[Senate Hearing 114-2]
[From the U.S. Government Publishing Office]




                                                          S. Hrg. 114-2

                   LOAN LEVERAGING IN INDIAN COUNTRY

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



                                HEARING

                               before the

                      
                      COMMITTEE ON INDIAN AFFAIRS
                      
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 4, 2015

                               __________

         Printed for the use of the Committee on Indian Affairs


                                     ______
                                     
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                      COMMITTEE ON INDIAN AFFAIRS

                    JOHN BARRASSO, Wyoming, Chairman
                   JON TESTER, Montana, Vice Chairman
JOHN McCAIN, Arizona                 MARIA CANTWELL, Washington
LISA MURKOWSKI, Alaska               TOM UDALL, New Mexico
JOHN HOEVEN, North Dakota            AL FRANKEN, Minnesota
JAMES LANKFORD, Oklahoma             BRIAN SCHATZ, Hawaii
STEVE DAINES, Montana                HEIDI HEITKAMP, North Dakota
MIKE CRAPO, Idaho
JERRY MORAN, Kansas
     T. Michael Andrews, Majority Staff Director and Chief Counsel
       Anthony Walters, Minority Staff Director and Chief Counsel
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 4, 2015.................................     1
Statement of Senator Barrasso....................................     1
Statement of Senator Daines......................................     3
Statement of Senator Franken.....................................     2
Statement of Senator Heitkamp....................................    30
Statement of Senator Lankford....................................    35
Statement of Senator Tester......................................     2

                               Witnesses

Difuntorum, Sami Jo, Chairwoman, National American Indian Housing 

  Council........................................................     4
    Prepared statement...........................................     5
Gauthier, Robert, Administrator, United Native American Housing 
  Association....................................................    23
    Prepared statement...........................................    24
Gore, Carol, President/CEO, Cook Inlet Housing Authority.........    13
    Prepared statement...........................................    14

 
                   LOAN LEVERAGING IN INDIAN COUNTRY

                              ----------                              


                      WEDNESDAY, FEBRUARY 4, 2015


                                       U.S. Senate,
                               Committee on Indian Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:30 p.m. in room 
628, Dirksen Senate Office Building, Hon. John Barrasso, 
Chairman of the Committee, presiding.

           OPENING STATEMENT OF HON. JOHN BARRASSO, 
                   U.S. SENATOR FROM WYOMING

    The Chairman. I call the hearing to order.
    We are moving along because there may be votes a little bit 
later into the procedure so we will now begin the Committee's 
oversight hearing on loan leveraging in Indian Country.
    One of the most significant issues in Indian Country is the 
need to access capital. Without capital, tackling challenges in 
Indian Country is difficult. Today we will discuss accessing 
capital for housing.
    Housing is crucial to establish stable homes and to empower 
Indian people. The National American Indian Housing Council 
estimates there is a need for about 250,000 new housing units 
throughout Indian Country.
    The Native American Housing Assistance and Self 
Determination Act has been successful. The success of this 
program NAHASDA is because it has been carried out at the local 
level by the tribes themselves. Tribal participants 
simultaneously expand financial competitiveness while 
addressing housing needs.
    While NAHASDA has been successful, there are still 
opportunities for improvement. These include the opportunity 
for greater participation. Attracting greater tribal 
participation will attract greater investment in Indian 
Country. Today, we will listen to how loan leveraging can be 
improved.
    I want to take this opportunity to thank the many elected 
tribal leaders here in attendance for this important hearing. I 
also want to recognize an old friend, Patrick Goggles, the 
Executive Director of the Northern Arapaho Housing Authority, 
who is in attendance today and whom I served with, together in 
the Wyoming legislature.
    First, I want to recognize the Vice Chairman for his 
statement.

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. I want to thank the Chairman for holding 
this hearing today.
    This afternoon, the Committee will examine loan leveraging 
in Indian Country. I look forward to hearing from our witnesses 
about the numerous challenges we face in addressing Indian 
housing and specifically issues regarding home ownership.
    The housing needs of Indian Country are great. American 
Indians currently comprise 8 percent of the country's homeless 
population--8 percent. They make up 1 percent of the general 
population.
    Nearly 46 percent of American Indians live in overcrowded 
conditions and over 25 percent live in housing units that have 
severe structural needs. There are ways we can help, by 
reauthorizing Federal programs that are aimed at improving the 
immense housing needs across our Indian communities.
    First and foremost, we need to move forward on a NAHASDA 
bill. I look forward to working with Chairman Barrasso on doing 
just that.
    Timely with this hearing, we need to reauthorize Section 
184 of the Indian Home Loan Guarantee Program. Home ownership 
in Indian Country is something that we need to pursue 
vigorously to help with the housing crisis we are facing on our 
Indian reservations.
    Section 184 loans are a piece of this puzzle. I look 
forward to hearing how the current structure of the program is 
working in Indian Country as well as where limitations might 
exist.
    Before we begin, I want to welcome the third witness we are 
going to will hear from today, a chap by the name of Bob 
Gauthier from my home State of Montana. Bob comes by way of the 
Flathead Indian Reservation and has a long and distinguished 
career in Indian housing, including currently serving on the 
Montana Board of Housing.
    Bob is one of the good guys in Montana and we thank you for 
being here today, Bob.
    Is Leif Holmgren in the audience? Leif is from Northern 
Cheyenne and is also involved in Indian housing.
    Mr. Chairman, I look forward to the testimony from all the 
panelists today and thank you for holding this hearing.
    The Chairman. Thank you, Senator Tester.
    Do any other members have an opening statement? Senator 
Franken.

                 STATEMENT OF HON. AL FRANKEN, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Franken. May I, because we may have votes?
    I want to thank you, Mr. Chairman, for bringing attention 
to the important issues of housing on tribal lands and thank 
our witnesses for coming today.
    Loan leveraging may not sound exciting but for tribes with 
limited resources to address their housing needs it is 
essential. The Native American Housing and Self Determination 
Act, NAHASDA, is vital to enabling American Indians and tribes 
to meet their particular housing needs.
    I look forward to working with the Chairman, the Ranking 
Member and other members of this Committee to reauthorize 
NAHASDA. I hope we can make improvements to these programs in 
the process.
    At the end of the day, we can design the perfect programs. 
We can cut out all the waste and tinker with them until they 
are just right, but that will not make a significant difference 
unless we also fund them.
    This is the case not only in housing but also in education, 
law enforcement, health care and just about every issue before 
this Committee. Not only have we failed to fund these programs 
sufficiently, but witness testimonies before us today show that 
the purchasing power of these programs is actually shrinking. 
You cannot sugar coat it, we are failing these communities.
    In housing, that failure is particularly stark. When Indian 
Country lacks quality, affordable housing, it compounds other 
problems that tribes face. Poor housing leads to worse health 
outcomes, worse educational outcomes and on and on.
    We need a sustained investment in housing if we want to see 
real progress. I hope today's hearing moves us closer to that 
sustained investment. I look forward to hearing from our 
witnesses.
    Thank you.
    The Chairman. Thank you, Senator Franken.
    Does anyone else want to make an opening statement? If not, 
we have three witnesses today: Ms. Sami Jo Difuntorum, who is 
here from the National American Indian Housing Council; 
President Carol Gore, from the Cook Inlet Housing Authority in 
Anchorage, Alaska; and Mr. Robert Gauthier from the United 
Native American Housing Association in Ronan, Montana.
    Senator Daines, would you like to say anything by way of 
introduction?

                STATEMENT OF HON. STEVE DAINES, 
                   U.S. SENATOR FROM MONTANA

    Senator Daines. I certainly echo Senator Tester's comments. 
Bob, from Ronan, we are very glad to have you here.
    You come from a beautiful part of our State. In fact, my 
son played in Class B football and we came up and played on 
your very nice football field a couple years ago. It is nice 
you brought a cheering section, even the Norwegian from the 
Northern Cheyenne. We are glad to have you all here.
    Thank you for your contribution to our community, to Indian 
Country as a whole and for providing perspective today. I look 
forward to your testimony.
    The Chairman. Thank you, Senator Daines.
    I will just tell you that Lamar Alexander wrote a book 
called The Little Plaid Book. He said if you want a standing 
ovation when you give a speech, you had better have five 
friends in the front row who are ready to stand up and that 
leads the rest of the crowd to join as well. Thanks for 
bringing your friends.
    We are going to move along with the testimony. Members may 
submit written questions to the witnesses as well. Your full 
written testimony will be made a part of the official hearing 
record. Please keep your statements to five minutes so that we 
may have time for questions. I look forward to hearing the 
testimony from each of you.
    Ms. Difuntorum, please proceed.

STATEMENT OF SAMI JO DIFUNTORUM, CHAIRWOMAN, NATIONAL AMERICAN 
                     INDIAN HOUSING COUNCIL

    Ms. Difuntorum. Thank you.
    My name is Sami Jo Difuntorum, and I am a member of the 
Kwekaeke Band of Shasta Indians from northern California. My 
family comes from the Upper Klamath River Canyon.
    I am also the Housing Director for the Confederated Tribes 
of the Siletz Indians in Oregon and Chairwoman of the National 
American Housing Council. I appear before you today as the 
Chairwoman of the Housing Council.
    On behalf of the NAIHC, I would first like to congratulate 
you, Senator Barrasso, on becoming chairman of this Committee, 
to thank you, Senator Tester for your hard work and 
distinguished service as immediate past chairman of the 
Committee, and each and every one of your for your commitment 
to Indian people and Indian Country. Our work doesn't get done 
without you.
    There are 566 federally-recognized Indian tribes in the 
United States. Tribal communities suffer from the highest 
unemployment and poverty rates, the worst health, poor 
education options, and the most substandard housing in the 
country.
    While Indian Country has made real strides in economic 
growth and development in the last thirty years, the truth is 
that in 2015, poverty in America continues to have an Indian 
face.
    I would like you to look at the pictures here on the 
easels. This is an example of a successful leveraging program 
at Siletz. You could use Title VI to leverage five times your 
annual allocation.
    Our allocation for the Indian Housing Block Grant is $3.8 
million. Leveraging that five times we were able to borrow $18 
million; we borrowed $1.4 million and were able to build five 
homes, infrastructure and roads in a community in Oregon. Not 
all tribes have the ability to leverage their funds.
    Title VI for us is a great program. There are a lot of 
minimally funded tribes that receive $50,000 to $100,000 per 
year. With limited leveraging of five times their allocation, 
that can be from $250,000 to $500,000. I think that is a 
challenge for small tribes trying to access the Title VI Loan 
Guarantee Program.
    We have had great success with it. Without the Title VI 
Loan Guarantee Program, it would have taken us seven years to 
build the development that we had. We would have to have saved 
$200,000 for a seven year period. Leveraging the grant allowed 
us to build it.
    We applied in July 2013 and our families moved in the 
following year. It was a very fluid process and a very 
successful one. We would encourage you to continue the Title VI 
program, increase the lending authority and the loan guarantee 
authority for HUD.
    Thank you for the opportunity to speak today.
    [The prepared statement of Ms. Difuntorum follows:]

Prepared Statement of Sami Jo Difuntorum, Chairwoman, National American 
                         Indian Housing Council
    Good afternoon. On behalf of the National American Indian Housing 
Council (NAIHC), I would first like to congratulate you Senator 
Barrasso on becoming Chairman of this Committee, and to thank you 
Senator Tester for your hard work and distinguished service as 
immediate past Chairman. The issues that Indian Country care most about 
continue to rest in good hands with you and the other distinguished men 
and women on the Committee.
    My name is Sami Jo Difuntorum, and I am an enrolled member of the 
Kwekaeke Band of Shasta Indians which is located in northern 
California. I am the Executive Director of the Siletz Tribal Housing 
Department in Oregon, and I appear before you today in my capacity as 
Chairwoman of the NAIHC. As many of you know, the NAIHC is in its fifth 
decade assisting American Indian and Alaska Native communities in 
meeting the housing needs of their members. Thank you for the 
opportunity to appear before you today to testify about how tribal 
communities are using federal loan guarantees to leverage scarce 
federal funds to build housing and related infrastructure for their 
members.
An Economic Profile of Indian Country
    There are 566 federally-recognized Indian tribes in the United 
States. Tribal communities suffer the highest unemployment and poverty 
rates, the worst health, poor education options, and the most 
substandard housing in the country.
    While Indian Country has made real strides in economic growth and 
development in the last thirty years, the sad truth is that in 2015, 
poverty in America continues to have an Indian face.
    Some tribes lucky enough to be located near metropolitan areas with 
sizeable populations, have developed successful gaming operations. 
Nationally, these tribes generate some $28 billion in revenues and 
employ tens of thousands of people, Indian and non-Indian alike.
    Other tribes are blessed with energy and natural resources, and 
have chosen to develop these resources for the benefit of their tribal 
members.
    Far too many tribes, however, have economies and households that 
are dependent in large measure on federal programs and services 
provided by the Bureau of Indian Affairs, the Indian Health Service, 
the Department of Housing and Urban Development (HUD), and others.
Housing and Related Infrastructure and Community Development
    In the mid-1990s, a broad consensus emerged in Congress and the 
executive branch that most programs and services provided by the 
federal government would be more efficiently administered and more 
effective in results, if they were consolidated and block-granted to 
states and Indian tribes.
    In 1996, a Republican Congress passed and President Clinton signed, 
the Native American Housing Assistance and Self-Determination Act 
(``NAHASDA,'' 25 U.S.C. 4101) to block-grant housing resources (and 
delegate related decisionmaking) to Indian tribes for their low-income 
members.
    As an aside, authorization for the NAHASDA has expired and again 
this year bi-partisan legislation has been introduced to reauthorize 
and improve the statute. The bill, H.R.360, was introduced by Rep. 
Steve Pearce (R-NM) and has thirteen original co-sponsors, including 
six Republicans and seven Democrats. The NAIHC fully supports this bill 
and is hopeful Congress will pass and send this important legislation 
to the President early this year.
    In the years since the NAHASDA was enacted, there is no question 
that more housing stock is being built and more housing units are being 
redeveloped and renovated using NAHASDA's Indian Housing Block Grant 
(IHBG) funds than under the previous regime.
    Since fiscal year 1998, appropriated funding under NAHASDA has 
averaged $650 million. NAIHC members and most outside observers agree 
that this figure is woefully inadequate to address the housing needs of 
low-income Indian people. These appropriated funds are complemented by 
important guaranteed loan programs: (1) the Section 184 Loan Guarantee 
Program, and (2) the Title VI Tribal Housing Activities Loan Guarantee 
Program.
The Section 184 Loan Guarantee Program
    The Section 184 Loan Guarantee Program (``184 Program'') was 
designed to provide American Indians and Alaska Natives access to 
mortgage financing to purchase single-family homes as primary 
residences. Historically, such financing has proved difficult to obtain 
for several reasons: trust lands may not be used as loan collateral, a 
lack of employment and, generally, tribal weak economies.
    By providing a 100 percent federal guarantee to repay the unpaid 
principal and accrued interest on mortgage loans to tribal members, the 
184 Program encourages bank participation and helps boost homeownership 
in tribal communities. A down payment of 2.25 percent is required on 
loans over $50,000, with a 1.2 percent down payment on loans under 
$50,000.
    Loans guaranteed under the 184 Program can be used to:

        1. Buy an existing home;
        2. Build a new home;
        3. Rehabilitate a home;
        4. Purchase and rehabilitate a home; or
        5. Re-finance a home.

    Participation in the 184 Program depends on being demonstrably 
enrolled in a federallyrecognized tribe, and HUD has developed a 
network of national and local banks that take part in the Program. 
According to HUD, as of September 2014, there were 25,748 loans 
guaranteed by the Program, totaling $4.2 billion. \1\ See Attachment 
A--``Loans Guaranteed with Section 184.''
---------------------------------------------------------------------------
    \1\ U.S. Department of Housing and Urban Development. (2014). Loans 
Guaranteed With Section 184 [Data Map]. Retrieved from http://
portal.hud.gov/hudportal/documents/huddoc?id=DOC_8761.pdf
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    In addition, the 184 Program can be used in forty states, with 
eligibility in thirteen of those states limited to selected counties: 
Alabama, Arkansas, Connecticut, Iowa, Illinois, Louisiana, Missouri, 
Mississippi, Nebraska, New York, Rhode Island, Texas and Wyoming. \2\ 
See Attachment B--``Section 184 Eligible Areas by State.''
---------------------------------------------------------------------------
    \2\ U.S. Department of Housing and Urban Development. (2012). 
Section 184 Eligible Areas By State [Data Map]. Retrieved from http://
portal.hud.gov/hudportal/documents/huddoc?id=DOC_8762.pdf
---------------------------------------------------------------------------
The Title VI Tribal Housing Activities Loan Guarantee Program
    Another tool in the tribal toolbox is the Title VI Tribal Housing 
Activities Loan Guarantee Program (the ``Title VI Program''), which is 
designed to assist IHBG recipients in financing their affordable 
housing projects. Individual tribal members are not eligible for Title 
VI loan guarantees.
    Backed by a federal guarantee, the Title VI Program is used by many 
tribes to leverage their IHBG by pledging future grant funds as 
security for repayment of the loan.
    Much like the 184 Program, the Title VI Program is a tri-partite 
arrangement involving an Indian tribe, a private bank, and the federal 
government. Under this Program, the tribe is required to repay the 
loan, but if it defaults on the repayment agreement, HUD will repay the 
lender and seek reimbursement from the tribe in the form of future IHBG 
funds.
    To be eligible for the Title VI Program, would-be borrowers must be 
a federally-recognized Indian tribe that receives IHBG funds, or a 
tribally-designated housing entity (TDHE) duly authorized by a 
federally-recognized tribe to commit to financial obligations and to 
pledge IHBG funds to secure those obligations.
    Title VI loans may be used to further a recipient's ``affordable 
housing activities,'' which is a term defined in NAHASDA at 25 U.S.C. 
4132 as:

        1. Indian housing assistance;
        2. Housing development;
        3. Housing services;
        4. Housing management services;
        5. Crime prevention and safety activities; and
        6. Model activities subject to HUD's approval.

    HUD receives an annual appropriation to cover the cost of the Title 
VI Program. In recent years, Congress has appropriated $2 million per 
year to cover these costs. The appropriators also place a maximum 
dollar limit on the loans HUD can guarantee. In fiscal year 2013, for 
example, HUD was authorized to guarantee up to $18 million in Title VI 
loans.
    As of June 2013, HUD had guaranteed seventy-four loans totaling 
$190 million since the Program was begun. The leveraging made possible 
with a Title VI loan means IHBG recipients may borrow up to five times 
the need portion of their block grant allocation. It is especially 
helpful to small tribes that receive modest IHBG allocations.
    In order to demonstrate the real-world value of these two loan 
guarantee programs, I offer the following examples involving the 
Confederated Tribes of Siletz Indians in Oregon, the Lummi Nation in 
Washington State, and the Susanville Indian Rancheria in California.
    The first example involves the Confederated Tribes of Siletz 
Indians (CTSI) in Oregon.
    The CTSI is a federally-recognized tribe located in coastal Oregon. 
The tribal membership is 4,984 members, yet they have only 214 units of 
affordable housing for low-income tribal members. Their waiting list 
for low-income housing includes over 200 eligible households.
    The CTSI receives an annual IHBG allocation of approximately $3.8 
million. During the Tribe's annual planning meeting, the CTSI Tribal 
Council identified the need to develop more homeownership programs and 
opportunities for low-income members. As a result, the CTSI applied for 
a Title VI loan guarantee to build Phase 2 of the subdivision known as 
Tillamook. The amount provided through the IHBG is not sufficient to 
both provide diverse housing services and construct new homes.
    The CTSI borrowed $1.4 million to complete on-site infrastructure 
that will accommodate twenty-one single family homes, construct five 
energy efficient units for first-time homebuyers, and build a 
connecting road within the subdivision. As more families qualify, the 
only funds that will be needed are for actual home construction because 
they now have the master plan in place, with roads and infrastructure 
complete.
    The HUD budget allocates $200,000 IHBG funds annually for on-
reservation new construction, and ordinarily they would have been 
obliged to save IHBG funds for seven years to complete this work.
    But the Tribe did not have to do this, because the Title VI 
Program's guarantee enabled the CSTI to borrow and repay the loan with 
IHBG funds over an eleven year period.
    The timeline for this was also short: the CTSI submitted a loan 
application in July 2013 and Phase 2 homes were built and occupied by 
September 2014.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The second example involves the Lummi Nation of Washington State.
    At Lummi, there are some 4,200 enrolled members, with 2,400 
enrolled members living on the reservation. To address the housing 
need, the Lummi Nation adopted a 10-Year Housing Plan that proposes to 
build 442 dwelling units (330 single-family homes and 112 apartments). 
The projected cost for this plan is $79 million--an average of $8 
million per year. The Lummi Nation Housing Authority (LNHA) receives an 
annual IHBG allocation of $2.8 million.
    To fill the $5.2 million gap in funding, the LNHA uses IHBG funds 
to leverage additional funds using the Title VI Program. The following 
are samples of the resources leveraged with IHBG funds:

   HUD's Indian Community Development Block Grant (ICDBG) 
        Program--LNHA has successfully competed for ICDBG grants for 
        six consecutive years for a total of $3 million, used to build 
        housing-related physical infrastructure.

   Department of Labor's Youthbuild Program--The Youthbuild 
        Program has been used to assist in providing facilities for 
        LNHA's housing projects and to train tribal youth. LNHA has 
        successfully competed for three Youthbuild grants totaling $2.2 
        million, which has been used on its development projects.

   Northwest Indian College--The Northwest Indian College 
        donated land valued at $1.2 million for the Kwina Village 
        project.

   HUD's Title VI Loans--The LNHA is in the final stages of 
        closing a $7.0 million Title VI loan. $5.8 million will be used 
        on the Turkey Shoot project, and the balance of $1.2 million 
        for LNHA's administrative building.

   Lummi Nation Business Council--The Lummi Nation is 
        contributing $500,000 to assist the LNHA with the Title VI debt 
        service.

    Over the next two years, the LNHA will be constructing basic 
infrastructure, new apartments, triand four-plexes, single-family 
homes, and a variety of community and recreational support facilities 
aimed at addressing critical tribal needs in the areas of rental and 
transformational housing, and low-income homeownership.
    Currently, the LNHA is finishing construction of a 52-unit addition 
to Kwina Village (124 total units) and a 1,200 square foot centralized 
laundry facility to serve the entire Kwina Village neighborhood. It is 
centrally located near the Lummi Nation's administration center, Tribal 
court, health clinic, police, and Northwest Indian College. Small one- 
and two-bedroom apartment units fill the need for housing young 
families attending the college. Over 75 percent of the initial $10 
million project was funded with leveraged sources from HUD, Northwest 
Indian College, Department of Labor, and the American Recovery and 
Reinvestment Act.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The Lummi Nation also recently completed the first sixteen single-
family homeownership units constructed on the 150-lot Mackenzie Master 
Plan for low-income tribal members who qualify for the 184 Program. 
Thirty lots that are fully-buildable with full street improvements, 
sidewalks, utilities, lighting, storm systems, and fire protection, 
were constructed in the past few years with ICDBG and IHBG funds.
    LNHA was just recently awarded its sixth competitive ICDBG grant by 
HUD to construct eighteen additional lots in the Mackenzie Neighborhood 
in accordance with the Mackenzie Master Plan.
    The Turkey Shoot development will be a 55-unit mixed-income 
development with single and two-story tri-plexes, four-plexes, and 
single-family homes within an integrated neighborhood supported by 
community and recreational amenities. Families undergoing transitional 
changes will be provided with housing units specially designed to 
accommodate their unique needs, as well as promote neighbor and 
neighborhood-building activities.
    Lummi is also providing housing units and ``wrap-around'' services 
to families in transition. There will be a resident's center that will 
include office, clinic, and meeting space for tribal service providers 
that support transitional families with case management and other 
services. By having the service providers housed in the neighborhood, 
there will be ease of access to services and consistent support for the 
families which the tribe believes will ensure that no one falls through 
the cracks.
    The nearly complete infrastructure of roadways and utilities was 
funded by the 2013 ICDBG grant award, IHBG funding, and LNHA proceeds 
of sale. Construction of the buildings will be accomplished utilizing 
(for the first time) a Title VI low-interest development loan in the 
amount of $5.8 million, and single-family homes will be constructed by 
tribal families who qualify for 184 Program loans.
    In addition to the residential structures, resident's center, and 
recreational amenities at Turkey Shoot, the LNHA will use a Title VI 
loan to finance a new office building at Kwina Village in the amount of 
$1.2 million.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The third example involves the Susanville Indian Rancheria (SIR) of 
California.
    The SIR is a small tribe located in Susanville, Lassen County, 
California, which is on the north eastern border of California, 80 
miles from Reno, Nevada. The SIR is comprised of 1,091 members, 378 of 
whom live in Lassen County, and the majority of those living on the 
Rancheria itself.
    The SIR consists of four northern California tribes: the Maidu 
Tribe, the Paiute Tribe, the Washoe Tribe, and the Pit River Tribe.
    The SIR has designated the Susanville Indian Rancheria Housing 
Authority (``SIRHA'') as its Tribally Designated Housing Entity, which 
constructs new units and maintains current assisted stock units using 
primarily IHBG and ICDBG funds.
    The SIRHA waiting list has 15 to 30 households of low-income 
status; tribal members who need affordable housing. The list would 
likely be longer if they had more housing stock available.
    The SIRHA is currently implementing a pilot project using the 184 
Program to finance unit construction. This will assist a tribal member 
who wishes to purchase a home on the Rancheria but does not qualify for 
assistance due to income limitations of the IHBG Program.
    The loan will cover the full construction cost of the unit and the 
tribal member will assume the loan once construction is complete.
    The governing body of the SIR sees this as a benefit due to the 
difficulties that arise when a tribal member wishes to live on the 
Rancheria but does not meet the income limitation of NAHASDA. The SIRHA 
has no product to offer many working families aside from a 184 Program.
    As a result, for the SIRHA, leveraging non-program funds is the 
only way to make this project possible and allow for the tribal member 
to purchase a home on the Rancheria. The SIRHA sees this as a critical 
first step in opening the door to other members in similar 
circumstances.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    The Chairman. Thank you very much.
    Ms. Gore.

  STATEMENT OF CAROL GORE, PRESIDENT/CEO, COOK INLET HOUSING 
                           AUTHORITY

    Good afternoon.
    Ms. Gore. Chairman Barrasso, Vice Chairman Tester and 
distinguished members of the Senate Committee on Indian 
Affairs, I want to thank you for the opportunity to appear 
today as the Committee examines loan leveraging in Indian 
Country.
    My written statement includes detailed leveraging examples 
from my home State of Alaska and I appreciate that they will be 
included in the record.
    My name is Carol Gore. I am the granddaughter of Alexandria 
Cooper, an Alaskan of Aleut descent, an enrolled member of the 
Ninilchik Village Tribe, and a shareholder of Cook Inlet 
Region, Inc., an Alaska Native Claims Settlement Act Regional 
Corporation.
    For fifteen years, I have served as the President and CEO 
of Cook Inlet Housing Authority, the tribally designated 
housing entity for Alaska's Cook Inlet Region. We serve an area 
the size of Switzerland that is home to tens of thousands of 
Alaska Native and American Indian people.
    The enactment of NAHASDA in 1996 profoundly improved the 
ability of tribes to address the housing needs of our low 
income families. For the first time ever, tribal housing 
providers were able to address our specific housing needs using 
strategies that are effective on our own tribal lands.
    Using the Indian Housing Block Grant as the initial funding 
source, tribal communities also began to attract other 
investment. In my home State of Alaska, tribes are also working 
together, pooling funding and resources to leverage capital and 
improve our capacity to bring outcomes beyond just building 
housing.
    Through collaboration, we achieve economies of scale and 
bring efficiencies to our collective work. We are building 
homes that improve sustainability for communities and catalyze 
measurable social, educational and economic improvements.
    Tribes in my home State of Alaska have leveraged IHBG 
funding in a variety of ways. TNHA Regional Housing Authority, 
which serves the northernmost reaches of Alaska, developed an 
innovative model of sustainable northern housing that is 
designed to last 100 years and uses less than a quarter of the 
heating fuel needed for typical rural Alaskan homes.
    To get there, they leveraged non-Federal funding at a ratio 
of more than four to one including a commercial loan secured by 
a Title VI loan guarantee. Thirty such homes are already 
complete.
    At Cook Inlet Housing, we used the HUD 184 Loan Guarantee 
Program to build seven four-plex family rental buildings in a 
community called Eagle River. The 184 Loan Guarantee Program is 
unique because it can be delivered as a single, close product, 
eliminating the need to procure separate construction financing 
and reducing the overall cost of funds.
    Additionally, the required down payment 2.25 percent is 
achievable for both families and tribal entities that may have 
more limited financial capacity. The Native American CDFI 
Assistance Program, commonly called NACA, has emerged as 
another critical leveraging tool in Indian Country.
    In Alaska, Cook Inlet Housing created a Native CDFI which 
deploys NACA assistance in a variety of strategic ways to help 
American Indian and Alaska Native families achieve home 
ownership. While not a loan product, tribes able to secure low 
income housing, tax credit awards can sell those credits to 
private investors to generate equity for the development of 
affordable housing.
    In remote Hooper Bay in western Alaska, AVCP Regional 
Housing Authority invited Cook Inlet Housing to partner with 
them to develop 19 new units of affordable housing. Cook Inlet 
Housing provided tax credit experience while AVCP provided 
knowledge of local design and construction techniques. Private 
equity from the sale of tax credits provided almost 60 percent 
of the project funding.
    Equally important were efforts to leverage our mutual 
capacity to develop housing that neither organization had the 
expertise to build on its own.
    As these examples demonstrate, many tribal housing 
providers are leveraging scarce NAHASDA resources to secure 
other critical sources of funding. Tribes and tribal housing 
providers are proud of the outcomes we are producing for our 
people and communities.
    We know we have more work to do if we are ever to achieve 
equal economic and housing opportunities for Native people and 
communities. We embrace that challenge and most respectfully 
ask for Congress' continued support.
    We extend our appreciation to the Chairman, the Vice 
Chairman and members of this Committee for the opportunity to 
testify.
    [The prepared statement of Ms. Gore follows:]

  Prepared Statement of Carol Gore, President/CEO, Cook Inlet Housing 
                               Authority
    Good afternoon Chairman Barrasso, Vice-Chairman Tester, and 
distinguished members of the Senate Committee on Indian Affairs. Thank 
you for the opportunity to appear today as the Committee examines loan 
leveraging in Indian Country.
    My name is Carol Gore. I am an Alaskan of Aleut descent, an 
enrolled member of the Ninilchik Village Tribe, and a shareholder of 
Cook Inlet Region, Inc., an Alaska Native Claims Settlement Act 
regional corporation. For fifteen years, I have served as the President 
and CEO of Cook Inlet Housing Authority, the Tribally Designated 
Housing Entity for Alaska's Cook Inlet Region.
    Cook Inlet Housing is responsible for serving Alaska Native and 
American Indian individuals living in an area of Southcentral Alaska 
roughly the size of Switzerland. These lands are home to tens of 
thousands of Alaska Native and American Indian people, all too many of 
whom struggle to find safe, sanitary housing they can afford. 
Unfortunately, the severity of the need for housing among Native 
families is ubiquitous not just in the communities we serve and the 
remainder of Alaska, but throughout Indian Country.
    Passed in 1996, the Native American Housing Assistance and Self-
Determination Act gave tribes access to an innovative resource that 
revolutionized the delivery of housing assistance to low-income 
American Indian and Alaska Native families--the Indian Housing Block 
Grant (IHBG). The IHBG enabled tribes to increase housing production 
and serve more of our people by providing critical funding and allowing 
decisionmaking to respond to local needs and cultural differences. 
However, housing needs in Indian Country are simply too significant for 
lasting progress to be made without the investment of additional 
resources. Many tribal housing providers have become skilled at 
leveraging their IHBG funds to secure those additional resources, 
including loans from a variety of sources. In tribal communities, IHBG 
funds are most often the first funds that provide the opportunity for 
critical leveraging and meaningful investment. It is my privilege today 
to share with the Committee some of the strategies tribal housing 
providers employ to provide the highest possible return on investment 
for the IHBG program.
The Native American Housing Assistance and Self-Determination Act 
        (NAHASDA)
    Prior to NAHASDA, housing assistance for American Indians and 
Alaska Natives was provided by various programs under the Housing Act 
of 1937 and other legislation. While these programs provided a broad 
range of assistance, they were administratively cumbersome and 
inefficient when used in tribal communities. They required separate 
applications and program administration, and eligibility requirements 
differed from one program to the next. The programs were an extension 
of urban-oriented housing programs and failed to recognize the unique 
social, cultural, and economic needs of American Indian and Alaska 
Native communities.
    In 1994, HUD articulated its intent to strengthen the unique 
government-to-government relationship between the United States and 
federally recognized Native American tribes and Alaska Native villages. 
This created momentum toward the development of NAHASDA, which was 
introduced in the U.S. House of Representatives by Rep. Rick Lazio. In 
his remarks, Rep. Lazio explained:

         Tribal governments and housing authorities should also have 
        the ability and responsibility to strategically plan their own 
        communities' development, focusing on the long-term health of 
        the community and the results of their work, not over burdened 
        by excessive regulation. Providing the maximum amount of 
        flexibility in the use of housing dollars, within strict 
        accountability standards, is not only a further affirmation of 
        the self-determination of tribes, it allows for innovation and 
        local problem-solving capabilities that are crucial to the 
        success of any community-based strategy.

    Congress enacted NAHASDA in 1996, establishing an Indian Housing 
Block Grant program specifically for the benefit of American Indians 
and Alaska Natives. NAHASDA represents an acknowledgement of the unique 
relationship between the Federal Government and Indian tribes. Keeping 
with the Federal Government's trust obligation to promote the wellbeing 
of Native peoples, it for the first time addressed the distinct 
affordable housing needs of low-income American Indians and Alaska 
Natives. NAHASDA authorizes tribes to address their specific housing 
needs using the strategies that are most effective in their tribal 
communities, rather than strategies mandated by officials working in 
offices thousands of miles away.
    NAHASDA has had a profoundly positive impact in American Indian and 
Alaska Native communities. Recipients have used NAHASDA to build, 
acquire, or rehabilitate more than 110,000 homes. We have developed new 
housing; modernized, weatherized, and rehabilitated old homes; provided 
rental assistance; created home loan programs; delivered housing and 
financial literacy counseling; offered down payment assistance; 
prevented crime; and revitalized blighted communities. Support for 
NAHASDA is strong throughout Indian Country. According to the 
Government Accountability Office, 89 percent of tribal housing 
providers hold positive views toward the effectiveness of NAHASDA.
    Like so many tribes and tribally-designated housing entities, Cook 
Inlet Housing has seized the opportunities NAHASDA presents to serve 
American Indian and Alaska Native people in innovative and effective 
ways. Within our service area is the community of Mountain View, which 
has one of the highest concentrations of Native people in the State of 
Alaska. In the early 2000s, Mountain View was characterized by blight, 
crime, and economic stagnation. It was a community of last resort. 
Dilapidated multiplexes run by absentee landlords dominated the housing 
stock, and the main road through the community ran through a sleepy 
commercial center that smacked of disinvestment. Windows were boarded, 
and discarded liquor bottles gathered on vacant, weed-choked yards.


    Working with residents, local government, the non-profit community, 
and state and federal policy makers, Cook Inlet Housing Authority 
helped develop a strategy to draw investment back into the community. 
Leveraging its NAHASDA funding to secure investments from numerous 
local, state, federal, and private sources, we began to acquire the 
``ugliest of the ugly'' housing stock in Mountain View. We purchased 
properties that had been abandoned and homes that had burned, 
collapsed, or been boarded up. We acquired buildings identified by code 
enforcement and the fire department as threats to community safety. We 
bought sites that were contaminated and plagued by hazardous materials 
like asbestos and lead-based paint. And then we tore them down.
    Where 143 blighted structures previously stood, discouraging 
investment in a largely Alaska Native community, now stand 349 new 
affordable homes. Contaminated properties have been remediated. Vacancy 
rates have decreased, and property values have risen throughout the 
community. Today, residents remain in the neighborhood longer--by 
choice.
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    Housing is a foundational investment; by improving housing stock 
and collaborating with a wide array of public, private, and non-profit 
partners, Cook Inlet Housing has been able to measure other social, 
educational, and economic improvements in Mountain View. For example, 
business is booming. Two new dentistry offices have opened in the 
neighborhood, as have a credit union, a telecommunications store, and a 
new fast food restaurant. A health clinic has announced plans to open a 
community office. Additionally, Cook Inlet Housing developed two mixed-
use commercial/residential buildings in Mountain View in an effort to 
provide incubator office and retail space that would attract businesses 
to the neighborhood. Every one of the six commercial spaces we built 
has been leased. Even education in the neighborhood has shown 
measurable improvements. Eighth grade test scores are up, as is 
attendance at parent-teacher conferences. Meanwhile, school transfer 
rates have declined.
    For our work in Mountain View, Cook Inlet Housing received the 2014 
HUD Secretary's Opportunity and Empowerment Award. Presented jointly by 
HUD and American Planning Association, the award honors excellence in 
community planning resulting in measurable benefits in terms of 
increased economic development, employment, education, or housing 
choice and mobility for low- and moderate-income residents.
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    Cook Inlet Housing's work in Anchorage's Mountain View neighborhood 
is but one example of the way in which tribes are using NAHASDA to 
address tribal housing needs in innovative and pioneering ways. Other 
tribes are finding ways to design and build culturally, 
environmentally, and economically sensitive housing that is improving 
life for many thousands of American Indian and Alaska Native families.
Fiscal Challenges
    Tightening federal budgets have made it more challenging for Indian 
Housing providers to find the resources necessary to improve housing 
conditions in tribal communities. In FY 2015, the Indian Housing Block 
Grant appropriation is just 1.5 percent larger than the amount Congress 
appropriated fourteen years ago, in 2001. Due to inflation, NAHASDA's 
purchasing power has been reduced by nearly half since the first Indian 
Housing Block Grants were awarded in 1998. For example, in the remote 
village of Seldovia, accessible only by air or sea, Cook Inlet Housing 
owns and operates 18 units of elder housing. Income among Native people 
in traditional communities is low, yet expenses in isolated Seldovia 
are very high. Utilities alone amount to nearly $5,000 per household 
per year, primarily due to the cost of heating oil. The combination of 
low household income and high operating expenses makes it very 
difficult to develop housing delivery models that are financially 
sustainable for both Indian Housing providers and the families we 
serve. However, there are tools available, which tribal housing 
organizations have used with great success.
Title VI Loan Guarantee Program
    Title VI of NAHASDA authorizes HUD to guarantee up to 95 percent of 
a loan made to a NAHASDA recipient for affordable housing activities. 
Borrowers pledge a portion of current and future IHBG funds to secure 
the loan. The guarantee encourages lenders to invest in housing in 
Indian Country, which in turn empowers Indian Housing providers to 
engage in long-term development planning for projects that are larger 
in scale.
    According to HUD, Title VI loans had by 2013 facilitated the 
development of 2,700 housing units and leveraged more than $74 million 
for affordable housing in Indian Country. In Alaska, Interior Regional 
Housing Authority (IRHA) is one of a number of tribes leveraging its 
IHBG funding using Title VI loan guarantees. IRHA is the Tribally 
Designated Housing Entity for 30 Tribes in the Doyon Region of Alaska. 
Over the past eight years, it has obtained ten Title VI loan 
guarantees, leveraging more than $6,000,000 in private financing to 
help build thirty-three affordable homes and complete fifty-four 
rehabilitation projects in remote Alaskan villages.
Section 184 Loan Guarantee Program
    The Section 184 Loan Guarantee Program was created by the Housing 
and Community Development Act of 1992 to address the lack of mortgage 
lending and homeownership in Indian Country. The program offers a loan 
guarantee to private sector lenders who make mortgage loans to eligible 
borrowers, which include American Indian and Alaska Native families and 
individuals, tribes, and Tribally Designated Housing Entities.
    Several characteristics of the Section 184 loan guarantee make it a 
particularly powerful leveraging tool. For example, new construction 
can be financed with a ``single close'' loan that provides permanent 
guaranteed financing before construction begins. This eliminates the 
need to procure separate construction financing, which typically 
carries a high interest rate. Additionally, the required down payment 
(2.25 percent) is achievable for both families and smaller tribal 
entities that may not have the financial capacity to make a large down 
payment. Because there are no income limitations for the 184 program, 
tribes are also able to serve a broader range of families and build 
healthier, more economically diverse communities.
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    In 2014, Cook Inlet Housing completed the Coronado Park Workforce 
Housing project in the community of Eagle River, Alaska (right). The 
28-unit development is comprised of seven new 4-plex buildings. In 
effect, we used $1.3 million in IHBG funding and Section 184 loan 
guarantees to leverage $6.2 million in additional funding, including 
nearly $5 million in HUD 184 debt. The single close allowed us to 
access the HUD 184 debt during construction in lieu of conventional 
construction financing, thereby reducing our cost of funds. In the end, 
the HUD 184 Loan Guarantee Program enabled Cook Inlet Housing to create 
a mixed-income community and increased the number of units we would 
have otherwise been able to produce.
The Native American CDFI Assistance Program
    The Native American CDFI Assistance Program, administered by the 
Treasury Department's Community Development Financial Institutions 
(CDFI) Fund, is another critical leveraging tool in Indian Country. The 
CDFI Fund was established by the Riegle Community Development and 
Regulatory Improvement Act of 1994, as a bipartisan initiative to 
increase economic opportunity and promote community development 
investments for underserved populations and in distressed communities. 
The CDFI Fund achieves these goals in Native communities largely 
through its Native American CDFI Assistance (NACA) program, which 
provides financial assistance, technical assistance, and training to 
Native CDFIs.
    Native CDFIs deploy NACA assistance in a variety of strategic ways 
to help American Indian and Alaska Native families achieve 
homeownership. Some Native CDFIs use NACA funding to deploy non-
traditional second mortgage products that fill the gap between the cost 
of a home and the amount of the loan the first mortgage lender is 
willing to make using its standard underwriting criteria. Others use 
NACA funding to provide down payment or closing cost assistance, which 
reduces the amount of cash a borrower must have on hand to close a 
loan. Providing down payment assistance also helps American Indian and 
Alaska Native families avoid the burden of private mortgage insurance 
(PMI) costs. NACA funding allows Native CDFIs to deploy loan products 
with low, fixed interest rates, long terms, and non-traditional 
underwriting.
    The primary barrier to deploying NACA funds in some tribal 
communities is the requirement that matching funds be provided by 
entities applying for Financial Assistance awards through the NACA 
program. Unfortunately, the amount of first mortgage lending leveraged 
by products like NACA-funded second mortgages does not satisfy the 
matching fund requirement. This fails to recognize the amount of first 
mortgage lending leveraged by the NACA program and for some tribes 
presents an insurmountable barrier to securing and deploying NACA 
funds.
The Low-Income Housing Tax Credit
    The Low-Income Housing Tax Credit (LIHTC) is the nation's largest 
and most successful affordable rental housing production program. 
Although the LIHTC is not a loan program, it is a critical housing 
development resource that many tribes are able to leverage using their 
Indian Housing Block Grant funds. The LIHTC incentivizes the 
utilization of private equity in the development of affordable housing. 
Since its creation in 1986, the Housing Credit has leveraged nearly 
$100 billion in private investment capital, providing financing for the 
development of more than 2.6 million rental homes for low-income 
families. The Housing Credit produces or preserves nearly 100,000 homes 
per year and supports 95,000 jobs annually.
    The Housing Credit is a premier example of public-private 
partnership. Because private investors can only claim credits after 
projects are completed, meet all federal requirements and are occupied 
by income-eligible tenants at affordable rents, the Housing Credit 
benefits from private-sector discipline. This model has led to 
effective management of affordable housing developments that have 
experienced an extremely low level of foreclosure--just 0.62 percent 
over the Housing Credit's entire history, according to the accounting 
firm CohnReznick.
    The Indian Housing Block Grant provides funding that tribes and 
TDHEs can use to fill development gaps for potential LIHTC projects 
that might not be financially feasible otherwise. The utilization of 
LIHTCs to develop housing in Indian Country has increased unit 
production and resulted in developments characterized by a degree of 
efficiency typically seen in the private sector.
    One example of the use of LIHTCs in Indian Housing is Cook Inlet 
Housing's 59-unit elder rental housing development, Eklutna Estates. 
The project design incorporated accessibility features that will enable 
elders to age in place. Other design techniques helped Eklutna Estates 
achieve a 5-star energy rating, reducing long-term operating costs. As 
the chart below demonstrates, Indian Housing Block Grant funds, 
including funds available through American Recovery and Reinvestment 
Act, comprised just 12 percent of the overall project financing.
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Case Study--Tagiugmiullu Nunamiullu Housing Authority (TNHA)
    TNHA serves the northernmost region of Alaska. Their Sustainable 
Northern Shelter Project was specifically developed to address the need 
for sustainable rural housing for northern climates, using simple 
construction techniques and resulting in the production of dwellings 
that use very little water or energy. TNHA built a prototype home in 
the village of Anaktuvuk Pass, which used less than 200 gallons of 
heating fuel during its first year, less than a quarter of the average 
heating fuel consumption for typical rural Alaskan homes (880 gallons 
per year). When completed, TNHA's Sustainable Northern Shelter Project 
will consist of 24 homes in six villages throughout Alaska's North 
Slope region.
    TNHA's sustainable northern shelter model incorporates numerous 
innovative design and construction techniques. The homes, comprised of 
three bedrooms on one level, are 1,000 to 1,300 square-feet in size. 
Their construction combines the time-tested method of earth banking 
with original ideas such as spray-on soy-based urethane foam insulated 
walls, which will be covered by waterproof steel siding. Materials have 
been customized to transport cheaply in smaller planes that can land on 
the short gravel runways common in most remote Alaskan villages. This 
strategy has enabled one house to be delivered in just two planeloads, 
allowing on-time delivery with transport costs far less than those 
required for traditional ``stick built'' construction. The steel studs 
and joist system for the projects are packed in cross-sections, nested 
into each other. Rather than using time-consuming multi-seasonal piling 
foundations, 18 inches of gravel mat allows for site preparation and 
foundation placement within a single day. The end result is the 
production of homes that are designed to last 100 years or more while 
using a fraction of the energy consumed by most homes. TNHA has managed 
to do this for approximately $170,000 less than the allowable Total 
Development Cost (TDC) for isolated Anuktuvuk Pass.
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    TNHA has achieved these results by leveraging its IHBG allocation 
to secure loans guaranteed under the Title VI Loan Guarantee program. 
Additional grant funding was provided by the State of Alaska.

------------------------------------------------------------------------
             Funding Sources                          Amount
------------------------------------------------------------------------
NAHASDA IHBG Funds                        $1,671,180
Title VI Guaranteed Commercial Bank Loan  $6,672,170
State of Alaska Housing Grant Funds       $1,478,468
Percentage of Leveraged Funds in Project  83 percent
------------------------------------------------------------------------
    Total Project Funds                   $9,821,818
------------------------------------------------------------------------

Case Study--Hooper Bay, Alaska Development Partnership
    The Village of Hooper Bay is located in the remote reaches of 
western Alaska. In 2006, the community was ravaged by a fire, which 
destroyed much of the community's available housing. The TDHE for the 
region, AVCP Regional Housing Authority, sought to work quickly to 
rebuild. However, a housing development of the scale needed would 
require the investment of Low Income Housing Tax Credits, and AVCP 
Regional Housing Authority did not have experience developing or 
operating LIHTC properties.
    AVCP reached out to another Indian Housing provider that had the 
requisite experience--Cook Inlet Housing. Together, our two 
organizations secured an allocation of Low Income Housing Tax Credits, 
sold the credits to an investor to generate equity for the project, and 
built 19 new affordable homes for a community in the midst of a housing 
crisis.
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    Development funding for the Hooper Bay partnership came from a 
variety of sources, including NAHASDA, a State of Alaska housing grant, 
HUD's HOME and Rural Housing and Economic Development (RHEP) programs, 
and equity from the sale of Low Income Housing Tax Credits.
    The Hooper Bay partnership between AVCP Regional Housing Authority 
and Cook Inlet Housing demonstrates the importance of leveraging both 
money and capacity. The investment of IHBG funds leveraged other 
sources, including tax credit equity, while AVCP's willingness to tap 
the existing capacity of another Indian Housing organization produced 
timely results and a collaborative relationship that persists to this 
day.
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Conclusion
    NAHASDA, and particularly the availability of the Indian Housing 
Block Grant, fundamentally changed how affordable housing is delivered 
in American Indian and Alaska Native communities. Many tribal housing 
providers have learned to leverage scarce IHBG resources to secure 
other sources of funding, including federally guaranteed loans, private 
equity from the sale of housing tax credits, and first mortgages for 
home buyers receiving additional assistance through the CDFI Fund's 
Native American CDFI Assistance program.
    However, I urge Congress to recognize that loan leveraging has its 
limitations. In communities like Mountain View, Anuktuvuk Pass, and 
Hooper Bay, where costs are high and income is extremely low, 
leveraging debt cannot be viewed as the primary strategy to address 
housing needs. Effective leveraging must result in housing developments 
that are financially sustainable in the long term. Private investors 
must achieve stable returns from Indian Housing projects or their 
desire to invest in our communities will remain low.
    For this reason, adequately funding the Indian Housing Block Grant 
program is the single most effective way for Congress to ensure that 
additional housing will be developed in American Indian and Alaska 
Native communities. Further, tribal housing providers have, through the 
National American Indian Housing Council, recommend minor changes to 
NAHASDA that would reduce unnecessary administrative burden, empowering 
tribes to spend less time navigating bureaucracy and more time building 
new homes.
    Congress made the right decision when it transitioned Indian 
Housing from a disjointed system that did not fit our communities to a 
more flexible block grant that has allowed tribes to build our 
collective capacity to produce housing. We are proud of our good 
stewardship of federal funding and the outcomes we are producing for 
our people and communities. We know we have more work to do if we are 
ever to achieve an equality of economic and housing opportunities for 
Native people and communities. We embrace that challenge, and we ask 
for Congress' ongoing support.
    Again, we extend our sincere appreciation to the Chairman, Vice-
Chair, and Members of the Senate Committee on Indian Affairs for the 
opportunity to appear today.

    The Chairman. Thank you, Ms. Gore.
    Mr. Gauthier.

  STATEMENT OF ROBERT GAUTHIER, ADMINISTRATOR, UNITED NATIVE 
                  AMERICAN HOUSING ASSOCIATION

    Mr. Gauthier. I will go right to the bottom line, if I can, 
Mr. Chairman.
    I too want to thank you and congratulate you. Senator 
Daines and Senator Tester have been tremendous to work with as 
we share our frustrations.
    Montana is one of the States that has been left behind. We 
have remote reservations that have high levels of poverty. I 
love hearing the success stories taking place but I want to 
share one thing. This is the fourth time I have appeared before 
this Committee over the last 30 years years.
    The first time I appeared, I was Chairman of the National 
Commission on American Indian, Alaska Native and Native 
Hawaiian Housing. The findings of that Commission, when the 
Honorable Daniel Inouye chaired this Committee, said the 
problem with leveraging and progress in Indian Country is there 
is too much dependence on HUD.
    We need to get all the resources that America has in rural 
communities to build housing. Here we are 22 years later and I 
would like to tell you it has changed. I think following 
NAHASDA, HUD has been a fabulous partner. They are going to do 
more 184 loans this year than the NAHASDA block grant. That is 
a fabulous story for Indians. That is the good news.
    The bad news is around 10 percent of them are on 
reservations and even less on restricted trust lands.
    What I am here to say is we need help bringing the other 
Federal agencies, USDA, the Veterans Administration, into the 
mix. They have significant resources and there is some 
attention to that but they are not bringing their lending 
programs and we need their technical assistance dollars on 
reservation.
    The other thing I will say is we have been trying to build 
a mortgage market in Indian Country for all 30 of the years 
that I have been here. There are significant challenges. We 
thought once the 184 program was passed, banks would swarm on 
to reservations. In fact, they have swarmed off reservations by 
and large because of the imperfections and lack of capacity in 
a lot of remote tribal areas.
    They don't have reporting systems, they don't have good 
appraisal systems, loan origination, mortgages are not a part 
of the culture, and the lease rules have been cumbersome. We 
are making progress on all those things is my message today.
    But, if we can, one thing we need--no more money, no more 
authority from the existing agencies. We need some of their 
technical assistance funds so that we can go to tribes that are 
willing and give them the assistance to build capacity to lend 
and make it comfortable for lenders to come to those remote 
reservations.
    Once we do that, we will open the doors for economic 
development and all sorts of good things. I think by and large, 
remote reservations with the highest amount of poverty and the 
largest land base are the ones struggling the most. That would 
be my comment.
    I know there are tremendous amounts of good things 
happening, tax credits and others, but we need capacity at the 
tribal level to help them learn how to be borrowers and good 
partners in lending.
    Thank you.
    [The prepared statement of Mr. Gauthier follows:]

  Prepared Statement of Robert Gauthier, Administrator, United Native 
                      American Housing Association
    Thank you, Chairman Barrasso, and other members of the Committee 
for the opportunity to address you today concerning what I believe is 
the number one impediment to growth in Indian Country.
    When I hear the term Indian Country, I think of tribal lands under 
the jurisdiction of duly elected officials from Federally Recognized 
Tribes. I believe Indians living in other parts of the United States 
have needs related to available credit too, but for today's comments; I 
would like to focus on Indian Reservations and Trust land.
    In 1993, when the NATIONAL COMMISSION ON AMERICAN INDIAN, ALASKAN 
NATIVE AND NATIVE HAWAIIAN HOUSING completed 18 months of Hearings and 
published its Report: A BLUEPRINT FOR CHANGE, the primary 
recommendations for Congressional action outlined changes to making 
credit more available for American Indians across the Nation with a 
special emphasis on the impediments of Trust land.
    HUD did its job during the Clinton Administration and developed the 
Native American Housing Assistance and Self Determination Act 
(NAHASDA), introduced by New York Congressman Rick Lazio, which for the 
first time, provided capital those Tribes could use to leverage other 
Housing Resources. Over 40 of the Commission's recommendations were 
incorporated into NAHASDA. As a bonus, Title VI of NAHASDA provided 
incentive for Banks to lend to Tribes with a 95 percent guarantee! 
Congress also responded thanks to Nebraska Congressman Doug Bereuter 
and his staff, and passed the HUD 184 program. For the first time, 
Indians on reservations had available to them a market rate loan 
product! I believe most Indian Housing practitioners and housing 
experts expected lending to Native Americans to take hold in a dramatic 
fashion. And it has, unless you happen to live on Trust land.
    In my opinion, nearly 22 years later, remote tribes on Trust land 
are still not making significant progress establishing sustainable 
lending programs. The result is that they continue to have a 
significant waiting list with diminishing subsidy. I wish it were 
different. Many will talk about the success of the HUD 184 program. The 
program has now grown to over $4 Billion in loans to Indians. That 
shows the need. However, an Indian living in Spokane Washington has 
many market rate loan products. He is however, able to take advantage 
of a program designed for developing markets and by its design was not 
as rigorous as other loan programs. If you happen to be an Indian 
living in Browning Montana on Trust land, the HUD 184 may be your only 
market rate option. My concern is that as the program grows, more and 
more it will resemble conforming loans without the flexibility and 
affordability developing Tribes and its members still require.
    USDA has still not come to the table with nationwide lending 
products adapted to unique tribal governmental requirements. In 
Montana, the Salish and Kootenai Tribes have an unresolved dispute with 
USDA regarding a couple of minor provisions in USDA required lease 
agreements on Trust Land. They have been unwilling to compromise. 
Indian Country badly needs the several loan and grant programs USDA 
administers. In most states, active partnerships with USDA do not 
exist. Tribes need exposure and training on these programs.
    In 1993 Treasury told HUD at an Indian Housing Leverage meeting 
that there was no need for the Administration to develop a new GSE 
dedicated to Indian Housing. HUD had been working on a draft of a 
Native American Finance Authority, when Treasury assured participants 
that the new CDFI legislation would not only provide capital, but also 
technical assistance to overcome the imperfections in Indian lending on 
Trust lands. Still, it is not happening.
    After nearly 33 years working in Indian Housing, I am convinced 
that overcoming the challenges of lending on Trust land is the key to 
solving the housing crisis on Americas Indian reservations. In fact, 
solving the housing lending puzzle will open up streams of capital for 
economic development as well. I know because the Confederated Salish 
and Kootenai Tribes developed a revolving loan program in the 1940s 
that today provides over 600 members of that Tribe access to mortgages 
on Trust Land. Their model is largely responsible for the high number 
of 184 Loans made in Montana as well. The membership is gaining wealth 
with nearly 70 percent of families owning their own home.
    Over the past 20 years I have learned also that capacity at the 
Tribal level is another critical component of success with developing 
sustainable lending on Tribal Trust land. The Confederated Salish and 
Kootenai Tribe operate its own Land Titles and Records Office (LTRO) 
under a contract with the Bureau of Indian affairs. They have developed 
reliable closing processes that are similar to closings on fee simple 
lands. I believe this too is a critical factor. I am surprised that 
Tribes asked Congress to pass the HEARTH Act in 2012, yet only two 
tribes across the Nation have developed BIA approved Regulations!
    In closing, I would like to recommend that this Committee work with 
the Tribes that have had success in developing functioning lending 
systems incorporating Trust lands and dedicate resources to provide a 
step by step guidance for developing tribes to follow.

    The Chairman. Thank you very much for the comments from you 
all.
    If you notice some of the Committee members have gone. It 
is because we are in the middle of a roll call vote so we will 
be coming and going. The questions may be repeated by someone 
who did not hear them but it is all information that is very 
interesting and important.
    At this time, I would call on Senator Daines.
    Senator Daines. Mr. Gauthier, thank you. I was struck that 
you did not look at a single note as you gave your testimony 
which tells me you have been doing this a long time. Thank you 
for being here today.
    Thank you for cutting to the chase. So often here in 
Washington, we circle around the airport as we decide what 
needs to be done. I appreciate your clear line of sight to 
solving this problem.
    I met with the Northern Cheyenne Tribe yesterday in my 
office and heard about how important access to home mortgages 
is and how difficult it is. As a kid who grew up in the 
building business, my mom and dad are home builders, they 
started off as mom and pop builders with a pickup truck, a dog 
and grew a little business in Boozman.
    Home ownership is about shelter and about human dignity. I 
am reminded of what Milton Friedman said once, that nobody 
washes a rental car. There is something about the ownership and 
the pride of ownership and how that builds safer and more 
secure neighborhoods as well.
    I believe many of the important aspects begin in the home. 
It is not about a house, it is about a home and how we build 
stronger families. We had the principal of Northern Cheyenne K-
12 School in the office speaking about the value of Indian 
housing to Northern Cheyenne children and families.
    If you don't have a home, achieving other life needs is 
difficult but with the high unemployment rates we are seeing in 
Indian Country, access to loans is very difficult. The Native 
American Housing Assistance and Self Determination Act, I 
believe, is an important law to facilitate access to housing 
for Native American communities.
    Mr. Gauthier, have Indian housing programs been easily 
accessible to tribal members or is there a need for technical 
assistance?
    Mr. Gauthier. There is most definitely a need for technical 
assistance. There are a lot of resources for homebuyer 
education, some that are Native American-based. Capacity at the 
tribal level is going to make this happen. The Northern 
Cheyenne are a perfect example. Once they got their audits 
going, a good and stable board and the staff, in eight years, 
they added $30 million to their block grant from other 
resources.
    That is a significant change and can create a lot of jobs 
and rehabbed a lot of houses. I am a believer in capacity and 
lending.
    We have courts on reservations in Montana that need to have 
the right foreclosure process. It needs to be compatible with 
USDA and the Veterans Administration. We have some issues to 
resolve with HUD to make it work better but they are trying 
hard. The other agencies we do not see as much.
    USDA said we have 13 housing programs. This morning, Mr. 
Hernandez came. He was very enlightened speaker and got us 
pumped. His heart is in the right place but I don't think he 
really understands. There are a lot of assumptions made about 
what has to happen on trust land.
    I have come to the conclusion that what money we can find, 
whether through HAC or USDA, we need to get hands-on assistance 
to the tribal level if they choose it so they can build the 
right system to report loans and to appraise properly. All 
those pieces we take for granted outside reservations do not 
exist on a lot of the most remote reservations. That is my 
plan.
    Senator Daines. My staff heard from the Northern Cheyenne 
Tribe similar concerns about this lack of access to technical 
assistance on the loan programs coming through HUD. Would you 
agree that there is value to allowing the Native American 
Indian Housing Council instead of HUD the ability to provide 
the technical assistance to tribes?
    Mr. Gauthier. I definitely think it should be a 
partnership. The name of the Act is the Native American Housing 
and Self Determination Act. Tribes should be teaching each 
other self determination. HUD has a lot to offer but I think it 
needs to be a two way street.
    Senator Daines. Sami, do you have a thought on that as 
well? I can see you smiling over there.
    Ms. Difuntorum. Yes, we believe Native people should teach 
Native people. We are a fan of the National American Indian 
Housing Council being able to provide technical assistance 
directly to tribes. They should be able to call our office, ask 
for technical assistance and have it dispatched to them.
    Senator Daines. Thank you.
    I have to go vote but I will say thank you for helping 
define the problems today. My training before I got into 
business was in engineering where you define a problem. Let's 
go find a solution. I think we have one here. I think we have a 
committee here that can act on this and let's get this problem 
fixed.
    Let's get you back in Montana longer and not so much time 
here in Washington, D.C., Bob. Thank you.
    Senator Tester. [Presiding.] Thank you, Senator Daines. The 
panel gets back to back Montana. I will pick up where you left 
off.
    Senator Daines. That is a good thing, Senator.
    Senator Tester. Absolutely. Thank you.
    Carol, we have seen an increase in the use of low income 
housing tax credits in Indian communities across the Nation. 
Still, these tax credits remain under utilized as a mechanism 
to provide housing to Indian Country. What are some of the 
barriers that exist in using these tax credits?
    Ms. Gore. First of all, I would echo what both Bob and Sami 
Jo have said, which is capacity matters. You don't jump from 
building a home to doing a complex tax credit development 
without capacity building. I think that is incredibly 
important.
    I would go back to the example I gave for Hooper Bay which 
is the westernmost region of Alaska. They lost all their 
housing in a huge fire, so they have this critical need. They 
couldn't build just one house at a time and their funding was 
fairly low.
    The idea that we reached across tribal boundaries and 
worked together where we had no experience in building in a 
place that had no dock, no hardware store, no materials 
available or no local capacity to work with them.
    We worked with the investor to convince them that their 
economics were really worthy of an investment and by partnering 
with AVCP and Cook Inlet Housing together, we had the right 
long term sustainability compliance.
    I think training and capacity building really matter to the 
investor.
    Senator Tester. That is especially helpful with dollars 
that come from HUD being whacked or at least not being applied.
    This is a question for all three of you. We will start with 
you, Sami Jo. NAHASDA was first passed in 1996 combining 14 
different programs at HUD that were operating in Indian 
Country. It was not a normal situation but not without 
precedent. This action led to one of the most flexible programs 
in Indian Country.
    From your perspective, what is the next step when it comes 
to Indian housing from this level?
    Ms. Difuntorum. I think we are on track with the hearing 
today and the topics being discussed. I think loan leveraging 
and learning how to better utilize the Federal resources that 
we get is really timely and important.
    More training and technical assistance, Bob was correct on 
that but I think it is not that simple an answer. When you look 
at the really remote areas and the size of the tribes, not 
everyone has equal access to technology and not everyone has 
equal access to training and technical assistance which is why 
I believe the National American Indian Housing Council should 
be the training and technical assistance provider.
    Next step, if it is different than Sami Jo's.
    Ms. Gore. It is different. I do think we need to try to 
tune up what we have but I also think we gave up a bundle of 
things that were making a difference in Indian Country and 
moved to a block grant.
    Now we are finding there is a bundle of funding where we 
are not eligible to apply. Many of us are ready to compete. I 
would encourage the Committee to look at the funding sources 
that come here to make sure tribes and their organizational 
structures, their entities like their housing TDHE's, have the 
ability to actually compete and apply.
    Lastly, I would say I would like Congress to look outside 
of Indian funding and allow us to compete with everyone else. 
When HUD is providing housing funding and USDA is providing 
housing funding, are we eligible to apply? If there are a dozen 
USDA housing programs, are they clearly open for us to use 
their funding?
    Senator Tester. Bob?
    Mr. Gauthier. I will continue with what Carol was saying. 
We talk about 13 housing programs with USDA. Every single one 
of them has a place in Indian Country. We have over 20,000 
mutual help units which have been conveyed. Most of them are 
not insured and most of them need repair. Where do you go to 
get the money?
    They are eligible to be served in NAHASDA if they are 
income eligible but we need 504 grants from USDA and we need 
504 loans. USDA says yeah, come on in. So we have an elder that 
finished paying for a mutual help unit and they go into the 
USDA office and it is like starting all over. Who lives with 
you, what are your taxes, what is your income, how many kids, 
and what car do you drive? They take the application and go 
home.
    We need to have a delivery mechanism that is sensitive to 
some of the cultures in which we have to provide those 
services. Currently we are told there isn't the money to do 
that. We have a whole group of Natives eligible for those 
programs who are not accessing them.
    Senator Tester. Let's continue on financing and continue 
with you, Bob. I know you would be an expert on Indian housing 
issues.
    The number one issue, as you have talked about, is finding 
the money, where is the money. If we look at the private 
sector, if we look at the community banks and those kind of 
folks, credit unions, those kind of folks. How do we get those 
folks to invest in Indian Country or is that just not a 
possibility?
    Mr. Gauthier. Senator Tester, do you watch Dancing with the 
Stars?
    Senator Tester. No, never.
    Mr. Gauthier. If you did, you would find out they practice 
a long time before they start dancing. We have a lot of 
partners that have not yet had a dance lesson.
    The banks are ready, willing and able and have the money 
and want to lend it but it isn't profitable. Almost every loan 
they currently make is qualified unless it is a guaranteed 
loan. That is holding them out in droves.
    If anything, right now it is getting tougher. I talked to 
HUD about this. Some of the latest program recommendations and 
modifications, dealing with the environmentals, I think will 
even chase more of the banks away.
    The second thing I would recommend is a way to empower the 
national and regional housing organizations, that is nonprofit 
to originate loans in a sustainable manner where they can get 
the loan fees and do it. If the banks aren't going to do it, 
let us do it until we work out the problems. Then banks can 
come in and compete. That is the way it should happen.
    The CDFI was supposed to do it, Senator Tester. There was 
talk in 1992 of creating a GSE strictly for Indian lending. 
Treasury said not needed. We have the CDFI and this thing is 
going to work great. Almost no CDFI's have housing as a primary 
goal in Montana.
    Senator Tester. You also talk about the success of the 
revolving loan fund the Confederated Salish and Kootenai Tribes 
developed several decades ago. Can you talk about the impact 
this program has had on the housing situation on your 
reservation?
    Mr. Gauthier. It kind of hit me alongside the head. One day 
I was meeting with some of the other regional housing 
authorities and listening to their story of how hard it is to 
operate Indian housing authorities. I said, are we talking 
about the same program. We would find the problems were out in 
the Dakotas, eastern Montana and all over.
    I suddenly realized that I didn't have one tribal 
councilman or one board member that had ever lived in a house 
that I managed for 20 years at the housing authority because 
our tribe created the revolving loan program. They expected the 
members of our tribe with a job to go get a loan there. If you 
didn't have elders, low income families would go to the housing 
authority.
    My job was easy because I could work the program the way it 
was designed to work. We had the luxury or the disadvantage of 
being in an area that had alternative housing, banks, a lot of 
different things that allowed us to develop more.
    When you go to a remote reservation that only has HUD-built 
units, it becomes very political and very tough. If the only 
units being built for 40 years are by HUD, even though there 
are 37 HAC units with very tight restrictions, they are going 
to be used by everybody because there is no other housing.
    Senator Tester. Let me flesh this out a little more. For 
the Revolving Loan Fund, there has to be more availability than 
just HUD housing. Is that what I just heard you say?
    Mr. Gauthier. America as a whole depends on HUD support for 
4 percent of their housing needs. Twenty years ago, in Indian 
Country it was 50 percent and it is growing. That isn't 
sustainable. We need to figure this out. We need to figure out 
the lending.
    Yes, we need USDA, we need VA, but until we figure out 
lending, like America, over half of Americans pay for their own 
house. At one time, it was 67 percent.
    Senator Tester. Are there other reservations that use 
revolving loan funds that you know of? Are there others out 
there?
    Mr. Gauthier. Not in Montana.
    The Chairman. Just to be clear, the reason for that is, why 
haven't they done it? You have had success with it.
    Mr. Gauthier. We have had success with it but I think the 
perception is there are better jobs or more jobs or better 
economic conditions at Flathead and that may be true. We have 
our share of poverty there but our tribal council understood 
quickly if it was their money, you had to pay it back.
    Yes, it gets political occasionally but that loan fund is 
now $40 million. Today as we speak 600 members of our tribe out 
of 4,000 who live there have their loans through tribal credit 
on trust land. It is an important driver.
    We are also one of the highest user reservation tribes of 
the 184 program. I think we have done over 300 184 loans.
    Senator Tester. Have you asked questions yet, Senator 
Heitkamp? I will yield.

               STATEMENT OF HON. HEIDI HEITKAMP, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Heitkamp. Thank you, Mr. Vice Chairman.
    I don't think anyone really understands how critical this 
issue is. Recently, Secretary Castro came to Pine Ridge and 
then came back and toured Turtle Mountain Band of Chippewa 
housing. It is HUD Project 1 in the Turtle Mountains.
    I think the shock and dismay on his face kind of said it 
all. This was the first time that he really had experienced the 
issues. I think it surprised everyone when he really came to 
the conclusion that the challenges on Turtle Mountain might 
even be in excess which is not to diminish the huge challenges 
on Pine Ridge.
    We know in the upper Great Plains how critical this issue 
is. Half of the housing in Turtle Mountain has black mold, the 
lack of the ability of folks to really afford anything and to 
repair what is there, and the inability of the tribes to really 
find the resources to do what needs to be done.
    At the very heart of it, you cannot expect children to go 
to school and learn when they are sleeping in a two or three 
bedroom home with 14 people. This is a formula for failure. At 
its base level, we can talk about health care, education and 
all those critical services, but housing is the beginning as 
far as I am concerned.
    If we simply look at doing what we have always done, we are 
going to continue to fall further and further behind.
    I will tell you a tale. I served on what essentially was 
the board of directors of something called the Housing Finance 
Agency in North Dakota. Sarah Vogel was the Ag commissioner at 
the time and I was Attorney General. We had a path that we were 
going to try to do just one first time homeowner, just one 
home, in Indian Country on trust land that would qualify and 
get first time homeowner status. In eight years, neither one of 
us got it done.
    Home ownership, never mind affordable housing, we take the 
next step to home ownership which we know builds communities, 
builds opportunity, builds equity for retirement, we are not 
there. We have got to look at this differently. We have to not 
just look at the existing programs.
    It is absolutely critically important. I am with you on 
those critical needs but we have to think beyond what we are 
doing because if we don't take care of this problem, we will 
suffer the consequences as we have going forward.
    I just want to challenge you to think outside the box on 
Native American housing. Take a look at those creative 
programs, public-private partnerships, foundation partnerships 
that we can engage and foster and build whether it is tax 
credits dedicated to just Indian Country for affordable 
housing.
    My great dream is single family housing that is affordable, 
quality and really houses just one family.
    If anyone wants to comment on that, I think the real 
challenge here is not to keep doing what we have always done 
and expect different results because we are getting further and 
further behind.
    The Chairman. Thank you, Senator Heitkamp.
    Senator Tester.
    Senator Tester. I have one quick comment I want to make. I 
don't know if it was Carol or Sami Jo who said our work doesn't 
get done without you. I would say quite the contrary. Our work 
doesn't get done without you.
    The folks on this Committee know the most about Indian 
Country of anybody in the U.S. Senate. The education process is 
great to do what Senator Heitkamp said, think outside the box 
and develop programs that will work and get houses built.
    We need to do our best to convey good information and 
hopefully will be able to teach the rest of our Senators what 
the challenges are.
    Thank you, Mr. Chairman.
    The Chairman. Would you like to respond, Ms. Difuntorum?
    Ms. Difuntorum. I would, thank you. I do have a comment or 
two, particularly with respect to the Title VI program, the 
Loan Guarantee Program, for a small tribe that receives under 
$100,000 to be limited in leveraging ability to five times 
their grant, I don't think really gives them enough capital or 
enough money to do anything.
    I think if they were structured differently so the tribes 
who receive smaller amounts of money have greater leveraging 
ability. That would be my suggestion in terms of Title VI.
    The Chairman. Anything else? I appreciate that answer 
because it was actually one of the things I wanted to ask you 
about the implications there. Thanks for bringing it up.
    I also wanted to ask you about your testimony where you 
discussed the tribe's success under Section 184, the Indian 
Loan Guarantee Program and how might tribes with a smaller land 
base approach Section 184 loan guarantee programs compared to 
tribes that have a much larger land base in terms of how this 
all works? Can you share some of those things with us?
    Ms. Difuntorum. I can. I will say I am not a 184 expert. If 
there is someone on the panel who has more experience, I would 
certainly defer to them. I am more familiar with Title VI. That 
is what we have primarily used.
    The Chairman. Mr. Gauthier.
    Mr. Gauthier. I know that Carol has done some tremendous 
things with 184 and leveraging and using it in ways that are 
very creative. I think that is a wonderful thing.
    I will tell you for the benefit of the Senators, 184, it is 
important to remember the concept. I think we have gotten away 
from it and I am a little bit nervous.
    The dialogue took place downstairs in the buffet room with 
Congressman Bereuter and a staff member named Joe Pigg, who I 
think is currently with the American Bankers Association. The 
discussion went like this: Congressman Bereuter would like to 
help you somehow in your work with the commission. We said 
right now HUD provide grants for low rent, mutual help under 
the 37 Act. What if we lent money to Indians and only 50 
percent of the loans were successful and the other 50 percent 
failed, we would double our production. That was the concept of 
the 184 program.
    Now, it is looking more and more and more like an FHA 
program. Some of the examinations of it require that 
underwriting is tighter. All those things are missing the 
target. The original target was Indians on reservations. Banks 
were comfortable to get that 100 percent guarantee.
    It has grown and is $4 billion in assets. It is fabulous. 
Unfortunately, the growth has primarily been off reservations 
and we are still struggling with ways to get those Indian folks 
on reservations a market rate loan that will help them.
    The Chairman. Let me also ask you about financing on trust 
land or some of the things you wrote in your testimony 
indicating that greater tribal control and management can 
address some of the challenges.
    I am wondering how tribes develop their capacity to manage 
sustainable lending operations like what is taking place on the 
Flathead Reservation?
    Mr. Gauthier. Capacity. We have a title plan at Flathead. 
You don't hear horror stories about waiting months for a title 
status report. You go down to George DuCharme and he produces 
one for you. He can even certify once he is comfortable. That 
really speeds up the process.
    It takes not much more time to do a 184 loan on trust land 
as long as it is a leasehold than it does a conventional loan 
on fee land.
    The important thing is capacity. The tribe has developed 
that capacity because for 50 or 60 years, they have done 
mortgage lending to their own members on trust land and have 
refined the process.
    The Chairman. Ms. Gore, you spoke about the regional impact 
that Cook Inlet Housing Authority is having. Can you share more 
with the Committee about the social and economic impact your 
community's housing assistance projects are having on the 
region?
    Ms. Gore. Using an example or two, we have been investing 
in a community that had a very large population of Alaska 
Native people. It was also the worst community in terms of 
crime and education, all of those social outcomes.
    We believed if we partnered with the community and 
specifically the safety officers, the fire department, to 
identify the really hot spots where the crime was occurring and 
the homes were unsafe, if we could strategically cut like a 
surgical knife and take those bad rocks out of the neighborhood 
and replace them with bright, colorful energy efficiency homes, 
that could in fact change other things in the neighborhood.
    After eight years, we did a social and economic impact 
study hoping we haven't just put pretty homes in an old 
neighborhood. In fact, the outcomes were pretty outstanding. We 
found families in the neighborhood had lived there five years 
or longer, 50 percent of them. When we first started, it was 8 
percent.
    Educational outcomes, participation from parents and 
teachers, were as high as 80 percent and they had been at the 
30 percent level. Reading, writing and math scores were up 
between 8 and 20 percent in that neighborhood.
    We cannot claim all the credit for that, but we truly 
believe at some point the neighborhood started to stand up for 
themselves. We used some crime prevention design principles, 
just eyes on the street, windows, simple things, porches, light 
fences to keep the foot traffic down, put the homes close to 
schools and community centers.
    The police told us after eight years we are getting more 
calls than ever and we were pretty depressed about that until 
they shared with us that their view was that the neighbors were 
now willing to make a phone call and they could actually see 
the potential crime without leaving their homes where they felt 
safe. I think there is great opportunity for those kinds of 
outcomes.
    We have had smaller communities consider that same plan. We 
think it is replicable. We have been through several small 
phases because we didn't have enough money to do it at one 
time.
    I think working hand in hand with a community, being great 
listeners, trying to be strategic with the tools and resources 
we have has been a major win for them. I am really proud of 
that.
    The Chairman. It sounds great.
    Senator Franken.
    Senator Franken. Thank you, Mr. Chairman.
    Thank you, Ms. Gore, for that and all your work.
    Appropriations for Indian housing have not kept pace with 
inflation and the cuts under sequestration further exacerbated 
the scarcity of funds for affordable housing. In fact, you 
noted in your testimony that NAHASDA's purchasing power has 
decreased by nearly half since 1998.
    It is time to move in the other direction. The President's 
budget on Monday proposed an additional $25 million to support 
Indian housing and economic development. That is a start.
    Ms. Gore, you said ``housing needs in Indian Country are 
simply too significant for lasting progress to be made without 
the investment of additional resources.'' What could increase 
funding for Indian housing block grants not only in terms of 
direct spending on housing but also in terms of the tribes' 
ability to leverage those funds for additional resources?
    Ms. Gore. We are used to being scrappers but I think we are 
sort of at the end of the rope in terms of scrapping. The more 
we develop, the less need money we really have to invest.
    To an investor, it means if we have reauthorization of 
NAHASDA, they know we have an income stream that they can count 
on. That will matter to investors. They care that our money has 
not been reauthorized. Though we have confidence in all of you, 
that does matter.
    If we had additional funding, I can tell you we all have 
pipelines of development that are five to ten years long that 
we cannot get to for the lack of resources. We can attract more 
resources but we need that first money in and that is always 
NAHASDA.
    If you look back historically, you would see that without 
NAHASDA, leveraging was nonexistent in Indian Country. We had 
to have that first dollar in. Even now, when we think about the 
communities we serve in Alaska, we are dependent on seasonal 
economies and subsistence economies, lack of infrastructure, no 
roads to most of Alaska, so you can imagine literally half of 
our costs are transportation of materials.
    That extra money is going to matter. We can get scale. We 
will build five homes instead of one. You cannot imagine how 
much scale that would bring to a small community scrapping 
together under Title VI.
    Using 184, if we could build two 4-plex units instead of 
one 4-plex unit, that makes a difference. You might be doubling 
the availability of housing with just one doubling of that one 
development in one small community. Little things really 
matter.
    Senator Franken. In your last answer, you talked about the 
effect of putting up good looking houses. In 2013, we heard 
testimony from Chairwoman Karen Diver of Fond du Lac, 
Minnesota. She testified that close to 20 percent of her 
tribe's service population lives in overcrowded homes, that 
this can cause safety concerns and increase the spread of 
communicable disease, and cause greater stress.
    Overcrowded housing has a particular impact on children. A 
2012 report by Wilder Research stated that it can ``threaten 
their educational success, health and mental health and 
personal development.''
    This problem is obviously not specific to one tribe. A 
disproportionate number of homes on tribal lands are 
inadequate, overcrowded or unaffordable. Ms. Difuntorum, you 
mentioned a number of other challenges tribes face such as 
poverty, poor health and poor education.
    Can you comment on how lack of quality, affordable 
education compounds those problems?
    Ms. Difuntorum. I believe Senator Heitkamp mentioned when 
you don't have a home, have multiple people living in the same 
home, you don't have the opportunity to go to school. A lot of 
times, we don't have teachers in our schools for the student to 
teacher ratio that the States require. It is a challenge for 
rural areas to get teachers to come into the area and stay 
there.
    I know on the Siletz Reservation, people actually bus their 
children to other schools because the quality of education in 
the rural community and the lack of, I don't want to say 
something ugly about the teachers, the lack of ability to 
recruit and maintain a good educational system and educators. A 
lot of it has to do with the lack of available housing for 
them.
    Senator Franken. Law enforcement too, I would imagine.
    Is it okay, Mr. Chairman, if I ask the other two to 
comment?
    The Chairman. Yes, please continue.
    Mr. Gauthier. The other side of that coin, Senator, if we 
ask our young people to please do well in school, get an 
education and then come home, share what you know and build 
your communities and we can't give them a place to live. They 
end up off reservation sharing their knowledge, spirit and 
culture rather than where they would rather be.
    We see that happen every single day because of the lack of 
the ability to get affordable loans in a timely fashion.
    Ms. Gore. May I comment on the overcrowding?
    The Chairman. Yes, please.
    Ms. Gore. I would put it maybe in the context of domestic 
violence which is a huge issue in Alaska. That is often the 
result of not just overcrowding but the lack of safe shelter. 
How do you get out of a domestic violence situation if there is 
no place to go?
    In our smaller Indian communities, there is rarely any sort 
of safe house or transitional housing, so we often wonder why 
it is just a cycle. I think the lack of affordable housing is 
just the foundation of virtually every social issue.
    When you look at the data, you find Alaska Natives and 
Native American people are over represented in virtually every 
one of those social conditions. I can't say enough.
    I came to this from the housing business generally but I 
can tell you this has my passion because I see it from people 
who come into our office every single day. They don't come 
because they have an answer and just need a house. They come 
because they have 15 things going on and we are the solution.
    We have to make housing first. It is the first solution for 
all the things you are talking about today. I appreciate the 
highlight on the issue. Thank you.
    The Chairman. Thank you, Senator Franken.
    Senator Lankford.

               STATEMENT OF HON. JAMES LANKFORD, 
                   U.S. SENATOR FROM OKLAHOMA

    Senator Lankford. Thank you all for being here and the 
conversation today.
    There are 566 recognized tribes nationwide. Is the issue of 
affordable housing and access to loans true for all 566?
    Mr. Gauthier. I think there have been quite a few tribes. I 
would say not a large number but probably a percentage, maybe 
10 or 15 percent that have really blossomed under NAHASDA. They 
have the capacity to do it right. It has really given them an 
opportunity.
    Senator Lankford. Let's talk about that a bit. That is one 
of the things I like to do. In neighborhoods, communities, 
schools, wherever it is, because sometimes you look at the 
school and you say all these kids are having a really tough 
time. When you slow down and look at it, you go, no, there is 5 
or 10 percent thriving in it.
    It begs the question of why. What is it we can learn? Those 
being successful in it are there characteristics we can pick up 
and pass around?
    Mr. Gauthier. Fabulous capacity, if they are a self-
governance tribe that has had success. One of the failures of 
NAHASDA, as a person who was there and advocated for it, as we 
look back, it assumed every tribe had the same level of 
capacity. As we know now, that is not true.
    I think we should have gone to more of an approach of opt 
in/opt out like some other self governance programs. While this 
isn't true, the self governance program as defined by the BIA 
and IHS, it has a lot of the components.
    Many small tribes need HUD to help them run a low rent 
program because they don't have any capacity to do it and their 
members suffer. Tribes who do have the capacity and are willing 
to take off, if I had it to do over, I think we would discuss 
that sort of situation.
    Senator Lankford. Self-governance, is that the main thing, 
their capacity for self-governance is the dividing point? Are 
there other areas you can look at and say I think that is a 
part of this?
    Mr. Gauthier. It helps to be near or have a tremendous 
amount of fee land. The more restricted land there is, the 
bigger hurdle there is.
    Senator Lankford. Reservation or non-reservation land in 
trust, fee-based, that becomes a big issue as well?
    Mr. Gauthier. Absolutely. Our reservation at Flathead, over 
half of it is in trust but the half that isn't is in fee and 
the Flatheads are a minority there. You can get a 184 loan on 
fee land within the outside boundaries of the reservation very 
quickly but trust land, not so quick.
    Senator Lankford. Define for me not so quick.
    Mr. Gauthier. It sort of depends on the number of factors. 
If it is a leasehold, it can happen maybe twice as long. There 
could be other issues. There are sometimes underwriting issues.
    Senator Lankford. Tell me in times, days, weeks or months. 
For fee based land, how many months or days or weeks, whatever 
it may be and then tell me about the other.
    Mr. Gauthier. From start to finish with appraisal in the 
works on fee based, you should be able to get a loan closed 
within 30 days. Tom Wright, who has overseen $4 billion worth, 
might want to argue that but it has been our experience at 
Flathead one month for a fee based 184 loan. The underwritings 
change with little nuances to it but 30 days.
    Senator Lankford. The underwriting changed based on Dodd-
Frank or some recent regulations or is that something else?
    Mr. Gauthier. I think all those are a piece. Dodd-Frank, 
environmental rules, a lot of different things changed, 
underwriting rules, HUD's relationship with banks.
    It is one of the things I have been talking to Assistant 
Secretary Boyd about and Tom Wright that this $4 billion of 
loans has been a wonderful thing for Indians nationwide but my 
concern is it has all been done without real consultation with 
tribes. I wish that 184 was subject to negotiated rulemaking. 
We could help solve some of their problems and make sure there 
continues to be a program focus on helping the most underserved 
communities.
    They have had good success with it and it has been able to 
meet some of the needs used in other ways. Take Northern 
Cheyenne, 98 percent trust land, and they have to go to 
Billings for all their title work. When they identify a lot for 
a potential building, oftentimes they find out the surveys were 
done 30 or 40 years ago and are incorrect. The Bureau won't 
accept them.
    They have a very, very slow process. I have heard, as I 
think Senator Tester or someone mentioned this morning, a two 
year window of one family that waited two years to have a title 
status report so they could proceed with a loan. The markets 
and banks wanting to 184 loans simply cannot tolerate that.
    Senator Lankford. Obviously they have turned around, they 
have cost and expenses. If it is a fee based, 30 days or so and 
that has gotten a little longer with some of the recent 
regulatory actions. If it is in trust, you are saying two years 
or two months?
    Mr. Gauthier. No, not as a rule. I have heard that as a 
worst case example.
    Senator Lankford. What do you think it is typically?
    Mr. Gauthier. Typically, if it is a good lease and 
everything is in good shape, I would say more like eight weeks.
    Senator Lankford. Twice as long.
    Mr. Gauthier. Twice as long. One other point just for 
discussion, there are things being done. The HEARTH Act was 
supported by almost everyone. At the conference this morning, 
they said only two tribes out of 566, probably 400 that would 
have a use for it, only two tribes two years later have adopted 
the regulations for residential leasing.
    To me that is an illustration of the capacity and awareness 
of understanding the complexity of building at each reservation 
a system that is friendly to lending.
    Montana and Wyoming, we started the Montana-Wyoming 
Association which has been working with the Bureau and the 
University of Montana, Indian Law Clinic. We now have drafts 
for all ten of our tribes. We are hoping by the spring we have 
a HEARTH Act implemented with every one of those tribes.
    We are also working with the Bureau to develop an 
alternative to an appraisal that is State licensed. Those kinds 
of appraisals don't work on Indian reservations. They have been 
a problem and 184 anticipated it and allows, in most cases, the 
replacement value of the cost of construction and to move an 
appraisal but that is nonconforming.
    There is a lot of pressure to make these loans conform more 
and as they do, they are available to less and less qualified 
Indian borrowers.
    Senator Lankford. Thank you.
    The Chairman. Any other questions Senator Franken, Senator 
Heitkamp? If there are no further questions, members may also 
submit follow-up written questions for the record. The hearing 
record will be open for two weeks.
    I want to thank each of you for being here today to 
testify. Thank you for your time and your travel.
    Alison, we wish you the very best at the White House. Don't 
forget us while you are down there. Remember we are still up 
here. All the best to you and thanks for your hard work.
    With that, the hearing is adjourned.
        [Whereupon, at 3:42 p.m., the Committee was adjourned.]

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