[House Report 109-697]
[From the U.S. Government Publishing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-697

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



 
             HAWAIIAN HOMEOWNERSHIP OPPORTUNITY ACT OF 2006

                                _______
                                

 September 28, 2006.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5851]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 5851) to reauthorize the programs of the Department 
of Housing and Urban Development for housing assistance for 
Native Hawaiians, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Performance Goals and Objectives.................................     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Committee Cost Estimate..........................................     4
Congressional Budget Office Estimate.............................     4
Federal Mandates Statement.......................................     6
Advisory Committee Statement.....................................     6
Constitutional Authority Statement...............................     6
Applicability to Legislative Branch..............................     6
Compliance With House Resolution 1000............................     7
Section-by-Section Analysis of the Legislation...................     7
Changes in Existing Law Made by the Bill, as Reported............     7

                          Purpose and Summary

    H.R. 5851, the Hawaiian Homeownership Opportunity Act of 
2006, reauthorizes Title VIII of the Native American Housing 
Assistance and Self-Determination Act (NAHASDA), a program 
administered by the Department of Hawaiian Home Lands (DHHL) 
that provides low-income native Hawaiian families the 
opportunity for homeownership on Hawaiian home lands.

                  Background and Need for Legislation

    The Native American Housing Assistance and Self-
Determination Act of 1996 reorganized the system of housing 
assistance provided to Native Americans through the U.S. 
Department of Housing and Urban Development (HUD) by 
eliminating several separate programs of assistance and 
replacing them with the Indian Housing Block Grant. In 2000, 
NAHASDA was amended to include Title VIII so that DHHL can 
directly receive this block grant funding, which it uses for 
improving lands in order to facilitate Hawaiian homeownership.
    The Hawaiian Home Commission Act (HHCA) was enacted by 
Congress in 1920 to assist the race of Native Hawaiian people 
by providing government land to re-establish Native Hawaiian 
communities. In order to qualify for a lease on the 
approximately 200,000 acres of Hawaiian home lands set aside by 
Congress, eligible applicants must have at least 50 percent 
quantum of Native Hawaiian blood. The HHCA operated under 
federal authority until Hawaii became a state in 1959. As a 
condition of statehood, responsibility for the administration 
of the Hawaiian Homes Commission Act was transferred to the 
state of Hawaii. DHHL was established as the executive agency 
to administer the Hawaiian Home Lands program in order to 
develop affordable housing opportunities for native Hawaiian 
families. This program targets assistance to families at or 
below 80 percent of median income. In conjunction with loan 
programs such as the Federal Housing Administration's (FHA) 
section 247 program and HUD's section 184(a) program, Title 
VIII is successful in assisting low-income Hawaiian families 
with their housing needs.
    Title VIII of NAHASDA was originally authorized for five 
years, through 2005, and has not been formally reauthorized 
since, although appropriations acts have continued to provide 
de facto one-year reauthorizations for the program.
    This legislation would reauthorize Title VIII of NAHASDA 
through FY 2011. In addition, it would make two substantive 
changes to current law. First, H.R. 5851 would allow the use of 
HUD's section 184(a) guaranteed loans for refinancing in 
addition to construction. Giving Native Hawaiians access to 
Section 184(a) refinancing would continue to provide families 
homeownership opportunities. Although relatively new, this 
program has already proven effective with Native American 
tribes living on trust or restricted lands. This change would 
assist native Hawaiians who already own a home and those who 
would like to refinance to reduce interest rates or use equity 
for improvements to start up businesses.
    Further, this bill would allow DHHL to become eligible for 
loan guarantees authorized under Title VI of NAHASDA. This 
program, modeled on the successful Community Development Block 
Grant program (CDBG), would allow DHHL to borrow or issue 
bonded debt with the security of the Federal Government, using 
the funding stream provided by HUD as collateral. The use of 
Title VI funding for continental Native Americans has expanded 
greatly, and this change will provide a separate credit subsidy 
pool for DHHL, in order to avoid any competition for these 
resources. This program would allow native Hawaiians that want 
to finance eligible activities but are unable to secure 
financing without the assistance of the Federal guarantee.
    The Committee understands that providing for greater access 
to capital markets on Native Hawaiian Home Lands should not 
come at the expense of capital access for Federally-Recognized 
Indian Tribes. Therefore, the Committee expects, at the 
discretion of the Appropriations Committee, that a separate 
credit subsidy for Title VI of NAHASDA shall be established and 
funded as necessary so as to provide a distinct credit subsidy 
for eligible recipients of NAHASDA under Title VIII.

                                Hearings

    No hearings were held on this legislation.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 26, 2006, and ordered H.R. 5851, Hawaiian Homeownership 
Opportunity Act of 2006, favorably reported to the House by a 
voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken within conjunction with the 
consideration of this legislation. A motion by Mr. Oxley to 
report the bill to the House with a favorable recommendation 
was agreed to by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held hearings and made 
findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 5851, the Hawaiian Homeownership Opportunity Act of 
2006, reauthorizes Title VIII of the Native American Housing 
Assistance and Self-Determination Act (NAHASDA) with the goal 
to provide low-income native Hawaiian families the opportunity 
for homeownership on Hawaiian home lands.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 29, 2006.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5851, the Hawaiian 
Homeownership Opportunity Act of 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Chad Chirico.
            Sincerely,
                                          Robert P. Murphy,
                           (for Donald B. Marron, Acting Director).
    Enclosure.

H.R. 5851--Hawaiian Homeownership Opportunity Act of 2006

    Summary: H.R. 5851 would reauthorize the Native Hawaiian 
Housing Block Grant and Loan Guarantee programs and would 
authorize the appropriation of such sums as necessary for those 
programs for each of the fiscal years 2007 through 2011. In 
addition, the bill would reauthorize loans provided under Title 
VI of the Native American Housing Assistance and Self-
Determination Act of 1996 for fiscal years 2008 through 2011 
and would expand eligibility to include the Department of 
Hawaiian Home Lands (DHHL).
    CBO estimates that appropriation of the amounts necessary 
to implement H.R. 5851 would cost $26 million over the 2007-
2011 period. Enacting H.R. 5851 would not affect direct 
spending or revenues.
    H.R. 5851 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would provide benefits to the state of Hawaii.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 5851 is shown in the following table. 
The costs of this legislation fall within budget functions 600 
(income security) and 370 (commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, in millions of dollars--
                                                                 -----------------------------------------------
                                                                   2006    2007    2008    2009    2010    2011
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law for Hawaiian Housing Programs
    Budget Authority/Authorization Level 1......................      12       2       0       0       0       0
    Estimated Outlays...........................................       4       4       2       2       2       1
Proposed Changes:
    Native Hawaiian Housing Block Grants
        Estimated Authorization Level...........................       0       9       9       9      10      10
        Estimated Outlays.......................................       0       *       1       2       4       6
    Native Hawaiian Loan Guarantees
        Estimated Authorization Level...........................       0       1       1       1       1       1
        Estimated Outlays.......................................       0       1       1       1       1       1
    Title VI Loan Guarantees
        Estimated Authorization Level...........................       0       *       2       2       2       2
        Estimated Outlays.......................................       0       *       2       2       2       2
        Total
            Estimated Authorization Level.......................       0      10      12      12      13      13
            Estimated Outlays...................................       0       1       4       5       7       9
Spending Under H.R. 5851 for Hawaiian Housing Programs
    Estimated Authorization Level...............................      12      12      12      13      13      13
    Estimated Outlays...........................................       4       5       6       7       8      10
----------------------------------------------------------------------------------------------------------------
\1\ The 2006 level is the amount appropriated in that year for Native Hawaiian Housing Block Grants, Native
  Hawaiian Housing Loan Guarantees, and Title VI Loan Guarantees.
Note: * = less than $500,000.

    Basis of estimate

Native Hawaiian housing block grants

    Section 2 would authorize the appropriation of such sums as 
necessary for the Native Hawaiian Housing Block Grant program 
from 2007 through 2011. Program grants are used to assist 
affordable housing activities for eligible low-income Native 
Hawaiian families. In 2006, $9 million was appropriated for 
this program. Assuming appropriation of similar amounts (and 
adjusting for anticipated inflation), CBO estimates that 
implementing this section would cost $13 million through 2011.

Native Hawaiian housing loan guarantees

    Section 3 would authorize the appropriation of such sums as 
necessary for the Native Hawaiian Housing Loan Guarantee 
program from 2007 through 2011. This program guarantees loans 
made to eligible Native Hawaiian families who reside on the 
Hawaiian Home Lands and who otherwise could not acquire private 
financing because of the unique legal status of the Hawaiian 
Home Lands. In 2006, $1 million was appropriated for this 
program. Assuming appropriation of similar amounts (and 
adjusting for anticipated inflation), CBO estimates that 
implementing this section would cost $5 million through 2011.

Title VI loan guarantees

    Section 4 would extend the authorization of the Title VI 
loan guarantee program through 2011 and expand eligibility to 
include the DHHL. Such guarantees allow Native American Block 
Grant recipients to leverage their funding by pledging future 
grants as security for the repayment of a loan. A private 
lender provides the financing and the Department of Housing and 
Urban Development (HUD) provides a 95 percent guarantee of the 
principal and interest due in the case of a default. The size 
of the Title VI loans can be no larger than five times the 
grant recipient's annual grant amount. HUD estimates this 
program currently has a subsidy rate of about 12 percent. In 
2006, $1.8 million for subsidy costs was appropriated for the 
program, which would support about $15 million in loans. 
Assuming appropriation of similar amounts and adjusting for the 
expansion of eligibility to include DHHL, CBO estimates that 
implementing this section would cost $8 million through 2011. 
CBO assumes that loans to DHHL that are paid off using Native 
Hawaiian Housing Block Grants would have a similar loan-to-
grant ratio as those Title VI loans backed by Native American 
Block Grants.
    There have been few losses to date in the Title VI program; 
however, repayment of these loans have been funded by federal 
grants. As a result, the actual cost to the government is borne 
by the grant program. It is uncertain what the cost of these 
loans would be in the absence of the grant program but it 
likely would be higher, perhaps substantially.
    Intergovernmental and private-sector impact: H.R. 5851 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would provide benefits to the state of 
Hawaii. The bill would allow certain state and tribal entities 
in the state of Hawaii to continue helping native Hawaiians 
with low incomes purchase, construct, or refinance homes.
    Estimate prepared by: Federal Costs: Chad Chirico and 
Susanne S. Mehlman. Impact on State, Local, and Tribal 
Governments: Sarah Puro. Impact on the Private Sector: Paige 
Piper/Bach.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                 Compliance With House Resolution 1000

    No ``earmarks'' within the meaning of House Resolution 1000 
were created by this legislation.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    The short title of this bill is the Hawaiian Homeownership 
Opportunity Act of 2006.

Section 2. Authorization of appropriations for housing assistance

    This section reauthorizes Title VIII of the Native American 
Housing Assistance and Self-Determination Act (NAHASDA) (25 
U.S.C. 4221) for fiscal years 2007 through 2011.

Section 3. Loan guarantee for Native Hawaiian housing

    This section reauthorizes the section 184(a) Native 
Hawaiian Housing Loan Guarantee Fund for fiscal years 2007 
through 2011.
    This section would also permit the use of section 184(a) 
guaranteed loans for refinancing, in addition to construction 
activities.

Section 4. Eligibility of Department of Hawaiian Home Lands for Title 
        VI Loan Guarantees

    This section would allow the Department of Hawaiian Home 
Lands (DHHL) to become eligible for loan guarantees authorized 
under Title VI of NAHASDA. This program, modeled on the HUD 
Community Development Block Grant program (CDBG), would allow 
DHHL to borrow or issue bonded debt with the security of the 
federal government, using the funding stream provided by HUD as 
collateral.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

NATIVE AMERICAN HOUSING ASSISTANCE AND SELF-DETERMINATION ACT OF 1996

           *       *       *       *       *       *       *



   TITLE VI--FEDERAL GUARANTEES FOR FINANCING FOR TRIBAL AND NATIVE 
                      HAWAIIAN HOUSING ACTIVITIES

SEC. 601. AUTHORITY AND REQUIREMENTS.

  (a) Authority.--To such extent or in such amounts as provided 
in appropriations Acts, the Secretary may, subject to the 
limitations of this title (including limitations designed to 
protect and maintain the viability of rental housing units 
owned or operated by the recipient that were developed under a 
contract between the 
Secretary and an Indian housing authority pursuant to the 
United States Housing Act of 1937), and upon such terms and 
conditions as the Secretary may prescribe, guarantee and make 
commitments to guarantee, the notes or other obligations issued 
by Indian tribes or tribally designated housing entities with 
tribal approval, or by the Department of Hawaiian Home Lands, 
for the purposes of financing affordable housing activities 
described in section 202 or 810, as applicable, and housing 
related community development activity as consistent with the 
purposes of this Act.

           *       *       *       *       *       *       *

  (c) Limitation on Outstanding Guarantees.--No guarantee or 
commitment to guarantee shall be made with respect to any note 
or other obligation if the total outstanding notes or 
obligations of the issuer guaranteed under this title 
(excluding any amount defeased under the contract entered into 
under section 602(a)(1)) would thereby exceed an amount equal 
to 5 times the amount of the grant approval for the issuer 
pursuant to title III or VIII, as applicable.

           *       *       *       *       *       *       *


SEC. 602. SECURITY AND REPAYMENT.

  (a) Requirements on Issuer.--To assure the repayment of notes 
or other obligations and charges incurred under this title and 
as a condition for receiving such guarantees, the Secretary 
shall require the Indian tribe [or housing entity], housing 
entity, or Department of Hawaiian Home Lands issuing such notes 
or obligations to--
          (1) * * *

           *       *       *       *       *       *       *

          (3) demonstrate that the extent of such issuance and 
        guarantee under this title is within the financial 
        capacity of the tribe or Department and is not likely 
        to impair the ability to use grant amounts under title 
        I or VIII, as applicable,, taking into consideration 
        the requirements under section 203(b) or 811(b), as 
        applicable; and

           *       *       *       *       *       *       *

  (b) Repayment From Grant Amounts.--Notwithstanding any other 
provision of this Act--
          (1) * * *
          (2) grants allocated under this Act for an Indian 
        tribe [or housing entity], housing entity, or the 
        Department of Hawaiian Home Lands (including program 
        income derived therefrom) may be used to pay principal 
        and interest due (including such servicing, 
        underwriting, and other costs as may be specified in 
        regulations issued by the Secretary) on notes or other 
        obligations guaranteed pursuant to this title.

           *       *       *       *       *       *       *


SEC. 603. PAYMENT OF INTEREST.

  The Secretary may make, and contract to make, grants, in such 
amounts as may be approved in appropriations Acts, to or on 
behalf of an Indian tribe [or housing entity], housing entity, 
or the Department of Hawaiian Home Lands issuing notes or other 
obligations guaranteed under this title, to cover not to exceed 
30 percent of the net interest cost (including such servicing, 
underwriting, or other costs as may be specified in regulations 
of the Secretary) to the borrowing entity or agency of such 
obligations. The Secretary may also, to the extent approved in 
appropriations Acts, assist the issuer of a note or other 
obligation guaranteed under this title in the payment of all or 
a portion of the principal and interest amount due under the 
note or other obligation, if the Secretary determines that the 
issuer is unable to pay the amount because of circumstances of 
extreme hardship beyond the control of the issuer.

           *       *       *       *       *       *       *


SEC. 605. LIMITATIONS ON AMOUNT OF GUARANTEES.

  (a) * * *
  (b) Authorization of Appropriations for Credit Subsidy.--
There are authorized to be appropriated to cover the costs (as 
such term is defined in section 502 of the Congressional Budget 
Act of 1974) of guarantees under this title such sums as may be 
necessary for each of fiscal years [1997 through 2007] 2007 
through 2011.

           *       *       *       *       *       *       *


TITLE VIII--HOUSING ASSISTANCE FOR NATIVE HAWAIIANS

           *       *       *       *       *       *       *


SEC. 824. AUTHORIZATION OF APPROPRIATIONS.

  There are authorized to be appropriated to the Department of 
Housing and Urban Development for grants under this title such 
sums as may be necessary for each of [fiscal years 2001, 2002, 
2003, 2004, and 2005.] fiscal years 2007, 2008, 2009, 2010, and 
2011.
                              ----------                              


   SECTION 184A OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992


SEC. 184A. LOAN GUARANTEES FOR NATIVE HAWAIIAN HOUSING.

  (a) * * *
  (b) Authority.--To provide access to sources of private 
financing to Native Hawaiian families who otherwise could not 
acquire housing financing because of the unique legal status of 
the Hawaiian Home Lands [or as a result of a lack of access to 
private financial markets], the Secretary may guarantee an 
amount not to exceed 100 percent of the unpaid principal and 
interest that is due on an eligible loan under subsection (c).
  (c) Eligible Loans.--Under this section, a loan is an 
eligible loan if that loan meets the following requirements:
          (1) * * *
          [(2) Eligible housing.--
                  [(A) In general.--The loan will be used to 
                construct, acquire, or rehabilitate not more 
                than 4-family dwellings that are standard 
                housing and are located on Hawaiian Home Lands 
                for which a housing plan described in 
                subparagraph (B) applies.
                  [(B) Housing plan.--A housing plan described 
                in this subparagraph is a housing plan that--
                          [(i) has been submitted and approved 
                        by the Secretary under section 803 of 
                        the Native American Housing Assistance 
                        and Self-Determination Act of 1996; and
                          [(ii) provides for the use of loan 
                        guarantees under this section to 
                        provide affordable homeownership 
                        housing on Hawaiian Home Lands.]
          (2) Eligible housing.--The loan will be used to 
        construct, acquire, refinance, or rehabilitate 1- to 4-
        family dwellings that are standard housing and are 
        located on Hawaiian Home Lands.

           *       *       *       *       *       *       *

  ( j) Hawaiian Housing Loan Guarantee Fund.--
          (1) * * *

           *       *       *       *       *       *       *

          (7) Authorization of appropriations.--There are 
        authorized to be appropriated to the Guarantee Fund to 
        carry out this section such sums as may be necessary 
        for each of [fiscal years 2001, 2002, 2003, 2004, and 
        2005.] fiscal years 2007, 2008, 2009, 2010, and 2011.

           *       *       *       *       *       *       *


                                  
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