National Housing Law Project Housing Law Bulletin

Major Restructuring Proposed for
Native American Housing Programs¹

Summary

• Reaffirms the special relationship between the federal government and Indian tribes, and acknowledges the federal government's "responsibility to promote the general welfare of the Nation" and its "unique . . . responsibility to Indian people";³
• Recognizes the provision of affordable housing as an "essential element" in the improvement of Native Americans' socio-economic status;⁴
• Finds the need for affordable housing in Native American communities as "acute";⁵
• States that housing assistance should be provided in a manner that develops "effective partnerships among the Federal Government, State and local governments, and private entities …fostering the development of a healthy marketplace" to enhance self-determination and economic self-sufficiency for Native American tribes and their members;⁶
• States that federal assistance should recognize "the right of tribal self-governance by making such assistance available directly to the tribes or tribally designated entities."⁷

Title VII of H.R. 2406 would make three important changes to Native American housing policy.⁸ It would:

1. Separate Indian public housing from other public housing;
2. Provide block grants to tribal governments and tribal entities; and
3. Provide loan guarantees for financing the development of affordable housing on Indian reservations and in "other Indian areas."

Definitions

Grant beneficiary: "Grant beneficiary" (or "grant recipient" as used in this article) means the Indian tribe or tribes on behalf of which a grant is made under Title VII.

Indian tribe/area: "Indian tribe" refers to any tribe, band, nation, pueblo, village or community or otherwise organized group of Indians, including Alaska Native villages or corporations recognized by the United States or any state government.⁹

Tribally designated housing entity: This includes any existing Indian housing authority or other entities authorized by a tribe or tribes to receive grant funds and provide assistance under Title VII for affordable housing for Native Americans.¹⁰

Affordable housing: The term "affordable housing" applies to rental and homeownership units affordable to low-income households. This would include permanent housing for homeless persons who are persons with disabilities, transitional housing, and single-room occupancy units.¹¹ Housing subsidized by block grant funds must remain affordable for the "remaining useful life" of the property.¹²

Income eligibility: The proposed Act sets income standards regarding who may be eligible for assistance through the block grant. Block grant funds may be used only for rental and homeownership units that are made available to low-income Indian families.¹³ This is the extent of the targeting requirements. Section 704 defines a "low-income family" as one whose income does not exceed 80 percent of area median income (AMI).¹⁴ Median income is defined with respect to the median income of the Indian area or the median income for the United States, whichever is greater.¹⁵ In limited circumstances, HUD may establish higher or lower income ceilings if it determines that such variations are necessary because of unusually high or low family incomes.

HUD may approve the assistance of non-Indian families if the recipient determines Indian families would benefit from their presence and housing for the non-Indian families cannot be otherwise reasonably met. Examples of non-Indians eligible for assistance could be doctors, teachers, and other types of people providing services in the area.

Separation of Indian Public Housing from Most Other Federal Housing Programs

• Indian public housing, under the United States Housing Act of 1937;¹⁶
• Tenant-based Section 8, under the United States Housing Act of 1937;¹⁷
• Youthbuild,¹⁸ a set-aside within CDBG for employment of low-income people in housing developments;
• HOME,¹⁹ a block grant for new housing production; and
• McKinney Act homeless assistance programs.²⁰

Indian public housing would no longer be governed under the rules of the United States Housing Act of 1937, nor would it be subject to the rules created by H.R. 2406 for other public housing. This would have the effect of prohibiting funds appropriated pursuant to the United States Housing Act of 1937 from assisting any Indian housing authority.²¹ Federal rent rules, which currently cap tenant rents at 30 percent of adjusted income for residents of public and Section 8 housing (the "Brooke Amendment"), would no longer apply to Indian public housing.²² In establishing its own tenant selection and lease requirements, it appears that] Indian public housing would also be exempt from federal rules governing tenant selection and income eligibility, termination and grievance procedures.²³ While the bill retains good cause protections,²⁴ no provision is made for any grievance procedure for disputed admission or termination practices.

It appears that Indian public housing would be subject to rules established elsewhere in H.R. 2406 with respect to demolition or sale of units.

Block Grants to Tribal Governments

Because the new block grant feature marks the most significant departure from current Indian housing programs, and because the preponderance of the proposed Native American Housing Assistance Act concerns this aspect, we will now discuss in greater detail some of its more important provisions.

As a condition of receipt of funds, tribal governments or TDHEs would have to submit an annual plan to HUD, outlining their housing needs and plans for expending available funds to develop or maintain affordable housing.²⁷ They would still be required to provide adequate funding for the operating and capital needs of existing Indian public housing.²⁸ Should the TDHEs not comply with the requirements set out by Title VII, HUD could reduce future grant payments or require repayment of funds already allocated to them.

Funding

The new block grant would be authorized at a level of $650 million for each of the next five years.²⁹

The funding allocation formula would be established by HUD through a process of negotiated rule-making with Indian tribes. The formula determining allocations to individual tribes would reflect (1) the number of Indian public housing units currently in operation, (2) the extent of poverty, and (3) other "objectively measurable" criteria.³⁰

Eligible Activities

Section 722 of the proposed Act sets limits on how the grant recipient may spend the block grant funds. They may be used to only to promote activities that facilitate the rental and homeownership of low-income housing and that provide housing services with respect to affordable housing. These activities include:

• Provision of operating or modernization assistance to currently existing Indian public housing;³¹
• Acquisition, new construction, reconstruction or moderate or substantial rehabilitation of affordable housing;
• Provision of housing services which include rental or homeownership assistance and assisting owners, tenants, contractors and other parties to participate in affordable housing-related activities;
• Provision of housing management services which include loan processing and tenant selection;
• Provision of crime prevention and safety activities that promote the protect residents of affordable housing from crime;
• Provision of other "model" housing activities designed to carry out the purposes of Title VII.

Recipients of block grants may use portions of the funds for investments subject to the requirements of Title VII and HUD approval.³² Such investments may take the form of equity investments, interest-bearing and noninterest-bearing loans or advances, interest subsidies and leveraging of private investments against existing or future grant amounts.

Administration

Under the proposed Native American Housing Assistance Act, HUD's Office of Native American Programs would administer the new block grant program. The grant would be received and locally administered by TDHEs, which in most cases would be the Indian Housing Authority. To be eligible for the block grant, the Indian tribe must first submit a local housing plan that meets certain criteria set out by HUD. HUD determines if the local housing plan satisfies the criteria. HUD may waive the local housing plan requirements if it finds that the "Indian tribe has not complied or can not comply with such requirements because of circumstances beyond the control of the tribe." HUD also requires that block grant recipients make "all reasonable efforts" to attract private parties to participate in the implementation of the local housing plan.

Local Housing Plans

As a condition to receiving funds under the block grant program, a tribal government or TDHE is required to submit a local housing plan to HUD, consisting of a five-year plan and a one-year plan.³³ The local plan must delineate the tribe's mission with respect to affordable housing — including its goals for meeting local housing needs and how these are consistent with the proposed Act's objectives.

Five-year plan. The five-year plan is required to describe the mission, goals, and objectives of the recipient with respect to affordable housing, and must contain an overview of plans for capital improvements over a five-year period.³⁴ The overview must include an overview of any anticipated capital improvements and an analysis explaining how these will enable the recipient to meet its low-incoming housing goals.

Annual plan. The annual plan is more specific and must include a financial resource assessment and an affordable housing assessment that analyzes the local housing market and how the grant can assist the recipient in meeting the needs of very low-income and moderate-income families.³⁵

It must identify and describe the financial resources available to carry out the activities related to creating and maintaining affordable housing, including existing Indian housing developed under the United States Housing Act of 1937 and homeownership opportunities. The plan must also include the anticipated number of families to be served and identify any potential obstacles that may prevent its successful implementation.³⁶ The one-year plan must also assess how the recipient's housing activities will affect low-income families, particularly those households with incomes below the poverty line.³⁷

Other items required by the annual plan include a description of the cooperation and coordination between the recipient and any units of general local government, as well as the extent of involvement of private industries, nonprofit organizations and public institutions, if any, and the recipient's access to any other financial resources.

The annual plan also requires the recipient's certification of compliance with Section 723 of the proposed Act, namely its maintenance of any low-income housing complexes it owns or operates that were developed pursuant to a contract between HUD and the IHAs under the United States Housing Act of 1937.³⁸ The annual plan requires that certain specific activities be taken with regard to existing Indian housing, including certification of compliance with HUD's reporting requirements. The recipient must certify that it will maintain written documentation of its activities and policies governing rent, and its occupancy, eligibility, admissions, and housing quality standards. Specially required would be an analysis of how the recipient's rent-setting methods would affect the affordability of housing for families with incomes at or below 30 percent of median area income.³⁹ A written record of maintenance standards and policies is also required, as is a description of any anticipated capital improvements or plans for demolition or disposition.⁴⁰

Other issues to be reported on in the annual plan concern the recipient entity's plans to coordinate state and tribal welfare agencies to endure resident access to employment and other resources for achieving self-sufficiency. The recipient must also describe its efforts to promote resident safety and the coordination of crime prevention activities between the recipient and tribal or local law enforcement officials, including provisions for resident input and involvement.⁴¹

Finally, the annual plan must address the recipient's anticipated use of Indian housing loan guarantees provided under Section 184 of the Housing and Community Development Act of 1992 and other assistance provided for Indian tribes by the federal government to meet the affordable housing needs in the recipient's jurisdiction.⁴²

The recipient entity must certify that it will keep written records describing the types, amounts and geographical distribution of assistance provided. The use of block grant funds must be consistent with the housing priorities within the recipient's jurisdiction, as articulated in its plan.

HUD may waive any of the Title VII local housing plan requirements if it determines that the Indian tribe or entity is so small that compliance would be burdensome. In the case of such a waiver, the Secretary shall establish other, more appropriate, requirements.⁴³

HUD review of plans. To ensure that grant recipients work toward complying with the Title VII requirements, HUD must review each TDHE's local housing plan and determine whether the it is in compliance.⁴⁴ HUD must notify the Indian tribe or tribally designated housing entity within 45 days of receipt of its local housing plan. If HUD fails to notify the tribe within 45 days, the plan is considered to have complied with all of the Title VII requirements.

If HUD determines that the plan is not in compliance under Section 712, it must specify "the reasons for the noncompliance and any modifications necessary for the plan to meet the requirements." HUD may reject the plan only if it is not consistent with the national objectives of Title VII (§ 721(a)), the information provided is incomplete in significant matters or substantially unreliable, or the Secretary of HUD determines that it violates the Act's purposes by failing to provide affordable housing at a reasonable cost on a long-term basis. In addition, the plan may be rejected if it fails to adequately identify the capital improvement needs for the entity's existing low-income housing developed pursuant to the United States Housing Act of 1937.

Lease Requirements and Tenant Selection Procedures

In an effort to protect tenants from abuse, Section 727 of the proposed act provides that owners and/or managers of the grant-assisted housing may not use leases that contain unreasonable terms and conditions. The proposed Act also requires owners and/or managers to maintain their housing in compliance with applicable housing codes and to give tenants adequate notice of termination. The proposed Act defines adequate notice in the following ways:

• In the case of nonpayment of rent, 14 days or the period of time provided by the applicable law, whichever is less;
• Where the health or safety of other tenants is at risk, a reasonable period of time, not exceeding 14 days.
• All other cases are governed by the applicable law of the jurisdiction.

The owner or manager of an affordable housing complex may terminate a tenant if the tenant, any member of the tenant's household or any person under the resident's control engages in criminal activity that threatens the health or safety of other tenants of the housing complex or others in the immediate vicinity of the premises.⁴⁵

The proposed Act requires owners and/or managers of affordable housing complexes to adopt written tenant selection policies that are consistent with the purpose of providing housing for low-income families.⁴⁶ To ensure that the housing units remain financially stable, potential residents must be deemed to be able to fulfill their lease obligations. The owner or manager must select residents from a written waiting list that is maintained in accordance with the local housing plan. If a potential tenant is denied housing, the owner or manager must promptly notify the rejected applicant in writing of the grounds for the rejection.⁴⁷

Remedies for Noncompliance

If HUD determines that a grant recipient has substantially failed to comply with any provision of the proposed Native American Housing Assistance Act, Section 751 authorizes HUD to:

• Terminate payments;
• Reduce payments by an amount equal to the amount that was not utilized in accordance with Title VII;
• Limit the availability of payments to activities not affected by the grant recipient's failure to comply; and
• Provide another tribally designated housing entity to be the grant recipient, with the replacement entity to be mutually agreed upon by HUD and the tribe.⁴⁸

If HUD determines that a grant recipient has substantially failed to comply with any provisions of the Act, and chooses to utilize any of the first three remedies listed above, the Secretary may continue to reduce or withhold payments until the recipient no longer fails to comply with the requirements. If HUD determines that the recipient was unable to substantially comply because of a technical incapacity, HUD may provide technical assistance to the extent necessary to ensure that the recipient will have the capacity to comply with the requirements.

In cases of substantial or willful noncompliance, HUD has the discretion to refer the matter to the Attorney General of the United States for civil action to recover the amount of assistance furnished that was not in compliance with the requirements. The Attorney General may seek mandatory or injunctive relief.

If HUD terminates, limits or reduces the grant level, a grant recipient may appeal the action within 60 days after receiving notice of HUD's intention to alter the grant payments. The appeal must be filed in the United States Court of Appeal. The court has to power to affirm, modify or set aside HUD's actions. If HUD's findings are supported by substantial evidence and are not contradicted, HUD's findings will be considered conclusive. To ensure that all relevant evidence is presented, the court may order HUD to present additional evidence. When the court reaches a decision, it is considered exclusive and final, except to the extent that the judgment may be reviewed by the United States Supreme Court.

To ensure that recipients work toward successful compliance with the Act's requirements, HUD would require block grant recipients to assess their own progress at the end of each fiscal year and to submit a report to HUD describing their conclusions.⁴⁹ The review should include a description of the use of the grant funds, the recipient's accomplishments, and any changes to the program that would achieve better results. The TDHE must make this report available to the public for comment prior to its submission to HUD. The final report should contain a summary of all comments made by the public regarding the program.

In addition to the recipient's annual self-assessment, HUD is required to make annual reviews and audits of beneficiaries of the block grant awards.⁵⁰ These will determine whether each grant recipient has complied with the requirements of Title VII and its own local housing plan. After the review, HUD may adjust the grant awards, as it deems necessary. Grant awards already spent on affordable housing may not be recaptured or deducted from future assistance provided to the Indian tribe.

Loan Guarantees for Financing Development of Affordable Housing

Other provisions of the loan guarantee program include:

• Guarantees cannot be made for loans that are more than five times the total amount of the TDHE's block grant allocation;
• Tribal governments or TDHEs are required to pledge their block grant funds as collateral, enter into a contract with HUD, and demonstrate their ability to repay;
• Loan maturities may be up to 20 years, or longer with HUD approval;
• HUD may limit any single tribe to $50 million in guarantees;
• There is no fee for the guarantee;
• Grant funds may be used to pay up to 30 percent of the interest costs of a loan;
• HUD may guarantee no more than $400 million per year for five years (with a limit of $2 billion in obligations at any one time);⁵² and
• The annual credit subsidy is $30 million, subject to appropriations.

Key Concerns Raised by Proposed Legislation

Too Much Discretion Allowed IHAs and TDHEs

One of the purposes of the proposed Native American Housing Assistance Act and the block grants is to promote Native American self-sufficiency and autonomy for Native Americans. While these goals are laudable, the proposed legislation's inadequate federal regulation and safeguard devices create the potential for abuse and misuse of federal funds.

The lack of vehicles to facilitate significant and genuine community and tenant participation in the planning and monitoring of the grant recipient's performance increases the possibility that TDHEs will succumb to the wishes of special interest groups and not the needs of the tenants and community members. The only mechanism tenants and community members enjoy to have their collective voices heard is a requirement in Section 754(d) that obliges grant recipients to make their performance reports available to the public before their submission to HUD. Grant recipients are required to include any tenant or community member comments with their final performance report, but there is no language that states or suggests that the grant recipients must implement any of the suggestions.

Weak Targeting Provisions

Although the proposed Act targets "low-income families," defined as those who earn less than 80 percent of the median income for their area (or the national median, if greater), it does not require grant recipients to reserve any percentage of the grant funds to assist very low-income families.

While the proposed Act⁵³ requires grant recipients to include in their local housing plans an analysis of what affect the rents have on families who earn less than 30 percent of the area's family income, it does not require them to take any affirmative steps to protect those families or ameliorate any adverse effects. The TDHE potentially could choose to target a narrow segment of "low-income families," thus neglecting a large portion of the needy population. There is no federal mechanism to prohibit this practice.

Diluted Tenants' Rights

The proposed legislation provides fewer guarantees to Indian housing residents in comparison to those associated with currently existing Indian public housing. Most notably missing from the new legislation are rent-setting protections provided by the Brooke Amendment, and basic protections, such as admissions standards and procedures, and a grievance procedure.

Next Steps

1. This article was prepared by Noel Tapia, a Project summer intern and first-year law student at the University of California's Boalt Hall School of Law in Berkeley.
2. Title VII, Native American Housing Assistance and Self-Determination Act of 1996 (hereafter, the "Native American Housing Act" or "Title VII"), contained in the Lazio floor amendment to H.R. 2406, 143 CONG. REC. H4580 (May 8, 1996).
3. H.R. 2406, tit. VII, §§ 702(1) and 702(2), respectively.
4. Id. § 702(5).
5. Id. § 702(6).
6. Id. This assistance would, with certain exceptions, be limited to low-income Native American families living on Indian reservations and in "other Indian areas." Id. § 721(b)(1).
7. Id. § 702(7).
8. There are other provisions dealing with environmental and labor standards, a $2 million grant to a national Indian housing technical assistance provider, performance reports for the block grant funds, HUD's authority to replace a recipient for malfeasance, and other issues not addressed in this article.
9. Id. §§ 704(3)-(5).
10. Id. § 704(11).
11. Id. § 704(1).
12. Id. § 725(2).
13. Id. § 704(8). While not specifically targeted, there is reference in the one-year plan authorizing "assistance for very low-income and moderate-income families" (§ 712(c)(2)(A)), and the requirement that grant recipients describe how their rent-setting methods would affect affordability of the housing to "families having incomes that do not exceed 30 percent of the median family income for the area" (§ 712(c)(2)(II)). The plan also requires recipient entities to state how their goals, activities, and policies will "reduce (or assist in reducing) the number of households with incomes below the poverty line" (id.).
14. Id. §§ 704(8)-(9).
15. The United States median family income, about $41,000, is likely to be higher in most cases.
16. Id. § 761, Termination of Indian Public Housing Assistance under United States Housing Act of 1937. However, Title VII grant recipients would be required to reserve and use amounts from those grants necessary to fund "any entity that owns or operates housing developed or operated pursuant to a contract between the Secretary and an Indian housing authority pursuant to the United States Housing Act of 1937." Id. § 723, Required Affordable Housing Activities. After September 30, 1997, financial assistance may not be provided pursuant to that Act unless such assistance is derived from amounts made available in FY 1997 and provided pursuant to commitments entered into prior to September 30, 1997. Id. § 761. Existing Indian housing developments would continue to be subject to the ordinary rules on demolition and sales that would apply to all other public housing. See Section 723(b), which makes Section 261 of H.R. 2406 applicable to such housing.
17. Id. § 762, Termination of New Commitments for Rental Assistance. This would apply to financial assistance committed after September 30, 1997.
18. Id. § 763, Termination of YouthBuild Program Assistance, would amend the Cranston-Gonzalez National Affordable Housing Act, 42 U.S.C. §§ 12899 et seq.
19. Title VII, § 764, Termination of HOME Program Assistance, would amend the Cranston-Gonzalez National Affordable Housing Act, 42 U.S.C. §§ 12721 et seq.
20. Title VII, § 765, Termination of Housing Assistance for the Homeless, would amend the McKinney Homeless Assistance Act, 42 U.S.C. §§ 11361 et seq.
21. Title VII, § 761.
22. As indicated in past Bulletin articles, Brooke Amendment rent protections are are under attack across the board. See, e.g., The Brooke Amendment Should Not Be Repealed, 26 HOUS. L. BULL. 17 (Feb. 1996), and Proposed Changes to Brooke Amendment Will Not Work, 26 HOUS. L. BULL. 79 (June 1996).
23. Id. § 727, Lease Requirements and Tenant Selection. However, these requirements give little guidance as to exactly what is required.
24. Id. § 727(a)(3)(C).
25. Except for McKinney Act assistance for homeless persons (§ 765, Termination of Housing Assistance for the Homeless), there is no mention of cutting CDBG funds for Native American assistance. Therefore, it is presumed that, at least as far as this legislation is concerned, other CDBG-funded programs would continue.
26. Id., subtit. A, Block Grants and Grant Requirements, §§ 711-718, and subtit. B, Affordable Housing Activities, §§ 721-784.
27. TDHEs submitting grant applications on behalf of a tribe must first submit the plan to the recognized tribal government for its review and obtain the tribe's certification that the plan was reviewed and authorized for submission to HUD. Id. § 712(d).
28. Id. § 723(a).
29. Id. § 711. The total appropriated funding for Indian housing programs in FY 1996 was $633 million, according to the Washington-based National American Indian Housing Council.
30. Id. § 742.
31. Id. § 723(a) requires continued provision of sufficient funds for the maintenance of operating assistance for Indian housing developed or operated pursuant to the United States Housing Act of 1937.
32. Id. § 724, Types of Investments.
33. Id. § 712, Local Housing Plans.
34. Id. § 712(b).
35. Id. § 712(c).
36. Id. §§ 712(c)(2)(A)-(D).
37. Id. § 712(c)(2)(I).
38. Id. § 712(c)(3).
39. Id. § 712(c)(3)(B)(ii)(II).
40. Id. §§ 712(c)(3)(C)-(E).
41. Id. §§ 712(c)(3)(F) and (G).
42. Id. § 712(c)(4).
43. Id. § 712(f).
44. Id. § 713, Review of Plans.
45. Id. § 727(a)(5).
46. Id. § 727(b).
47. Id. § 727(b)(3).
48. This last remedy is reserved for cases where the tribe has engaged in a pattern or practice of activities that constitutes substantial or willful noncompliance. Id. § 752, Replacement of Recipient.
49. Id. § 754, Performance Reports.
50. Id. § 755, Review and Audit by Secretary.
51. Id., subtit. F, Loan Guarantees for Affordable Housing Activities, §§ 771-777, and subtit. G, Loan Guarantees for Indian Housing, § 781.
52. This $400 million guarantee program could finance 6,600 units per year at an average cost of $60,000.
53. Id. § 712(3)(B)(ii)(II).