighting to get them to recognize the need.
Senator Tester. OK. David?
Mr. Bland. The first thing I would do is make the modest
recommendation to change the Community Reinvestment Act to
allow banks to get full assessment credit for an investment on
an underserved, unbanked Indian reservation. I think that would
unleash millions of dollars.
Senator Tester. OK.
Mr. Bland. The second thing I would do would be to
encourage the States to equalize their understanding, if you
will, or at least their acknowledgment that Indian Country is
different. It is not the same as rural America, and it is
certainly not the same as urban America.
As Cheryl said, there are some States that embrace the
notion of assisting tribal housing. In particular, Arizona is
one of the more embracing States. North Dakota has a set-aside,
but it is a small set-aside. It is only 10 percent of the
State's allocation, and that is not nearly enough.
But we are faced now with many of the States, as I said in
my opening statement, are putting an emphasis on urban, in-fill
developments and that also give credit and additional points in
the competition for credit dollars for projects that are near
urban amenities that you simply cannot have on Indian
reservations--grocery stores, libraries, doctors' offices, and
those sorts of things. There needs to be an acknowledgment that
Indian Country is different and you cannot lump them together.
Those would be the two, and I will ponder the third one.
Senator Tester. OK. That is perfectly all right.
Once again, I just want to thank you all for being here
today. I appreciate your testimony. Thank you.
Chairman Johnson. Ms. Causley, as Chair of the National
American Indian Housing Council, can you give the Committee a
sense of how NAIHC partners with HUD and others to provide
technical assistance for tribes and their housing authorities?
How does this partnership lead to more capacity building so
that tribes can leverage their resources?
Ms. Causley. We have one of the largest training and
technical assistance programs in Indian Country. We encourage
all of our tribes to create partnerships with public and
private agencies beyond HUD. We integrate information and
resources on leveraging our NAHASDA money. Anytime that there
is actually a program out there, you should see--the need is so
great in there. There is so little resources that they welcome
it with open arms. ``How do we get the money?'' You know, it is
like--I do not know how to explain it. So they want to know
that knowledge. That knowledge and that learning and that need
is so--I do not have the words for. So every single program
that we come up with or that seemed to be interested in coming
onto Indian lands, they want to know how to do it, and they
want to know how to do it successfully.
In May, our membership said, ``We want you to go, and we
need you to bring the VA in. We want to know all about VA
programs. We have Natives that need to be served. Bring them
in. We want them at everything, and we want to be trained on
how to access their programs. And if we cannot, we want to know
how to fix them so our people that have been at war can be
served.''
I guess, you know, that would be my answer as far as that.
We also have joint training courses with Travois, for
instance. They come in and they train at our conventions and
our meetings on how to apply for a low-income housing credit.
For GSA products, for things like that, we will bring the GSA
in to teach our membership. So that is how we address it.
Chairman Johnson. In South Dakota, I have seen far too many
inadequate homes on reservations that house two, three, or more
families. In addition to overcrowding, there are a number of
other problems, including black mold.
Ms. Causley, can you give us a sense of the negative impact
unsafe and overcrowded housing has on the health of Native
communities?
Ms. Causley. The impact is huge. We know that we are not
supposed to put that many people into a unit. I think the most
I had was 17 in a two-bedroom that I knew of. But we call those
``the invisible tenant'' because they do not want the housing
authorities to know that they are there. But that is a thing
that I guess would differentiate us from the rest of the
general public. You will never see a homeless Native unless it
is summertime in my area because they would not survive. So it
will be a grandma, it will be a cousin, it will be--but
somebody will take them in.
The mold, we fight with it. I tried to build an energy
efficient house, but then if it is overcrowded, it is going to
be even worse because of the mold implications. It is not
healthy.
South Dakota is very similar to Michigan. We have closed-
door conditions to begin with, so our doors are basically
closed from October until May. And then you throw all those
extra people in the house. Our respiratory problems are huge,
as well as it filters into our health, but our education also.
Chairman Johnson. Mr. Bland and Ms. Causley, a question for
both of you. I constantly hear from tribal leaders that the
lack of drinking and wastewater infrastructure is a huge
impediment to increasing the housing stock in Indian Country.
To what degree have you experienced these challenges? And how
can we help address the need for this critical infrastructure?
Mr. Bland?
Mr. Bland. Yes, thank you, Senator. South Dakota in
particular, with the low-income housing tax credit program,
which is where we have most of our experience--I apologize for
limiting most of my comments to that. That is where we do
business. South Dakota has relatively low cost caps when
compared to other States, and I think the rationale behind that
is a good one. They want to spread the available tax credits to
as many projects as possible; therefore, they will allow you to
spend less money per unit.
The problem is that assumes that you have got existing
infrastructure, water and sewer, and that is not the case on
Indian reservations. So when you have to add the extra cost per
unit, which can be $20,000 or $30,000 just to bring water,
sewer, roads--well, roads would be a luxury in many cases--but
water and sewer, then you have lowered the amount of money you
can spend on the dwelling unit itself, and it becomes almost an
impossibility to get a fully financed housing project through
the tax credit program in South Dakota. And you certainly
cannot include the kind of public amenities that are present in
other areas of the Nation.
So, in particular--and that is not just South Dakota. North
Dakota has cost caps as well. But it is a critical issue. If we
could modify some of the program procedures to allow a
splitting off the funds that you use for infrastructure, that
would be a big help.
Chairman Johnson. Wouldn't better land use planning play a
part in this instance, Mr. Bland?
Mr. Bland. Absolutely, it would. And the coordination
between Indian Health Service and USDA and other agencies on
provision of those kinds of critical infrastructure, plus the
New Markets Program that can, in fact, finance some of those,
if we could coordinate and use those various funding
mechanisms, that would be a huge help.
Chairman Johnson. Ms. Causley?
Ms. Causley. In my tribe, I have been the director there
for 22 years, sir, and I actually do very, very good land use
planning. I built a project which had 80 units in it. Of
course, you have to bring the infrastructure on a reservation
to build anything. Every single person has to have
infrastructure in place, because it is non-existent. So in
order to draw and be able to have mortgages, a person that
wants to put like a trailer, I cannot allow them in that 80-
unit project. But my project is full already, so I am
completely landlocked.
So I have got another development on top of a hill, but it
is $6 million I am looking at for infrastructure. When you get
a $285,000 allocation a year, it is going to take me a while to
develop. So I have got my road up there, and you just do very
small, little things at a time. But you also have to have
areas, if you are going to try to leverage these other markets,
you cannot put a $1,000 trailer next to a $90,000 unit because
the banks are not going to like that very much. So land use
planning is vital to it, but it goes back to the funding also.
We also need to look at addressing the IHS prohibition and
using sanitation facilities in conjunction with our monies.
Like I said earlier, that should be a tribal decision. But we
do not need a solution that will decrease funding for
infrastructure for either one of us because it is so sadly
needed on both our behalf.
Chairman Johnson. Senator Akaka.
Senator Akaka. Thank you very much, Mr. Chairman.
Mr. Bland, last year, you were honored at the HOPE Awards
for raising more than $350 million in private capital to build
or rehab almost 4,000 homes in Native communities across the
country. Reviewing your experiences, what lessons can you share
with others in navigating the Federal process? And, second,
what feedback can you provide to Federal agencies looking to
improve access to their programs for Native communities?
Mr. Bland. Thank you, Senator. The lessons that we have
learned in the 18 years that we have been in business and the
23 years that I have worked in Indian Country, I think that the
Federal agencies have to do a better job, need to do a better
job at understanding the expectations of the private sector;
that their expectation is not just to have a return on
investment; it is an expectation that that return will be safe
and will be sound and will be something that they can be proud
of and will understand that the dollars that they invest will
return to them, and they will be able to reinvest them.
So the Federal Government, the Federal agencies, in
particular, I think misunderstand the expectations of the
private sector to have immediate return on their investment. It
is not delayed gratification. There is not very much patient
capital in the United States today. And I am not sure that we
have ever had much patient capital, but we have less of it for
Indian Country than we have ever had.
So I think a better understanding of the requirements of
the private sector by the various agencies, and flexibility. I
think if the--no one's intent when legislation is written is to
make something inflexible. Obviously, NAHASDA is, I think, one
of the great success stories because of its great flexibility.
The other Federal agencies, the education grants that go to
tribal colleges that cannot be used for anything other than
what it is prescribed for, it has to be used for a classroom as
opposed to being able to use it for tribal housing, for
example--excuse me, student housing; the USDA programs; if we
could build in statutorily, if that is possible, the kind of
flexibility that would allow these Federal funds to be combined
with private sector dollars, those are the two things that I
have seen in my 23 years that have been most striking to me
Senator.
Senator Akaka. Thank you very much for that response.
This question is for both of you. In this Committee's last
hearing on Indian housing, Federal agencies testified about
their efforts to collaborate to ensure that Native communities
have access to adequate housing. My question to you is: Can you
provide any examples where the Federal agencies worked well
together or where they could have improved their efforts for
Native communities? Any examples?
Mr. Bland. This is a difficult question, Senator. I think
that the Indian Health Service is particularly problematic in
its willingness to deal with other agencies, at least in our
experience. They know and do what they do well, but they are
one that I spoke to earlier. They in our experience seem to
have less of an understanding of the demands of the private
sector when they are putting private equity dollars into a
transaction, where you are combining NAHASDA funds. To me it
seems utterly ludicrous that you cannot combine Indian Health
Service dollars with NAHASDA dollars to achieve a simple house
to be built on a piece of ground. It seems utterly illogical to
me that you cannot do that.
Ms. Causley. And expanding on that particular situation,
the tribes also want to have everything, or at least my tribe,
when I cannot use Indian Health, I pay them out of a different
fund to still come in and use their engineers, so my as-builts
and my water department and utility department which I run have
all those resources in place, because I think it is ludicrous
to have something else out there built by someone else. So I
utilize them anyway and have to pay an additional fee for those
engineering fees, you know, in the places where they cannot
help, because they are ultimately responsible for the water
tanks and everything else coming into the reservation.
Senator Akaka. Well, I was looking for examples of where
they worked well together, but I certainly appreciate your
feelings about how they should be.
Ms. Causley. When you said ``working together,'' I guess
that is where I am having trouble, because they still do not
seem to work with each other. But there are improvements out
there. The HEARTH Act being passed, the BIA actually worked
with us wonderfully for the first time, and, I mean, there are
big improvements there. So we are not going backwards, and they
have worked with us as the council. So I cannot say enough
about his ``killer bees,'' as they called them, and the things
there. You know, they have done a lot of hard work. Like VA
right now is coming into the picture a little bit more, but,
you know, we are dragging them to come on over here, we need
your money, too.
USDA, boy, if we could do some work there, because that is
more money. Like I said, my tribe does wonderfully with USDA
and the college and things like that. But other States do not
have that. That is where we--she at one point had said that she
would have a tribal advisory committee, and they still have not
put that into place, and we are pushing real, real hard for
that because USDA seems like it should be hand in hand with
Indian Country.
Senator Akaka. Mr. Bland, any further comments?
Mr. Bland. Senator, there are other sources of funding that
are non-Federal also. The Affordable Housing Program, for
example, of the Federal Home Loan Bank System, it is a
federally mandated pot of money. I believe it is 10 percent of
the Federal Home Loan Bank System's profits from each bank
district. And many times they have a difficult--or an
unwillingness to work at cooperatively with the Federal
agencies with respect to the timing of when funds are
available, and that sometimes stretches out when you can draw
down the funds that have been granted to you or to a project
through the Federal Home Loan Bank of Des Moines, for example,
or Seattle or whichever bank it might have been. And because
the time gets delayed, they will sometimes seek to withdraw
those funds, take them back, and they are delayed because of a
lack of coordination between the other agencies, whether it is
the BIA, the Indian Health Service, HUD, or USDA.
I was just reminded by our vice president here, Elizabeth
Glynn, that we have a project on the San Carlos reservation in
Arizona where we have got BIA, IHS, USDA, and HUD funding, and
nobody is talking to one another. There is no single entity
that coordinates all of those funding agencies. They all have
the same goal, but nobody is talking to one another. And as a
result, things get stretched out, and then investors get
worried because now they are concerned that their investment
dollars are put at risk, because is this project actually going
to happen?
So some coordination between the agencies I think would be
very important. That is my third recommendation to Senator
Tester, coordination between the agencies.
Senator Akaka. Thank you. Thank you very much. I really
appreciate your answers here, and I want to thank Director
Causley and Chairman Bland for being here with us today.
Thank you very much, Mr. Chairman.
Chairman Johnson. Thank you all for your testimony and for
being here with us today. Each of you plays an important role
in providing American Indian families with safe, affordable,
and high-quality housing options.
This hearing is adjourned.
[Whereupon, at 11:11 a.m., the hearing was adjourned.]
[Prepared statements and additional material supplied for
the record follow:]
PREPARED STATEMENT OF CHERYL A. CAUSLEY
Executive Director, Bay Mills Indian Housing Authority
on behalf of the National American Indian Housing Council
July 24, 2012
Good afternoon Chairman Johnson, Vice Chairman Shelby, and
distinguished Members of the U.S. Senate Committee on Banking, Housing
and Urban Affairs. Thank you for inviting me to attend today's
oversight hearing to discuss partnerships to provide affordable housing
in Indian Country. My name is Cheryl Causley and I am the Executive
Director of the Bay Mills Indian Housing Authority. I am an enrolled
member of the Bay Mills Indian Community located in Brimley, Michigan.
Today, I appear before you in my capacity as Chairwoman of the National
American Indian Housing Council (NAIHC). I wish to thank the Committee
for this opportunity to appear before you today to discuss housing
programs for Native Americans.
I say without hesitation that tribal communities suffer from some
of the worst housing conditions in the United States. New partnerships
between the Federal and tribal governments and the private sector may
provide local tribal communities the tools they need to meet the
longstanding housing challenges and build better housing environments.
As a community of advocates, we are committed to creating good jobs
in tribal communities, providing our families with housing
opportunities and building a brighter future for our children. We thank
you for your leadership and vision in meeting the longstanding
challenges throughout Indian Country.
Background on the National American Indian Housing Council (NAIHC)
The NAIHC was founded in 1974 and has, for 38 years, served its
members by providing invaluable training and technical assistance (T/
TA) to all tribes and tribal housing entities; providing information to
Congress regarding the issues and challenges that tribes face in terms
of housing, infrastructure, and community and economic development; and
working with key Federal agencies to address these important and, at
times, vexing issues, and to help meet the challenges. The membership
of NAIHC is expansive, comprised of 274 members representing 463 \1\
tribes and tribal housing organizations. The primary mission of NAIHC
is to support tribal housing entities in their efforts to provide safe,
decent, affordable, and culturally appropriate housing for Native
people.
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\1\ There are approximately 566 federally recognized Indian tribes
and Alaska Native villages in the United States, all of which are
eligible for membership in NAIHC. Other NAIHC members include State-
recognized tribes eligible for housing assistance under the 1937
Housing Act and that were subsequently grandfathered in the Native
American Housing Assistance and Self-Determination Act of 1996; and the
Department of Hawaiian Home Lands, the State agency that administers
the Native Hawaiian Housing Block Grant program.
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Brief Summary of the Problems Regarding Housing in Indian Country
While our country has been experiencing an economic downturn that
many have described as the worst global recession since World War II,
this economic reality is greatly magnified in Indian communities. The
national unemployment rate seems to have peaked at an alarming rate of
nearly 10 percent and still persists at just over 8 percent; however,
that rate does not compare to the unemployment rates in Indian Country,
which average 49 percent.\2\ The highest unemployment rates are on the
Plains reservations, where the average rate is 77 percent.\3\
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\2\ Bureau of Indian Affairs Labor Force Report (2005).
\3\ Many of these reservations are in the State of South Dakota,
which has one of the lowest unemployment rates in the Nation. On some
SD reservations, the unemployment rate exceeds 80 percent.
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Because of the remote locations of many reservations, there is a
lack of basic infrastructure and economic development prospects are
difficult to identify and even more difficult to pursue. As a result,
the poverty rate in Indian Country is exceedingly high at 25.3 percent,
nearly three times the national average.\4\ These employment and
economic development challenges exacerbate the housing situation in
Indian Country. Our first Americans face some of the worst housing and
living conditions in the country and the availability of affordable,
adequate, safe housing in Indian Country falls far below that of the
general U.S. population.
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\4\ U.S. Census Bureau, American Indian and Alaska Native Heritage
Month: November 2011. See http://www.census.gov.
According to the 2000 U.S. Census, nearly 12 percent of
Native American households lack plumbing compared to 1.2
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percent of the general U.S. population.
According to 2002 statistics, 90,000 Indian families were
homeless or under-housed.
On tribal lands, 28 percent of Indian households were found
to be over-crowded or to lack adequate plumbing and kitchen
facilities. The national average is 5.4 percent when structures
that lack heating and electrical equipment are included.
Seventy percent of the existing housing stock in Indian
Country is in need of upgrades and repairs, many of them
extensive.
Less than half of all reservation homes are connected to a
sewer system.
There is an agreement among most Members of Congress, the Federal
Government, tribal leaders, and tribal organizations that there is a
severe housing shortage in tribal communities; that many homes are, as
a result, overcrowded; that many of the existing homes are in need of
repairs, some of them substantial; that many homes lack basic amenities
that many of us take for granted, such as complete kitchens and
plumbing; and that at least 250,000 new housing units are needed in
Indian Country.
These issues are further complicated by the status of Indian lands,
which are held in trust or restricted-fee status. As a result, private
financial institutions will generally not recognize tribal homes as
collateral to make improvements or for individuals to finance new
homes. Private investment in the real estate market in Indian Country
is virtually non-existent, with tribes almost entirely dependent on the
Federal Government for financial support in meeting their growing
housing needs. The provision of such assistance is consistent with the
Federal Government's well-established trust responsibility to American
Indian tribes and Alaska Native villages that is underscored in the
U.S. Constitution.
The Native American Housing Assistance and Self-Determination Act
While we often discuss numerous challenges in providing low-income
Native families housing opportunities, we must also consider a recent
shift in the relationship between tribes and the Federal Government by
reducing the regulatory requirements that historically burdened tribes
attempting to develop housing with their Federal housing funds. The
passage and implementation of Federal legislation has enabled tribes to
leverage Federal funding for tribal housing in innovative ways,
resulting in substantially increased housing production.
In 1996, Congress passed the Native American Housing Assistance and
Self-Determination Act (NAHASDA) to provide Federal statutory authority
to address the above-mentioned housing disparities in Indian Country.
NAHASDA is the cornerstone for providing housing assistance to low-
income Native American families on Indian reservations, in Alaska
Native villages, and on the native Hawaiian Home Lands.
The Indian Housing Block Grant (IHBG) is the funding component of
NAHASDA, and since the passage of NAHASDA in 1996 and its first fiscal
year of funding in 1998, NAHASDA has been the single largest source of
funding for tribal housing. Administered by the Department of Housing
and Urban Development (HUD), NAHASDA specifies which activities are
eligible for funding.\5\ Not only do IHBG funds support new housing
development, acquisition, rehabilitation, and other housing services
that are critical for tribal communities, they cover essential planning
and operating expenses for tribal housing entities. Between 2006 and
2010, a significant portion of IHBG funds, approximately 24 percent,
were used for critical planning, administration, and housing management
and services.
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\5\ Eligible activities include but are not limited to downpayment
assistance, property acquisition, new construction, safety programs,
planning and administration, and housing rehabilitation.
---------------------------------------------------------------------------
NAHASDA is scheduled for reauthorization in September 2013. The
NAIHC developed and implemented an outreach process designed to
encourage open discussion about the Act from inception to the present,
from the perspective of the tribes and Tribally Designated Housing
Entities (TDHEs), as recipients and intended beneficiaries of programs
within NAHASDA. The outreach facilitated in-depth, ongoing discussions
to assess the effectiveness of the Act, its individual components, and
its rules and regulations in meeting its intended purpose(s). The
objective of this extensive outreach process was to have a reauthorized
Act that more effectively accomplishes its purpose of providing
quality, affordable housing to tribal communities.
Federal program spending restraints are a constant topic in the
midst of both a struggling economy and concerns about deficit spending
and the increasing national debt. It is against this economic reality
that tribal housing entities are encouraged to promote tribal self-
determination and self-governance and continue development of
innovative partnerships that complement NAHASDA programs to meet the
tremendous housing backlog throughout Indian Country.
Leveraging Housing Funds
Leveraging funds or investing borrowed money in a way that
maximizes potential funding opportunities creates partnerships and
solutions to providing low-income families with housing opportunities.
Tribes are increasingly exploring innovative ways to utilize NAHASDA
grant funds, combined with tribal funds and other resources, to
maximize housing project outputs. The passage of NAHASDA in 1996 and
its funding in 1998 have spurred several tribes into exploring
partnerships with lenders or utilizing existing funds to enhance the
effectiveness, efficiency, and success of housing projects.
For example, tribal housing organizations are increasingly
encouraged to leverage their IHBG funding to secure other sources, such
as Low-Income Housing Tax Credits (LIHTC), and to combine multiple
funding streams from other sources such as the U.S. Department of
Agriculture Rural Development, U.S. Treasury Department's CDFI program,
the Federal Home Loan Bank, private foundations, and commercial banks.
However, even basic compliance requirements vary from program to
program, presenting barriers to efficient administration of multiple
funding streams and limit the ability of tribes to access multiple
programs in an effort to reach adequate scale.
Tribes are faced with income limitations, rent restrictions, and
even requirements for providing notices to tenant that are inconsistent
from program to program. Many organizations have developed numerous
projects, each with a unique blend of funding. Some sources are
significant in certain developments and entirely lacking others. In all
cases, the number of units governed by the rules applicable to a
certain funding source varies from one development to the next. As a
result, some tribal housing entities are spending substantial resources
to develop project-based compliance manuals as a tool to help staff
comprehend complex and various rules that apply to different units
within each development. The process is administratively cumbersome and
inefficient. A better solution is for the Federal Government to launch
a concerted effort to align program criteria for Federal housing
programs. The Administration's proposed changes to the LIHTC income
limitations are an example of a positive and strategic move in the
right direction.
It should also be noted that eligibility to receive funding
available through various Federal housing programs is not consistent. A
number of organizations in Alaska and Oklahoma, for example, cannot be
accurately characterized as either tribes, units of local government or
501(c)(3) nonprofit organizations. A simple solution would be to review
eligibility requirements for Federal housing programs and, whenever
possible, extend eligibility to entities that have been designated as
Tribally Designated Housing Entity for one or more Indian Tribes for
the purposes of NAHASDA.
Title VI Loan Guarantee Program
Under Title VI of NAHASDA, HUD is authorized to guarantee notes or
other obligations issued by tribes, or tribal housing entities, if
approved by the tribe, for the purpose of financing affordable housing
activities as described in Section 202 of NAHASDA. Eligible burrowers
must be a tribe or a tribal housing entity that is an IHBG recipient.
IHBG funds may be used as a security for the guarantee or other
obligations. The objective of the program are to enhance the
development of affordable housing activities, increase access to
capital to further economic growth, and encourage participation in the
financing of tribal housing programs or financial institutions that do
not normally serve tribal areas.
Passamaquoddy Tribe of Maine
Over the years, some tribes, such as the Passamaquoddy Tribe of
Maine, have found creative approaches to maximize the impact of their
NAHASDA funds they receive. Using the Title VI loan guarantee program
to attract other sources of capital, the Tribe successfully leveraged
its IHBG funds to enhance its housing development strategies. The
flexibility of the Title VI program criteria, allows financing of any
NAHASDA-eligible affordable housing activity for a period of up to 20
years. Title VI has also proven to be a cost-effective source of gap
financing during initial stages of a housing project.
The Passamaquoddy Tribe used Title VI to construct 28 low-income
housing tax credit units and a community center. The balance on the
Title VI loan was paid down with the tax credits and Federal Home Loan
Bank of Boston's Affordable Housing Program funds.
Section 184 Home Loan Program
The HUD Section 184 program is a mortgage loan product designed to
resemble a conventional, or private housing loan, and there are no
income limits for the Section 184 Loan program. Because the Section 184
loan program is guaranteed by the Federal Government, the program has
provided much needed access to capital to many individuals and Native
families who might otherwise struggle to obtain home financing.
White Mountain Apache (WMAT) Tribe
The White Mountain Apache Tribe of Arizona utilized a blend of
funding streams including NAHASDA, Section 184 guarantees, and tribally
issued tax-exempt bonds to develop a 250 unit single-family housing
project. This project provides long-term rentals (amount paid
determined on family's ability) with the housing entity as the lessor
and the tenants have the opportunity to purchase their units.
Bay Mills Housing Authority
The Bay Mills Housing Authority of Michigan developed a tri-party
agreement that included the Central Savings Bank as a partner. The bank
was able to offer the Section 184 loan program, USDA Rural Development
loans, or tribal loans to members of the tribe. Bay Mills used NAHASDA
funds as downpayment assistance of up to 10 percent of the loan (not to
exceed $8,000) to families with incomes at or below 80 percent of the
area median. The tribe provides similar opportunities to families with
higher incomes.
Nonprofit to Enhance Access to Funding
Some tribes have created 501(c)(3) nonprofit corporations for the
purposes of establishing an independent organization that accesses
additional housing funding opportunities. Forming a 501(c)(3) is a
multi-step process. First, the concept must be endorsed by the tribe's
governing body. Once the concept is approved by the tribal government,
a charter must be developed and submitted to the tribe and approved.
Once approved and chartered, the nonprofit must maneuver through a
complex field of Internal Revenue Service rules and regulations to
appropriately establish a nonprofit entity. Based on multiple tribal
housing examples, this process has provided increased access to a
variety of funding possibilities and a greater ability to serve the
individual housing needs of tribal members.
Yukon-Koyukuk Elder Assisted Living Facility (YKEALF)
The Yukon-Koyukuk Elder Assisted Living Consortium (YKEALC) is a
501(c)(3) organization founded to develop the Yukon-Koyukuk Elder
Assisted Living Facility in Galena, Alaska. The facility is located on
the banks of the Yukon River in central Alaska and was completed in
2011.
Five federally recognized Alaska Native tribes came together to
create the facility: Nulato Tribal Council, Louden Tribal Council,
Koyukuk Tribal Council, Ruby Tribal Council and Kaltag Tribal Council.
Total investment in this assisted living center was $7.8 million.
These tribes needed a closer facility to provide housing and
services to their elders. Without a closer facility, elders would have
been forced to move, and this would have put them far from their
families, friends and culture. Through the development of YKEALC the
elders can remain in their tribal communities and receive top quality
housing and health care.
The New Markets Tax Credit financing will allow the facility to
purchase medical supplies, install solar panels on the roof and install
a wood-based heating system. These energy efficiency measures are
critically important due to the very high cost of energy in this very
remote region. The financing also provides working capital to help fund
operations at the facility. The project created 28 construction jobs
and 10 permanent jobs.
YKEALC will also work to keep the elders connected to the
community--a crucial element of elder care. This is done through
volunteer efforts of local residents bringing fish and game to the
facility for community meals.
Native Community Development Financial Institutions
Increasingly, tribal housing programs are exploring the advantages
of instituting and working with Native Community Development Financial
Institutions (CDFIs) in an effort to leverage resources for
homeownership. Native CDFIs were created when the Community Development
Banking and Financial Institutions Act of 1994 established the
Community Development Financial Institutions Fund (CDFI) whose purpose
is to promote economic revitalization and community development through
investment and assistance to fund-certified CDFIs. The Fund offers
grants, loans, equity investments, and other forms of assistance on a
matching funds basis. CDFIs are administered by the U.S. Treasury
Department.
These Native CDFIs must demonstrate their independence from tribal
government and inclusion of the tribal target population on its board
of directors to obtain funding from the Fund. This structure is
intended to assure separation from tribal politics and sound lending
practices. CDFIs may also attract financial support from banks and
other lenders and are especially conducive to tribal housing programs
that seek focus on homeownership loans.
It is the goal of most Native CDFIs to bring in funding from
various sources to lend back to tribal community members at favorable
rates or provide the necessary financial education and credit
counseling to increase tribal members' access to lending products.
Native CDFI's not only help to boost homeownership through providing
loan products and other services, but they provide tribal members with
the knowledge and skills in building productive financial
opportunities.
New Mexico Native CDFIs
In New Mexico, 10.7 percent of the population identified as
American Indian and/or Alaska Native (AI/AN)--making it the third
highest AI/AN-populated State proportionate to the rest of the State's
population. Out of the 12 certified CDFIs in the State there are 4
Native CDFIs that provide varied services to the tribal communities of
Laguna Pueblo, Ohkay Owingeh, Isleta Pueblo, and the Navajo communities
near Gallup, New Mexico. They provide mixed lending products, such as
home mortgage loans, home rehabilitation loans, and construction
lending. In addition, they provide homeownership education, financial
education, and credit counseling and repair.
The financing of the Native CDFIs are diverse, and underscore the
multifaceted contribution from various funding sources to meet the
housing needs in the New Mexico tribal communities. Three of the New
Mexico Native CDFIs receive direct funding from their respective
Tribally Designated Housing Entity, two CDFIs receive funding from the
New Mexico Mortgage Finance Authority (a State agency), and two CDFIs
receive funding from nonprofit entities. The Tiwa Lending Services
(TLS) receives direct funding from the Pueblo of Isleta, which
transferred its home loan portfolio and tribal funds to TLS.
Ho-Chunk Community Development Corporation (HCCDC)
HCCDC is an emerging CDFI, and was formed by and partners with the
Winnebago Tribe and its entities. The Mission of the Ho Chunk Community
Development Corporation is to raise the socio-economic and educational
levels of Native American communities and the people of Thurston
County, Nebraska. A goal of HCCDC is to decrease substandard housing,
increase housing opportunity, increase clients' ability to access
housing, and increase capital available locally.
The Winnebago Reservation lacks affordable housing and tribal
members who are able to afford a mortgage are forced to live elsewhere.
Others tribal members lack the funds for the initial downpayment to
purchase a home. Using the Winnebago Tribe's other private subsidiary,
Ho-Chunk Inc., the HCCDC and the Winnebago Tribe have worked together
to develop a Housing Down Payment Assistance Program that provides a
significant portion of a standard downpayment for a new homeowner. The
homeowner is required to go through a special financial and
homeownership education course and must meet other criteria to qualify.
In 2010, Ho-Chunk, Inc. and the Winnebago Tribe authorized a $1
million Housing Stimulus Program to set aside Ho-Chunk, Inc. dividends
and other tax revenues to offer $50,000 in downpayment assistance to up
to 20 new homeowners who build a home on the Winnebago reservation.
Through these combined efforts, housing on their reservation is more
affordable and tribal members can start building the traditional wealth
that other non-Native homeowners have gained.
Beyond their downpayment assistance program, the HCCDC has invested
in Ho-Chunk Village, a modern comprehensive subdivision that
incorporates their traditional village design. The Village will provide
both commercial and residential development with a senior-living
housing project, private homes, 20-unit apartment complex, and 10 unit
town-houses. On the commercial side, the Village will include a
commercial office building, laser art panels, veteran's park, sculpture
garden, theater, playground, and public-use building. Beyond creating
the needed affordable housing opportunities, the development of the Ho-
Chunk Village is raising the tribal economy and creating much-needed
jobs.
Conclusion
Given the funding constraints in the tribal housing arena and the
need to not only maintain existing units, but keep up with growing
tribal populations and meet the tremendous existing housing backlog,
tribes have, out of necessity, been very creative in developing
partnerships and crafting innovative solutions to meet their unique
housing needs and expand community development. Some innovations are in
the form of utilizing nontraditional financing mechanism or leveraging
limited financial resources to realize their maximum benefit. While
trying to address the need for affordable housing, some tribal
communities have instituted efforts to re-vamp their community and this
added development is boosting the tribal economy and creating jobs.
In spite of the forward movement detailed herein, the value of the
Federal funding authorized by NAHASDA, including the Indian Housing
Block Grant program, the Indian Community Development Block Grant
program, and provision of invaluable training and technical assistance
for tribes to develop, enhance, manage, and improve tribal housing
programs, is essential and cannot be over-stated. One of the most
important functions that NAIHC's T/TA provides is a forum in which to
share such innovative partnerships among tribal communities. In this
process NAIHC is able to transfer information in the form of best
practices, and such strategies will ensure that these innovative
housing partnerships and strategies will be more broadly adapted and
utilized.
Thank you Chairman Johnson, Ranking Member Shelby, and all for
organizing this hearing and opportunity to highlight solutions that
help meet the overwhelming housing needs in tribal communities. Your
continued support of tribal communities is truly appreciated, and the
NAIHC is eager to work with you and your professional staff on any and
all issues pertaining to tribal housing programs, the housing and
living conditions for America's indigenous people, and to pursue ways
that we can mutually address housing and housing-related community
development throughout Indian Country.
______
PREPARED STATEMENT OF DAVID W. BLAND
Chairman, Travois, Inc.
July 24, 2012
Good morning Chairman Johnson, Ranking Member Shelby and Members of
the Committee. It is an honor to appear before you. Thank you for
drawing attention to the ways private and public partnerships improve
housing in Indian Country. My name is David Bland and I am the founder
and chairman of Travois, a financial consulting firm that assists
American Indians, Alaska Natives, and Native Hawaiians with affordable
housing and economic development.
While we still have a long way to go before all Indigenous people
in the United States have safe, decent and affordable housing, I
believe we have made significant strides in improving housing
conditions since 1996. Thanks to your efforts Chairman Johnson and the
passage of the Native American Housing Assistance and Self-
Determination Act (NAHASDA), and now with the passage of the HEARTH
Act, tribes and tribally designated housing entities (TDHEs) have begun
to leverage this funding, seeing ever more private capital coming to
the reservations, specifically through the use of the Low-Income
Housing Tax Credit (LIHTC) program.
As you know, there is a critical shortage of privately financed
housing in Indian Country throughout the United States. Most housing on
Federal Indian Reservations has been built or rehabilitated through
either the Department of Housing and Urban Development, Farmers Home
Administration (now Rural Housing), or the Bureau of Indian Affairs.
The housing that has been built has been financed from outside the
Federal Indian Reservations, typically with subsidized debt, little or
no equity, and often little or no direct financial involvement by
tribal officials or other reservation residents.
Due to the lack of local investment in affordable housing in Indian
Country, the long-term preservation of housing assets and the regularly
scheduled and effective maintenance and modernization of housing units
has generally suffered. The rural nature of most of the reservations
further complicates projects undertaken by American Indian Tribes.
Increased construction costs and diminished competition for contractors
in remote Indian Country areas create an obstacle generally not
encountered in other areas.
Until the onset of the Low-Income Housing Tax Credit program in
Indian Country and the changes brought by NAHASDA, rent and account
delinquencies were chronic challenges faced by many Tribally Designated
Housing Entities. According to a report in Indian Country Today, it was
estimated that prior to NAHASDA, 36 percent of all tribal area program
tenants were delinquent in rent payments. As a result, the long-term
viability of affordable housing equity investments had been severely
limited in Indian Country. Along with the other changes envisioned by
NAHASDA, it was determined that immediate steps should be taken to
increase the affordable housing operational expertise in Indian Country
and direct involvement in the Low-Income Housing Tax Credit program has
been one of the first steps.
Recent history and experience has shown that Native Americans will
go to great lengths to live amongst their tribal extended family,
despite the resulting overcrowding, grossly inadequate facilities and a
severe shortage of available units. The number of affordable housing
units needed by Native American families reflected by TDHE waiting
lists can number in the hundreds of households--a staggering uphill
battle. HUD estimates that since 2003, the housing shortage for Native
Americans has increased more than 40 percent.
While these statistics are bleak, Indian Country has made
significant strides recently. Since 1995, our company has helped secure
more than $450 million in private equity for Indian Country resulting
in more than 4,200 units of affordable housing worth more than $627
million. Unfortunately, this is a tiny portion of how much housing is
needed, but we are proud of what the tribes and Travois have been able
to accomplish together.
This success would not have been possible without the perseverance
of countless tribal housing authority executive directors such as Ms.
Causley, Mr. Kirk and Mr. Kittson, their housing board members, tribal
councils and dedicated staff, who work very hard to educate Federal
funding agencies, State allocating agencies and investors on the unique
nature of tax credit transactions in Indian Country. This process has
been slow and at times, very difficult. When I started Travois in 1995,
9 years after the establishment of the tax credit program, only one
tribal project had been financed using the program. I knew that the
housing tax credit program generated 90 percent of all affordable
housing in our nation and I could not understand why this program had
not been put to better use in Indian Country. Through my research, I
discovered several barriers to success, many of which we have overcome,
but some of which remain challenges today. We have developed several
ways to work around these initial challenges. First, we structure all
of our housing projects with ``soft'' debt in which an investor
typically provides 80 percent of the total project cost with an equity
investment and the TDHE provides 20 percent as debt, typically with
NAHASDA funds. This allows TDHEs to charge very low rents, in line with
what their tribal members can afford--and means the project has
essentially no foreclosure risk.
Second, many investors were initially reluctant to work in Indian
Country based on a mostly erroneous understanding of tribal law. We
have worked to devise an alternative dispute resolution mechanism
acceptable to both tribes and investors, usually including a limited
waiver of sovereign immunity solely for the project and dispute
resolution enforcement in tribal court rather than State court.
Third, and most vexing, many State allocating agencies, the
agencies that control the distribution of tax credits, simply
misunderstood Indian Housing programs and were reluctant to award
housing tax credits for tribal projects. We worked very hard to develop
relationships with the States and demonstrate the overwhelming need for
affordable housing in Indian Country, and now many States include
preferential points for tribal developments. Notably, Arizona has a
tribal set-aside guaranteeing at least two tribal projects will be
funded every year. We have come a long way since that first project and
thousands of affordable housing units have been built or rehabilitated
thanks to the tax credit program.
Unfortunately, several challenges remain. We can divide these
challenges broadly into two categories: a growing emphasis on urban
areas by a variety of funding programs and a lack of investment
interest by the majority of players in the housing tax credit market.
First, we have seen State-allocating agencies decrease scoring
opportunities for rural housing and increase opportunities for projects
in urban areas more likely to be considered ``job centers.'' Given how
the country is still struggling to jumpstart the economy, the goal
seems to make sense at first glance, but in our opinion it indicates a
lack of understanding of the truly desperate state of housing on most
reservations. A case in point, in the last year many States have
changed their qualified allocation plans to give preferential scoring
for projects that are in-fill developments; located near transit stops,
libraries, grocery stores, and the like; or near large employers. This,
combined with a reduction in preservation and rural housing set-asides,
results in the near elimination of tribal projects from tax credit
competition. We are very concerned that this lack of consultation with
tribal leaders and a disregard for the neediest populations will set
Indian Country back yet again and reverse the positive trends we've
recently seen.
We believe it is important to encourage urban development near
jobs, but in a balanced manner that does not eliminate affordable
housing opportunities for tribal communities. For example, perhaps
Congress could encourage State-allocating agencies to consult with
tribal leaders when developing qualified allocation plans to better
understand the great need in Indian Country. In our experience, many
State-allocating agency staff know very little about life on the
reservation and thus do not take the needs of tribal communities into
account when developing policies and scoring systems. Another positive
step would be for Congress to encourage State-allocating agencies to
consider adding tribal set asides like has been done in the past for
projects with HOPE VI funding, for farm workers, nonprofit sponsors, or
for the elderly. Indian Country is as in need of affordable housing, if
not arguably more so, than these groups. Unfortunately, that need
continues to go unrecognized in many States.
Second, investor interest in Indian Country, while growing
substantially, has always lagged behind interest in other areas of the
country. We have had great success finding investors for our New
Markets Tax Credit-funded projects, but housing tax credit projects
depend on a limited number of investors with a relatively small
appetite. We believe much of this stems from a reluctance of big banks
to invest outside of their Community Reinvestment Act (CRA) footprint.
While this CRA-created market distortion is a problem for all of rural
America and results in lower pricing for their projects, it is a
particular problem for Indian Country given that many reservations are
a many-hours drive from the nearest bank. Indian Country is largely
unbanked and as a result too few commercial banks see Indian Country as
a desirable CRA investment opportunity.
Some modest changes to the way the CRA is administered could result
in millions more in investments for Indian Country. For example, we
believe regulators could put a greater emphasis on investing in our
neediest communities, tribal communities, and thus encourage banks to
meet their CRA requirements beyond just their immediate footprint.
Perhaps a Gulf Opportunity Zone-type structure could be used to
encourage investment in Indian Country just as recognition was given to
Alabama, Louisiana and Mississippi after Hurricane Katrina. We believe
there are many opportunities to encourage private and public
partnerships in Indian Country along these lines.
Finally, despite the challenges that we still face, the housing tax
credit program is incredibly valuable to Indian Country. Every year the
tax credit industry announces the Charles Edson Award for Excellence in
Affordable Housing. For the first time ever a project in Indian Country
took the top award for rural projects this year. The Colville Indian
Housing Authority's project on Buttercup Lane is a beautifully designed
project intended for eventual tenant ownership. So this project, while
providing very affordable family housing, will also create homeowners.
This is a shining example of what can be done through public private
partnerships and we are thrilled to have played a role in its
development.
I am happy to answer any questions you may have. Thank you.
Additional Material Supplied for the Record
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