Report on Indian housing


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Report on Indian housing
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vi, 186 p. : ill. ; 24 cm.
United States -- Congress. -- Senate. -- Select Committee on Indian Affairs
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Indians of North America -- Housing   ( lcsh )
federal government publication   ( marcgt )
bibliography   ( marcgt )
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Includes bibliographical references.
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written by Phil Shenk ; U.S. Senate Select Committee on Indian Affairs.
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Printed for the use of the

U.S. Senate Select Committee on Indian Affairs


For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402

SELECT COMMITTEE ON INDIAN AFFAIRS I Created by S. Res. 4, 95th Cong.) JOHN MELCIIER, Montana, Chairman D)ANITEL K. INOUYE, Hlawaii WVILLIAM S. Co I IE N, Maine
ROY M. WHITACRE, Staff Director ALAN R. PARKER, C'hicf Counsad MICHAEL D. Cox, Minoritil Cou ,wl

This~j report on Indlian housing~ was written lor' the Senate Select Committee on Indian Affairs by Phil Shenk, professional stair mfembhler of the Senate Select, Committee on Indian Akffalrs.

Digitized by the Internet Archive in 2013


Introduction .. . . . . .. . .. . . .. .... .... -v ii
Photographs of housing conditions- -------------------IX
Chart: Infant mortality rates by age at death------------..... 2
Federal involvement----------------------------------------------2
Prototype cost limits-----------------------------------------5
Owens Valley example--------------------------------------.. 5
Timing------------------------------ ......................Publishing ------------------------------------------------ 7
Data sources for IItA prototypes------------------------Inflation outpaces increases---------------------------------Indian prototypes are lower than non-Indian prototypes -9 HiUD fails to establish Indian prototypes----------------------------J
Summary------------------------------------------------ 10
Recommendations-----__---------------------.. (0
I)avis-Bacon wage rates----------------------------------------------13
Inappropriate reservation rates------------------------------------18
Unequal application---------------------------------- 14
Table: Variances in Davis-Bacon rates within 1IU1) region 1X 14
No meaningful apprenticeship or training allowed by the )epartnnt
of Labor------------------------------------------------. 15
Relative impact on costs--------------------------------- 15
Recommendlations---------------------------------------........-1 (
Problems in financing Indian housing on trust land-------------------. 17
Trust lands background------------------------------. 17
Mortgaging trust lands for housing construction- --------------------1s
Summary-------------------------------------............. 19
Summary----------------------------................. 21
Recommendations------------- ---------------------------------22
Indian Housing Authority structure . . . . .23
R ecom m endtations---------------------- ... ...... ......... .. 24
HUI) administrative structure ...-- ------------------- ... 25
Recommelndations--------------------------------------.... 26
Comprehensive planning for home construction at the local level --------- 27
Meaningful planning thwarted------------- 27
Recommendations .29 Sanitation systems------31
Recommendations- 32
Interagency coordination-- 88)
Recom m endations- - - - -- - .. .. . .. .... ... .. .. ... .. .....34
Minimum property and design standard requirements. :35
Recommendations----------- 0
Lease purchase proposal ---------7. .
Recommendations-------- ... ..... .. ...... .. ... .... ... ...-Rehabilitation and modernization of existing substandard housing 39
Recommendation------------------------........................ 40
t1UD's latest proposal: Add a construction manager_. 41
R e c o m m e n d a t i o n s - - - - - ... . . . . .. . . .. . . . ... ..4 2
BIA housing improvement program------. 43
Recommendations----------- 43


Digest of major recommendations-- 45
Prototype cost limits - - - - - - - - - - -- 45
Davis-Bacon wage rae---------------------45
Financing Indlianl housing on trust lad--------------45
Indlian housing authority srcue-------------- 45
HUD administrative stutr------------------46
Comprehensive plnig--------------------46
Sanitation sytm-----------------------46
Interagency coriain--------------------46
Lease-purchase pooa---------------------46
1. Official communication on Indian housing------------49
11. Section 901-Indian and Alaska Native housing and community
development provision in the 1977 Housing an(I Community
Development Act (Public Law 95-128)------------69
111. January 11, 1979, proposed regulations on HUD Indian public
housing porm--------------------71
IV. Digest and summary of GAO report: Substandard Indian
Housing Increases Despite Federal Effort-A Change is
V. Summary of 1975 field hearing on Indian housing--------137
V I. Proposal ft. t a lease-purchase homeownershi p opportunity program-147 VII. HUD administrative stutr--------------VIII. Rural Credit for American Indians, a handbook of FtnHA programns------------------------------------------------- 151
IX. Selected reports from FmHA field offices on the implemnentation of the FmIIA Indian Outreach efot---------171
X. Selected1 communications from Indian tribes and1 housing
XI. Factsheet on Housing-Rural America------------183


During the 1970's, Indian housing has been the target of more than one dozen substantive studies I)erfornied by congressional, administrative, public, and priNrate organizations. As a result, there have been a number of attempts to correct the identified problems. To (late, most) if not all, have proven to be false starts in that there have been no significant administrative or legislative initiatives during this period.
In part, this may be attributable to the almost overwhelming complexity and scope of the problem. The need for new housing units and renovation of existing housing for Indian communities continues to increase dramatically. The root causes of the Indian housing crisis are pervasive and the determining factors are so unique that they tend to obscure the search for alternatives for improvement.
It is clear that a significant, comprehensive, and coordinated Federal effort is called for if there is to be any meaningful change in the foreseeable future. However, the recently increased level of attention (11rected. at what has been accurately described as a crisis in Indian housing gives cause to believe that such an effort will be forthcoming.
In July 1978, the Department of Housing and Urban Development invited Indian housing authority representatives to a national meeting to discuss the latest version of the proposed new regulations, the Counselor to the Secretary's recommendations on Indian and Alaska Native housing programs, and also to introduce the Indian commum t37 to the new Special Assistant on Indian Programs. While the participants were in Washington, D.C., the Select Committee on Indian Affairs took the opportunity to invite them to a meeting with congressional staff after HUD's national meeting. There, participants related their frustration at the failure of the HUD meeting to produce meaningful dialog and discussion. As a result, the chairman of the Select Committee on Indian Affairs directed the chief counsel to send a letter in September to all tribe and Indian housing authorities requesting their assistance in identifying problems and suggesting solutions. The response to that request was overwhelming, and led to a meeting in Albuquerque in December to which the Select Committee on Indian Affairs invited IHA's, House and Senate Committee and other congressional staff to more specifically identify problems and to discuss and refine corrective solutions, including those nonlegislative in nature which could be effected through congressional oversight and administrative review. It is out of this context and in direct response to the General Accounting Office report: Substandard Indian Housing Increases Despite Federal Efforts-A Change Is Needed; that this report was prepared.
This report is not designed to be simply another study of an endemic problem situation but rather to provide an analysis for congressional and administrative decisionmakers which will, with specificity and clarity, identify realistic alternatives. That is, this analysis represents (VII)


an attempt to go beyond the problem identification level of past studies and to recommend a range of modest and realistic alternatives which, taken together, can bring about significant and enduring change.
In the following report, a series of problems and recommendations are cited. Three primary problem areas revolve around the prototype cost limits, the Davis-Bacon wage rates, and the financing activity on Indian trust land. The correction of just these three would result in a significant increase in housing production, and measurable progress towa rd eliminating substandard housing in Indian communities.

The following photographs represent a collect ion of raph Ic ill111 rations of the p~resenlt housing~ ~ond(itionls on some -smallI reserVa t 10115 aM( i'anchei'ias in California. Jamnes Fletcher, with the ( 1alifornia Departrnent of fTousino, aind Community Developmenit, supp1liedI the Select Committee on Indiain Affirs with, the Jphoto -rajph,. PhotOlL,iphv credlits go to M.lli Chamirbers.



In 1970, 63,000 Indian families lived in substandarid housing on reservations across the country. In 1976, 86,500 Indian families were living in substandard housing.' During the same perioI, Fe(leral housing assistance efforts to Indians declined. As the overall Indian reservation population increased, the number of fedIerally suIpported new housing starts dropped sharply from about 5,000 in fiscal year 1970 to 3,500 in fiscal year 1976.
Stark figures like these are helpful in that they lepict the deteriorating situation of Indian housing in terms of numbers. But numerical categories are of little assistance in gaining an unlerstandling anl sensitivity to the experience of living in substandard housing conditions. A substandard house, according to the Bureau of Indian Affairs, is a house which is not generally "decent, safe, anI sanitary" and loes not meet minimal standards relating' to overcrowding, year-roundl heating, and simple plumbing and electrical systems.
Indian reservations are located in some of the most isolated areas of the United States. These geographical factors, along with the near absence of physical infrastructure, combine to exacerbate the dismal living conditions of poverty and ill health existent on many reservations. Of all population groups, American Indians an(I Alaska Natives continue to have the lowest incomes, the fewest economic opportunities, the highest mortality rates, the least education, and, notably, the worst housing.
There are approximately 650,000 Indian people living on reservations. Migration back to the reservation community has increased dramatically during this decade, compounding the shortage of available housing. Additionally, the deman(l for housing will assuredly mushroom exponentially during the next 10 years since the median age for Indians is 20.4 years, causing an expected sharp increase in family formation and a corollary expansion of need for single-family dwelling units in the near future.
Most Indian families live in rural areas where the typical family dwelling is 30 to 40 years ol and in need of extensive repair. Most of the families are in the very low to low income range, with large families to each house.
Another way to measure the condition of Indian housing is to focus on the environmentally related health status of Indian people. More than 10 out of every 1,000 Indian infants between the ages of 1 and 11 months (lie after they arrive in their family's home from the host pital, a rate which is more than double that of non-Indian infan1 For a more extensive description and documentation of the Indian housing need, see chapter twc of th HUD Secretary's 1978 Annual Report to Congress on Indian and Alaska Native 1lousing and Community Development Programs (p. 61).

m1ortali~ty ra'tes. Tphe accident rate in Indian communities is more than thre-e and one-hlfl times that, in flof-lfldianf areas, a rate in part related to home safety factors.



10--ALL RACES r-r ---i r51

II rU /rr
UNDER 1 DAY 1-6 DAYS 7-27 DAYS 28 DAYS11 mots
~O~~H~YV t~ SAISICSREPRT.NCHS, VOL. 25 NO. 13. 1977
~uc:FY 199 Bdge Justification Material; Indian Health service (DHEW)

It is of crucial importance that Indlian housing be considered ill the context of' the over-all economic dev elop~ment picture on reservations. I-osn- sitanice programs are a major component in present, reserve t 1011 economic, deCvelopment, activities. Unles-,s thiey aire desv~rned a11d imleinentedl inl a fashion which contributes to thie eradict Ion11 o1' the niy other- debilitating social and ecoomic factors extant onl most rese(rvaItions, pi)rgess inl elimlinatingr Indian hiousing- will1 conIt111e to be tlIWlrtCel.

1~Ei)ER l I VoiViExiw Nr
( ongress in the Houising, Act of 1949 (42 U.S.C. 1401), as
tifiei e '5 fl~is(I,,s a't onima gonl thatt eadci Amiericzan. family liii Ie decent s, adsinir omle, and ail thorized various subi./A( I 1werallhosn programs, to hell) meet ta ol
Ini l 96l, f)llir housing*,1I1 program adminstered byN IThe Depnrt(di oI IWI1111n 1111dI Urban1 lDevelopinenit (II UI)) wvere niade aal
alh to 011a~liigo esrain thlrough Indian HouISing- AllI~~I'- hori ic ,1lshich w\ere formed to develop an11d )ernte bothl
IA! t;iI td 10Imi ( wim u'isl hlp [mhhu pril iii g ),ject 5. I I111 j)rga l
I a e i ie 1w(t't I1 lie ii :j 01 1q ()I* ii ofIiew h is g fI' nln s
1I ) W 1 '0V t 1 IureN 11 ofd I Til [ in AfhtlI rs ( B I A) In thle In1t erior I )part Ii I UIA'llI IIiS O~i 1 I ti I Tii mroeien 1 I -, I l ~ t 0


pr-ovide fol the housing needs of Indians livirlg' onl rese-rvations thlat coul(Inot be met by1IUD priogramins orother maniiis. 131A aIlso pr-ovide~s appIraisals, site select ion, and land acqutisition serices,1' '11 ai lliIIs access roads, for housing pi-ojects.
In add(ition to HtUD and BIA houisjnr a"Itac f~oris ew
Indlians have received housin(r assis-ttnce loans or loanl guIar'ailtes from the Farmers Housing Administration (FmIIA), the \eterans' Administration (VA), ti-ibal credIit programs, and a lew other, public" or pr-ivate sources.
The Indian Health Service (IllS) of the Department of Hlealthi, Educa tio, and lfar (rener-ally deshis afunds IUT(1vater- and sewal-e facilities for most reser-vation homes.
In gener-al, Indians living on reservations have haid to rely heavilyv on Federal })rogirams to meet their housing needs b clause of relatively low incomes, isolated locations, and the unique land owner'sip stat us.

The establishment of a "prototype cost" limit as a means of
controlling costs of Indian housing does not provide an effective
tool with which to contain costs nor meet production goals. Instead, the prototype system as presently administered has built-in escalation tendencies which encourage initial underestimates of the real costs, resulting in delay producing reduced designs an(d/or features, renegotiations, and rebidding.

The following is an example of the impact of the chronically disjointed prototype and delivery system on costs and productions
achievements. The Owens Valley Indian Housing Authority in California received a program reservation for a 21-unit project in April 1977. The program reservations like all others, listed the number of house units, the size of the houses (in terms of number of bedrooms), and the total development cost for the project. The total development cost for the project was computed by multiplying the prototype cost in use at that time by a factor of about 1.75. Their April 1977 program reservation's total development cost limit was formulated with the June 1976 prototype because the 1977 prototype had not yet been published.
The Annual Contributions Contract (ACC) 3 for this project was awarded in July 1978, more than 15 months later. The responsibility for the delay falls both on the IHA and HUD. The IHA experienced difficulty in obtaining satisfactory performance from its architectural firm and had to fire it and rehire. HUD failed to make timely approvals during the various procedures. But the primary reason for the undue delay lies both with the prototype system itself and HUD's maladministration of it.
This project was initially based on the June, 1976 prototype.
Later, HUD allowed the IHA to use the June, 1977 prototype limit
'The prototype cost limit is the allowable unit cost of HUD subsidized housing in a given area based on the expected costs of building a modest dwelling for low-income people using a standard design. Basically, the prototype cost is the estimated cost of an average house.
2 A program reservation is awarded an IHA after it submits an application showing need and preliminary plans for a housing project. A program reservation is basically an internal JIUD administrative action which reserves an unspecified amount of money sufficient to finance the construction of a specified number of housing units for the project. This commitment by HUD to allocate a certain number of units to the IHA is the cue for the IHA to begin substantive work in preparation for the actual construction. It should be n oted that the program reservation always is given in terms of numbers of units reserved for an IIIA, and not in terms of a dollar amount reserved. The actual project and per-unit cost is established later when. HUD allows the lIHA to float a note for the project under an Annual Contributions Contract (ACC) agreement.
3 An Annual Cenlributions Contract (ACC) isan agreement by HUD loan IHA to make annual financial contributions suffcient to amortize the development and financing costs of a housing pro.:ect over a 25- or
*0-year period. HUD makes a short term loan to the ItIA after the award of a program reservation. Under HUD supervision, the IIA then sells temporary notes to private investors in order to repay the initial HUD loan. Once construction is completed, these notes are incorporated into more permanent notes or bonds on which 1t UD pays the annual debt service until the note or bond is retired (25 years for the Mutual Help iomeownership Program; 40 years for the Low Income Rent Program).


for the project and when the ACC was finally agreed to, the 1978 prototype was used. But the 1978 prototype was precisely the same level as the 1977 prototype for Owens Valley, despite inflationary increases in the market. HUD's rationale for not increasing the proto4,ype was that the last previous public housing construction bid tward(ed in that area had been 12 percent less than the prototype limit (SS percent of the June, 1977 prototype) and, thus, the 1977 level was (deemed high enough to absorb inflationary increases during 1978. What HUD failed to consider was the fact that the 88 percent bid was one of five bids placed. The other four were at 110 percent of prototype. The 88 percent bid was far below the normal competitive level, presumably because the winning contractor nee(led the job Desperately. In the end, HUD's failure to recognize the freak nature of the previous bid level pro(luce(d a nightmare for the IHA in its next project.
During 1977, the IHA was forced repeatedly to revise its cost-perunit downward by deleting the landscaping, fencing, and other regular budget categories in or(ler to come under the 1976 prototype limit.
The project was finally put out to bid in September 1978, 1'1 years after the program reservation and based on a 1% year old prototype cost. Only one firm bid, and its level was at 118 percent of the prototype. (HUD regional offices have to make a specific exception approval for bids above prototype up to 105 percent of prototype-HUD central office has to make a specific exception approval for bids between 105 and 110 percent of prototype-bi(ls 110 percent of prototype and above are rejecte(I). The IHA made material cuts and placed the 21-unit project out for bi(d a second time in October 1978. The same firm bid, again the lone firm, at about the same level; 115-118 percent. Likewise, it had to be rejected because it was too high. The cost limits were irrationally based on a market more than 2 years old with an annual inflation rate of between 10 and 15 percent.
Under the present prototype system, the only recourse left to the IHIA in December 1978 was to request that IIUD ("o one of three things: (a) increase the Owens Valley prototype cost limit to the point that it could be successfully bid upon; (b) establish a higher prototype for the Owens Valley 1HA project separate from the Lone Pine, ( alifornia, Prototype area under which Owens Valley is included; or (c) place Owens Valley under the Gardnerville, Nev., p)rototyp)e area whicllh is geographicallvy closer to Owens Valley than is Lone Pine (alid is also $:,000 per unit higher).
As of ('arly January 1979, the IHUD regional office has not yet (sp onale! Ito the IllIA request. 'Thus, the IHA assumes that the regional office has re(luested I that the central office give approval to an ;iterim prototy)e lipi)(Iate. At best, it takes : to 4 months for an illt(1,1111 Il))(I ht, to glll a pprOval. I other words, the IIIA can, at IWst. ,Xj) ,t to receive a reviseI p)rototyl)e in vy 1979, and award a bid by Jul y 1979. If it is extremelvy fort unate, the IliA may see actual calls iitl i mwork beginii on the 21 houses b)y the end of summer 1979. P lrhaps these 21 houses \vill be ready for o(cuplanc b y me11111111 1981, 1110 111 11 4'N0 Veals after soli(id co1mitment was ma(e for 21 hiees. 1,The riary (:,1se of the delay? A rigidly inflexible system
of I!lo l)1i()flrci' (' ost ('o0 t i0 llo i lf'es tl t m1I' Jpe Iersely V oiillter-


The law requires HUD to publish prototypes at least once a year, with the implication that it can be more often. The act was written in 198'7. The annual rate of inflation has skyrocketed since that time, making it a near imperative that HUD publish prototypes more frequently. Nonetheless, IIUD publishes them only once each yr in the Federal Register.
To compound(I the problem, HUD normally )publishes t!n'e -rotovytpe in June, precisely halfway through the prime construe action )eriodI for most areas of the United States. If an IHA exercises good connonsense, it attempts to get its project under construction in early spring, in order to capitalize on the longest possible period of amenable weather. Yet, to do so, the IHA must award a contract to a ccntra;ictor at the previous year's year-old prototype levels. The onli other choice is to delay the ACC agreement (and, therefore, the bid process and construction start), until immediately after the June publishment of the new effective prototypes, and thereby lose a number of good construction months in early summer.
In addition to the fact that prototypes are published too late to be used effectively in the construction period, on the very day they are published they are often 3 to 6 months out of d(late because of the lag between the time the data is gathered and the time it is finally )processed and published. Inflation and other market cost changes do not remain static while HUD toys with the data; they increase. Yet, the prototypes are kept the same. In many respects, p)rototyl)es are at best useless and at worst inflationary and stultifying.
Many contractors understandably attempt to delay projects during the bid process (especially in the second half of the prototyl)e year) in order to take advantage of upcoming higher prototype cost limitations. Since a contractor is aware that a given prototype is based upon out-dated cost factors, it is clearly in the contractor's interest to slow down the process because the contract cannot be performed( within a sufficient margin of profitability at the outdated limits.

Publication of a prototype cost limit is 1)roblematically inflationary. Numerous IHAs testified that the first question often asked by a prospective construction firm is what is the prototype limit, rather than what is the design and how much labor, materials, and overhead will it take to build the project. The prototype process, therefore, results in the contractor bidding backwards from the prototype
rather than from the bottom up. Contractors tend to bid the prototype cost limit automatically since there are so few firms interested in competing for the often remote IHA jobs. And, IHAs do not have the authority to negotiate with the contractor of their choice but instead must put all construction projects up) for public bid.

The data sources used to construct prototype cost limits for IHAs are in most instances generalized from the nearest metropolitan areas.


HUD uses regional factors as its data source for determining prototpI)es. In many Indian areas, a usable data source is nearly nonexistent since these areas do not have an established market which can be readily transmitted into meaningful and realistic material or labor costs. The nearest home construction activity from which market costs can be determinedd is often too far away to provide an accurate extrapolation. Few HUD field offices have even attempted to determine the d(lifferentiations in labor and material cost markets, much less the variances related to climatic, geographical, and cultural factors. Though the prototype is touted as the typical construction cost, it has not been calculated to 1HA-specific situations such as remote locations, scattered housing sites, and transportation factors. There is one notable exception.
The HUD Denver regional office developed a slightly different nethod of preparing prototype costs for the 1978 list that appears to have produced some prototypes for some IHAs that are more specific to the local needs and assets of the particular community and market area.
Simply put, the regional office prepares an "example dwelling" on paper for the region, and a(dapts it to each IHA's situation. The IHAspecific t'rototype is estimated(l from the Federal Housing Administration (FHA) single family cost book; adjusted upward for the degree of remoteness of the IHA from the materials and labor markets; increased for the projected impact of inflation on the costs by the time they are published; and opened up in a limited way to the special needs of that IHA.
The following account provides an example of the value to HUD and an IHA in allowing prototype adaptation to a unique circumstance or condition. The Northern Cheyenne reservation in southeastern Montana has a lot of coal underneath it making coal the lowest cost heating fuel available. However, the initial cost of acquiring and installing a coal-fired furnace is on the average of $1,000 more than the initial cost of a normal heating system in a regular "example (dwelling." In reflection of more long-term cost considerations, the p)rototype for Northern Cheyenne now contains an additional $1,000 to cover the special furnace costs (after persistent lobbying of HUD )by the IIIA).
The Northern (heyenne 1978 )rototypl)e for a three bedroom exam1)le dwellin is $34,700. The nearest major metropolitan (Billings, Mont.) )prototyp)e for a similar size house is $29,350. The variance between the two, $5,350, is suil)i)ose(d to represent the d(lifferences rehlated to remoteness and( specificity, including the installation of coal flirnaices. The Northern ( 'heyenne 1978 prototype was more than 17 lJ'ern('nt higher than its 1977 prototype, siml)ly because of the new IllA-slPwcifi,' formula utilize(I by the Denver region.

I t 1h plrivtle iim il' constiuction in(lustry, tie open market sets (ie cwlontru lti a,'osts. 11l1) uses the 1)rototyle as a method( of cost uoiit llaillm't ll 1at e11ileavois 10to loject what cost levels for a tyl)ical house will he iIIn I he f 1tu re year as established by the prevailing market, anid also as n inalterable gui(deline for the cost reiliiing on a i i house.


When the HJUD prototypes aI'e comparedI with the national average cost for a new home, the surreality of prototype cost limits beco:nes readlily apIparent,. Tphe Census Bureau released a report on January 11, 1979, which stated that in 1976, the last year for which complete statistics are available, new single family homes soldl foi an aver-age of' $44,770 nationwide, ranging from $28,557 in West Virginia to $64,3;06 in Alaska. As of early January, 1979, the Census Bureau estimates that the average price of a new home is nearly $65,000. The average total development cost for a HUD-assisted Indian house was $40,828 in fiscal year 1976, and $51,977 in fiscal year 1978. In other words, while the private market prices rose 45.2 percent between 1976 and 1978, HJUD Indian allowable house costs rose only 27.83 p~ercent. And, while the average sale price or a privately dlevelolped anld primarily suburban house is not comp~arable with the total dlevelop~ment, cost of a JIUD financed, reservation-based home, it is certain that the substantial dlifference in the rate of increase between the two is not readily exp~lained except by the fact that Indian prototype cost increases have not reflected the inflationary increases extant in the surrounding private market (luring the past 2 years.

When 11UD Indian prototypes are measured against the neighboring public housing authorities' prototypes, it is clear that many IHAs are given lower prototype cost limits than those enjoyed by the nearest urban public housing authority (PHA).
For example, the 1978 prototype for a, three bedroom detached or semidetached house at Fort Thompson, S. Dak. (Crow Creek Sioux Reservation) is $36,400, while the nearby State capital city of Pierre is at $40,700, and the largest urban metropolitan city of Aberdeen, S. Dak., is at $38,750.
In Michigan, the prototype for the Marquette area covers a number of the Michigan IHAs. Its 1978 prototype for a three bedroom detached or semidetached house was $25,350, while the major metropolitan area of Lansing was at $31,200.
There are some notable exceptions, but as a general rule many IHAs possess similar if not lower prototype limits than do their neighboring urban counterparts. Thlis is the case despite the fact that cost factors vary such as those incurred on transportation. An IHA's transportation costs are ge nerally higher than an urban PHA's since an lIHA encounters higher transportation costs going to and from the labor and material markets to the often remote Indian projects, and because it experiences higher transportation costs traveling between the often scattered housing units in one project.

Some IHAs dto not have a prototype that is categorically separate from another PITA's. Here again, the lIlA often is forced to operate under a cost limit that was specifically designed for an urban area.
For example, the Creek IHA in Oklahoma must use the prototype developed for the city of Muskogee and the Muskogee PHA. In 1978, the prototype for a three bedroom detached or semidetached house was $27,400. The Muskogee PHA has its public housing projects


clustered in mostly one part of the town nearby the PHA's offices. On the other hand, the Creek IHA with the same prototype limit must travel over an eight countywide area to its projects, producing an additional cost factor in terms of time and money which is not taken into account in the shared prototype ceiling.
In Alaska, the inequities of such a shared prototype situation are in the extreme. In some instances, the differences in transportation costs of one project compared to another project within the same prototype area can reach $5,000 per unit.

At the local level, many IHAs feel that HUD has placed them in a double bind. On the one hand, HUD insists that costs be kept within certain prototype established limits. On the other, HUD uses a cost containment system of prototypes that is so out of touch with market and situational realities that it produces delays in production which directly cause increases in cost. In short, prototype cost limits are more reflective of wishful budgetary constraints than reality.

HUD should seriously consider the option of eliminating the prototype cost limit for Indian public housing, replacing it with an aggregate funding mechanism. Under such a system, the IIIA would, with the close monitoring of IIUD, design and construct a housing project from ain aggregate sum in much the same manner as a specific grant is administered, except that the use of an ACC would be retained. In order to Insure that the IIA builds as many good houses for the dollar as is possible in the specific setting, an incentive should be built into the grant process which emphasizes the accountability the IIlA has to its constituents, the low-income resident Indians of the reservation communnity. Perhaps the initial implementation of such an aggregate funding syNstem should be in the form of a limited demonstration project in order to insure that it is meritorious. There is working I)reced(ence for such an idea in the use by IlIS of a flexible-grant funding mechanism for the construction of offl'site sanitation systems on 11i'lUI) In(lian projects. Under such a system, there woul( appear to )e no reason able need for a premature projection of the fututire market typical costs nor a heavy-handed application of outdated cost limits. The IllA woul( simply have to make efficient, appropriate, and timely expe ditures. In the long run, this grant style funding would coinceivab V become the most cost-effective possible system, replacing th1e d(laiVy-)prme alld inflationary p)rototype p0roce(1ure.
While l IIl) considers the elimination of the prototype, it should 111111iatlV ilstit ute s011() initeriln procedures that would apply the pfrlto\t v) a t( mlia areas ill a 11ore reasonable fashion.
l1 Irfl lert(/11l hra llyg I lmlill pul) 1i l housiing- construction costs iil) 111ine wi 1i real market cost levels andI thereby reduce production (IelHn, 1Ill1) shoul immediately institute flexibility and( streamlining Irom lift'es i)re-eill III the 1) lVate (onstruction reaInl with respect to l i i (',111, pilwit 1011 I)ro( lifr4, ni g(elierll COst.
111.1) Thli a ls delegatee a significant degree of latitu de and( auIhrity to its Iiel ( oIices fo(r the miid-vear amnending of proto ypes


where circunst ances a1nd COilinonsellrerequ ire 1II pwIard( revi"iol, with the aim of redluciing the time it takes to process sich a revisioti to a matter of ays rather than months.
Since part of the problem with prototypes is that they are hase'-d onl defective, outdated, and inappropriate lata sources, II1 ) shOlui require all its field offices serving IllAs to use a process similar to t lat developed by the Denver region in dletermining more realistic prototype for IIllAs. These protypes should be specific to each IllA's condition, including a special emphasis on reflecting local and cultural preferences with respect to (durability and designn to the utmost extent.
Rarely, if ever, are the IllAs involved in or even informed of the development of the prototype cost limits for their areas. Whenever even the most obvious and commonsense change is necessary to the published prototype an IllA, such as the Northern ('heyenne, is forced to expend a significant degree of time and money before it can successfully convince enough IIUD officials to authorize a depart ure from the status quo prototype. In other words, the iIA is confined toa negative reactive posture rather than one of positive initiatilon. In order to remedy this situation, HUD should require all its field offices serving IHAs to ensure the full participation and involvement of each IHA in every stage of the development of its prototype.
Since the once-per-year publishing of prototype costs duringg the prime construction period renders such prototypes practically useless (especially during the current period of high inflation) and tends to encourage delays, HUD should immediately begin to issue prototype costs for Indian areas twice each year, once in June and once in December. The biannual prototypes should be computed according to the process developed by the IUD Denver region, and should reflect the local cost factors. These biannual prototypes should also accommodate the time lag in the production pipeline by projecting the estimated co st increases over the life of the construction project and trend the prototype accordingly.
In light of the enormous delays encountered at the HUD center office level in absorbing the field prototype data and in getting it published in the Federal Register, HUD should consider other means by which HUD field offices could compute and publish the prototypes locally in the area in which they are to be applied.

The requirement for HUD Indian public housing programs to pay "Davis-Bacon" wage rates on all HUD-assisted construction has beeti identified by many different IHA's as a major source of inflation and delay.
The Davis-Bacon Act requires that all construction labor wages on HUD-assisted Indian housing projects be paid at least at the rate prevailing in that area. The original purpose of the act was to prevent Federal contractors from engaging in the practice of bringing into an area of Federal construction out-of-State workers who general]-y worked for less than the local community workers thereby undercutting and depressing prevailing local wage scales, demoralizing local labor markets, and in turn, disrupting local economic conditions. While the Davis-Bacon Act has provoked a significant amount of controversy, the arguments pro and con have in large part been irrelevant to the unique problems ensuing from the application of the act in the reservation setting.
The act was supposed to have prevented the Federal Government from becoming party to a procedure which could cause nonlocal workers to depress local waore levels and take jobs from local workers. Precisely, the opposite is true on Indian reservations. The direct result of Davis-Bacon ha's been a discrimination a(yainst local hire of Indians because few have had the opportunity to gain a marketable skill to the degree that it is feasible for a contractor to hire these workers at Davis-Bacon rates.
The act was not designed to increase construction wages or benefit rates in an area. Its purpose was to maintain wage levels, already found to prevail in an area where federally assisted construction is to take place. Yet, as applied on Indian reservations where little, if any, similar precedent setting construction activity has been performed, the DavisBacon rates are often much higher than they would otherwise be. In large part, this is because the Department of Labor has made little or no effort to compute Davis-Bacon rates that are specific to each reservation situation. Many reservations are not located in unionized areas. Despite the fact the Department of Labor surveys are supposed to include all workers performing similar work in the area, both union and nonunion, studies by the General Accounting Office and private researchers have established that Department of Labor procedure', often involve the use of old data, data from outside local areas, or simply the use of the prevailing union rates in construction- all practices which discriminate against nonunionized bidders in the reservation areas.
In the case of reservation area rates, apparently the Department of Labor has simplistically taken the rate established for the nearest metropolitan area and increased it by an amount sufficient to transport


a worker from the metropolitan area to the reservation and back each work d(lay. By virtue of their nonspecificity, reservation Davis-Bacon rates are prohibitively high.
The few contractors located near an IHA generally have lower wage rates than the Davis-Bacon rates. The requirement of Davis-Bacon rates often causes such potential contractors to shy away from bidding on an IIHA's project simply because the contractor must reduce the firm's wage scales after the IHA project is completed (a demoralizing )rocedlure to the worker), except in the unlikely event that it obtains another Davis-Bacon governed job or is able to bid successfully at noncompetitive levels in the private market. Unfortunately, the superficially )rep)are(l and nonspecific Davis-Bacon wage rates under which an IHA must operate tend to diminish the number of interested contractors thereby diminishing the level of competition and cost-effectiveness to the point that, in many instances, only one firm bids on a project.
Under the HUD Indian public housing program most of the house construction is on detached, if not scattered, single-family units in isolated rural areas. No other federally assisted housing program of a similar nature is subject to Davis-Bacon. The Davis-Bacon Act of 1931 was al)pplied to public housing projects at a time when all Federal public housing projects were located in urban areas and were multifamily dwellings. Today, single family units assisted by both HUD's FHA, and USDA's FmHA are not subject to Davis-Bacon wage
rates, yet IIUD Indian units are require(l to pay those wage rates.
Following is a table of the average wage rates established under Davis-Bacon which graphically 1)ortrays the extreme variances contained within one IIUD region (IX) on 35 different projects governed by 20 different Davis-Bacon determinationss:
Number of Average
Reservation projects wage rates
Moapa River, Nev .......-------------------------------------------------------.. ..... 1 $14.83
Fort Mohave, Calif ..------------------------------------------------------------ 1 14.75
All Mission, Calif ...........------------------------------------------------------------- 1 14.05
Pyramid Lake, Nev ... ..-----------------------------------------------------------. 1 13.42
Fort McDowell, Ariz .. ...----------------------------------------------------------- 1 12.98
Salt River, Ariz ------.. ------------------------------------------------------ 2 12.94
Papago, A riz -I- - - - - - - - - - - - - -2 12.81
Navajo, Ariz .. ...---------------------------------------------------------- 6 12.24
Laguna, N M ex .. .. .. .. ... ... . . . .. ... . . . . .1 11.83
Northern Pueblos, N. M ex .- -- - - - - - -... .... 1 11.72
Navajo, N.Mex -------------... -------------------------------------------- 2 11.26
luI, N. Mex 1 10.34
All Imban, N. Mex... 6 9.60
AllIriaN Mex------------------------------------------- 61 9.40
Mescalero, N. Mex ..1 8.47
W ite Mountain, ArIz 1 7.14
an Carlos, Anz ...1-----------------------. I 7.14
Gla hIver A z 2 6.94
'Rouidl Vall'ey, Calif 2 6. 58
ie M ak, Nev 1 6.50
(oshut, N ... 1 6.08
A age of 3 trades Carpenters, plumbers, and electricians.
Source bUD 1978 draft survey, HUD region IX.


Despite the fact that in most instances Davis-Bacon rates are inflationary because of their "oiispecificity, it is "iflictit to aIrgue against the payment of high wages to Indian workers, especially in high unemployment areas such as are found oil lost reservations. Yet, few Indians are ever hired on many IHA projects because the pool of skilled labor on most reservations is alost nonexistent. The Act was intended to address such situations by allowing the establishment of apprenticeship and training programs i which a nonskilled worker could work on a Davis-Bacon governed project at a lower apprenticeship wage in order to gain the experience and training necessary to qualify the worker for master craftsman rates.
Yet, the Department of Labor's Bureau of Apprenticeship an(l Training (BAT) which administers these programs has not taken any initiative to adapt them to the reservation and make them work. Only one tribe-the Navajo Nation-has had a large scale an(d successful apprenticeship program and then only after the exertion of much effort. Few other tribes are large enough or diverse enough to make such a program, as presently administered by BAT and the Navajo Tribe, a success. One of the many requirements is that the IHA or tribe applying for an accredited program must be able to guarantee that a trainee will have work experience for at least a 3year period. An approved program must also have a significant classroom component; an activity which must be lone on a large scale in order to become cost effective. And, finally, an IHA or tribe attempting to establish such a program must gain approval from the State apprenticeship council, violating the Federal policy of a direct government to government relationship with Indian tribes. Unfortunately, the relationships between many tribes and unions have not been very good since many tribes are outside the immediate areas of high union activity.
Despite the urgings of the chairman of the Select Committee on Indian Affairs during the 95th Congress, and the requests of various tribes, BAT has not responded with an apprenticeship and training program that is usable on a reservation. The Department of' Interior's BIA-run Indian Action Training (IAT) program has established emaployment training projects on more than 50 reservations. DOL's own Employment an I Training AdIministration (ETA) has Comprehensive Employment anl Training Act (CETA) offices on more than 100 reservations. Given the two other existing Federal programs, it appears that there are more than enough training resources out of which BAT could easily construct a worthwhile and appropriate program. Nonetheless, BAT has yet to take any interest in Indian apprenticeship programs although In(dian community unemployment rates generally eclipse even the worst urban ghetto black teenage rates, with some reaching as high as 80 percent.

There is some dispute over the degree of impact that Davis-Bacon wage rates have on the cost of HUD Indian housing. In an informal


survey of several IHA's, it appears that the percentage of the total Development cost attributable to total labor costs (as opposed to materials and equipment costs) ranges from 40 percent to 53 percent for one housing unit in an average project.
ttUD recently conducted a study which in draft form indicated that reservations with high Davis-Bacon wage rates did not have high dwelling construction costs, but reservations with low wage rates had modIerate and low dwelling construction costs. In other words, the draft study attempted to show that low wage rates help keep some projects inexpensive, and that it is not high wage rates that make other projects expensive.

Whether or not Davis-Bacon wage rates are engines of inflation on HUD Indian homes, one thing is clear: as presently administered, the Davis-Bacon program bars local unemployed Indians from working on their own housing projects. The Department of Labor should immediately make a concerted effort to develop an Indian apprenticeship and training program that works on Indian reservations. Such a )rogram should make maximum use of the existing Federal efforts under CETA and the BIA, and should be designed to insure a measurable and significant increase in Indian employment on HUD and other Davis-Bacon regulated Federal construction activity on reservations. For both practical and policy reasons, the program should respect the direct one-to-one relationship which the Federal Government possesses with Indian tribes. HUD, Department of Labor's ETA, and DOI's BIA should cooperate fully in assisting BAT's lead role in the expeditious development of this program.
The Department of Labor should also develop wage rates that are specific to each IHA's situation. Prevailing wages should be determine(d on the basis of actual surveys, not paper extrapolations from metropolitan areas hundreds of miles away. These IHA specific rates should both insure that Indian workers are paid sufficient and fair wage rates and that local contractors are not frightened away from bid((ling on IIA projects by artifically high labor rates.
And finally, HUD and the Department of Labor should jointly ('onsi(er exempting those HUD-assisted Indian houses that are detached single family units from the Davis-Bacon requirements. As a substitute to protect the interests of Indian workers, HUD should take high level initiatives requesting that the Department of Labor a(l BIA work with IIUD to institute an apprenticeship and training lIogLram to insure that local Indians are allowed fair and equitable ('11 JloNent oplort unities.

In order to understand Indian housing problems associated with the status of Indian lands, an analysis of the legal background and policy developments relating to the Federal trust as applied to Indian lands is necessary.
Nearly 150 years ago, the Supreme Court described the relationship between the United States and Indian people as "perhaps unlike that of any other two people in existence," and "marked by peculiar and cardinal distinctions which exist nowhere else." One of these dist.inctions involves the trust or fiduciary responsibility which, under treaties and Federal statutes, the United States owes to Indians.
The Federal trust responsibility with respect to Indian lands is one of the most important manifestations of the trust relationship. Under the trust responsibility 1 1
the Federal Government has applied special protections on both al and allotted Indian lands for the benefit of the Indian owners. In most cases, the Federal Government actually holds legal title to tribal or allotted lands in trust for the Indian owners. In others cases, although the Indians hold legal title to the land, Federal law imposes special trust restrictions on the land. In both cases, Indians are the beneficial owners of the land, but the Federal Government may impose restrictions on use and management of the land pursuant to its trust responsibility.
It is perhaps worthwhile noting that in one important sense the Federal trust responsibility respected the general Indian philosophy of life that centered on the land. Aboriginal homelands are highly valued by the various Indian groups for socio-cultural and religious reasons as well as for political and economic reasons. Concef)ts of private ownership were not recognized in most tribal societies but rather land was considered to be commonly owned by members of the tribe. Under this framework, individual members held a use right or privilege to the land.
The most common legal restriction applicable to individually owned trust or restricted Indian lands is the general restriction against alienation incorporated under the allotment laws or other special acts. Under these laws, allotted lands were to be held in trust and restricted against all forms of voluntary or involuntary alienation for a certain period of time. Similar restrictions apply with respect to tribal trust lands. The purpose of these restrictions was to prevent the Indian owners, unfamiliar with non-Indian land tenure and business practices, from improvidently disposing of their allotted lands. In the 1934 Indian Reorganization Act, the restrictions against alienation were extended indefinitely as an expression of Federal policy designed to preserve the diminishing Indian land base.


Originally, the restrictions against alienation of individually owned In(ian lanls were absolute, preventing the sale, partition, mortgage, lea, or granting of rights-of-way over Indian lands as well as precluding the judicial sale of Indian lands in execution of a court judg111nt a81ainst the Indian owner or for nonpayment of property taxes. Over the years, Federal law relaxed the absolute restriction against alienation by allowing for the sale or lease of allotted lands with the approval of the Federal Government. Although the Federal Government theoretically acted in its trust capacity in approving or (isapproving the alienation of Indian lands under these laws, the result, was that millions of ncres of individually owned Indian lands were removed from trust ownership, and subsequently, Indian ownership.
Prior to 19:14, over 40 million acres of land vere allotted to Indians. Through BIA approved sales, removal of restrictions, etc., only approximately 18 million acres remained in individual trust status in 198 4. Individually owned trust or restricted lands were diminishe( to less than 14 million acres by 1952, and approximately 12 million acres by 1960. As of 1976, approximately 10 million acres of land rennian in trust or restricted status for individual Indians.
Ihe restrictions against alienation of tribal lands, however, have been relaxed only slightly. Only a few special laws authorize the sale or mortgage of tribal lands, generally in connection with acquisition of other lands on behalf of the tribe. As a result, the tribal land base has not deteriorated over the past 40 years as have individually owned Indian lands.

Iliousing construction and improvement on privately owned lands is generally financed by a connercial loan secured by a mortgage on the land. If the owner defaults on the loan, the lender can foreclose an( sell the land through the courts to recover the amount of the loan. lecause of the general restriction against alienation of Indian trust plants, however, individually owned and. tribal trust lands cannot be mort gage( I absent specific Federal statutory authority. The result, of course, is that connercial credit for housing construction on Indian trust lands is, i man pr11 ically unavailable since many
i ntIil O110is Ive 110 seclfitY for the loan, otemf tian th1e land

As flot ed alhove, however, th1 bsol ie restriction against alienatioll of inilividuallv onne trust or restricted lands has been modified over the years 1o 1tht atllt ted la could be Sold or leased wit1 the a ntr(v of 1he llA unimd ir Fedleral I law. In 1956, Congress pi)asse(d
Public law 1-150 u(allowing allot ted trust lands to be mnortgaged by Slie I inli i wners w ith the approval of t he lIA. The purpose of t he wH w s to Miico rit' rage Ill Ili id 11( 111 i la dowilers to 111 iZ O c01ilile I cit 1to t he liaXiifluii extellt possible, unllder proper superviin, \ 1 11 11 11 vid a t rui st land as secilt v for Obt alilll lie m a 1 H i e Ill'lNssilrv for 'oiioill i c le ve lloil Ilf i iles. Ofide 11i is Ihw il ie i lis Fjiro eel~ ionsa1))1 il )1 10to Il 00 I lam Is wer relaXed iii orde o ob'fa 1r 1 he bneft (fc to icreit b11 1 tHe
It Ii'ti(h11'i- r 1w l 111o0e Iie1, Ih ever, it 11111 he rec gilze 1d that 1le u V h\ 0 i0 forecosure on Illil'1111fmI ti st llnds 1111der


State law, also presents the )potential for further (tliminishient of the Indian land base.
The extent to which BIA-a))rovedI mortgages on triust-~ ilotte(I lands have enabled( Indian owners to obtain the finanini- necessary to construct adequate housing on their lands is unknown. NMutltfiple ownership) of in(livi(lual trust laind( (because of fractionate(I heirship) and delayss in the BIA (mlministrative processs may, however, have impaired the effectiveness of the law in securing the cre(lit necessary to ensure adequate housing on trust lan(Is. MNoreover, to the extent that foreclosure is possible, the Indlian housing 1)roblem may only be worsened, since foreclosure can often result not only in the In(lian owner being It shoul also be noted that the construction of a(lequate housing for inmlividual Indians on many Indian reservations may also be precluledl when the inmlividual has no private proprietary interest in land, a situation which prevails on the so-called(I unallotte( reservations. Where the reservation land base is owned( tribally, in SU. IMARY
The trust status, multiple ownership, and other legal restrictions on much of the Indian land base have been a well-known obstacle to obtaining conventional financing for all types of development activities, including housing. This land simply cannot be attached in event of the borrower defaulting because the land is not alienable. Given this, private financial institutions have been extremely reluctant to finance housing construction located( on Indian lands. If there were a meaningful Federal program, in which the Federal Government played( the role of effective guarantor for the necessary home constructionrelated credit, this obstacle could be overcome.

Farmers Home Administration (FIA) has administrative authority to provide direct loans to Indian indivi(luals and tribes for various activities, including the financing of homes anl land. Under section 502 (home ownership loans), an Indian individual who cannot obtain needed credit from other sources at reasonable rates and terms may borrow a direct loan from FmIA at about 8 percent for up to 33 years with no downl)ayment require(. The minimum family payment for principle, interest, taxes, and insurance is 20 percent of adjusted annual family income. The borrower generally must have an adjusted annual family income that does not exceed $15,600. Interest credits


can be obtained which will reduce the interest rate to as low as 1 percent. The interest credit eligible borrower's income must generally not exceed $10,000. Houses constructed with section 502 loans must meet HUD's minimum property standards.
While the terms and conditions of section 502 loans are more lenient than those of a commercial lending institution, the security requirements for a 502 loan likewise jeopardize the Indian trust ownership on both allotted and tribal trust land. For all its loans, FmHA requires as a securable interest either a valid and enforceable mortgage on the title to the land or on a leasehold to the land. In general, the lease must extend for 50 years from the date of the loan ciosing. If the borrower defaults on the loan, FmHA may foreclose and sell the house along with the leasehold to the land to any purchaser. Only at the end of the 50-year leasehold term will the land return to unencumbered status. Though it encumbers trust lands temporarily, this section 502 program provides the greatest degree of latitude available to Indians for the capital generation necessary to construct houses on trust lands apart from HUD's public housing program.
Despite the fact that FmHA's section 502 program is better suited than most existing programs to the reservation setting, Indian participation is minimal.1 The primary reason for this underutilization is that FmHA has failed to successfully encourage and process Indian applications. The administrative structure is decentralized-with about 1,800 offices serving all the rural areas. Usually, the office is located in the county seat, and linked closely with the county government structure. As such, it cannot avoid being influenced by the often deep-seated tensions between county governments and tribal governments at the local level. Reportedly, Indian participation is discouraged: not only through subtle discrimination, but also by the continuing staff shortages which cripple attempts to carry out an adequate Indian educational outreach effort on FmHA programs, produce an enormous backlog of unprocessed applications, and provide no assistance in adequately preparing applications. In addition, the $15,600 income limit on section 502 loans bars the very group of Indian families which need credit assistance-those in the low to mid(lie income range are no longer eligible for public housing assistance.
FmttA has implemented a succession of steps designed to increase Indian participation in their loan programs. A description of that effort was published in the Federal Register on January 27, 1978. Under the published procedure, each FmHA State Coordinat r is to make a semiannual report to the National Coordinator of Fn I.
SFmIl IA sir ion 502 (home ownership) and section .)1 (home repair):
Fiscal Number of Amount of
y ar ( atcgVry loans fund s
1978 T olal ... .. ...... ......... ... . ... .. . .. . .1 7 2 $ ,7 4 ,
IP*7s Twl ------- -------- 117,382 $2, 702, 9412. 000
I I a--I I7 10, 7 19, 000
k7 T o! I ...... .. .. .... ..... .. .......... ......... 138, 4, 3, 391. (H00, ()O
4)do -- 111,411 ** 3,021,0 (00,00
I I I Irc : l


Indian Activities on his or her activities relating to carrying out th, outreach program. A copy of some of the more significant reports sul)mitte(l in 1978 (not a representative sample) can be foudl in the appendix on page 171. FmliA's latest nIndian outreach program is yet too new to have measurable impact. IHowever, it is (:lear that int il such time as FmHA addresses the problems of staff shortcomings, education and outreach, and the income ceilings, Indian people will be denied meaningful access to the FmIIA loan programs.
HUD has a number of mortgage insurance programs which operate as an insurance agency for participating premium payers. l nese
programs (primarily section 203(b) and (i)) rely on commercial lending institutions to finance and mortgage the house and property, and simply administrate the mortgage insurance program to which the
borrower pays regular premiums. Since the private banks require a securable mortgage on the land, there have been no recorded instances of section 203(b) or (i) insurance of mortgages made on houses built on Indian trust lands. The program is not presently designed to insure a loan without a mortgage placed on the land.
HUD also operates a section 2:35 program which provides subsidies for mortgage insurance and interest subsidy payments for low- and moderate-income home buyers. HUD can reduce the home buyer's interest rate to as low as 4 percent. The homeowner must contribute 20 percent of adjusted income to monthly mortgage payments and must make a. downpayment of 3 percent of the initial cost. Section 221 (d) (2) authorizes a program which also insures private lenders against loss and is especially directed toward displaced households. Section 237 provides authority to HUD to insure lenders against loss on home mortgage loans to low- and moderate-income families which are marginal credit risks, and to offer budget, debt management, and related counseling services to these families as needed. All of these various programs require the participation of private lending institutions which in almost every instance require a mortgage on the land.
Under the Indian Financing Act (Public Law 93-262), the Bureau of Indian Affairs (BIA) is authorized to make both loan guarantees and direct loans to Indian individuals for the purpose of general economic development, including the specific purposes of purchasing, constructing, or improving housing on a reservation to be occupied by the borrower. Unfortunately, the BIA has made few loans under this authority for the support of housing,' and has experienced great difficulties in successfully administering the overall program to date. Last year, the General Accounting Office made a series of recommendations and suggestions to BIA on ways in which the program could be improved. Here again, the emphasis was placed on general economic development rather than on the financing of new home construction.

Access to mortoaZe) credit is nearly nonexistent on most reservations for a number of reasons. There are the legal restrictions to much of the reservation land as cited above. There are also problems relative
'According to the BIA's annual credit report for fiscal year 1976 (the latest one available) the BIA made a little more than $1 million worth of direct loans under the Indian Financing Act for the purpose of new house construction. Since there has been no update since fiscal year 1976, the BIA appears to be unable to give the current status of these loans.


to the remoteness of many reservation areas far from the normal service areas of most privatee lending institutions. Also, many of these banks and savings and loans are reluctant to finance lower income Indian housing regardless of the security problems. And, Federal agencies with authority to make direct, insured, or guaranteed loans have not encouraged Indian participation. As a result, the public housing program is the only significant housing effort on most reservations, regardless of income levels and need. Clearly, if the burgeoning number of substand(lard housing units on reservations is to be diminished, both the public and private sectors will have to become heavily involved. The public housing effort is not alone sufficient even if its outlays were to be significantly increased.

HUD, as the lead Federal agency on Indian housing, should initiate anl interagency assessment of the present credit and financing problems with respl)ect to Ind(lian housing, and provide Congress with a series of recommendations for a solution. Such a solution should encourage, wherever possible, the private sector involvement in house financing. However, proposals to waive restrictions on alienation or encumbrance of trust laInds in order to make the land available as a security interest run directly counter to the fundamental and longstanding Federal policy of protecting the tribal land base. As the record shows, the historical pattern of diminishing the Indian land base threatens the very survival of Indian communities. HUD should also make a special effroirt to a(al)t its section 203(b) and (i), 235, 221(d)(2), and 237 programs to the reservation setting taking into account the restricted status of the land(. IUD should also ensure that HIUD field offices make every effort to encourage Indlian and private lending institutional involvement in these programs.
FmIA should measurably increase Indian participation in homeownership loan programs by establishing specific Indian homeownershil) loan agreement goals and holding its field offices accountable for annual goals bse(d on t)both local housing needs and realistic budget projections. FiIA should immediately increase staff capabilities at the field levels in order to insure sufficient assistance to Indians eligible for FmiIlA loan opportunities. FmIA should additionally (levelo) a more streamlined( procedure in conjunction with the BIA nadl eact t1ri)e to exl)ped(ite landi security agreements necessary for IminllA loans. Am i, FilIA s11mil remove the income ceiling on section )2 loans for Ind(ian families who cannot otherwise obtain credit Iinaneine. from conuMnercial lending institutions.
BIA shoulll reactivate the Indian Revolvinig Loan Fund pursuantt to lihlic lax 9:1 2G2) for )both loall g1a unI'atees and direct loans to I11ii min ilitivi tll s for the 1 )url)Ose of flialWinlg homes.
Il 1I) simll( con(iS ir, in c(1ooleration withI BIA and FmIIA, the shi il ml~iti of a F, (leral I 1 oa ,gil'Irant P)rograll Wl Which would ,eiiii1ei ,l lreovei, the eed for a private lelin1 institution's reiIIr 11illI for eIll)(iprarv or e)m1FllIanInt potential a lienat ion of trust 1lit li 1 I I siI V oi a 1ati. an t Iw 1 11 h h111 loull Illlse fin nlcing g1 ilra i( c i)rFograil shotl hi also conlliin ilefntisv s which enIcolfrage lprv ,111' ing slsit Ilions to seek active financing, involvement on f u i iFt n 1 llill c( mu1111111ities,.

Tribal governments establish IHAs in much the same way that non-Indian local units of government create public housing authorities by enacting an ordinance which gives the lIHA certain authority and responsibility. Each lIHA has a number of Commissioners (generally numbering between 5-15) which are appointed by the tribal government. They, in effect, are the board of the 111A, awl lure the staff. The staff head is an executive director who is in charge of the day-to-day operations of the lIHA.
Each lIHA determines the local housing need, solicits Federal. housing assistance from HUD, acts as project developer and construction manager, and fnlyas pulchosn manager for the life of
the project.
Public Housing Authorities were initially created under the 1937 Public Housingr Act in order to allow metropolitan communities to obtain housing assistance directly from the Federal Government in a way that would minimize State government interference or involvement in part because most States had very tight reins on the cities in terms of their debt and bonding powers.
When HUD, in somewhat of an afterthought, dlecided1 to institute an Indian public housing program in 1961, the easiest solution was to model the Indian program after the existing public housing program. including its use of the local public housing authority. It should be note I, however, that while the Public Housing) Act of 19.37 broug-ht public housing assistance to much of the country in 1937, it was not until 1961 that reservation Indians began to benefit from the program. In effect, the application of the Public Housingc Act in the early 1960's was the first significant house construction effort on many reservations in this century.
The incidence of substandard huigis most acute within the smaller Indian communities. Notably, about 83 percent of all Indian tribes have populations of less than 1,000 members. The needs of these small tribes, while overwhelmingly large in their specific contexts, are each but a small portion (relatively speaking) of the entire Indian housing need. The public housing programs are designed for larger scale administration than is applicable to many of the smaller tribes' situations.
In some instances, HUD has required that small tribes join together for the purpose of receiving HUD Federal housing assistance under one Indian Housing Authority. Some of these multitribal IHAs are responsible for as many as 16 different tribes and communities, over a span of as much as 400 miles. Thus, small tribes are forced to seek out other tribes with common areas of need and a willingness to cooperate. Given the geographical isolation of many small tribes and the scarce financial resources which preclude travel, it is more often than not a sheer impossibility for small tribes to identify other tribes in a similar situation and to make the communication necessary for such an alliance.
41-094-79-3 (23)


The task of the IHAs is not an easy one. One of the overriding problems is that the programs which they administer are overly complex. This problem is compounded by the fact that few IHAs possess the funds to employ highly skilled personnel capable of expeditiously mastering the complex program requirements. HUD, while claiming that technical assistance and training is made available wherever possible, has rarely found sufficient funds nor adequate administrative resources to provide IHAs with meaningful assistance when needed. The result is a basic impasse in problem identification; and as a result, problem resolution. HUD officials have, in the past, blamed "incompetent" IHAs for delays, while the IHAs have blamed HUD for failure to provide technical assistance at levels comparable to that provided to other non-Indian l)ublic housing authorities.
Furthermore, the IHAs are confronted with HUD programs and a IJUD administrative structure that is predominantly oriented to an urban, high density environment. Constantly, the IHA is required, on its own initiative, to adapt programs and structures to its specific situation. As will be discussed later, amendments to cost limits and other program requirements simply are not easily obtained. In general, the exceptions and appeals that are necessary to adapt these programs to the reservation are time-consuming and (lelay-prodiucing.

Given the present status quo at the Federal level of fractured responsibility for Indian housing assistance, it is clear that IHAs of necessity require strong administrative resources in order to successfully obtain and coordinate joint agency funding of housing projects. Hence, HUD should provide more technical assistance and training funds to IHAs. HUD should increase the HUD staff, time, and resource assistance devoted to IHAs' projects, particularly at the field level. HUD should ensure that funds provided for comprehensive management and adIministrative training functions are efficiently am effectively expended in order to reduce duplication and disorganization at the local level of public housing administration. And, HUD should be required to perform an accurate assessment of the achievements and failures of the latest HUD technical assistance program to Indians called the Management Initiative for Indian Housing (MIFIH).
Although IIUD agrees that its Indian programs are in need of major changes, since they are not readily fitted to the reservation setting (see appendix, p. 51, 1978 IUD report on Indian housing), such major changes ,will take time to implement. In the interim, 11UD shouhlI initiate special streamlining procedures that cause the expeditious and flexible application of waivers and exceptions for Indian programs in order to eliminate HUD generate(d delays in all aspects of the IHUD Itnlian housing deliveryy system.

Directly linked to an IHA's capability to perform its functions successfully is the performance of HUD personnel and the structure under which they operate. The less assistance and support an IHA receives from its HUD offices, the less work the 1111A will acconiplish successfully. Likewise, the less time HUD field staff give to aii 1HA project, the more production will be delayed. Generally, HUD field and central offices have not devoted a proportionate amount of tirne and resources to Indian public housing despite the fact that IHAs often need more assistance than PHAs.
There have been a series of recommendations presented to HUD both from the Indian community and the lower echelons of HUD which support the establishment of separate and identifiable offices and structures for Indian public housing programs. The response, a tradition in cases of Indian reorganization proposals, has been slow and tentative.
However, the central office in its November, 1978 reorganization effort undertook to establish a central office on Indian housing programs directly under the Deputy Assistant Secretary for Public Housing and Indian Programs. To date, this newly created office has not resulted in an increase in the number of central office personnel assigned to Indian housing duties, but has merely represented a reshuffling of existing staff. (See, p. 147 for central office organizational chart). Nevertheless, this move to establish such an office can only contribute to an increased focus and accountability at the central office level on new Indian housing policy and program development initiatives.
The acting director of the newly formed office has stated that there are four primary elements to the new office's charge:
1. Process the new regulations, and any amendments thereto.
2. Simplify and streamline the handbook.
3. Restructure the field offices so as to better assist IHAs.
4. Train IHAs and field offices in order to promote greater
understanding and effective use of the present system.
Additionally, the new office has the authority and responsibility to coordinate the work of other central offices involved in the delivery of Indian housing (e.g., architect and engineering, field operations, budget, etc.). The office also serves as the central office unit to which the Indian housing field personnel relate. The office will resolve appeals by IHAs beyond the field offices.
In March of 1978, the HUD Secretary appointed a special assistant for Indian programs pursuant to the requirements of section 901 of the Housing and Community Development Act of 1977. The special assistant provides advice and counsel to the Secretary and other HUD program officials with respect to policy and program design and, in general, serves as the departmental advisor on Indian aff airs. The


special assistant is also to serve as the primary contact for Indian groups, organizations, and individuals, providing them with information and assistance, and facilitating their input to the design and implementation of HUD programs.
Onv two of HUD's 10 regional offices have a special Office of Indian Programs. The largest one is region IX (San Francisco) with program responsibility to tribes in California, Arizona, New Mexico, anl Nevada. It presently has about 70 staff working fulltime on both housing and community development programs. (See, p. 148 appendix for organizational chart). Region VIII (Denver) has jurisdiction over Colorado, North Dakota, South Dakota, Montana, and Utah. It presently has about two dozen staff working fulltime on Indian housing. (See, p. 148 appendix for organizational chart). Under this structure, some of the regional office staff are assigned to the area offices nearer the project locations. These two regions have the largest number of Indian tribes participating in HUD programs.
Three other regions (V-Chicago; VII-Kansas City; and XSeattle) each have one Indian program coordinator, but in these regions and the remaining regions, regular staff handle both nonIndian and Indian public housing. Unfortunately, the tendency has been for these regional and field offices to devote most of their energy and resources to public housing programs in metropolitan areas at the expense of the struggling Indian housing authorities.
On two accounts, however, it appears that HUD is beginning to recognize the problems generated by the present field administrative structure. In its December, 1978 report, HUD stated that it was presently analyzing the field organization to determine the best structure for improving the administration of HUD Indian programs in the field, and that it plans to make appropriate changes within its staff limitations upon completion of the assessment.
Also, HUD region X has established special Indian housing prograin team in the Seattle area office with full authority over all Indian housing programs in Washington State. This special team does not represent an increase in staff (except for the reassignment of a regional staff person to the area level to serve as area coordinator), but does reflect an increased focus on Indian programs at the area level. This team is initially a demonstration project designed to meet certain immediate goals (a description of the team and the program goals are reprinted( in the appendix on page 149).
During the first half of fiscal year 1979, HUD should conduct a colprelwensive analysis of the present administrative structure's ill)pact on the )ro( auction and management of Indmian housing, includIla :compl)arison between the achiievements of regions VIII, IX, and the Seat t le area office teanm, and the experiences of the remaining field offices lacking any specific Indian structure. By the end of fiscal year 1979, 11UI) shouiI construct a reorganization scheme for the regional 11an11(d a:Lrac offices from the findings of the foregoing analysis which introd uces a focused, coherent, and productive emphasis on Indian programs a all levels, and which delegates broad authority and latit-iide to the lowest levels possible in or(ler to readily enhance the exercise of flexibility and a(laptability at the local levels.


Without argument, constructing a home is a significant act of economic development. Housing construction on the reservation is just one element of a total community development scheme. In other words, it has a great impact on employment and training, community ,economic life, and the development of physical infrastructure such as roads and utilities.
Most activities on reservations are related to Federal programs and funding. The Federal Government, of course, has divided up responsibility for the various issue fields between different Federal agencies.
t The tribal government, as the primary planning, management, and ruling body on the reservation, attempts to coordinate and centralize all of the various Federal programs impacting the reservation in a wvay which results in comprehensive economic and community development. This is an awesome task. Unfortunately, the Federal departments have often frustrated rather than complemented the efforts of tribes to coordinate the many programs and funds into an intellig-ible whole. The result has been an approach to economic and community development which is best described as "band-aid" in method and result.

For instance, the Southern Puget Sound Inter-Tribal lIHA has presented a specific case in point. The Suquamish Tribe prepared a HIUD 701 comprehensive plan for community development. As part of the plan, they identified 20 acres as a site for about 30 niew homes for tribal members. The Tribe bought the land, and the lilA applied for HUD housing. The lIHA received a program reservation from HIUD for the first year to build a portion (14 of a final total of 29) Of the houses planned for that site. Then, the lIlA attempted to get lilA to approve funding for a commurntywidle sanitation system that would ultimately handle the entire housing development as it was being expanded to its full capacity of about 30 units.
In a long arduous battle, IHS steadfastly refused to fund the comprehensive communitywid e system because IllS termed it economically not feasible. More specifically, IllS determined that it could not commit itself to building a comprehensive system, even in incremental steps as the need arose when more of the total number of houses were built, because 111S apparently requires a firm indication from H-UD that the future units of housing would be likewise funded.
Because IllS refused to fund a comprehensive system that would have allowed the lot size to be significantly smaller in this land-scarce area, the Il-A was forced to plan for 16 houses on the 20-acre plot,

4 1-094-79---


rather than the 30 it had planned for under the comprehensive plan. The individual lot size has been forced up to more than 1-acre per house due to the individual drainfield system employed by IHS.
The land value in that area is at about $4,000/acre. The tribe was attempting to apply principles of economic feasibility by making maximum use of available land. IHS thwarted that tribal initiative by applying principles of economic feasibility that produced the cheapest (per house) sanitation system, thereby reducing the number of houses in that project. In the end, the Tribe was not allowed to plan comprehensively because IHS planned specifically. IHS thwarted meaningful, long-term communitywide planning by applying short term, bureaucratic considerations.
Generally, tribes and IHAs have found that planning efforts in many fields are often futile and perhaps even counterproductive-futile because all relevant Federal agencies rarely agree, within the planning time frame necessary, to fund the suggested activities dictated by the plan, and counterproductive in that false hopes are raised and expectations generated that are never fulfilled.
IHAs and tribes receive planning assistance relevant to housing construction primarily from HUD's section 701 planning grant program, HUD's community development block (CDB) grant program, FmHA's section 111 planning grant program, or HEW's Administration for Native Americans. Unfortunately, these sources generally provide only minimal amounts of funding thereby diminishing the potential scope and impact of well-developed planning. The HUD 701 program, for instance, has been decreasing its allocation to Indians. For fiscal years 1976-1978, the annual Indian set-aside each year was $1.25 million. For fiscal year 1979, HUD, has reduced it to $1.0 million.
In Region 7, 701 funds were received by two of the eight applicant tribes in fiscal year 1978. The funds were so limited that if they had been split evenly between the eight, it would have amounted to $3,400 per tribe. The $13,750 barely allowed each of the two tribes to hire one person and establish an office. The limitations on the ability of such a small office to meaningfully function are obvious.
Under section 701 planning grants, California tribes' share of the national set-aside during fiscal year 1978 was $159,000. There were 86 reservations or rancherias in California eligible to receive the funds, but only 12 actually received them.
The Colville Confederated Tribes applied in mid-1978 for a CDB grant to develop a comprehensive planning program for their reservation that would have facilitated the wise and efficient development of housing in the future. Their application was turned down. The proposal was to have performed the following activities:
(a) Con(duct an inventory and assess the current condition
of the existing housing stock, the existing physical infrastructure including water systems and sources, sewage systems and disposal,
and access roads;
(b) Survey the land and its resources in order to construct a
land use plan;
(c) Project the future housing needs, particularly with respect
to attitudinal skills, and educational surveys of tribal members I)Ieseit ly off-reservation to (let ermine future migration patterns;


(d) Prepare site plans for each potential develoI)ment area
in accordance with land use plans, discuss the plans with the citizens presently residing in these areas, and gain mutually
acceptable plan approval;
(e) Develop engineering designs for the planned physical
infrastructure, prepare the architectural designs for the plane(
community facilities; and
(f) Assemble a plan for a capital iml)rovements program which
schedules the construction of the physical infrastructure an(I
community facilities.

Each agency, and particularly HUD, should fund and otherwise encourage the development and use of comprehensive plans by IHAs in shaping housing projects. The scale at which planning activities are funded should be sufficient to ensure the development of meaningful plans. HUD should immediately allocate more (rather than less) of the section 701 planning grants to Indian tribes and should monitor the HUD field administration of that program to guarantee an efficient application of these scarce dollars. HUD should consider bidding an additional line item in the total development-cost budget for each project which would provide the requisite support for comprehensive planning of the housing project.
Each agency involved in the delivery of HUD-assisted Indian housing should ensure that priGrity is assigned to the implementation of IHA comprehensive plans (where available) in the planning and allocation of each agency's resources. Agency consideration of short term cost savings should be balanced against long term considerations of the involved tribe's overall development, with the latter overriding the former.

The Indian Health Service (IlS) is a major provider of sanitation systems and assistance on reservations because its primary mission concerns the health of Indian people and the diminishment of all sources of disease, including- those related to environmental factors. Yet, as with virtually every aspect of the Federal Indian housing delivery system, IllS has varying responsibilities for sanitation depending on the location and origin of the house needing sanitation services.
On HUD-assisted homes, only those that are clumped together in a clustered site and which are close enough and numerous enough to warrant a commurntywide water and sewer system (on the basis of the per unit cost efficiency in both construction and operation) are funded by IllS. On HUD-assisted homes that are scattered or in small projects, I11S designs individual unit systems, but it is ITUD that finances the construction out of the total development cost. On new BIA-HIP homes, IllS both designs and funds the water and sewer systems regardless of site location.
In the case of HUD homes, IHS has the authority to determine whether communitywide or individual unit systems are to be utilized. Very oftenI this IllS decision determines the size and location of a site solely on the basis of the economic feasibility of the water and sewer systems, and not on other important factors involving land costs, location preferences, and so forth. (See, Suquamish example cited on p. 29). In other words, IllS' control over sanitation design tends to extend to ultimate house project design without consideration of the overall factors related to the total development scheme or the preferences of the affected lilA.
Since IllS funds are used only when communitywide systems are chosen, these funds are not charged off against the HUD-funded total development budget. HUD, on the others hand, funds the individual unit systems out of the total development budg-et of the house thereby increasing the house cost to the occupant. IHAs are thus often compelled into clustering HUD houses in order to not deplete funds from the HUD-funded total development budget that are needled for other activities and items. Too often, IllS design decisions have been determined by the availability or nonavailability of IHS funds. Where no IS funds were immediately available, or where IllS computed a per-unit cost based on sanitation costs alone and not on related factors, IllS has designed systems that it does not have to fund.
The IRS sanitation budget is in the form of a direct appropriation which provides in one fiscal year a lump sum for sanitation construction work in Indian communities. Each year, a portion of this money is targeted for assistance to federally funded new housing. The remaining portion is devoted to providing sanitation services to existing


hotisin~r stock. IllS also has the latitude to commit funds appropriated ini one fiscal year for expenditure in future fiscal years "in coordination with the pa~ce of construction.
IllS should be given complete authority for design and funding of all water and sanitation services for new federally assisted Indian housing, thereby eliminating the confusing division of responsibilities and, programmatically, linking the design and funding' activities. This will not result in a major shift of budget responsibility since the additional work being transferred to IllS will be associated with relatively low cost individual unit systems. Instead, this step would simplify the project development process and ensure cost efficient expenditures. IllS should also be required to expand its design considerations to incorporate local preferences and overall project cost factors.

For years, study after study has concluded that one major obstacle to improving the Federal Indian housing delivery system is the lack of coordination between the four Federal a(rencies involved. Especially in the late sixties and early seventies, there were numerous examples of uncompleted housing projects that were delayed to the point of deterioration simply because the agencies involved bad not coordinated their budget and program cycles.
Fortunately, it appears that this problem is becoming less common. However, the IHA's task of seeking cooperation between the various agencies remains a major responsibility which a non-Indian public housing agency does not bear. At times, it is beyond that which a given IRA can reasonably be expected to accomplish.
Interagency coordination is primarily a matter of clear role definition and timing as to the allocation and commitment of resources between relevant agencies. The delineation of the respective functions of HUD, IHS, and BIA in the delivery of HUD-assisted housing is one thing. The differing roles of FmHA, BIA, and IHS on FmHA assisted homes is another. With respect to BIA's HIP, the duties of BIA and IHS must often be joined together in order to complete the project.
Perhaps the most frequently; suggested solution for this maze of conflicting Federal responsibilities has been to consolidate programs, budgets, and responsibilities into one single agency. But such a consolidation may well generate other problems, both political and practical in nature. As a practical matter, consolidation of all Federal program efforts in one agency may well have the consequence of reducing the overall scope of the Federal effort. Consolidation or reorganization efforts may also divert public, administrative, and congressional attention and support away from the question of refining the delivery system toward the relatively simplistic issue of where the scattered functions should be centralized. Additionally, such a reorganization effort requires a great deal of time, a period during which housing production would be expected to fall off even as housing needs continued to escalate.
Interagency coordination efforts are more meaningful when directed toward establishing and maintaining procedures whereby communication and cooperation is encouraged at each administrative level on each project. Also necessary y is specific clarification of the interdependent responsibilities of each agency involved on a project. These divisions of responsibility must be carefully drawn to produce the most cost effective, timely, and efficient process possible.
In response to the work of the General Accounting Office in preparing its 1978 report, HUD wrote BIA and FmHA on December 1, 1977, to suggest that the agencies meet to promote interagency coordination on Indian housing and to discuss the development of a national policy for Indian housing. It was more than one year later that the first meeting took place. As yet, there is little to indicate that


any of the departments has taken any tangible steps to improve the Federal Indian housing delivery system. Though the HUD Secretary admitted, in her December 1977 letter, that "in the past, efforts to create a coherent Federal policy on Indian housing apparently have failed because of parochial disputes," those same parochial disputes appear to continue to thwart meaningful change by the administration.
Since HUD, BIA, IHS, and EmilA have apparently had only limited success at interagency dialog and coordination, a different approach should be pursued which basically recognizes the present division of responsibility and focuses on streamlining the overall program delivery system in a manner that complements program interactions at the local level. Z
HUD, because of its primary role in Indian housing, should be designated as the lead agency for Federal Indian housing efforts. As lead agency, it should ensure that the other agencies' independent programs address the housing needs unmet by HUD's public housing programs. For example, HUD should encourage FmIIA to increase participation in its reservation-based program through outreach and technical assistance. The resources for the BIA-HIP programs, designed to meet the needs of the lowest income groups incapable of participating in either HIUD or FmHA programs, should be based on eligible need based on an accurate assessment of the service population. Also HUD should determine whether the IHS funded and operated sanitation programs are readily available to all three programs. In addition to the coordination of the independent programs, HUD should also take the lead role in intermeshing the various responsibilities of the BIA and IllS in the production of HUD public housing.
An interdepartmental working group on Indian housing should be established at the national level as the forum in which the various dIepartments can engineer the coordination tasks. The Office of Manag-ement and Budget should designate an official to serve as cochairman with an official from HUD. As organic parts of the national group, HUD should establish an interdelpartmental working group at each HJUD regional and area office level. These area, regional, and national groups should meet quarterly (luring the fiscal year andl allow JIJAs to attend the meetings whenever possible. Coordination efforts should be first generated at the local area and regional levels. Only when 1)1(gram coordination problems are nonspecific to the given area or* rio(-n should the national level working, group become invol ved, in order to allow the national group to primarily concentrate on developing more generalized policy initiatives and p)roced1ures.

It is no surprise that HUD has tended to resist any significant variations from its standard prototype house and minimum property standard (MPS) requirements. Unfortunately, HUD's idea of a standard prototype and MPS house does not adapt very. well to the extreme variety of cultural and natural conditions found in all parts of Indian country. HUD's inflexible requirements have produced uniformly standardized houses known in Indian communities as "HUD boxes".
Citing actual examples makes the case for flexibility most persuasive. For instance, many Pueblo Indians would prefer to have adobe houses. While the use of adobe may lengthen the construction period slightly, it is without question a durable building material appropriate to both local weather and Cultural factors. Adobe happens to be a leading construction material in the private house building market in their area-the Southwest. Adobe is a common indigenous building material to that area, making it perhaps the most cost efficient building material.
FmHA has approved section 502 loans to build adobe houses in the area. Yet, HUD refuses to take the experience of the surrounding private market and FmHA practice at face value. It seems that there is nothing in writing which proves scientifically that a one-adobe thick wall has insulation qualities equal to or greater than an insulated 2 X 4 or 2 X 6 wood frame wall. So, despite the surrounding practice, HUD has refused to allow IHAs to use adobe, unless they reinsulate it, which, of course, drives the costs far beyond that of a standard wood frame house.
HUD has done little if anything to research the benefits of adobe, but has instead left the burden of proof with the IHAs. From the Pueblos' point of view, they are now being told they must prove that a building material they have been using for thousands of years is a sufficient insulator.
In another almost similar instance in Alaska, some Native housing authorities have requested that logs be used as a major part of the house frame and walls. In Alaska, logs have been a common building material for hundreds of years. Since surrounding private market house construction continues to use logs, the housing authorities reasonably assumed that logs would be allowed by HUD. Instead, HUD has not allowed any HUD homes to be built with logs despite the fact that various engineers and associates of the University of Alaska have concluded that a log house can be built as energy efficient as a regular wood frame house.
In another example presented to the committee staff, the Quinault Tribal Housing Authority experienced great difficulty in obtaining HUD approval of the use of cedar shake shingles on a housing project they began in the spring of 1978. The Quinault Tribe operates a cedar shake mill, one of the Tribe's attempts to achieve economic selfsufficiency. The IHA not only preferred cedar shakes for aesthetic and climatic reasons, but also, as an entity of the Tribe, the IHA preferred to build up the local economy by using their own tribal enterprise's resource (cedar shakes) on the tribal housing project.


HUD's response was that cedar shakes were simply too expensive. Only after prolonged persistence, and a tribal offer to provide the shakes to the IHA project at a discount, did HUD accept cedar shake use.
Cost appears to be the determining factor in these instances. But HUD's set of cost factors does not include a meaningful consideration of the consequential impact HUD's projects have or do not have on a given tribe's economy. While HUD sets its cost containment procedures at the national level, the local application of these procedures often defy elementary management principles by ignoring factors other than the cost per square foot of floor covered.
If the overall interest of the Federal Government is to contribute to the self-sufficiency of the reservation economy, then this interest should be an important component in the set of cost factors governing a HUD project. In other words, if the long term goal of the Federal Government's public housing and other public assistance programs is to move people away from a state of severe economic dependency, then HUD should incorporate local preferences with respect to which building materials are utilized at least in those instances where it makes economic sense for the tribe to so prefer.
MPS' are a regulation device whereby HUD is supposed to be able to uniformly measure the housing it assists against a standard set of minimum criterion. Existing regulations allow for MPS standards to be amended or adjusted. Yet, on the rare occasion that an amendment is approved, it is only after a well-knit case is presented to HUD accompanied by persistent pressure. HUD's administrative (and perhaps cultural) tendency is to dismiss as a matter of course any deviations from the national norm of minimum criterion. In effect, the minimum property standards have been made operatively sacroscant by HUD.
The original intent of MPS and design standards was generally to ensure a degree of quality and control expenditures. Even in theory, the MPS and design standards have a bias favoring metropolitan rather than isolated rural applications. In actual ractice on reservations, MPS and design standards have resulted in "box houses", in clustered rural housing, and in inappropriately sized and styled housing with many of the scarce housing assistance dollars being spent on unwanted features.
HUD should include a specific process in its upcoming handbook whereby standards for house design are locally specific. HUD should direct its area offices to work with their IHAs and in conjunction with HIUD regional and central offices to develop MPS and design requirements specific to each IHA. Such IHA specific requirements should primarily reflect local climatic and cultural considerations, and secondarily reflect national uniform standards. As a result, each IHA should have its ownl specific minimum design standards, eliminating the delays p previously associated with requests for exceptions and makitig (leslil application appropriate in terms of cost efficiency, durability, individual preferences, and cultural respect. In the interim period( while the iHA-specific standards are developed, HUD should vest its area or regional offices with authority to readily expedite such excep1)tions.

There are essentially two main tasks which an THA performs. The first involves getting a project funded and constructed, or the construction and development phase. The second phase has to do with management of the public housing projects built in the first phase. This management phase varies from between 25 to 40 years, depending on which of the four different public housing programs the IHA has utilized within its area over the past 18 years (rental, turnkey III, old mutual help, or new mutual help). The varying responsibilities under the four different programs present a literal management maze for IHAs faced with the conflicting program requirements, accounting procedures, and responsibilities. It is in this management phase where many of the problems with HUD Indian public housing lie.
Many of the Indian families occupying. rental and mutual help homeownership homes are not able to meet the financial requii-ements. As the HUD Secretary's 1978 Indian housing report (p. 51) points out, Indian reservation communities are extremely low income areas. Despite the statutory requirement that a mutual help participant pay no more than 25 percent of his or her annual adjusted income, the 1HN's administrative charge and the monthly utility costs alone often exceed the 25 percent ceiling. The result is that families who are not supposed to pay more than 25 percent must do so except in the unlikely situation where the IHA or the public utility decline to collect their bills. While these extremely low-income families cannot afford their basic housing costs, most are unwilling to give up their homesite and their opportunity for homeownership in f avor of a rental house at a different site and a 20-25 percent income rental payment.
Also, there are a number of rental families who have long occupied their rental home and whose economic situation has improved to the point that they would prefer to remain in their home and begin to purchase it.
Reservation income levels change seasonally and periodically. Many occupants of rental and ownership homes lack income stability. Yet, some would welcome the opportunity to incrementally invest in home ownership as often as they can under their vacillatmicy income levels. ;n
Many IHAs and their staffs have long experience with the problems of developing and managing the various public housing programs in the rural, often isolated and low income areas that comprise many reservations. On the basis of that experience, some have proposed an alternative lease-purchase program model that would select the best features from each existing program and unite them into one simplified program more appropriate to the reservation setting. Unfortunately, since their initial presentation of the lease purchase proposal to HUD in February 1978, they have had no formal response, either positive or negative.


The basic concept of the lease-purchase proposal would combine the present rental and homeownership programs into one program in which the participant makes a payment which is between 15-25 percent of the adjusted family income. As the participant's income level fluctuates over time, the percent of income factor will generate varying levels of payment. 'Where the participant's payment exceeds the amount necessary to meet the IHA's administrative charge for operational expenses associated with the project (as determined presently by HUD) and the utility costs of the house, the excess amount will be credited to the participant's equity in the home in a manner identical to the monthly equity payments account under the mutual help homeownership program. If the participant's payment is consistently above the minimum payment level, that participant will develop increasing equity in his or her home and thereby shorten the time in which the occupant can gain homeownership title. The amortization period (and thus the purchase period) would be 25 years or less, identical to the procedure utilized currently by the new mutual help homeownership program.
If, on the other hand, a participant's income drops, the arrangement would retreat from an equity building purchase scheme to that of a partially subsidized low rent program so that the IHA is not forced to evict the occupant from the home into a low-rent house simply because of the temporary drop of income despite the fact that the participant is still paying 15-25 percent of his or her now reduced income.
In sum, this lease-purchase program proposal would do a number of basic things. It would give good rental tenants a break by allowing them to gain ownership in the future. Though the program would not necessarily result in any immediate Government savings (or costs for that matter), it would simplify the programs thereby allowing more efficient and effective management on the part of IHAs. It would also institute a comprehensible financial arrangement so that each participant would be able to understand the precise financial obligations and responsibilities each has. The period in which the IHA manages the maintenance and operations of the project would be conformed to 25 years for all new projects, identical to the mutual help program's present arrangements. And, the new units of public housing would be constructed and developed exactly as they were before. Only the management phase would be affected.
Since many IllAs, particularly those in region IX, have requested without success since early 1978 that HIUD consider implementing the lease-purchase model, IIUD should immediately initiate a thorough examination of the merits and demerits of the general leasepurclhase model and issue a report to the appropriate congressioual committees. This process should specifically assess whether such a program model would simplify the existing programs, diminish unnecessary or time consuming administrative requirements inappropriate to the reservation setting, encourage efficient and improved management of public housing stock, and increase the quantity and quality of Indian 1)public housing production.


Many of the existing homes, whether of HUD, BIA, or private origin are in a severe state of disrepair. The need for rehabilitation and modernization work has been cited by numerous studies including those of the GAO. In addition to normal maintenance needs, there are a large number of built-in maintenance problems resulting from faulty design and poor construction of units.
While maintenance of HUD homes is the responsibility of the IHAs, many IHAs lack sufficient funds because their source of funds is supposed to be the rental and homebuyer payments collected from existing occupants, and many IHAs are experiencing great difficulties in collecting these payments. The reasons for this problem are manifold. Many of the occupants live in poverty and cannotafford the payments. Tribal leaders and courts are reluctant to enforce collection and eviction policies because there is often no other place on the reservation for evicted people to be housed. Construction defects discourage an occupant from making payments for a deficient product. BIA-HIP house participants make no payments. Many IHAs lack the experience required for effective collection. And, under the present system, a tenant's accounts and financial liabilities are not precisely known by the tenant.
The General Accounting Office reviewed 12 separate IHAs in preparing its 1978 report and found that 228 of the 301 existing units observed were in need of repair. And, HUD region IX office estimated that about $3 million is needed to correct design and construction deficiencies in approximately 2,000 HUD Indian units in that region. In its 1978 report to Congress, HUD states that of the approximate total of 24,000 HUD units now occupied and under IHS management, an estimated 10,000 are in need of some modernization such as converting the existing utility systems to utilize indigenous fuel sources (HUD estimates the need to be $20 million for 10,000 units). HUD has set aside $465,000 in fiscal year 1979 contract authority. for approximately $5 million in modernization work on Indian housing.
The new regulations make Mutual Help homes eligible for modernization funds for the first time, but these funds will be restricted to activities other than correcting design or construction deficiencies. HUD states that the latter deficiencies must be ameliorated through the use of funds derived from the total development cost or through enforcement of adequate performance on the part of the contractors involved. Unfortunately, for many occupants of HUD homes, there is no more total development money remaining and the project contractor is beyond reasonable reach. The needs of these houses must be addressed by specific rehabilitation efforts designed to make the units durable, energy efficient, and safe.


RECOMMENDATION HUD should assess the extent of the rehabilitation and modernzation need on existing HUD Indian units, and develop an incremental plan for eliminating the need.

HUD's responses to the continuing crisis of need and the deficient HUD delivery system have been sporadic and vacillating. During 1978, HUD floated the concept of adding a private firm fo the delivery system to provide technical assistance. HUD termed the additional service as that of a construction manager. In stating the need for such a construction manager, HUD said:
Although HUD finances a substantial portion of all new Indian units, the production goals for Indian housing have never been reached; the development process has been too long; the development costs have been too high, and much of the housing has been plagued with deficiencies. This represents a clear admission of gross problems. This admission by HUD is used, however, as the rationale for introducing a private firm to the process which would basically perform the 1HA's (not HUD's) jobs for them. By clear implication, the construction manager concept as presently designed would position the blame for the gross failures onto the IHAs, and- away from HUD. Without question, this is unfair.
Though there have been a number of rewrites of the original construction manager request for proposals, it appears clear that HUD, in proposing this as a solution, is implying that the problem is that the IHA cannot do its job as it is supposed to, rather than identifying the problem for what it is: HUD field offices fail to give even proportionate time to Indian housing; IHAs receive little or no meaningful technical resource funding; and, the public housing programs are not easily applicable in the rural reservation setting.
Since HUD has not yet released its specific and final intentions regarding, the construction manager proposal, it is not possible to provide a full and accurate analysis of the concept. HUD has, however, already solicited applications from private firms to perform what is called a "demonstration" project. Apparently, HUD intends to use the construction manacrer in regions where there is presently major Indian housing. The use of a construction manager's services in the development of future unit allocations could apparently be imposed on an 1HA by HUD arbitrarily. The choice for such an IHA would be either to accept the IHA-surrog ate construction manager's services or receive no new units. This provision raises serious questions regarding Indian self-determination, and legal conformance to HUD's authority to award and deny units of public housing. Second, the funds for the construction manager firm are to come out of the total development costs, in other words, out of the already overburdened source of funds which IHAs have to work with in buildin(y their houses. Third, the proposal says little if anything about the ways by which the HUD administrative structure and its programs might benefit from the construction manager's assessment, advice, and assistance.


Regardless of the merits or demerits of the construction manager concept, it is altogether too clear that HUD's failure to consult with Indian tribes and IHAs in proposing this concept is inconsistent with the p)revailinlg Federal policy of self-determination. The idea did not originate with the IHAs. Instead, it came from central office with the unambiguous message-the IRA's are at fault, not HUD. If HUD had proposed that IHAs were to each have the latitude to revise and amend the total development cost categories in such a way as to locally acquire the necessary technical assistance in a timely and appropriate fashion, IllAs may have welcomed the opportunity. Such flexibility is something they have unsuccessfully been seeking for a long time. Instead, HUD conceived of a national superfirm(s) which would be controlled by the HUD central office, not by the local IHAs.
In addition, if the construction manager proposal had been characterized and designed as an optional tool by which IHAs and Indian groups, previously denied allocations of HUD housing units, could gain sufficient technical assistance to successfully develop a housing project, then the request for proposals would have been a welcome initiative. If elementary foresight would have been exercised by HUD, the energy and time of both the IllAs and H-UD could have been diverted to more meaningful and constructive changes in the delivery system. Unfortunately, the proposal has caused diversionary brushfires in the field of Indian housing, allowing the debilitating patchwork delivery system to go on unchecked.

In its present form, the construction manager proposal carries the stigma of a politically mishandled, conceptually incomplete, and by inference, obnoxious HIUD proposal. For these reasons, HUD should take the proposal back to the drawing stages in complete consultation and cooperation with the IHAs, in order to recast it into a useful and elective tool for IHAs to use.

Although HUD provides a large percentage of Indian housing, B IA's Housingr Improvement Program (HIP) has had an important role to play in the Federal attempt to alleviate substandard Indian housing. HIP is a grant program which allocates one-year grants to tribes which in turn can be used to make emergency repairs to existing substandard housing (limited to $2,500 per unit), to repair housing' to bring it up to standard condition (limited to $13,000 per unit),- to make dowvnpayments on housing loans (up to $5,000 generally; $6,000 in Alaska) or to finance construction of a new house (uip to $30,000 generally; $40,000 in Alaska). Assistance under this program is only available to families that cannot obtain assistance from any other source, public or private.
The HIP program is generally simple to administer and is often contracted by the tribe with minimal direct involvement of the BIA. As a result, it is quite flexible in adapting to local conditions and p~references. HIP is primarily a repair program for existing substandard housing, and, in many instances, HIP funds are used to make emergency repairs which still leave the home in a substandard condition.
The program was funded at about $20.2 million in fiscal year 1978. Approximately, $16 million of this financed the construction of more than 500 new homes and repaired more than 3,000 units. In fiscal year 1979, the BIA-HIP program received more than $25.2 million, $20.8 million of which will go to the actual construction and renovation of Indian housing.
It should also be noted that the HIP program tends to foster friction and misunderstanding in some areas since it does not necessarily require HIP participants to make financial contributions while HUD or FmHA participants must do so. In most instances, the HIP program assistance is limited to the poorest of the poor who are otherwise without adequate housing.

BIA should conduct a sound inventory of need and present an incremental plan for eliminating the worst of the substandard housing. BIA's HIP and tribal housing personnel should be encouraged to work with HUD and lIHA personnel in the development of realistic housing program plans specific to each reservation for eliminating substandard housing.



HUD should seriously consider eliminating prototype cost limits in the production of Indian housing. HUD should immediately imp~lement some interim procedures which: a) ensure expeditious flexibility and consultation in the establishing and revising of prototypes; b) ,develop appropriate and specific Indian area prototypes; and c) pub lish Indian prototypes biannually.

The Department of Labor should develop an Indian apprenticeship and training program that works on Indlian reservations. The Department of Labor should establish Davis-Bacon wagre rates that ,are specific to each Indian area. And, the Department of Labor and HUD should seriously consider exempting HUD-assisted Indian homes that are detached single family units from Davis-Bacon requirements.

HUD should initiate an interagency assessment of the financing difficulties, and provide Congress with remedial recommendations. Such solutions should encourage private market involvement, but should not place trust land in jeopardy. HUD should adapt its mortgagre insurance programs to the reservation setting, in order to increase Indian participation. FmHA should measurably increase Indian participation in its existing homeownership loan programs by setting annual loan agreement goals, increasing Indian related field staff, and removing the $15,600 income ceiling for Indian participants. BIA should reactivate the Indian Revolving, Loan Fund for Indian housing. And HUD, in cooperation with BIA. and FmHA, should establish Federal loan g uaran tee program. for Indian home financing.

HUD should provide increased technical assistance, training, and administrative management funds to Indian Housing- Authorities. HUD staff should devote more field-level staff time and resources to Indian housing projects. In general, HUD should immediately institute interim procedures designed to cause the expeditious and flexible application of waivers and exceptions to the burdensome Indian program. requirements.


During fiscal year 1979, HUD should study its present organizational structure, and reorganize the regional and area offices in order to effect an efficient and productive Indian housing delivery system at all levels.
Comprehensive I)lIfls should be funded and utilized wherever possible by each agency involved. HUD should allocate more (not less) section 701 planning grants to Indian communities.
The Indian Health Service (IRS) should be given complete authority for the design and funding of water and sewer services for all new fedlerally assisted Indian housing. IUS should ensure that local design preferences are adhered to wherever possible.

HUD should be designated the lead Federal agency for Indian housing. Interagency efforts should focus on streamlfining the existing delivery system andl coordinating the program interactions at the local level. Interdepartmental working groups at all levels should be established to perform the necessary coordination tasks.

I-UD should conduct a thorough examination. of the lease-purchase proposal, and give serious consideration to implementing it as a
program option.


I. Official Communications on Indian Housing
(a) September 29, 1978 letter to HIUD Secretary Harris from Senators
Proxmire, Abourezk, and Gravel.
(b) December 1, 1978 letter to Senator Abourezk from HUD Secretary
(c) December 1, 1978 HUD annual report to Congress on Indian and
Alaska Native housing and community development programs.
II. Section 901-Indian and Alaska Native housing and community development provision in the 1977 Housing and Community Development Act
III. January 11, 1979 proposed regulations on HUD Indian public housing programs.
IV. Digest and summary of March 31, 1978. General Accounting Office report
(#CED-78-63): Substandard Indian Housing Increases Despite Federal
Efforts-A Change is Needed.
V. Summary of 1975 field hearing on Indian housing.
V I. Proposal for a lease-purchase homeownership opportunity program. VII. HUD administrative structure
(a) National Office of Indian Housing organizational chart.
(b) Denver Region VIII Office of Indian Programs organizational
(c) San Francisco Region IX Office of Indian Programs organizational
(d) Seattle Area Office Indian Housing Program organizational chart
and demonstration team plans.
_VIII. Rural credit for American Indians, a handbook of FmHA programs. IX. Selected reports from FmHA field offices on the implementation of the FmHA Indian Outreach effort.
X. Selected communications from Indian tribes and housing authorities. XI. Factsheet on Housing-Rural America.


HOD. PATRICIA ROBERTS HARRIS, Washington, D.C., September 29, 1978.
Department of Housing and Urban Development, Washington, D.C.
DEAR MADAM SECRETARY: As you know, section 901 of the Housing and Community Development Act of 1977, P.L. No. 95-128, requires that the Secretary of the Department of Housing and Urban Development, not later than December 1 of each year, submit a report to Congress which shall include(a) a description of her activities during the current year and a projection of her activities during succeeding years;
(b) estimates of the cost of the projected activities during succeeding fiscal years;
(c) a statistical report on the conditions of Indian and Alaska Native housing; and
(d) recommendations for such legislative, administrative and other actions as she deems appropriate.
We are very concerned that the report you submit on or before December 1, 1978 be as comprehensive and detailed as possible. In March of this year, the General Accounting Office issued a report, entitled "Substandard Indian Housing Increases Despite Federal Efforts: A Change is Needed". The GAO's critique of HUD and Bureau of Indian Affairs housing efforts suggests the need f or a thorough report which will provide data, conclusions and legislative recommendations for improving Indian housing and community development programs. Your Department, as the federal agency with the largest Indian housing program, bears primary responsibility, in our judgement, for providing such guidance.
As part of the information mandated by section 901(d), we would expect the Dertment's report to include:
a) Departmental plans for reorganizing the administration of HUD Indian ,ing and community development programs, including consideration of the creation in all appropriate regional offices of an Office of Indian Programs; plans for carrying out more effective coordination of program efforts with BIA, the Farmers Home Administration and the Indian Health Service; and plans f or developing closer and more supportive relationships with Indian Housing Authorities.
(b) Specific changes in Indian housing and community development regulations, including those which relate'to the use of modernization funds for the mutual help homeownership program, establishment of realistic prototype housing costs on a timely basis, allocation of Indian housing units and use and targeting of community development block grant funds.
(c) Precise staffing plans for the Office of the Special Assistant to the Secretary for Indian and Alaska Native Programs and the nature and extent of his authority within the Department at this time and in the future.
Finally, and on a different subject, we have learned that during the recent July conference on Indian housing held in Washington, D.C., participants from Indian Housing Authorities and tribal governments requested that the Department more fully inform other tribal governments of changes proposed by Joseph Burstein, Counsellor to the Secretary, in Indian and Alaska Native housing programs and to reconvene the conference this Fall to further consider those proposals. Would you please advise us of the effort made to date to disseminate to such tribal governments those proposals and whether HUD plans to reconvene the conference? If alternatives to such a national conference are being or have been considered, please indicate what those alternatives are, the extent to which


they have been implemented and the role which the national office, including the Office of the Special Assistant for Indian and Alaska Native Programs, is to play in directing that implementation.
We look forward to your prompt response to the concerns, outlined above. We are aware that you have indicated your strong personal commitment to resolving the problems which HUD has encountered in improving its record in this area. We look forward to working closely with you to help meet the extraordinary needs of Indians and Alaska Natives, our worst housed Americans.
Chairman, Committee on Banking, Housing and Urban Affairs.
Chairman, Select Committee on Indian Affairs.
U.S. Senator.


Hon AMESABOUEZKWashington, D.C., December 1, 1978.
U.S. Senate, Washington, D.C.
DEAR SENATOR ABOUREZK: In accordance with section 4(d) of the Department of Housing and Urban Development Act (as added by section 901 of the Housing and Community Development Act of 1977), I am pleased to send you the Department's Annual Report to Congress on Indian and Alaska Native Housing and Community Development Programs. The report describes the Department's activities in delivering housing and community development assistance to eligible recipients and in improving program design and regulations. It also projects the costs which will be incurred in Fiscal Year 1979, and includes a statistical report on the conditions of Indian and Alaska Native housing.
The specific issues which you raised in your letter of September 29, 1978, are addressed. Improvements in the housing and community development regulations have been made, and we anticipate that the modifications in the housing regulations will be published early in 1979. The Community Development Block Grant (CDBG) regulations for CDBG in Indian areas were published during Fiscal Year 1978.
I am concerned about HUD's organizational structure. As you know, I appointed a Special Assistant for Indian Programs in March 1978 and established in November the Office of Indian Housing under the jurisdiction of the Assistant Secretary for Housing-FHA Commissioner. Regions VIII and IX, which contain the largest number of Indian tribes, have offices of Indian Programs, and Regions V, VII, and X have Indian Program Coordinators. The Department is studying ways to improve the field structure for Indian Programs and all options are being considered. We are taking into consideration comments of Indian clients, and expect to make appropriate changes within our staffing limitation.
This Department is committed to improving the delivery of housing and community development assistance. At the same time, however, we would expect that the interdepartmental working group chaired by the Assistant Secretary of Interior for Idian Affairs will soon consider the multi-faceted needs of -the Indian ,Co1~lflitV, anld will develop recommendations to the President for policy and program inpr-ovements.
sinicer-ely yours,



In accordance with section 4(d) of the Department of Housing and Urban Development Act (as added by section 901 of the Housing and Community Development Act of 1977) the Department of Housing and Urban Development has prepared the First Annual Report to the Congress on Indian and Alaska Native Housing and Community Development Programs. The report includes:
The activities which the Department has undertaken during FY 1978 to
deliver housing and community development assistance-Chapter 1;
Estimated FY 1979 costs of HUD programs directed toward Indians and
Alaska Natives-Chapter 1;
A Statistical Report on the condition of Indian housing, as well as selected
data on income and education-Chapter 2;
The Department's suggested agenda for future considerations-Chapter 3.
Delivery of Housing and Community Development programs has beep difficult. The costs of housing production are high because very expensive infrastructure development costs due to widely scattered sites and difficult terrain often must be included in the housing development program and because there have been significant delays and inefficiencies in the development process. Housing management is difficult in part because the very low income of the Indian beneficiaries results in very low revenue and in part, because Indian Housing Authorities (IHA's) generally require upgrading in their capacity. In addition, there has been a need for significant improvements in program regulations. Community Development has been hampered by program regulations that have not accounted for the difference between reservations and other communities.
The Department of Housing and Urban Development has taken important steps to improve housing and community development programs for Indian and Alaska Natives. These include:
The appointment of a Special Assistant for Indian and Alaska Native
Programs who provides input to policy and program design;
The establishment of the Office of Indian Housing under the direct supervision of the Deputy Assistant Secretary for Public and Indian Housing;
The examination of the field organizations for the purpose of improving
The significant modification of Indian housing regulations, which are anticipated to be published shortly; the changes address both production and
management concerns;
The initiation of a construction management demonstration; an interim
rule will be published shortly;
The publication of separate regulations for community development in
Indian areas-CFR 24, Part 571;
The initiation of research and development efforts, including management
assistance and group home development for the elderly, retarded and handi.capped; the latter project was inspired by Dr. Karl Menninger and is being conducted with the cooperation of the Department of Health, Education,
and Welfare.
In housing, there were 4,858 unit reservations, (new, rehabilitation and existing) 4,581 construction starts, and 2,677 completions. The Department used $22.4 million in contract authority for the unit reservations at an average of $4,329 contract authority per unit. Based on experience, the Department anticipates that the actual amount of contract authority per unit will be substantially higher.


In the Community Development Block Grant Program, the Secretary's Discretionary Fund was increased from 2 percent to 3 percent of the total Block Grant Program in accordance with Title 1, Section 107, of the Housing and Community Development Act of 1974, as amended in 1977. $94.5 million was available for all eligible recipients and Indian grantees received $25 million. One hundred and sixty-eight grants were awarded; these include four comprehensive grants which are part of a demonstration program. The Department also awarded S1.25 million in Section 701 Planning Assistance Grants to 55 Indian tribal groups and bodies.
The condition of Indian housing is generally poor. A minimum of 60,000 new units are needed on Indian reservations. However, housing assistance alone cannot be expected to solve even the housing segment of what is a multi-faceted problem. Many Indian reservation families are of very low income, live in highly isolated areas, and have limited economic and educational opportunities.
This Department will continue to improve housing and community development assistance to Indians and Alaska natives. With the publication of amendments to the housing regulations expected in fiscal year 1979, the Department will develop an improved handbook and conduct training for HUD staff. BIA mid IHS field staff will be invited to participate in the training.
It is necessary that the Interdepartmental Working Group, which consists of the Departments of Interior, Agriculture, Health, Education, and Welfare, and Housing and Urban Development under the chairmanship of the Assistant Secretary of Interior for Indian Affairs develop comprehensive Government-wide approaches to the Indian problems and prepare policy recommendations for the President.
I. Headquarters
A. Office of the Special Assistant to the Secretary, for Indian and Alaska
ANative Programs
In accordance with Section 4(d) of the Department of Housing and U~rban Development Act (as added to Section 901 of the Housing and Community Development Act of 1977) the Secretary established the position of Special Assis*-tant for Indian and Alaska Native Programs and appointed Mr. Irvin Santiago. A slot for a Deputy to the Special Assistant has been budgeted.
The Special Assistant serves as the Departmental adviser on the activities, programs, and needs of Indians and Alaska Natives; administration of programs rean with the program Assistant Secretaries. As the principal adviser to the Secretary on Indian Affairs, the Special Assistant participates in formulating the programmatic goals of the program Assistant Secretaries. He also provides advice to the Assistant Secretaries and Field Managers on program operations issues.
The Special Assistant is the primary contact for Indian groups, organizations, andl ind~ividuals, provides them with information and assistance, and facilitates their input to the design and implementation of programs. In FY 1978, the Sjecial Assistant met with over 40 Indian groups, both in Washington and thirwogout the United States, lie has also participated in a number of interdeparftmnental task forces on Indian concerns. He has been designated as a HUD i,( prescintative on the interdepartmental working group on the establishment of Govermnent-wide policies on Indian housing to be chaired by Assistant Secretary F~orrest Gferard of the Department of Interior.
B?. Housing
An Office of IndinnHui reporting to the Deputy Assistant Secretary for Public hlouintg andI Indin Programs, was established on November 13, 1978. This un1it deals withi 1)0th production aind management of Indian housing under I ho~US osn Act of 1937. It has the responsibility for policy and procedure
wri jgcoor'Iit inig withi other federal agencies and for training and monitoring 01h, actions of the field Stair.
IL. F icld
Preenlythene nire Offices of Indian Programs in Region VIII (Denver) and Region I X (Sanl I'lrancisco) which admfinister housing and community develop-


ment programs in their jurisdictions. These Regions contain by far the largest number of Indian tribes. Three Regions (V-Chicago, VII-Kansas City and X-Seattle) have Indian program coordinators, but in these Regions and the remainder of the Regions, the regular staff is responsible for handling Indian, as well as, non-Indian programs. Realizing that the field organization must be improved, an analysis is presently under way to determine the best structure for improving administration of HUD Indian programs in the field and all options are being considered. Once this analysis is completed, the Department plans to make appropriate changes within its staffing limitations. Comments of Indian ,clients are being considered in this analysis.
The Department of Housing and Urban Development provides assistance in both the development and management of housing f ot Indians and Alaska Natives. Pursuant to the U.S. Housing Act of 1937, as amended, the Department provides rental and Mutual-Help Homeownership Opportunity Housing. This section briefly describes each program and reviews the Department's activities in FY 1978, as well as the projected activity for FY 1979.
A. Program descriptions
Public Housing Program
In 1961 it was administratively determined that Indian tribes had legal authority to establish, under Indian law, tribal housing authorities to plan, develop and operate low-income public housing projects. This determination created the first real housing program on reservations and other restricted lands.
Public housing in Indian areas depends on cooperation from other federal Agencies, such as the Bureau of Indian Affairs (BIA) for roads and the Indian Health Service (IHS), Department of Health, Education and Welfare, for water And sewer. Each Indian Housing Authority (IHA) administers its housing, which is generally either rental or homeownership opportunity housing and which is produced mainly by either the conventional or the Turnkey construction method.
Rental Housing.-The Indian rental public housing program is essentially the same as the non-Indian rental public housing program.
Under the conventional method of construction, the IIIA selects sites and hires its own architect to prepare building plans and specifications. The development
- program ib reviewed by HUD and, if approved, an Annual Contributions Contract (ACQ is executed. The IHA then obtains the sites and authorizes its architect to prepare the detailed working drawing& and specifications in conformity with HUD requirements and any applicable local ones. The IHA with HUD approval
-then advertises for competitive bids from private contractors and awards a con-stiuction contract to the lowest responsible bidder.
Under the Turnkey procedures, the IHA invites developers to submit proposals for a proje ct of a stated number and type of units. After the IHA selects a Turnkey Aeveloper, with HUD approval, the developer prepares schematic drawings. HUD prepares cost estimates on the basis of these drawings and site information. A
-firm price is then negotiated between the IHA and the Turnkey developer. HUD then enter,,- into an ACC with the IHA. With federal financial assistance guaranteeing the purchase of the project if completed in accordance with the contract, the developer can secure construction financing in the usual manner.
To finance the development costs of the projects, the IHA sells notes or bonds to private investors. HUD agrees to pay annual contributions in an amount sufficient to assure payment of the annual debt service (principal and interest) and these annual contributions are pledged as security for the local housing notes and bonds, thereby enabling them to be sold at relatively low interest rates. By Federal law, these notes and bonds are exempt from Federal taxation, thus creating an additional incentive for investors.
Under the rental program, the contract is for 40 years and the dwelling units,
-upon completion, are rented by the housing authority to low-income Indian families
-at rents not to exceed 25 percent of their adjusted incomes. If rents from tenants are not sufficient to pay the housing authority's operating expenses, operating subsidies may be paid by HUD under certain conditions to ensure the low-income ,character of the projects. Indian rental projects also are eligible for the moderniza-tion program for improving low-income public housing projects.
Mutual-Help Homeownership Opportunity Housing.-This program was begun in 1964 in an effort to provide an alternative to rental housing and now constitutes


approximately 70 percent of public housing assistance in Indian areas. The underlying concept of the program is to provide an opportunity for ownership which will be a strong incentive tor participating families to aid in the building and maintenance of their homes. Each participating Indian family must make a substantial contribution toward the cost of the dwelling unit (at least $1,500) in the form of land, work, cash, materials or equipment. This obligation can also be met by tribal contribution of the building site and, where feasible, local building materials. The participants receive equity credit, in amounts approved by HUD, toward the purcha e of their homes in lieu of cash for their contributions. After construction, the homebuyer occupies under a lease-purchase type of contract and is obligated to maintain the home, pay the utility costs, and make a required monthly payment. This required monthly payment is the greater of the basic administrative charge or not less than 15 percent nor more than 25 percent of the adjusted family income taking into account an allowance for the costs of utilities.
Normally, the participating family will acquire title at the end of 25 years. However, if the family's income increases and it makes correspondingly higher payments, its equity builds up faster, thus shortening the period of time before becoming a homeowner.
B. Program activities
In developing a strategy during the past few years to meet the development needs of Indians and Alaska Natives, HUD identified a number of problem areas that the Department could address.
These fall in the following categories: additional housing units, revised regulations, and making available to Indians improved technology for construction management.
Additional Units.-Although there are significant problems with data on Indian housing (see Chapter II), there is no question that the need for housing units far exceeds HUD's available resources.
In its March 1978 Report to the Congress on Indian Housing, the General Accounting Office (GAO) estimated that 81,500 Indian families resided in substandard housing. The BIA Consolidated Annual Housing Inventory for FY 1977 indicates that 59,700 new construction units are necessary to replace substandard units which cannot feasibly be rehabilitated and to provide for new family formation. Since 1970, HUD has sought to fund approximately 6,000 newly constructed units per year; where budgeted amounts for Indian housing approvals have not been sufficient, additional amounts, where possible, have been provided from other public housing contract authority.
During fiscal year 1978, the Department made available $23.7 million of annual contributions contract authority which was estimated to produce 6,000 units. However, because of increasing development costs, the Department was able to reserve only 4,858 units by utilizing $21.6 million in contract authority, exclusive of amendments to prior year projects for cost increases. The average per unit amount of contract for the new units reserved from recaptured prior reservations. The average per unit amount of contract authority for the new units reserved during fiscal 1978 was $4,315, as compared with an average of $4,200 on which the budgeted amount was based. Based on experience, it is anticipated that the final contract authority per unit will be substantially greater. The increased costs are (11 to )problems in the delivery system, which HUD is attempting to address (see discussion on technology below).
Appendix I, Tales 1-3, provides data on production levels since 1962, development costs since 1972, and HUD assisted production by Region during 1978. During 1975 through 1977 the number of units placed under reservation averaged well above 6,000 units per year, but the average number of construction starts and completions was much lower. Accordingly, the emphasis was reversed for fiscal year 1978. During 1978 some 4,900 units were placed under reservation but the number of construction starts increased from about 4,000 to 4,600 and the number of completions more than doubled from about 1,300 to almost 2,700. The FY 1979 TtUDI budget provides $25.2 million in contract authority, which was initially estimated to produce 6,000 units. Because we know that this amount is inadequate, the Department's present expectation is to reserve $27 million in contract authority. The number of units which realistically can be expected to be produced with the new amount is 5,317, still short of the original goal of 6,000 units. The FY 1979 goals in construction starts are 5,000 units and completions 4,000.


Program Regulations.-Prior to March 1976, requirements relating to the Indian housing program were contained in HUD Handbooks, circulars and contracts and in interdepartmental agreements. During 1975, the Department undertook the major task of reexamining and updating the policies, and procedures in consultation with the BIA the IHS and representatives of I I I As.
This effort resulted in a proposed regulation which was published for comment in September, 1975. After all comments were considered, a final regulation was published in March, 1976.
Operations under the new regulation disclosed a number of problems, many of which indicated that amendments were needed. The process of reexamining various provisions was begun in early 1977. The Department held c xtonsive consultation with Indian Housing Authorities and other concemed Indian organizations, BIA, IHS and HUD field staff prior to publication in the Federal Register. A set of proposed amendments was distributed to the field, other government agencies, and Indian organization prior to publication in the Federal Register. Alany comments were received and revised amendments were again made available in July 1978. In the light of a generally favorable response, the Department is taking steps toward publishing as soon as possible the amendments in the Federal Register for comment.
The principal improvements, as proposed, would provide for (1) reservations of funds at the Program Reservation Stage; (2) a liberalization of the amount of preliminary loans to IHAs to permit HUD-approved costs in addition to preliminary surveys and planning; (3) improved design to reflect extra durability and quality features and cultural preferences; (4) additional procedures to facilitate establishing and revising separate prototype costs f or Indian areas, (5) improved inspections and funding therefore; (6) training for initial tenant families in rental projects; (7) operating subsidy to IHAs for Nlutual-Help projects under specified circumstances; (8) strengthening and clarifying the responsibilities of the homebuyer families and the IHAs in the maintenance of the homes; and (9) a modified Turnkey production method in addition to the current conventional and Turnkey methods. The modified Turnkey combines the best features of both the conventional and Turnkey methods.
In providing for closer control by the IHA and HUD over design and contract specifications and more intensive inspection of the construction, together with the use of contract construction managers and training of IIIA staff, the revised regulations should serve to prevent a recurrence of construction deficiencies that have been uncovered.
Technology.-Although HUD finances a substantial portion of a, 11 new Indian units (currently over 90 percent of all new housing on reservations), the production goals for Indian housing have never been reached; the development process (starting when an application for a program. reservation has been approved and ending with completion of construction) has been much too long; the development costs have been too high, and much of the housing has been plagued with deficiencies.
The Department is initiating a Construction 2XIanagement Demonstration to develop techniques which will reduce substantially the overall time f or the development process for Indian housing, increase the rate of production of Indian housing reduce the cost of production of Indian housing, improve the quality of Indian housing and achieve designs for Indian housing that are more responsive to needs and local conditions and are within the costs authorized by Congress and HUD. In addition, there is the long-term goal of achieving permanent improvements so as to assure that the benefits of the Demonstration will bQ continued after the end of the contract term. Accordingly, the scope of work includes a task directed to the development of recommendations and the setting up of procedures and mechanisms to perpetuate the improvements resulting from the Demonstration.
The Department currently plans to select a Development and Construction Manager, on the basis of responses to a Request for Proposals, to provide a. full range of services for production of predominantly single-family scattered site projects. The projects will be for various Indian Housing Authorities in a number of different states in which most of the Indians are located. The Manager will adapt construction manager skills to the special requirements of the Indian housing program and provide additional assistance to relevant agencies-BIA, Indian Health Service (HEW), the Department of Labor, the Indian Housing Authorities, tribal governments and HUD-in performing their respective functions in a timely way. The full RFP is in Appendix II.

The Construction -Management Demonstration is intended as a means of implementing a major cost containment effort outlined in the Department's December 28, 1977 response to the General Accounting Office on its draft report on Indian housing. In that response, HUD indicated it was considering a system which would allow each Indian Housing Authority to submit a basic outline of an acceptable house; require HUD to identify the types of construction that would be economical and feasible, while outlining the exterior and interior variations, and provide that HUD would ascertain that the house could be produced within the total development cost limitations anticipated by the Congress in its authorization of contract authority to the Department. The total development cost includes the costs of site development (site development includes site preparation, the construction of streets, installation of water and sanitation facilities, and other utilities, e.g., electricity and gas), which are often assumed by HUD rather than BIA and IHS. A method which includes those costs in projecting the number of units which can be constructed is essential as opposed to one which relies on the current prototype costs, which- include only dwelling construction and equipment.
The Department has prepared for publication an interim rule on the Construction Management Demonstration. Indian participation will be solicited in three ways: (1) submission of comments on the rule; (2) meetings in Regions VI, VIII, IX; and (3) participation in the review of proposals.
Housing Management
There are a number of very difficult problems in housing management. They revolve around management practices, the level of available operating subsidy, and lack of modernization for the Mutual Help Program.
Management Practices.-For a variety of reasons, Indian Housing Authorities have frequently been ineffective in managing and maintaining existing units: inadequate or lack of management/maintenance training; insufficient funding; little or no technical assistance from the field offices and, to a certain extent, tribal politics. Specifically, IHAs have difficulty in the following areas: hiring and retaining adequate staff; collecting rents and homebuyer payments; maintaining adequate management controls and accounting records; and budgeting.
In order to improve the IHAs' management capabilities, the Department has recently funded special initiatives as described below:
(a) Management Initiatives for Indian Housing (MIFIH): The intent of MIFIH was to provide management assistance to Indian Housing Authorities, with particular emphasis on the development of "administrative capability". The general focus and direction of the program was on provision of "detailed technical training in the practical knowledge that the IHA employees must master in order to do an effective job in their day-to-day management responsibilities." Particular emphasis was placed on providing IHA Board members and staff with a basic working knowledge of the program, and the respective roles of HUD, the IHA, an(l the participants. A secondary and related objective was development of IHA capability to properly maintain books and records so as to facilitate development of effective fiscal controls, and ensure that accounting records were brought to and maintained in auditable condition. Preliminary indications are that almost all of the funds have been committed by the IHAs, and most of the funds disbursed.
In this fiscal year, the )epartment plans to conduct an evaluation of the effectiveness with which the funds were expen(led and the extent to which the original goals were achieved. This evaluation will serve as the basis for considering future plans for training of I11A staff and for developing "built-in" capabilities for selftraining among the IllAs with geographical or cultural affinity.
(b) tlousing Counseling: On October 6, 1978, the Secretary awarded $730,000 in comprehensive housing counseling grants to national and community-based organize ions. Indian organizations were given grants:
Natire American Mlanagement Group, $45,000, to assist Indian Housing
Aut horities in becoming 11UD-approved counseling agencies by providing
necessary training to their staffs.
Sac & Fox Indian Housing Authority, $45,000, for a film to prepare Indian
families for greater participation in the Mutual-Help Homebuyets Program and to Ioost comprehensive housing counseling services across cultural
triall al) lines.
(c) Management Assistance Program (Project-Based Budgeting): The Public IIousing Management Assistance Program, announced in July 1978, was designed to improv dhe t management capal ulities of selected housing authorities with 1,250 or more units. It involves two phases: Phbase I involves a diagnosis of the level of


effort required to develop and implement a project-based budgeting and accounting system; Phase II will implement the plans developed in Phiase 1. Thel programs will specifically assist agencies in the development and implementation of projectbased budgeting and management systems. Costs and revenues Will be segregated by project, and operational accountabilities will reach the project level. Public Housing Operating Subsidy funds are being used for this assistance.
The following Indian tribes have received assistance from the M\anagemnent Assistance Program for Fiscal Year 1978:
(1) Cherokee (laoa-------------------$150, 000
(2) Chickasaw (kaoa-------------------150, 000
(3) Choctaw (kaoa--------------------130, 000
Operating Subsidy.-In the Mutual-Help Housing Program, hJAs receive limited operating subsidies to cover their operating deficits when administrative charges are insufficient to cover their operating costs. The shortfall1 is due to relatively high per unit overhead costs resulting from the relatively small number of units under management, vacancies during which no administrative charge is payable and collection losses prior to vacancies which cannot be recovered from the former homebuyer's equity account. Operating subsidy is limited to $10 per unit per month (PUM) with respect to certain types of families in occupancy at the end of the fiscal year.
Amendments to the Indian housing regulations are currently und er consideration within the Department which would eliminate the $10 PUM limitation and would specifically enumerate the circumstances for which operating subsidy is payable. Items that would be payable include administrative charges for vacant units which the IHA is making all reasonable efforts to fill; collection losses due to delinquencies of homebuyers who have vacated their homes; costs of homebuyer counseling not funded under the Development Cost Budget, and costs resulting from other unusual circumstances. While these measures will not eliminate all problems, in part because at least some Mutual-Help program participants lack the income needed to pay the increasingly high costs for utilities and maintenance, they should prove a significant improvement. Utilities and maintenance are a responsibility of the participants under the Mutual-Help and Occupancy Agreement.
Operating subsidy for Indian rental public housing is provided in accordance with the Performance Funding System (PFS). This system allows a calculated amount for operating expenses, less audit and utilities costs, equal to what a wellmanaged PHA would need to operate the project taking into account the cost variables among projects. The subsidy level for which an IHA is eligible under PFS, therefore, is the budgeted deficit which results from the calculation of rental income based upon actual rent rolls, utilities costs based upon actual consumption rates and current unit costs, the budgeted cost for biennial audits, if any, and the allowable expense level for the other prototype expenses.
The PES constitutes a discipline on those operating costs which reflect the quality of management of an IHA and are susceptible to control by the lIHA and avoids the open-end funding of any level of expenditures which might be incurred by an IHA.
There are indications, however, that the PFS formula does not adequately provide for the additional expenditures which appear to be an intrinsic part of an IHA's operating needs. These ne~ds include periodic training made necessary by frequent IHA staff changes; the absence of a reservoir of trained and experienced executive, fiscal, clerical and maintenance personnel to draw from for replacement-,-; high maintenance costs, often associated with isolated site locations; the low participant payment income because participant group has the lowest income of any HUD program beneficiary group.
The Department expects to review as soon as possible the PES and its applicability to IHAs.
Modernization for Mutual Self-Help Projects.-Of the approximately 25,000 units of Indian housing in management, approximately 10,000 are estimated to need some degree of modernization. The financial need is substantial. For example, to convert utility systems, including heating equipment, in order to utilize indigaenous fuel, approximately $2,000 per unit, or $20 million, would be needed. The units in need of modernization include Mutual-Help housing, which is currently ineligible for modernization funding. Even for otherwise standard structures, convei sion of utilities to indigenous fuel is critical due to the inability of program participants to pay for conventional fuel, and fuel supply problems.


HUD is preparing a regulation change that would provide for modernization of homeownership opportunity projects, including Mutual-Help. The proposed regulation would prohibit the use of modernization funds for the correction of design or construction deficiencies because such corrections should be accomplished through the use of development funds without affecting the original purchase price to the homebuyer.
Anticipating a final regulation during fiscal year 1979, HUD has set aside $465,000 in contract authority for Indian housing modernization which would support approximately $5 million in modernization work.
The Department of Housing and Urban Development is currently sponsoring four research and demonstration programs aimed at improving Indian housing:
1. Small Group Indian Housing for Mentally and Physically Handicapped, Including Elderly and Children
A study and demonstration project, jointly financed by HUD and HEW to explore ways to house and care for Indians with limited disabilities in their home surroundings, was approved on August 21, 1978. The concept for this demonstration project was developed by Dr. Karl A. Menninger of the Menninger Foundation, who will continue to serve the project in an advisory capacity.
Indian persons with limited disabilities frequently are sent to institutions which often are far removed from their cultural and family base. The practice applies to those who are disabled or retarded, elderly persons with infirmities, and abandoned or neglected children needing special care. The study and demonstration are an effort to halt that practice.
Preliminary to the demonstration project, HUD and HEW are funding up to $63,945 for a study conducted by five southwestern tribes-White Mountain Apache, llopi, Navajo, San Carlos Apache and Zuni-in collaboration with the Native American Research Institute, Inc., an Indian non-profit firm in Lawrence, Kansas. The Institute is contributing from its own resources all direct and indirect costs in excess of $63,945. The estimated total cost is $70,250. The study will focus on these key needs:
de-institutionalization of Indian people, including children, with limited
examination of the policies which constrain construction for groups with
such disabilities; and
the need to maintain and reinforce the natural family and extended family
Through the study, the tribes will assess their needs themselves and will determine where to put their limited resources. This study is preparatory to the planning and construction of 50 specially-designed housing units to be allocated among the five tribes in a demonstration project.
The facilities developed by the demonstration will be owned and operated by tribal governmental or non-profit organizations. Federal assistance for developing and1 constructing these facilities will be shared by IIUD and the Indian Health Serice (IlS) of ItENV. The federal assistance for operating and maintaining the facilities, and for the provision of special care, also will be shared by HlUD and IEW, with potential participation by other appropriate agencies. The BIA is also nt ively co operating in carrying out the demonstration.
This demonstration is part of the ongoing effort by the Secretaries of IHUD and Il l\\W to promote nationally the objective of de-institutionalization of persons, incluhi(ing children, into alternate facilities with appropriate care.
11 F's Intria-I )epartmental Council on Indian Affairs is cooperating with IHUD in oversight and administration of the project.
2. Solar Hleating and Cooling Demonstration Program
II I 1) ponsors a National I)emonstrat ion Programn to encourage widespread use of sol:ir eliergy fr heating anit cooliming. The Program provi(eS grants for installat in of s(,lar systems in residential buildings through a series of at least five d ontrtion ccles at intervals of nine months to one year. The first three eyeb0s h me slIppote I projects primarily featuring solar space systems and domestic L(t water stnzs although some spate cooling projects have been funded. The n t eetees of slar installations was an important selection criteria in iclhe fo ur which closed January 16, 1978. The high costs of conventional energy .(11re. f ii ,litei reservation in the West ald Southwest, in a(ldition to their weat her led t teros, iuakes them iparticularly suited for such programs.


Trlie foliowhiig Inldianf tribes 811(1 ('0!iUIities hiave received grant's dur11ilg on-e or more of the four cycles for a total of $299,438: Blackfeet (Mnt0a3)n:, 919 Ft. Belknap (Mntn)2 125 Northern Che enne (otn)-----------------70,)890
Creek Nation '(Oklah~oma)---------------------------------------- 39, 935
Pleasant Point Passamaquoddy (Maine) ----------------------------22, 579
3. Solar Energy Demonstration Project for Pyramid Lakce, Navada
Fundled through the regular IJUD-assisted Indian P'rogramn, the 137ramid Lnlke Indian HOUSing Authority has constructedl 75 mutual-help homes fitted wilth solar-assisted gas-fii'ed domestic hot water systems, double-glaze win (lows, ext ra insulation and energy sufficient solidly fuel fireplaces. These homes were built at. 93% of the established prototype cost for dwelling construction and equipment.
Direct fuel cost savings are estimated to range from $15 to $20 a month at current energy costs.
These solar-assisted domestic hot water systems are designed for low maintenance. Instruction in essential maintenance is provided by the Indian, Housing Authority through its homeownership counseling program. All homes are sited so the solar collector systems have maximum exposure to the sun.
The design architect interviewed participating mutual-help families during the design stage to assure that the house designs reflected their desires. The San Francisco Regional Office has included this project among its Best Projects nominations.
Seventy-nine new energy efficient homes utilizing solar domestic water systems are planned for construction. These will be mutual-help and rental homes. 4Indian Housing Management Study
A study is to be conducted as soon as possible on the overall management problems of Indian Housing Authorities, including the applicability of the PFS in determining operating subsidies for rental housing. This study's purpose is to make recommendations for improvement.

The Department of Housing and Urban Development supports local development efforts of Indian tribes through the Community Development Block Grant (CDBG) program, as well as the Section 701 Planning Assistance grants. This section describes the HUD CDBG mandate, the FY 1978 grants, and regulatory changes made in order to be responsive to the needs of the Indian tribes. The Section 701 grant activity is also described.
A. Community development block grant mandate
In October 1977, Congress amended the Housing and Community Development Act of 1974 with Public Law 95-128. This transferred the funding of Indian tribes from Section 106 to 107 (the Secretary's Discretionary Fund) and Section 107 funding was increased from two percent to three percent for the total CDBG authorization.
Senate Report 95-175 on the Housing and Community Development Act of 1977 indicated that Committee testimony revealed serious inequities in the allocation of block grant funds to Indian tribes, as well as regulatory requirements and restrictions which were clearly unsuitable in a non-urban, reservation context. The funding and regulatory mechanisms used had proved inadequate both in relative and absolute terms in meeting the needs of Indian tribes. In addition, funding allocations under existing procedures did not recognize that many Indian reservations overlap county, State, and-HUD regional office boundaries.. Thus a separate funding mechanism, which authorized grants from the Secretary's Discretionary Fund, was established in conjunction with preparation of separate program regulations designed specifically to be more responsive to Indian problems.
The Senate expected this approach to result in a more equitable and responsive method of funding for Indian tribes. The Secretary's Discretionary Fund was increased to $94,500,000 in FY 78 and $101,500,000 is available for FY 79. Of these amounts the Indian component was funded at $25,000,000 in FY 78, and $28,000,000 has been approved by the Secretary fur FY 79.



Fiscal year 1978 grant awards
Slightly over half (267) of the 493 eligible Indian tribes submitted pre-applications in FY 1978. Most of the eligible applicants not submitting pre-applications, were in Regions X and IX, and, in general were the smaller and least- populated reservations. Twenty-seven non-eligible applicants also submitted pre-applications in Region X (Alaska). (See Appendix 111, Table 1).
Demand exceeded supply by $58.8 million (Table 1). HUD invited full applications for 30 percent of the total dollars requested in pre-applications submitted by eligible applicants. By the end of the fiscal year all full applications had been invited and about 60 percent had been awarded grants. The largest percentage of the invited and awarded applications, which amounted to 37.9% of total funding, was in Region IX and New Mexico.
Grants ranged from $3,000 to $1,714,532 in FY 1978, with an average size of of $148,810. Four Indian Block grant Comprehensive Grants were awarded as part of a demonstration projection. The remaining 164 grants were Basic Grants. Included were 36 planning grants for FY 1978. The legislative objective receiving the highest priority in invited applications was the expansion and conservation of housing (Appendix III, Table 2). Three regions will provide technical assistance funds from their regional assignments of the Secretary's Discretionary Fund.
Both the number of applicants funded and dollar amounts disbursed increased over previous years during the first year Section 107 was in effect. One hundred sixty-eight applicants were funded in FY 1978, as opposed to a high of 109 in FY 1977 under Section 106. The per capita funding dollars of eligible Indian tribes increased from $22 per capita in FY 1975 to $51 per capita in FY 1978 (Table 111-3). The average size grant of $148,810 in FY 1978 decreased from an average size of $172,837 in FY 1977.
Appendix' IVY Table 1, provides a detailed breakdown of the tribes receiving grants in FY 1975, 1976, and 1977. Appendix IV, Table 2, provides the same data for FY 1978.
Regulatory Improvement
The Department's primary regulations for the Community Development Block Grant Program, CFR 24, Part 570, did not take into account the special needs and legal status of Indian tribes. On March 23, 1978, the Department published interim regulations applicable to "Community Development Block Grants for Indian Tribes and Alaskan Natives". It is expected that the final regulations will soon be published.
The new Indian block grant requirements have several important features. Eligible tribes are'those tribes which are eligible under the Indian Self-Determination and Education Assistance Act or under the State and local Fiscal Assistance Act of 1972. Consultation with Indian tribes, to the extent possible, is sought prior to major changes in policies or procedures. Planning set-asides are allowed, and both Basic and Comprehensive Grants may be awarded. A fund recapture provision has been added in the event of unneeded funds or poor grantee performance. The Indian Civil Rights Act is substituted for the non-discrimination requirements of Section 109. Indian preference in contracting and authority to waive the Davis-Bacon requirements on a case-by-case basis are new additions.
When the interim regulations were published in March, some 2,100 copies were mailed to Indian Housing Authorities, Indian news agencies, Indian tribes, and Indlian advocate organizations, but only three comments were received. These addressed the eligibility of non-profit Indian organizations, the eligibilty of tribes which qualify for other Federal program funding, and a State role in the Indian block grants program. Interested groups had been involved in drafting the interim regulations in conjunction with Region IX's Indian Community Planning and Development staff.
At the reques-,t of the Regional Administrators, the regulatory requirement for a Housing Assistance Plan (HAP) was eliminated for FY 1978 and the interim regulations were amended accordingly, due to the coordination time that would have been required to develop and clear a modified HAP through HUD and ONMB. Although not a statutory requirement, a HAP will be required for FY 1979. Wirth the,( e exception of the IIAP, no substantive change in the final regulations is vanticipatedl.
Af ter the F4 Y 1979 program is underway, a review of the regulations and funding formula will he undertaken in consultation with the tribes, and the program regulations amiendled imsved on, their recommendations.


Program Operations
To implement the new program regulations, HUD Central Office coordinate (-(I various aspects of the program with related Federal agencies and internal 11 t"' 1) offices. Field staff were trained in Washington and the Indian block grant program was included on the agenda of the Indian Housing and Community Developulent Conference held at HUD last July. Initiatives at the regional level include a Region X recommendation for a joint HUD/HDA consultation process to devise regional Indian funding strategies, a recommendation currently under consideration by Central Office.
The FY 1978 Regional Allocation Plan, which was developed at a national Indian conference which all interested tribes were asked to attend, was approved by the Under Secretary in July (Appendix III, Table 4) and the CPD Redelegation of Authority from Central Office to the Regional Administrators became effective in August. With the Allocation plan and the Authority, Regional and Area Offices began to develop policies on a Comprehensive Grant set-aside, a planning set-aside, a health and safety set-aside; and to draft their rating and ranking systems and establish a pre-application review process. No single rating and ranking system was required by Central Office, in large part because of widely varying client legal and socio-economic characteristics. Each region developed its own model, based on policies set forth in the interim regulations. Letters were sent to tribes as part of the required consultation process and workshops were held to obtain tribal views on program policies. Pre-applications were processed, full applications invited, and grants awarded. B. Section 701 comprehensive planning assistance program
In accordance with Section 701 of the Housing Act of 1954 the Department of Housing and Urban Development provides Comprehensive Hanning Assistance Grants to State and local governments. Indian tribal groups or bodies are eligible recipients. The purpose of the assistance is to improve and expand both the planning and development capacities of recipients.
The Section 701 program provided $1.25 million to 55 Indian tribal groups or bodies in FY 1978. The grants were used for a variety of planning activities. Based on a survey of 48.2 percent of the grants to Indian tribes the following is a breakdown of the fund usage by type of activity: Indian tribes used 44 percent of 701 funds for management; 42 percent for planning and programming; 14 percent for technical assistance, economic and demographic studies, social service planning and citizen involvement.
Management activities and their proportionate share of funds were: Percent Policy planning and evaluation -------------------------------------- 27
Government modernization and reorganization ------------------------ 6
Program 10
Capital budgeting, financial planning and 1
Planning and programming activities and their proportionate share of funds were:
Land use planning ------------------------------------------------- 12
Housing 10
Other functional planning activities such as open space, transportation,
water, sewer, energy and environmental assessments 22
Appendix V provides a list of Indian tribes that received Section 701 Planning Assistance Grants in FY 1978 and the grant amounts.


Of all minority groups in our Nation, American Indians living on reservation lands have the lowest incomes, the fewest economic opportunities, the highest mortality rates, the least education, and the worst housing. The median income for Indian families on reservations reported by the U.S. Census in 1970 was $4,821, as compared to $6,067 for Blacks, $7,348 for families of Hispanic origin, and $9,955 for Whites. Almost half of all reservation Indians were below the


poverty level, compared to 13.7 percent for the U.S. as a whole. Few Indian communities have reasonably complete water, sewage or road systems, and most are only partially served, if at all, by electricity and telephone systems.
Table I provides the best current housing data available for Indian reservations, and Tables II and III provide comparative 1970 U.S. Census income, poverty, education, and housing conditions data. The 1970 Census provides the only reasonably reliable indicator of several socio-economic variables for Indian reservations, but even these statistics considerably understate the magnitude of the problem. As the Bureau of Census has admitted, Indian reservations census counts were often significantly understated (by as much as 1,000 percent in one instance) and heavily biased towards the most accessible families. The more readily surveyed families were far more likely to have employment, to have received housing assistance, and to have access to standard utility services. The magnitude of the resulting variance is indicated by the 1978 Bureau of Indian Affairs (BIA) labor force survey which suggests that current median family income is in the $5,000$6,000 range.
Housing needs remain a severely critical problem, despite HUD and BIA efforts in this area. In large part, the current problem is a direct consequence of the fact that programmed housing assistance resources have been insufficient to significantly reduce the substandard housing stock. A minimum of 60,000 new units are currently needed on Indian reservations, even assuming that it is costfeasible to rehab another 30,000 units characterized by major structural deficiencies. Such assistance has been substantially increased the past three years, but only to the point where funds for 5,000-5,500 new units a year have been available. These increases have only managed to do slightly better than compensate for increased reservation populations.
The real problem, however, is not simply a matter of limited housing assistance funds. As the statistics provided suggest, many Indian reservation families are of very low income, live in highly isolated areas, and have limited economic and educational opportunities.
Many Indian reservations are so isolated and resource-poor that it ig unreasonable to assume that their economic conditions will improve. To complicate matters, many families live in areas so isolated that it is not cost-feasible to consider building a house, or supply it with water and electricity. It is even less realistic to expect that such families will have the income or access to supplies and services needed to assure a new home's maintenance. While these problems are most severe in Alaska, they are hardly uncommon in the United States. The point being made is that while the U.S. Government is almost the sole supplier of reservation housing and clearly has a major responsibility to improve its efforts in this area, it is in the long-term interests of both Indian communities and the U.S. Government to emphasize educational opportunities and, where feasible, reservation economic development, since housing assistance alone cannot be expected to solve even the housing segment of the multi-faceted problem posed by Indian communities.


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11970 percentage distribution of families by income

U.S. total Black Hispanic Indians

Less than 2.5 6.6 4.4 9.2
$1000-$11999 --------------------------------------- 3.4 8.1 4.6 10.1
$2:000-$2,999 --------------------------------------- 4.4 8.9 6.1 10.9
$3,000- 3,999 --------------------------------------- 4.9 9.1 7.6 11.2
$4,0 00- 4,999 --------------------------------------- 5.1 8.5 7.9 10.4
$5,000-$5,999 --------------------------------------- 5.7 8.3 8.3 9.6
$6.000-$6,999 --------------------------------------- 6.1 7.8 8.3 7.8
$7,000-$7,999 --------------------------------------- 6.7 7.2 8.2 5.9
$8,000-$8,999 --------------------------------------- 7.1 6.3 7.6 5.8
$91000-$9,999 --------------------------------------- 6.8 5.3 6.7 4.3
$101000411,999 ------------------------------------- 12.9 8.3 10.9 5.2
$12 000-$14,999 ------------------------------------- 13.7 7.8 9.6 5.0
$15:000-s24,999 ------------------------------------- 16.0 6.9 8.3 3.9
$25,000 and over ------------------------------------ 4.6 1.0 1.5 .6
Median income ------------------------------------- $9,590 $6,067 $7,348 $4,821
Mean $10,999 $7,114 $8,192 $5,770
Incomes less than poverty level:
13.7 35.0 23.5 53.4
Families --------------------------------------- 10.7 29.8 20.4 44.4
Unrelated individuals 14 yr old and over ----------- 37.0 47.7 39.8 65.3

Source: 1970 U.S. Census, HC and PC series.
Note: For reasons noted in the body of this report actual income and housing conditions are known to have been worse than indicated.

[In percent]

U.S. Total Black Hispanics Indians

No school years completed --------------------------- 1.6 3.3 7.3 7.7
14 yr --------------------------------------- 3.9 11.3 12.2 7.6
5-7 yr ----------------------------------------- 10.9 18.7 18.6 17.6
8 yr ------------------------------------------- 12.6 10.5 11.6 16.8
High school:
1-3 yr ----------------------------------------- 19.4 24.7 18.2 25.7
4 yr ------------------------------------------- 31.1 21.2 21.1 19.4
1-3 yr ----------------------------------------- 10.6 5.9 6.5 3.9
4 yr or more --------------------------------- 10.7 4.4 4.5 1.3
Median school years completed ----------------------- 12.1 9.8 9.1 9.0
Percent high school graduates ------------------------ 52.4 31.4 32.1 24.6


I In percent]

U.S. total Black Hispanic Indians

Persons per room:
1 orless --------------------------------------- 86.1 80.6 74.3 54.4
1.01 to 1.50 ------------------------------------- 5.6 12.5 16.2 18.0
1.51 or more ------------------------------------ 2.1 6.9 9.5 27.6
Selected equipment: I
With complete bathroom ------------------------- 92.5 82.4 93.2 52.3
With more than I bathroom ---------------------- 27.3 11.9 -------------- 44.9
Wit piped water in building --------------------- 97.5 92.1 98.6 70.9
Wit i public water supply ------------------------- 81.7 87.3 -------------- 47.9
Wit i public sewer ------------------------------- 71.2 80.7 79.5 29.1
Witi air-conditioning ---------------------------- 35.8 18.0 19.7 4.9
Percentage households in owner-occupied units --------- 62.9 33.7 37.2 166.6
Value--owner-occu pied units:
Less than $5,000 -------------------------------- 6.1 16.1 11.5 53.7
$5,000-$7,499 ----------------------------------- 7.2 15.4 10.9 14.5
$7,500-$9,999 ----------------------------------- 8.4 14.9 11.2 8.4
$10,000-$14,999 --------------------------------- 20.1 23.8 22.0 11.3
$15,000-$19,999 --------------------------------- 20.1 16.3 19.8 6.6
$20 000-$24,999 --------------------------------- 14.7 7.2 11.9 2.6
$25:000-$34,999 --------------------------------- 13.9 4.6 8.8 1.5
$35;,000-$49,999 --------------------------------- 6.4 1.4 2.9 .7
$50,000 or more --------------------------------- 3.1 .4 1.0 .8
Median ---------------------------------------- $17,000 $10,000 $13,700 $4,300

All other sources suggest this figure is significantly lower than the actual figure even for the sample population. Rental situations, per se, are atypical for tribal members living on their own reservation, with the limited exception of HUD rental low-rent public housing.
Source: 1970 U.S. census, HC and PC series.

B. Data availability
Data on Federally-recognized Indian reservations in the United States Is available from five major sources. These sources and an evaluation of the quantity and quality of data they provide is provided as follows:

Data source Content Limitations

1. 1970 U.S. census ---------- Provides the only generally available, rela- Only 133 out of over 400 federal ly- recog.
tively complete socioeconomic data on nized reservations were surveyed in 1970,, American Indians, on and off-reservation Detailed information was published on population. Data includes income, hous- only the largest 24 of these reservations, ing, employment, and other detailed in large part because of concerns of samdemographic and socioeconomic data. ple sizes; 1970 was the Census Bureau's Ist major attempt at surveying reservations, and sample sizes and techniques
used resulted in high error factors. Detailed resurveys have indicated that 50
percent or more of the population of a
number of reservations was missed-gen2. BIA: rally the most isolated, poorest families.
(a) Housing data -------- BIA has conducted an annual housing Many, but not all reservations are surveyed.
survey since the early 1970s (summary The quality of data obtained is dependent attached) which is supposed to count and on the knowledge and efforts of the surclassify all residential structures on veyor. Comparison with sporadically f ederally- recognized reservations and available, but thorough HUD 701 studies classify by structural condition. has indicated that: many units classified
as "standard" have 1 or more maigr
structural deficiencies; many units classified as "suitable for rehabilitation"
cannot cost-feasibly be brought to HUD's
minimum property standards; and undercounting occasionally was done by as much
as 100 percent of reported households.


Data source Content Limitations

(b) Demographic and em- BIA provides what are now annual estimates Data is incomplete; demographic and employment data. of total reservation demographics by age, ployment data appears to be relatively
sex, employment, and income status accurate in areas where BIA is active (e.g., (income categorization is limited to Arizona and New Mexico), but consider"over" and "under" $5,000 income ably less reliable in other areas where annually classification). BIA lacks the staff or data sources
needed for this purpose; no means of
verifying the accuracy or inaccuracy of
BIA income data exists, but information
provided should be regarded as inadequate for detailed planning purposes.
3. Indian Health Service-..... IHS complies annual estimates of service Data is incomplete, since IHS provides data populations. limited service to some small reservations;
Estimates are based partly on health
service usage information, and therefore
cannot be assumed accurate for population as a whole; "Service populations"
may differ from reservation residency
data because of eligibility criteria.
4. IRSI.. .... -IRS revenue-sharing population estimates-. IRS is normally a user of data from other
sources. Disputes over rather large data
discrepancies have led it to research the
accuracy of data used in allocating
revenue-sharing funds to some reservations; not all reservations receive such
funding, but estimates used may well
reflect best cross-compilation of gross
reservation population estimates.

It should be assumed that available data is generally inadequate for detailed planning purposes. Data for a small number of reservations is, however, available which is both detailed and accurate. Analyses of this data and the 1970 Census have shown that housing conditions, employment and poverty statistics are surprisingly uniform when aggregated to a Regional-level basis. It follows that for "fairshare" purposes use of population data alone is a reasonably equitable way of allocating resources to the Regional level.
The U.S. Bureau of Census have been doing extensive preparatory research in conjunction with tribal governments, BIA and IHS to assure an accurate and
complete census of Indian reservations in 1980. The geographical isolation of many Indian families is compounded by the fact that it is not unusual to make no use of normal services (e.g., telephone, electricity, water companies) in terms of survey techniques. Until the 1980 Census is completed, HUD must use available data in planning for Indian communities with the knowledge that it contains serious defects.

It is evident that HIUD has not met its goal of providing decent, safe, and
sanitary housing for American Indians, including Alaskan Natives, and that
major changes must be made in the way HUD administers its Indian housing
programs. In addition, we have found a need for a coherent, Government-wide stance on Indian housing policy an(d related assistance. Early last year Secretary Harris asked Mr. Joseph Burstein, Counselor to the Secretary to study the matter iand( report with recommendations on ways in which HUD' could best deal with the delivery of IIUD Indian programs.
In October 1977, while Mr. Burstein was completing his stuly, I UD received from the General Accounting Office a copy of its propose I report to the Congress, "SubIistandard Indian Housing Continues to Increase I)espite Fefleral Effortsthe Need for Change," with a request for our comments. This proposed! report dressedsd not only the issue of inteIr-)epartmental coordination ibut also the )roaler question of a national policy for Inianm housing and it suggested that tei responsibilities of the I)epartmnents of Interior, Agriculture, and IIU1) be re lefinedHl in order to provide for a coordlinaite(d policy.


Since copies of the proposed GAO report had also bci)(I seiit to the Secretar11y of Agriculture and the Secretary of the Interior for their revieWw and~ corijerit, Secretary Harris considered it appropriate to invite them to participate ini joint consideration of the issues raised in the dIraft report by the etliheltof a working group and the participation lby organizations repres enting the boneficiaries of the program. Accordingly, on D)ecember 1, 1977, Secretary 11arris a memorandum to the Secretary of Agriculture and the Secretary of the Interior suggesting that a working group 1)e formed from the three agencies to formulate legislative and administrative proposals for the President. It was also suggfestedt that Interior be designated the lead Department and that the Assistant Secretary for Indlian Affairs might be the appropriate chairperson of this working group. On February 2, 1978, the Secretary of Interior replied that the Assistant Secretary for Indian Affairs would act as chairperson of the working group. The Secretary of Interior stated that he had also requested HEW Secretary Califano to designate a representative on March 9, 1978. Secretary Harr-is responded favorably naming the designated HUD) representatives and expressing the hope that the group would meet as soon as possible. We are still awaiting response from the Assistant Secretary for Indian Affairs.
Mr. Burstein's reports on Indian Housing in general and Alaska Native Housing in particular were completed in November 1977 and were discussed in the July 13 and 14, 1978 HUD Indian Housing Conference in Washington with representative Indian leaders. These reports, together with a synopsis of relevant discussions of the Counselor's recommendations at the Conference have been incorporated in Notice 78-21 (PHA) dated 7/27/78 and transmitted to all IllAs (Appendix 11). This Notice was also sent to each Tribe, Band, Pueblo, Group and Community of Indians and Alaska Natives.
We are awaiting comments from Tribal officials and Indian organizations on Mr. Burstein's report. No decisions will be made on the Counselor's recommnendations, or the advisability of another HUD-sponsored national conference until the Department considers the comments from Tribal officials and the Interdepartmental Working Group considers these issues. Until this working group is initiated and makes recommendations upon which policy decisions can be made, we will continue to improve the existing program, including better coordination under the current Inter- Departmental Agreement. Undoubtedly any recommended changes in the basic handling of the program resulting from the working group would be the subject of Congressional hearings and require statutory changes. It is therefore appropriate that HUD defer major recommendations until the working group reports.

The following actions are planned to be taken this fiscal year to improve the Indlian housing program:
Program Procedures.-As indicated earlier, amendments to the Indian housing regulations have been prepared for publication. During the first part of the fiscal year, we expect the revised regulations to become final and a revised processing handbook to be written during the interim period, so that both may be issued simnult aneously.
Training.-Once the revised regulations and handbook as discussed above are final, we plan to hold training sessions for field staff, including if possible, field staff of the Bureau of Indian Affairs and the Indian Health Service. Subsequently, our field staff, with Headquarters assistance, will train IHA staff on the new procedures. It is contemplated that this training can be accomplished in FY 1979.




Fiscal year Reservations starts Completions

1962 ------------------------------------------------------------- 299 51 0
1963 ------------------------------------------------------------- 1,114 56 0
1964 ------------------------------------------------------------- 1,827 294 83
1965 ------------------------------------------------------------- 600 624 201
1966 ------------------------------------------------------------- 354 533 603
1967 ------------------------------------------------------------- 811 1,222 513
1968 ------------------------------------------------------------- 1,515 1,206 992
1969 ------------------------------------------------------------- 3,949 1,049 1,523
Subtotal --------------------------------------------------- 10,469 5,035 3,915
1970 ------------------------------------------------------------- 5,679 3,763 1 206
1971 ----------------------------------------------------------- 5 686 4,974 2:160
1972 ------------------------------------------------------------- 9: 714 3,111 2,889
1973 ------------------------------------------------------------- 562 2,675 3,788
1974 ------------------------------------------------------------- 1,288 2,638 3,499
Subtotal --------------------------------------------------- 22,929 17,161 13,542
1975 ------------------------------------------------------------- 6,726 2,170 3,459
1976, ----------------------------------------------------------- 6,888 3,507 2,695
1977 ------------------------------------------------------------ 8,065 3,965 1 299
1978 -------------------------------------------------------------- 4,858 4,581 2:677
Subtotal --------------------------------------------------- 26,537 14,223 7,453
Total ------------------------------------------------------ 59,935 36,419 24,910

1 Figures include fiscal year 1976 and the transition quarter. The timing of the Federal fiscal year was changed to begin Oct. I rather than July I in 1976; the quarter July 1, 1976 through Sept. 30, 1976, was called the transition quarter.


annual Average total
contribution development
per dwelling cost per
Fiscal year unit dwelling unit

1972 --------------------------------------------------------------------------- $1,574 $22,124
1973 --------------------------------------------------------------------------- 1,930 28,201
1974, -----------------------------------------------------------------------------------------------------1975 --------------------------------------------------------------------------- 3,129 35,760
19762 -------------------------------------------------------------------------- 3,428 40,828
1977 --------------------------------------------------------------------------- 4 316 55 420
19783 -------------------------------------------------------------------------- 4:311 51:977
19794 -------------------------------------------------------------------------- 4,500 54,256

1 Fiscal year 1974 data is not included, since that was the year of the suspension and only 888 units were placed under ACC at an estimated total development cost per unit of $24,790.
2 Includes transition quarter.
3 Preliminary data; expected to be higher when actual data is reconciled and confirmed.
4 Estimate.


Fiscal year United
1978 States 1 11 111 IV V VI VII Vill ix X

Net reservations---- 4,858 15 0 0 255 282 1,002 238 1,154 1,193 719
Starts -- ----------- 4,581 0 0 0 150 200 981 195 854 1,693 508
Completions I ------- 2,677 20 0 0 175 40 865 10 489 745 333

1 Estimate.


SEC. 901. Section 4 of the Department of Housing and Urban Developmen Act is amended by adding at the end thereof the following:
"(b) (1) There shall be in the Department a Special Assistant for Indian and Alaska Native Programs, who shall be responsible for coordinating all programs of the Department relating to Indian and Alaska Native housing and community development. The Special Assistant for Indian and Alaska Native Programs shall be designated by the Secretary not later than 60 days after the date of enactment of this subsection.
"(2) The Secretary shall, not later than December 1 of each year, submit to Congress an annual report which shall include'(A) a description of his actions during the current year and a projection
of his activities during the succeeding years;
"(B) estimates of the cost of the projected activities for succeeding fiscal
"(C) a statistical report on the conditions of Indian and Alaska Native
housing; and
"(D) recommendations for such legislative, administrative, and other
actions, as he deems appropriate.".


On January 11, 1979, HIUD published proposed regulations on Indian public housing. These were the first changes proposed since the comprehensive regulations were made final on March 9, 1976, a version which many Indian Housing Authorities have found to be inadequate and over-complicated.
The new proposed regulations offer a number of welcome initiatives. Specifically, tenant counselling is proposed as an allowable cost, design st andlards are to meet minimum property standards but are not necessarily to be controlled by them, construction inspections are ensured, amendments will be allowed to the annual contributions contract and development program budget in order to correct deficiencies, and a limited operating subsidy payment maty Ibe madec for mutual help homeownership homes.
[From the Federal Register, Thurs., Jan. 11, 1979-Part II]


Agency: Department of Housing and Urban Development.
Action: Proposed rule.
Summary*: This notice sets forth proposed amendments to the regulations for the HUD Indian Housing Program under the United States Housing Act of 1937. The amendments would include changes in the procedures for development of the housing, changes in the procedure for providing Indian enterprise preference in lIHA contracting, and for Mutual Help housing, changes in the computation of required homebuyer payments and a provision for payment of -needed operating subsidy.
Date: Comments are due on or before February 12, 1979.
Address: Comments should be filed with the Rules Docket Clerk, Office of General Counsel, Room 5218, Department of Housing and Urban Development, 451-7th Street, SW., Washington, D.C., 20410 (202) 755-7603 (this is not a tollfree number).
Each person submitting a comment should include name and address and refer to the document by the document name indicated in the heading and give reasons for any recommendation. Copies of all written comments received will be available for examination by interested persons in the office of the Rules Docket Clerk at the address listed above.
For further information, contact: Thomas Sherman, Office of Assisted Housing, Department of Housing and Urban Development, Washington, D.C. 20410, (202) 755-5658 (this is not a toll-free number).


Supplementary information: Comprehensive regulations for the Indian Housing Program became effective on March 9, 1976. At that time it was anticipated that amendments would probably be required on the basis of experience under the published regulations. The present amendments provide for important changes in the present regulations, reflecting the concerns of Indian Housing Authorities and of HUD during the period the regulations have been in effect. These changes can be accomplished under present statutory authority. The Department recognizes that more extensive changes, requiring new legislation, may be needed in order to realize a more comprehensive solution to the problems of the program.
The changes which are now proposed for public comment are already the result of an extensive series of consultations with IHAs and other concerned Indian organizations, since early 1977. Successive working drafts of the amendments were simultaneously circulated to these groups and to HUD Field Staff. Numerous comments from HUD and non-HUD sources were received on successive rounds of the amendments, and have been carefully considered.
The following, is a summary of the specified proposed amendments: Production method-Modified turnkey
1. Section 805.203(a) now provides that the lIHA's application for a Project shall state which production method it prefers to use and that the IHA shall provide a justification for its chosen method. Under this system, some IHA's have been using the Turnkey method, while others have been using the Conventional method. Section 805.203(a) is continued without change. It has been determined, however, that a modified form of the Turnkey method should be established in order to provide a more expeditious and less costly method and to take account of certain complaints by LIlA's that under the present Turnkey method they do not have sufficient control of the design.
Accordingly, 805.203 would be amended to set forth a modified form of the Turnkey method which responds to the two objections mentioned above and combines the best features of both production methods. The modified form of Turnkey includes the following basic provisions.
(A) Before advertising for Turnkey Proposals, (1) the sites shall have been selected, (2) HUD shall have approved drawings and specifications for the housing in sufficient detail to enable a developer to quote a firm price and to assure the quality of the design and construction, and (3) on the basis of these drawings and specifications, HUD shall have approved an estimate of the Total Development Cost and separate estimates of the cost of Dwelling Construction and Equipment Cost (DC&E Cost) and of the maximum total construction contract price which it hias determined to be reasonable and within applicable limitations.
(B) The invitation for Turnkey Proposals shall be based on a Developer's Packet which includes a description of the sites and the detailed drawings and specifications.
(C) Accordingly, each developer will be required to quote a firm price. After the developer has been selected, and the ACC, executed, the Contract of Sale will be executed.
(D)) Finally, whatever the production method used, the IHA shall provide (and sufficient development funds will be provided for this purpose) regular inspections by a qualified inspector sufficient to assure compliance with the approved drawings and specifications and the quality of the completed housing. (See comment 41.)
Prohibition on/ bonding for turnkey
2. The regulations would provide, for both the standard and the modified Turnkey Method, that the developer may not be required to post a bond for performance or payment ( 805.203(b) and (c)). Production method-Force account
3. In response to comments, 805.203(f) (3) would authorize the field offices to approve the use of Force Account for repairs and rehabilitation of acquired housing, correction of deficiencies, or completion after default by the original contractorl. For new construction, however, 805.203(d) (2) would permit the use of Force Account only with the approval of the Assistant Secretary for Housing, and only if the tribe agrees in writing to cover any excess costs. The tribe would have to demnonstArate tOat it has the financial resources to meet this commitment up to a specifiedI amount.


In all cases where an IHA requests authority to use the Force Account method, it would have to provide the justification and demonstrate that it has the capability to achieve timely completion of the work within the Total Developni('Ilt Cost and with the additional assurances provided by the tribe. Public advertisement for competitive proposal
4. A number of comments requested authority to enter into construction contracts on a negotiated basis. It has been determined that the arguments given are insufficient to outweigh the public interest in providing public opportunity for competitive bidding. Accordingly, 805.203(g), provides that contracts for development of a Project may be awarded, whether to Indian Enterprises or to others, only after public advertisement for competitive proposals.
5. Difficulties have arisen in the past where the lowest bid or proposal could not be accepted because it was above the amount budgeted for the contract or because the amount allocable to DC&E Cost was in excess of the applicable rototype Cost limit. These difficulties arose because there was nothing in the advertlsement or in the information made available to the prospective contractors to apprise them of any such limitations. Accordingly, 805.203(g) would provide that the advertisement for proposals shall inform all prospective contractors of the amount of the applicable Prototype Cost limit and of the maximum total contract price which has been determined to be reasonable. Indian preference in contracting
6. Section 805.106(a) would be amended to clarify the meaning of "Indian Organizations and Indian-owned Economic Enterprises," the class of businesses entitled to contracting preference under Sectlon 7(b) of the Indian Self-Determination and Education Assistance Act. This class includes both an "economic enterprise" as defined in Section 3(e) of the Indian Financing Act of 1974, and a "tribal organization" as defined in Section 4(c) of the Indian Self-Determination and Education Assistance Act. The regulations now incorporate only the Indian Financing Act definition of an "economic enterprise," and would be amended to add the statutory definition of "tribal enterprise."
7. Since it has been determined to exempt programs subject to Section 7(b) from the conflicting requirements under Section 3 of the HUD Act of 1968, Section 3 requirements would be deleted from 805.106.
8. Experience has shown that public advertisement for bids or proposals addressed to all types of contractors, with a provision that the bid of an Indian Enterprise shall be preferred if its price is within 110 percent of the otherwise low bid, is not workable. Generally, non-Indian contractors are reluctant or unwilling to participate in such bidding. In addition, troublesome questions have arisen as to how the 10 percent price preference can be reconciled with Prototype Cost limits and reasonable contract cost determinations. This experience indicates that the most practicable and effective method of providing preference to Indian Enterprise is to issue an advertisement for proposals limited to Indian Enterprises.
Accordingly, 805.204 would be revised to incorporate this with HUD approval as an optional method of providing preference to Indian Enterprises. When this method is used, the amended 805.204 would also specifically authorize the IHA, with HUD approval, to publish a prior invitation for Indian Enterprises to submit a Statement of Intent to respond to an advertisement for proposals when published and to furnish evidence to establish their qualifications in accordance with 805.204 (a) (4).
9. Where a contractor seeks to qualify for award of a contract under the new preference provisions, the contractor's eligibility for preference must be approved by HUD Q 805.204(a) (4)). This section would state the nature of the submission by any prospective contractor seeking to qualify for the preference. The contractor would be required to submit evidence showing fully the extent of Indian ownership and interest, and evidence of structure, management and financing affecting the Indian character of the enterprise.
10. Section 805.204(d) would provide that for all construction contracts, the information for prospective contractors shall set forth all Indian preference requirenjents affecting award of or to be included in the terms of the Contract.
IHA Commissioner8
11. A new 805.110(b) would be added to provide that a member of the Board of Commissioners shall not be eligible for employment by the IHA except under unusual circumstances and with the approval of HUD. While some comments


suggested allowing employment of a Board member in the position of Executive Director, it was the consensus of the comments that the role of Commissioner was basically incompatible with concurrent employment by the IHA in any capacity and that exceptions should be allowed only for the most compelling reasons.
12. There were several recommendations from IHAs and Indian groups that IHA Commissioners be compensated for losses in income incurred by reason of attendance at board meetings and that such compensation be funded by additional operating subsidy from HUD. Either a flat rate of compensation would have to be established which would be paid to Commissioners regardless of the varying amounts of lost income or HUD would have to become involved in calculations of individual losses of income.
The present policy is in line with that which prevails in the public housing program generally, and it is felt that this issue, as well as other operating policy issues, should be deferred until consideration has been given to the recommendations of the Counselor to the Secretary under which increased responsibility for operations and for maintaining the financial stability of the projects without HUD operating subsidy would be placed on the tribal governments and their IHAs. For these reasons, no amendment on the issue of compensation for Commissioners is proposed.
Allocation of contract authority
13. A proposal to amend 805.205 to provide that HUD will allocate contract authority for Indian housing in accordance with need and administrative capability of the IHA was rejected based upon negative comments.
Compliance with Section 213 and OMB Circular A-95
14. Section 805.206 would be amended to provide that the application shall designate at least the general locations of the proposed housing as needed to permit the commencement of the Section 213 local review process. To expedite processing for Section 213 purposes, the application may be accompanied by comments on the application by the Chief Executive Officer on behalf of the local government. Appropriate provisions of OMB Circular A-95 are quoted. Section 805.217(a) would be revised to eliminate a description of procedural requirements under A-95, and to provide only that tentative site approval shall not be given until the requirements for compliance with Section 213 and with A-95 (where applicable) have been met.
Program reservation and development program
15. The definition (in 805.102) of the term "Program Reservation" has been modified to indicate that the obligation of contract and budget authority will be made at the program reservation stage and that the number of units which may be approved for ACC will be the number of units in the Program Reservation or such lesser number as is consistent with the reserved amount of contract and budget authority.
16. Section 805.206(b)(4) would require submission of an approvable Development Program within one year from issuance of the Program Reservation.
17. Section 805.208 would be substantially expanded to provide a mechanism for an ongoing process of coordination and cooperation by HUD, the IHA, the tribe and other concerned agencies during the development period. The amendments would require institution of the coordination process as soon as sites are i(lent ified. By concurring in tentative site approval, each party would be committed to provide any agreed funding or other assistance.
Section 805.208 would also provide for periodic consultations between the tribe, as well as IA, HIlUD and other concerned federal agencies, on the progress of project development, at which times the parties would agree on necessary action on problems delaying the project development. Before the end of the one-year period, the parties would recommend to HUD whether to extend the one-year limit or cancel the Program Ieservation. Preliminary loans
1I8. The provisions of preliminary loan funding ( 805.209) would be comprehensively revised. Because the amount of preliminary loan previously authorized ($00 per unit, $1,000 in Alaska) has often been inefficient, the amendments would allow a higher and more flexible limitation for preliminary surveys and planning. The new limitation is 3 percent of estimated Total Development Cost ($1,.500 in the case of a $50,000 TDC). In addition, the IHUD field office could


under certain specified1 cond~itions5 approve prelim ina-ry loan funding for pnurpo)-(-s Other than preliminary surveys and planning, or for more than 3 pe(rcornt.
19. While increasing the amounts of prelimn ary ba ii, the ri 1;tinswoul1( also establish limitations on the availability and1 use of the funds. rul regulations would clarify that preliminary loan funds are only tvatilab~le for purpoises alln in amounts that can be included in a D)evelopment (Xist Budget ( X(05.209(c)). i order to establish tighter controls over the use of the funds, the lilA would he. required to adopt, and submit for HUD approval, a budget for use of the loan funds ( 805.209(d)). Finally, since adequate preliminary loan funding is now to be provided, the amendments would explicitly prohibit an lIlA from the Ilse of funds from other projects to cover the pre-ACC expenses ( 805.209(e)). Capability of contractor
20. A new 805.211 (c) would provide that the lIlA may not award a construletion contract until the prospective contractor has demonstrated that he has the technical, administrative and financial capability to perform the contract worFk within the time provided under the contract. Design of the housing
2.Section 805.212(a) sets forth a revised statement of the basic design standards. In the interests of clarity, all the relevant standards are brought together in one paragraph. In addition, the revision states that the HUD Minimum Plroperty Standards shall be taken into account, but shall not be controlling. This will eliminate the need for specific exceptions or waivers where deviations from the MPS are considered desirable or appropriate.
22. Section 805.212(b) is a new provision which sets forth the procedure for obtaining HUD approval of a design preliminary to preparation of a Developer's Packet and advertisement for proposals. Under this procedure, the IHA shall prepare and submit to HUD a basic outline for a minimum acceptable house for its jurisdictional area and attendant water supply and waste disposal facilities. This shall be done after consultation with the families to be housed. HUTD shall approve a basic outline of the housing and facilities which, as determined by HUI), can be constructed within the applicable Prototype Cost limit and at a reasonable total contract price, and within an acceptable Total Development Cost. These amounts shall be stated in HUD's approval of the basic outline and, as stated earlier, the prototype cost limit and the maximum total contract price which has been determined to be reasonable shall be included in the advertisement for proposals. Following HUD approval of the basic outline, the IHA shall prepare the drawings and specifications needed for the advertisement for proposals and shall submit these, together with the remainder of the information for prospective contractors, to HUD for its approval.
Cost limits-New construction for acquisition
23. Section 805.213 which provides procedures for special prototype cost determinations for this program, would be amended to clarify that these provisions apply only to separate Indian prototype cost areas.
24. The statement of the special factors to be considered in establishing prototype costs for separate Indian areas (now 805.213 (b) (1)) would be modified by adding a sentence requring that prototype costs shall provide for features, appropriate for the area, designed to conserve energy, lower utility costs, or utilize indigenous energy sources.
25. Section 805.2 13 (b) (2), a new provision, states that a copy of the prototype design on which a published prototype cost is based shall be supplied to the lIHA for its guidance in preparing the basic house design to be submitted to HUD for approval.'
26. Section 805.2 12(c) deals with revisions of prototype cost, in the context of the procedure which calls for the submission by the IHA to HUD of a basic outline of the housing and facilities it desires to have built. This section states that if the IRA finds that a proposed housing design cannot be built within 110 percent of the existing prototype cost because construction costs have increased (but not because the design has more expensive features than the prototype design) the IHA shall so state and request a revision of the prototype cost. This request shall be accompanied by evidence of the cost increase. HUD shall agree to revise the prototype cost only if (1) it determines that the evidence of cost increases supports the request and (2) the design cannot be modified to reduce the cost sufficiently.



27. Section 805.214d(b) would be amended to clarify that the prototype cost limit applies only to new construction, and to provide that where a Project is developed under the Acquisition method Development Cost shall not exceed 90 percent of the imputed Development Cost of a comparable hypothetical new construction project (or an appropriately lower percentage if the projected useful life of the acquisition project is less than the ACC term).
28. Many comments addressed the delay in the publication of the annual updates and interim revisions of prototype costs. The Department is reviewing actions it might take to alleviate this problem by expediting the present process or by delegating authority to field offices subject to total development cost ceilings. Comments from the public are specifically invited on this point.
Provisions relating to development cost
29. At the request of the BIA, 805.2 14(c) would be amended to provide that where BIA is to assume responsibility for maintenance of streets after the housig development is completed, BIA must be given the opportunity to review the design and to inspect the construction of the streets.
30. Section 805.214(e) presently provides that connections to utility distribut ion systems may be included in Development Cost. In view of questions and comments relating to the meaning of the word connections and whether costs of extensions to distribution systems may be included, the paragraph has been revised to change the word connections to hookups and to provide that where reasonably short extensions are needed to make the utility distribution system available to the site, such costs may be included in the Development Cost if the costs can be justified on the basis of net savings in the Development Cost or long-term savings based upon utility analysis.
31. Section 805.214(e) now provides that costs of facilities to be provided by other than H UD shall not be included in Development Cost. This paragraph has been revised to state that such costs may not be included unless such costs are offset by other parties assuming costs that would otherwise be included in Development Cost.
Tenant counseling
32. A new paragraph, 805.214(i), has been added to provide for the costs of a HIUD-approved counseling program (up to $500 per dwelling unit) in Development Cotsts for tenants of a Rental Project. Previously such counseling programs were allowable only for Mutual-Help projects.
Site selection and approval
33. Section 805.216(b) is being amended to specify that a site may not be approved unless, in addition to assurances of access roads in time for initial occupancy of a proposed project, there are assurances that there will. be access to the site in time for construction purposes.
34. Section 805.2 16(e) would be amended to specify that IHAs may only use sites for which the costs of surveys and planning, including test borings and drilling, are expected to be reasonable. A new 805.2 16 (g) (5) would state that final site approval will not be given unless HUD determines there is not an unreasonable risk of natural hazard.
35. Section 805.217(b) would be amended to include an exception permitting execution of ain ACC before final site approval on donated sites or contributed sites for which the MH Contribution credit is $750 or less per site under the following condlit ions:
a. All projects have tentative site approval before ACC;
b. At least 50 percent of the sites have final site approval before ACC;
c. It is shown to the satisfaction of HUD that the balance of the sites will prohalv me!et the requirements for final site approval no later than one year from execution of the Construction Contract; and
d. The Construction Contract shall provide that if all sites, finally approved and with executed leases have not been delivered by the IHA to the contractor withinl one year from execution of the Construction Contract (or HUD-approved extenisioni), the C"onstruction Contr-act shall be reduced by the amount attributable to( the units to b~e developed oni the undelivered sites.
36. Section 805.217(c) would prohibit the acquisition of a site until after (1) finial ,it(, appr-oval andI an)y nees, sar-y approvals from IllS and BIA and (2) execuitioni of the ACC, unless II 1) authorizes advance acquisition.


37. In response to field recommendations, the dollar amount below which an
appraisal is not required is raised from $500 to $750 ( 805.219(a)).
38. Section 805.219(b) would be amended to eliminate the provision that HUD
or BIA appraisals shall not be requested until receipt of a 1-1 U D notification that a sufficient number of sites have been approved to permit the project to proceed.
It is intended to facilitate and encourage the submission of requests for site appraisals for particular sites, or batches of sites, at the earliest possible date, to
avoid delays in project development.
39. Section 805.219 (c) (4) provides that the valuation of a leasehold intei est on I trust land may not exceed % of the value of the land as if alienable in fee. This
limitation would be retained, but the regulation would be amended to provide that the % limitation may be exceeded with approval of the Assistant Secretary for
Housing in exceptional cases where no other suitable -zites are available.
Financial feasibility-Rental projects
40. An amendment of 805.220 to state in detail the process by which financial
feasibility of a rental project shall be determined has been eliminated based upon comments that it was difficult, to understand. Therefore, the section remains unchanged and the financial feasibility test is referenced to the test applicable to projects subject to the Performance Funding System (24 CFR 890.101 et. seq.) for providing operating subsidy. Operating subsidy for the,--e projects is now provided under PFS.
41. Section 805.221(a) has been expanded to make it clear that whatever the
production method used, inspections during construction must be performed with such frequency and under such procedures as will assure completion of quality
housing in accordance with the contract.
42. Section 805.221(c) would provide that the homebuyer must be given a
copy of the report on the final inspection when the home is completed.
ACC amendments
43. A new 8005.223(b) would provide explicitly that the Development Program and ACC may be amended to provide amounts needed to correct deficiencies in design, construction or equipment and resulting damages, where it is not possible to obtain timely correction by the responsible parties.
44. In the case of a MH home, the additional development cost for such work
will not result in an increase in the homebuyer's purchase price. However, before approving work on a MH home for correction of deficiencies, the field office may review the homebuyer's compliance with the MHO Agreement and may require the IHA to reach an agreement with the homebuyer for the correction of Significant non-compliances.
Admission policies
45. The existing regulation permits IHAs to set maximum income limits for
eligibility at the maximum permitted under the Act, which limits participants to families who cannot afford to pay enough to cause private ente rise to build an adequate supply of decent, safe and sanitary dwellings for r9eir use. It was anticipated that under permissible income limits, families of relatively higher incomes who could not obtain decent housing because of the near impossibility of obtaining private financing on trust or restricted land would be able to participate in the program and the existing regulation specifically states that "H U D shall approve the IHA's schedules of maximum income limits unless it finds that
the IHA's determination of such limits is arbitrary or capricious."
Evidence has been received that higher income limits in some cases are not
being approved. Therefore, the provision would be revised (a) to state that IHAs in submitting higher income limits to HUD for approval may furnish a certification that private (conventional, FHA or VA) or Farmers Home Administration financing is not available to the prospective tenants or homebuyers along with such other supporting evidence as the IHAs deem advisable and (b) to eliminate the "arbitrary and capricious" language and provide a new standard for HUD field offices in acting up on an IHA's request. The new standard is that HUD shall not disapprove such income limits on the ground of their being too
high unless it finds that the IHA certification is incorrect.


46. The regulations now require ( 805.302(b) (2) (i)) the adoption by an IHA of admission policies for Rental, MH and Turnkey III Projects designed to achieve occupancy by families wlth a "broad range of incomes and rent-paying ability which is generally representative of the range of incomes of low-income Indian families in the area." These provisions would be amended to change the standard of reference to "range of income of low-income Indian families in the area, as determined by HUD, who would be qualified for admission to the type of project (Rental or Mutual-Help)." Thus, in the case of a Mutual-Help project, the relevant area population would consist of only those families who would be income-eligible for a Mutual-Help project, taking into account the obligation to pay as a minimum the amount of the Administration Charge and to provide maintenance and utilities. A similar amendment would be made in 805.302(b)
(2)(iv) in connection with the requirement for at least 20 percent occupancy of an MH project by those of very low income. maintenance and improvements
47. Section 805.306(d) presently states, with respect to IHA homeownership projects, that the IHA is responsible to HUD for assuring that the housing is being kept in decent, safe and sanitary condition. In response to concern that this does not sufficiently express the responsibility of the IHA, bearing in mind that the obligation to provide the maintenance is on the homebuyer, this section would be amended to provide that the IHA has the overall responsibility for assuring that the home and grounds are maintained in a manner that will preserve their condition, normal wear and depreciation excepted. A provision would also be added requiring the IHA to conduct a complete interior and exterior examination of each home at least once a year, and to take appropriate remedial action, including steps to assure performance of the homebuyer's obligations.
48. A new provision which would have required that any improvements to rental, Turnkey III or MH units must be performed under HUD-approved plans and specifications, even if financed by non-project funds, and has not been included because minor improvements by homebuyers would be delayed and excessive paperwork and administrative time would be required.
Operating subsidy for mutual-help projects
49. Some comments requested the payment of operating subsidies to assist homebuyers in paying the Administration Charge and utilities and in maintaining the homes, since the costs of these items have increased faster than the incomes of homebuyer families. It is felt that this issue, as well as other operating policy issues, should be deferred until consideration has been given to the recommendations of the Counselor to the Secretary under which increased responsibility for operations and for maintaining the financial stability of projects without HUD operating subsidy would be placed on the tribal governments and their IHAs. However, to provide for the immediate need for operating subsidy for items for which the homebuyer is not responsible, a new Section 805.311 would be added. In addition to the use of operating subsidy to pay for Independent Public Accountant Audits, operating subsidy could be authorized to pay for the following:
(a) Administration Charges for vacant units where the IHA is making all
reasonal)le efforts to fill the vacancies.
(b) Collectio n losses (due to delinquencies of homebuyers who have vacated
their homes, and the costs of repairs to the vacant homes.
(c) Costs of homebuyer counseling not funded under the Development Cost
Budget, and training of staff and Commissioners.
(d) Costs resulting from other unusual circumstances determined by IIUD
as justifying payment of operating subsidy.
Ind(er the 'unusual circumstances" provision, it is the intent that operating subsidy present ly being paid for existing projects will be continued to the extent otherwise justified. However, it is also anticipated that each IIA will update the amount of the Ahninistration Charge in accordance with its Operating Budget.
50. Many comments pointed out that although the Development Cost Budgets for projects developed under the new Regulation may include an amount of $500 pler unit for homebuyer counseling, there is no source of funds for homebuyer counseling with respect to the occupants of the older Mutual-Help projects, or for training of III A staff and Commissioners, Moreover, these are ongoing needs fhr which "one-shot" funding from development cost is not in itself sufficient. The provision aut hoIrizing operating subsidy for ongoing training and counseling woiul lerrmit uayminnt of operating subsidy to meet these needs.


Development of MH projects
51. Unrestricted land (fee land) may be purchased for a Mutual-1elp homesite if the tribe and the homebuyer cannot donate or contribute enough usable sites. Under the present Regulation, 805.404(c), the maximum amount that may be paid for a purchased site is $1,500 per unit, unless the excess cost is paid for by non-project funds or is compensated for by additional ,[utual-hIelp coitribution. In view of rising costs, as well as cost differences among localities, it has been determined that a more flexible ceiling is necessary. Another problem with the flat dollar ceiling is that it fails to give credit for those cases where the purchased site happens to include improvements which can be used in the development of the projects and which would otherwise have to be provided at additional development cost. Accordingly, 805.404(c) would be amended in three respects:
a. The ceiling amount for an unimproved site would be stated as 8.75 percent of the estimated Dwelling Construction and Equipment Cost (DC&E Cost). This percentage would amount to approximately $1,500 where the DC&E Cost is about $17,000. This ceiling could be exceeded if the site has such topographic features that offsetting savings will be achieved through lower site improvement costs.
b. In case of an improved or partially improved site, the purchase price, together with the cost of further site improvements, must be reasonable in relation to the estimated DC&E Cost and consistent with an acceptable Total Development Cost.
52. In order to reflect increases in land cost, the maximum cost for a homesite, below which an appraisal is not required, has been raised from $500 to $750, and the maximum Mutua! Help credit for a contributed homesite has been revised from $1500 per homesite to a project average of $1500 per homesite. (Section 805.219(a); 805.408(c) (2)).
53. Section 806.404(e) would provide that after final site approval a change of site shall not be permitted except with specific HUD approval on the basis of a showing of special circumstances and that the change will not unreasonably delay or add to the cost of the project.
54. Section 805.404(f) requires that contributed or donated land be leased or conveyed to the IHA before execution of the construction contract. This section would be amended to provide for exception as allowed by HUD.
55. Section 805.404(g) would provide that the IHA shall be responsible for determining the extent to which homebuyers be given an opportunity to comment on the planning and design of the homes, consistent with HUD standards and cost limitations.
Admission to MH projects
56. A new 805.406 (a) (2) which would have required that a family to be eligible for a MH project must have at least one person (not counting minors) who is not yet either sixty-two years of age or disabled was considered on the basis that this would help assure the ability to maintain the property. This section was withdrawn, however, based upon comments that such a section would adversely affect elderly family applicants and would not necessarily assure maintenance.
57. Section 805.406(b), which states the requirement for limiting admission to MH projects to families able and willing to meet all obligations under an MHO Agreement, would be amended to refer specifically to the MH homebuyer's duty to perform or provide the necessary maintenance. Homebuyer accounts
58. Section 805.409(a) would be amended to clarify the treatment of MH contribution credits after a substitution. In particular the amendment would provide that any additional MH credit after a substitution must be offset by an agreed reduction in the amount paid to the contractor. The additional credit cannot be covered by an increase in the total contract price included in development cost.
59. Section 805.414 would be amended to clarify the treatment on termination of M4 credits for contributed land where the terminated homebuyer does not receive reimbursement or return of property.
60. Sections 805.418(a) (2) (ii) and (b) and 805.421(c) (4) would be amended to allow charges to be made to an MH homebuyer's equity account if necessary for the correction of a condition which presents an immediate risk of serious damage to the property.


Mutual-help--Required monthly payments
61. Under 805.416(a) of the present Regulations, a homebuyer is required to pay the higher of (a) the Administration Charge, the amount necessary to meet per unit monthly operating expense of the IHA, or (b) 25 percent of the family's adjusted income ("Family Income"), less an allowance for utilities. If a family pays more than the Administrative charge, the family gets individual equity credit for the additional amount. Comments to the Department have indicated a need for more flexibility by permitting the use of a lower percentage than 25 percent and by permitting a ceiling for those homebuyers of relatively high income. In response to these comments 805.416(a) would be amended to provide that, except as necessary to meet the Administrative Charge, the amount of the Required Monthly Payment shall be computed by multiplying Family Income by a specified percentage (no less than 15 percent and no more than 25 percent). In addition, an IHA may provide for a maximum Required Monthly Payment of not less than the economic rent (Administration Charge plus debt service).
62. Section? 805.416(b) and (d) would be amended to provide for changes of Required Monthly Payments under a HUD-approved schedule to reflect changes in any of the factors affecting computation of the monthly payment.
63. The new rules for determination of Required Monthly Payments would be applicable only to MH projects placed under ACC on or after March 9, 1976. These rules would not apply to existing projects unless they are converted to development or operation under the new regulations.
64. A new provision, 805.416(d) (2), is added to permit agreements to be made with homebuyers for seasonably adjusted payments schedules in order to accommodate wide fluctuations in a payments burden due to seasonal conditions.
MH operating reserve
65. Section 805.420(a) would be amended to provide that the Operating Reserve for an MH project must be sufficient for working capital and other HUD-approved purposes.
Purchase of home
66. Section 805.442(c) (2) and (3) would be amended to provide a simplified and uniform procedure for computation of the purchase price for an MH homebuyer other than the homebuyer who first occupies an MH home.
67. Section 805.422(d) (4) would be amended to specify that the home may not be conveyed until the homebuyer has met all his obligations under the MutualHelp Agreement.
68. Sections 805.422(d) (5) and 805.423(d) would be amended to state the IHA's obligation to invest, and later to send to HUD, the purchase monies received by the IHA.
69. Section 805.422(a) and (e) would be amended to delete any requirement for a homebuyer to take title when his income increases, although the homebuyer does have the right if he so desires to obtain title with iHA homeownership financing (see 805.423). Under the new text of 805.422(e), when the IHA finds that a homebuyer is eligible to purchase with IHA homeownership financing, it will send him a written notification to that effect. This notification will also advise the homebuyer that until he purchases the home, his status will be governed by 805.422
(e) (2). Under this provision, the homebuyer will continue to make payments based upon his income, equity credits will continue to build up, but the purchase price will be frozen at the amount as of the date of the written notification.
70. Section 805.424(f) would be added to state the IHA's obligation to take action for non-compliance by a homebuyer with the Mutual-Help Agreement, and to require adoption of an agreed plan for bringing a homebuyer into compliance. Where a homebuyer does not comply with the plan, the IHA is required to proceed with eviction.
Settlement upon termination-Maintenance credit account
71. Under the present Regulation. 805.424(d) (3) provides that in case ol termination of the MH1O Agreement before acquisition of ownership, any credit balance in the Monthly Equity Payments Account (MEPA) shall be disposed of (after making all the necessary charges for repairs, etc.) by paying to the departing homebuyer only the amount that is equal to his total Maintenance Credit. This system has required that a special Maintenance Credit account be carried for each homebuyer to show the estimated value of the maintenance he is required under


the present Regulation to provide. Comments have indicated that this adds to the complexity of bookkeeping and it has been urged that since the Maintenance Credit account serves no function under any other circumstances, it should lKe eliminated. In recognition of the need for simplifying the program as much aIs possible, the Regulation would be amended by deleting the Maintenance Credit account and authorizing payment to a departing homebuyer of the amount remaining in the MEPA Account after charging that account with the cost of all necessary repairs to the home and other delinquencies, if any.
72. Section 805.428(b) would be amended to state the form of agreement by a Participant in the old Mutual-Help Program (before March 9, 1976) to convert his unit to the new Mutual-Help system.
A finding of inapplicability regarding the National Environmental. Policy Act of 1969 has been made in accordance with JIUD procedures. A copy of this finding of inapplicability will be available for public inspection (luring regular business hours at the office of the Rules Docket Clerk at the above address.
Accordingly, it is proposed to amend Part 805 as follows:

Subpart A-General
805.101 Applicability and scope. 805.102 Definitions.
805.103 Types of low income housing projects. 805.104 Assistance from Indian Health Service and Bureau of Indian Affairs. 805.105 Applicability of civil rights statutes.
8516Preferences, opportunities, and non discrimination in employment and contracting. 805.107 Compliance with other Federal requirements. 805.108 Establishment of IHAs pursuant to Tribal law or State law. 805.109 Procedures for establishment of IHAs by Tribal ordinance. 805.110 lIlA Commissioners who are tenants or homebuyers. Appendix I-Tribal Ordinance.
Subpart &-Development 805.201 Definitions.
8522Roles and responsibilities of Federal agencies. 805.203 Production methods. 805.204 Indian preference in contracting. 805.205 Allocations of contract authority. 805.206 Submission and HUJD review of application for Program Reservation. 805.207 Prerequisites for application approval. 805.208 Interagency and Tribal Coordination. 805.209 Preliminary loans. 805.210 Development program. 805.211 Contracts in connection with development. 805.212 HUD's minimum property standards. 805.213 Prototype costs in Indian areas. 805.214 Development cost. 805.215 Design for economy in fuel consumption. 805.216 Site selection.
805.217 Site approval.
805.218 Types of interest in land. 8015.219 Appraisals.
805.220 Financial feasibility of rental projects. 805.221 Construction inspection. 805.222 Inspections after acceptance and enforcement of warranties. 805.223 Cost to correct deficiencies. Appendix I-Interdepartmental Agreement on Indian Housing. Exhibit to Agreement- BIA Ho meb~uyer
Training Program.
Subpart C-Operation 805.301 Definitions.
805.302 Admission policies. 805.303 Grievance procedures. 805.304 Determination of rents and homebuyer payments. 805.305 Rent and homnebuyer payment collection policy. 805.306 Maintenance.
805.307 Procurement and administration of supplies, materials and equipment. 805.308 Correction of management deficiencies. 805.309 Indian preference in contracting. 9805.310 Contracts for personal services. i805.311 Operating Subsidy-MH Projects. ,805.312 Operating Subsidy-Other Projects.


Subpart D-Mutual Help Homeownership Opportunity Program

505.401 Scope and applicability.
5L5.402 Definitions.
805.403 Contractual framework.
805.404 Special provisions for development of an MH Project. 805.4 05 Financing of development cost. 805.406 Selection of MH homebuyers. 50C.407 Notifications to applicant families. 805.408 IMH contribution.
E(n5.40 MH contributions in event of substitution of homebuyer. 503.410 MH work contribution.
805.411 Cash contribution.
805.412 Materials or equipment contribution. 805.413 Special requirements for NH construction contracts. 805 414 Disposition of contributions on termination before date of cocupancy. 805.415 Actions upon completion; commencement of occupancy. 805.416 Required monthly payments. J15.417 Inspections; responsibility for items covered by warranty. 805.418 Maintenance, utilities, and use of home. 805.419 Admiiistration charge and operating expense. 805.420 Operating reserve.
803.421 Homebuyer reserves and accounts. 805.422 Purchase of home.
805.423 IHA homeownership financing. 805.424 Termination of MHO agreement. 8053.425 Succession upon death, mental incapacity or abandonment. 805.426 Miscellaneous.
805.427 Annual contributions contract. 805.428 Conversion of existing projects. 805.429 Counseling of homebuyers.
8.430 Cross references to defined terms. AUTHORITY: Section 7(d), Department of Housing and Urban Development Act (42 U.S.C. 3535(d)) sections 201(b) and 203 of the Housing and Community Development Act of 1974 (42 U.S.C. 1437, note and 1437f. note); U.S. Housing Act of 1937 (42 U.S.C. 1437 et seq.), especially sections 5(b), 5(c), and 5(h) (42 U.S.C. 1437c(b), 1437c(b), and 1436c(h)).

Subpart A-General
805.101 Applicability and scope.
(a) General. (1) Under the U.S. Housing Act of 1937 (42 U.S.C. 1437 et seq.), the U.S. Department of Housing and Urban Development provides financial and technical assistance to public housing agencies for the development and operation of low income housing projects. This Part is applicable to such projects which are developed or operated by an Indian Housing Authority in the area within which such Indian Housing Authority is authorized to operate.
(2) If assistance under this Part is not available to a low income Indian family because the family desires housing in an area within which no Indian Housing Authority is authorized to provide housing, or if for any other reason an Indian family desires housing assistance other than under this Part, a family may seek housing assistance under other Parts of this Chapter.
(b)) Other HUD regulations and requirements. The provisions of this Part do not constitute a self-contained or complete statement of the HUD regulations and requirements affecting the development or operation of low income housing
Projects of Indian HIousing Authorities. Except as modified or supplemented by the provisions of this Part, H UD regulations, procedures and requirements generally applicable to the development or operation of low income housing are applicable to Projects subject to this Part.
805.102 Definitions.
This section sets forth certain definitions of terms used in this Part. Definitions of other terms are contained in various sections where the terms are used. For a list of cross references to the location of the various definitions, see 805.430.
A ('C. An annuall Contribuitions Contract.
Act. The U.S. IIousing Act of 1937 (42 U.S.C. 1437 et seq.).
.Inntual Contributions Contract. A contract on a form prescribed by HUD
for loans and annual contributions between IHUD and an IHA, under which HUD finiauwces the develolment of a low income housing project under the Act, and the IilA agrees to develop and operate the project in compliance with all provisions o(if the A('( and the Act, and all 11I) regulations, requirements and procedures pulr-unt thereto. 'The amount (charged against contract authority is the maximum contribution payab le under the ACC (Maximum Contribution Percentage
times MaxiNmum l)evelopment ('ost), and this amount multiplied by the maximm numtlr of (debt service annual contributions over the term of the ACC is the amount chargl(d against u(Iget authority.


BIA. The Bureau of Indian Affairs in the department of the Interior.
Construction Contract. The contract for cOns.triIiction of the case of tI1e ( onventional method, or the Contract of Sale in the case of the Furnkey method.
Conversion. A conversion of an Existing Project in accordance with S{)5.428.
Development Cost. See Total Development Cost.
Development Program. A statement of the basic elements of a ProJect, including the estimated Total Development Cost of the Project, as adopted by the I1A and approved by HUD.
Existing Project. A Mutual Help Project placed under ACC before March 9, 1976, the effective date of this Part.
Home. A dwelling unit covered by a Homebuyer's Mutual Help and Occupancy Agreement.
Homebuyer. A person(s) who has executed a Mutual Help and Occupancy Agreement with the IHA, and who has not yet achieved homeownership.
Homeowner. A Homeowner who has achieved ownership of his Home.
HUD. The Department of Housing and Urban Development, including the Regional, Area or Insuring Office which has been delegated authority un(ler the Act to perform functions pertaining to this Part for the area in which the IHA is located.
IHA. An Indian Housing Authority.
IHA Homeownership Financing. IHA financing for purchase of a Home by an eligible Homebuyer who gives the IHA a Promissory Note and Mortgage for the balance of the purchase price (see section 805.423).
IHS. The Indian Health Service in the Department of Health, Education, and Welfare.
Indian. Any person recognized as being an Indian or Alaska Native by a tribe, the Government, or any state.
Indian Area. The area within which an IHA is authorized to provide housing.
Indian Housing Authority. A public housing agency established (a) by exercise of a tribe's powers of self-government independent of state law, or (b) by operation of state law providing specifically for housing authorities for Indians.
Interdepartmental Agreement. The agreement among HUD, the Department of Health, Education and Welfare and the Department of the Interior concerning assistance to Projects developed and operated under the Act (Appendix I to Subpart B).
MEPA. The Monthly Equity Payments Account (see 805.421(b) (1)).
MH. Mutual Help.
MH Construction Contract. A Construction Contract for an MH Project where an MH contribution of work, materials or equipment is to be made, which contract shall be on a form prescribed by HUD.
MH Contribution. A contribution of land, work, cash, materials or equipment toward the Development Cost of a Project in accordance with a Homebeuyr's MHO Agreement, credit for which is to be used toward purchase of a Home unless used earlier to pay for maintenance or other obligations of the Homebuyer.
M1HO Agreement. A Mutual Help and Occupancy Agreement between an IHA and a Homebuyer.
MH Program. The Mutual Help Homeownership Opportunity Program.
MH Project. A Project developed and operated under the MH Program.
Program Reservation. A written notification by HUD to an IHA, which is not a legal obligation, but which expresses HUD's determination, subject to fulfillment by an IHA of all legal and administrative requirements within a stated time, to enter into a new or amended Preliminary Loan Contract or ACC covering the stated number of housing units, or such lesser number as is consistent with the amount of contract and budget authority reserved by HUD under the Program Reservation.
Project. The entire undertaking to provide housing as identified in the ACC involved, including all real or personal property, funds and reserves, rights, interests and obligations, and activities related thereto to be developed and operated by an IHA.
Total Development Cost. The sum of all HUD-approved costs for a Project incurred by an IHA in any and all undertakings necessary for planning, site acquisition, demolition, construction or equipment and their necessary financing (including the payment of carrying charges), and in otherwise carrying out the development of the Project.
Tribe. An Indian tribe, band, pueblo, group or community of Indians or Alaska Natives.


803.103 Types of low income housing projects.
IHAs may develop the following types of Projects:
(a) Rental. In a Rental Project, the occupants are month-to-month tenants of the IHA. Projects may be developed with single family detached, duplex, row house, walk-up, garden type, or elevator structures. Projects for the elderly and the handicapped may include congregate housing.
(b) Mutual Help Homeownership Opportunity. This program (see Subpart D) is available only for use by IHAs eligible for assistance under this Part. Under this program, a Homebuyer enters into an MHO Agreement under which the Homebuyer agrees to (1) contribute cash, work, land, materials, or equipment, or a combination thereof, for development of the Project; (2) make monthly payments based on income; and (3) provide all maintenance of the Home. In return, the initial purchase price of the Home is reduced each month in accordance with a predetermined purchase price schedule, and the Homebuyer is given the right to buy the Home by payment of the remaining balance of the purchase price at the time of the purchase. The credit for the Homebuyer's contribution is available for maintenance of the Home, and any balance is applied against the purchase price of the Home.
(c) Section 8 Housing Assistance Payments. The regulations for this program are set forth in Parts 880, 881, 882, and 883 of this Chapter. Under this program, a low income family leases a dwelling unit in newly constructed, substantially rehabilitated or existing housing. Housing assistance payments are made on behalf of the family to cover the difference between the contract rent of the unit and the amount payable by the family, as determined in accordance with schedules and criteria established by HUD. This program may include rental and cooperative projects, including housing for the elderly or handicapped and congregate housing, and homeownership opportunity housing (see Section 8(c) (8) of the Act). 805.104 Assistance from Indian Health Service and Bureau of Indian Affairs.
Projects undertaken by IHAs of Federally Recognized Tribes shall be developed and operated in accordance with the provisions of the Interdepartmental Agreement. "Federally Recognized Tribe" means a tribe recognized as eligible for services from BIA or IHS. Since HUD assistance under this Part is not limited to IHAs of Federally Recognized Tribes, provisions in this Part relating to assistance from BIA or IHS, or to required approvals, actions or determinations by these agencies in connection with such assistance, shall be constructed as applicable only to Projects undertaken by IHAs of Federally Recognized Tribes.
805.105 Applicability of civil rights statutes.
(a) Indian Civil Rights Act. The Indian Civil Rights Act (Title II of the Civil Rights Act of 1968, 25 U.S.C. 1301-03) provides, among other things, that no Indian tribe in exercising power of self-government shall deny due process or the equal protection of its laws to any person within its jurisdiction. The Indian Civil Rights Act applies to tribes which exercise powers of self-government. Thus, it is applicable in all cases when an IHA has been established by exercise of such powers. In the case of an IHA established pursuant to state law, the capacity of the tribe to exercise powers of self-government and the applicability of the Indian Civil Rights Act shall be determined by HUD on a case-by-case basis. Projects of IHAs subject to the Indian Civil Rights Act shall be developed and operated in compliance with its provisions and all HUD requirements thereunder.
(b) Non-applicability of Title VI and Title VIII. Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-4), which prohibits discrimination on the basis of race, color or national origin in federally assisted programs, and Title VIII (if the Civil Rights Act of 1968 as amended (42 U.S.C. 3601 et seq.), which prohibits diiscrimination based on race, color, religion, sex or national origin in the sale or rental of housing, do not apply to IHAs established by exercise of a tribe's powers (if self-government. IUD regulations implementing Title VI and Title VIII shall not be applicable to development or operation of Projects by such IHAs. In tle case of an ILA established pursuant to state law, the question of applicability of Title VI and Title VIII shall be determined by HUD on a case-by-case basis.
805.106 Preferences, opportunities, and nondiscrimination in employment and
(:a) In dian Self-Determin ation and Education Assistance Act (preference for Indwins). I U) h1as determined that the Projects under this Part are subject to Sf.ction 7(b) of the Indian Self-l)etermination and Edu cation Assistance Act (25 t .S.(. 450e(b)), which requires that, to the greatest extent feasible: (1) Pref-


Ierence and opportunities for training and employment shall he given to lIninS, and (2) preference in the award of contracts and subcontr-acts shall b~e given to Indian Organizations and Indian-owned Economic Enterprises. "lidia Organ izations and Indian-owned Economic Enterprises" include b)0th: (1) Any "economic enterprise" as defined in Section 3(e) of the Indian Financing Act of 19J74 (Pub. L. 93-262); that is "any Indian-owned commercial, industrial, or business activity established or organized for the purpose of profit: Provided, that such Indian ownership shall constitute not less than 51 percent of the enterprise., and (2) anly "tribal organization" as defined in section 4(c) of the Indian Self- Dctei-mination and Education Assistance Act (Pub. L. 93-638); that is: "the recognized governing body of any Indian tribe; any legally established organization of Indians which is controlled, sanctioned or chartered by such governing body or which is democratically elected by the adult members of the Indian Community to be served b)y such organization and which includes the maximum participation of Indians in all phases of its activities**
(b) Executive Order 11246 (equal employment opportunity). (1) Contracts for construction work in connection with Projects under this Part are subject to Executive Order 11246 (30 FR 12319), as amended by Executive Order 11375 (2FR 14303), and applicable implementing regulations (24 CFR Part 130; 41CFR, Chapter 60), rules, and orders of HUD and the Office of Federal Contract Compliance Programs of the Department of Labor. Executive Order 11246 prohibits discrimination and requires affirmative action to ensure that employees or applicants for employment are treated without regard to their race, color, religion, sex, or national origin.
(2) Compliance with Executive -Order 11246, and related regulations, orders and requirements shall be to the maximum extent consistent with, but not in derogation of, compliance with Section 7(b) of the Indian Self-Determination and Education Assistance Act.
(c) IHA's Own Employment Practices. Each IHA shall adopt and promulgate regulations with respect to the IHA's own employment practices which shall be in compliance with its obligations under Section 7(b) of the Indian Self-Determination and Education Assistance Act, and Executive Order 11246, where applicable. A copy of these regulations shall be posted in the IHA office, and a copy '-hall be submitted to HUD promptly after adoption by tlhe IHA. (Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e), as amended, 'which prohibits discrimination in employment by making it unlawful for employers to engage in certain discriminatory practices, excludes Indian tribes from the nondiscrimination requirements of Title VII.)
805.107 Compliance with other Federal requirements.
(a) National Environmental Policy Act. Projects shall be developed in compliance with the National Environmental Policy Act (42 U.S.C. 4321 et seq.) and all requirements thereunder.
(b) Clean Air Act and Federal Water Pollution Control Act. Projects shall be developed in compliance with the Clean Air Act (42 U.S.C. 1857 et seq.) and t he Federal Water Pollution Control Act (33 U.S.C. 1151 et seq.) and all requirements thereunrder.
(c) Davis-Bacon Wage Rates for Laborers and Mechanics. Not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.C. 276a through 276a-5), shall be paid to all laborers and mechanics employed in the development of a Project.
(dl) Professional and Technical Wage Rates. Not less than the wages prevailing in the locality, as determined or adopted (subsequent to a determination under applicable state or local law) by HUD, shall be paid to all architects, technical engineers, draftsmen and technicians employed in the development of a Project.
(e) Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 and Expenses of Temporary Relocation. (1) When a Project is developed by an IHA established in accordance with 805.108(a), thbe Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 ("Uniform Act") (42 U.S.C. 4601 et seq.) does not apply, because such an IHA is not a "State agency" covered by the Uniform Act.
(2) When a Project is developed by an IHA established in accordance with 805.108(b), the Project shall be developed in compliance with the Uniform Act and HUD policies and requirements thereunder (24 CFR, Part 42).
(3) In the case of both (1) and (2), Development Cost may include the reasonable moving costs for a family which is moved from a Project site during construction and is returned to the site after completion.


805.108 Establishment of IHAs pursuant to Tribal law or State law.
An IHA may be established either:
(a) By a tribal ordinace enacted by exercise of a tribe's powers of self-government independent of state law, creating an IHA with all necessary legal powers to carry out low income housing projects for Indians, which IHA shall be established in accordance with 805.109; or
(b) Pursuant to a state law which provides for the establishment of IHAs with all necessary legal powers to carry out low income housing projects for Indians.
805.109 Procedures for establishment of IHAs by Tribal ordinance.
(a) Applicability. This section shall be applicable only when an IHA is established by exercise of a tribe's powers as described in 805.108(a).
(b) Legal Capacity of Tribe to Establish IHA. Where an Indian tribe has governmental police power to promote the general welfare, including the power to create a housing authority, an IHA may be established by tribal ordinance enacted by the governing body of the tribe.
(c) Approval or Review of Ordinance by the Department of the Interior. HUD shall not enter into an undertaking for assistance to an IHA formed by tribal ordinance unless such ordinance has been submitted to HUD, accompanied by evidence that the tribe's enactment of the ordinance either has been approved by the Department of the Interior or has been reviewed and not objected to by that Department.
(d) Form of Ordinance. The form of tribal ordinance shown as Appendix I to this Subpart A shall be used for the establishment of IHAs by tribal ordinance on and after March 9, 1976, the effective date of this Part. No substantive change may be made in the form of tribal ordinance except as indicated by footnotes in Appendix 1 or with specific written approval from HUD.
(e) Amendment of Ordinance Previously Enacted. Tribal ordinances enacted prior to the effective date of this part, which do not conform to the required provisions of the form of ordinance set out as Appendix I, shall be amended to conform thereto as soon as possible. Beginning January 1, 1977, no contract or amendment providing any additional commitment for HUD financial assistance shall be entered into unless such conforming amendments have been enacted.
(f) Submission to HIUD of Documents Establishing IIA. The tribal ordinance, evidence of Department of the interior approval or review, and the following documentation relating to the initial organization of the IHA, in the form piescribed by HUD, shall be submitted to HUD prior to or with any application for financial assistance:
(1) Certificate of appointment of Commissioners.
(2) Commissioner's oath of office.
(3) Notice of organization meeting.
(4) Consent to meeting.
(5) Minutes of meeting.
(6) Resolutions establishing the IHA, adopting the by laws, adopting a
seal, designating a regular place of meeting and designating officers.
(7) Bylaws.
(8) Certificate of Secretary as to authenticity of documents.
(9) General Certificate of Housing Authority.
805.110 IHA Commissioners who are tenants or homebuyers.
(i) Ten ant or HIlomebuyer Commissioners. No person shall be barred from serving (on an IlA's Board of Commnissioners because he is a tenant or Homebuyer in a housing Project of the IlA. A commissioner who is a tenant or Homebuyer shall be entitled to part icipate fully in all meetings concerning matters that affect all of the tenants or homebuyers, even though such matters affect him as well. However, no such Commissioner shall be entitled or permitted to participate in 1or be present at any meeting (except in his capacity as a tenant or Homebuyer), or be counted or trea:ited as a member of the Board, concerning any mniatter involving his imdividual rihts, obligations or status as a tenant or Hlomebuyer.
(b) ('ontuision(er as IIlIA Employee. A member of the IIIA's Board of Commisin1ers shall not be eligible for employment by the IIIA except under unusual circumstances and with 11U) approval.
Pursuant to the authority vested in the Tribe by its Constitution,
1nid particularly by Article - ---, Sections --- thereof, and its


authority to provide for the health, safety, morals andi welfare, of the Tribe, t he ITribal Council of the -Tibe hereoby es-tablishes a public body knowni
as the Housing Authority (hereinaifter, referred to AsZ thle Authorty ),
and enacts this ordinance which shall establis--h the purposes, powers and (Rut i s of the Authority.
In any suit, action or proceeding involving the validity or enforvemenwit of or relating to any of its contracts, the Authority shall be conclus ively (I(*ine( to have become established and authorized to transact business- inf ( erise its powers upon proof of the adoption of this ordinance. A COV f h ordinance duly certified by the Secretary of the Council shall be adini,-siblc in evidence in1 any suit, action or proceeding.

It is hereby declared:
1. That there exist on the Reservation insanitary, unsafe, and
overcrowded dwelling accommodations; that there is a shortage of decent, safe and sanitary dwelling accommodations available at rents or prices which persons of low income can afford; and that such shortage forces such persons to occupy insanitary, unsafe and overcrowded dwelling accommodations;
2. That these conditions cause an increase in and spread of disease and crime and constitute a menance to health, safety, morals and welfare; and that these conditions necessitate excessive and disproprotionate expenditures of public funds for crime prevention and punishment, public health and safety protection, fire and accident prevention, and other public services and facilities; 3. That the shortage of decent, safe and sanitary dwellings for persons of low income cannot be relieved through the operation of private enterprise;
4. That the providing of decent, safe and sanitary dwelling accommodations for persons of low income are public uses and purposes for which money may be spent and private property acquired and are governmental functions of Tribal concern;
5. That residential construction activity and a supply of acceptable housing are important factors to general economic activity, and that the undertakings authorized by this ordinance to aid the production of better housing and more desirable neighborhood and community development at lower costs will make possible a more stable and larger volume of residential construction and housing supply which will assist materially in achieving full employment; and
6. That the necessity in the public interest for the provisions hereinafter enacted is hereby declared as a matter of legislative determination.

The Authority shall be organized and operated for the purposes of:
1. Remedying unsafe and insanitary housing conditions that are injurious to the public health, safety and morals;
2. Alleviating the acute shortage of decent, safe and sanitary dwellings for persons of low income; and
3. Providing employment opportunities through the construction, reconstruction, improvement, extension, alteration or repair and operation of low income dwellings.
The following terms, wherever used or referred to in this ordinance, shall have the following respective meanings, unless a different meaning clearly appears from the context:
"Area of Operation" means all areas within the jurisdiction of the tribe.
"Board" means the Board of Commissioners of the Authority.
"Council" means The Tribal Council.
"Federal government" includes the United States of America, the Department of Housing and Urban Development, or any other agency or instrumentality, corporate or otherwise, of the United States of America.
"Homebuyer" means a person(s) who has executed a lease-purchase agreement with the Authority, and who has not yet achieved homeowniership.
"Housing project" or "project" means any work or undertaking to provide or assist in providing (by any suitable method, including but not limited to: rental;

See footnotes at end of article.


sale of individual units in single or multifamily structures under conventional condominium, or cooperative sales contracts or lease-purchase agreements; loans; or subsidizing of rentals or charges) decent, safe and sanitary dwellings, apartments, or other living accommodations for persons of low income. Such work or undertaking may include buildings, land, leaseholds, equipment, facilities, and other real or personal property for necessary, convenient, or desirable appurtenances, for streets, sewers, water service, utilities, parks, site preparation or landscaping, and for administrative, community, health, recreational welfare, or other purposes. The term "housing project" or "project" also may be applied to the planning of the buildings and improvements, the acquisition of property or any interest therein, the demolition of existing structures, the construction reconstruction, rehabilitation, alteration or repair of the improvements or other property and all other work in connection therewithand the term shall include all other real and personal property and all tangible or intangible assets held or used in connection with the housing project.
"Obligations" means any notes, bonds, interim certificates, debentures, or other forms of obligation issued by the Authority pursuant to this ordinance.
"Obligee" includes any holder of an obligation, agent or trustee for any holder of an obligation, or lessor demising to the Authority property used in connection with a project, or any assignee or assignees of such lessor's interest or any part thereof, and the Federal government when it is a party to any contract with the Authority in respect to a housing project.
"Persons of low incmw" means persons or families who cannot afford to pay enough to cause private enterprise in their locality to build an adequate supply of decent, safe, and sanitary dwellings for their use.

1. (a)2(l) The affairs of the Authority shall be managed by a Board of Commissioners composed of five persons.
(2) The Board members shall be appointed, and may be reappointed, by the Council. A certificate of the Secretary of the Council as to the appointment or reappointment of any commissioner shall be conclusive evidence of the due and proper appointment of the commissioner.
(3) A commissioner may be a member or non-member of the Tribe, and may be a member or non-member of the Tribal Council.
(4) No person shall be barred from serving on the Board because he is a tenant or homebuyer in a housing project of the Authority; and such commissioner shall be entitled to fully participate in all. meetings concerning matters that affect all of the tenants or homebuyers, even though such matters affect him as well. However, no such commissioner shall be entitled or permitted to participate in or be present at any meeting (except in his capacity as a tenant or homebuyer), or to be counted or treated as a member of the Board, concerning any matter involving his individual rights, obligations or status as a tenant or homebuyer.
(b)3 The term of office shall be four years and staggered. When the Board is first established, one member's term shall be designated to expire in one year, another to expire in two years, a third to expire in three years, and the last two in f our years. Thereafter, all appointments shall be for four years, except that in the case of a prior vacancy, an appointment shall be only for the length of the unexpired term. Each member of the Board shall hold office until his successor has been ap pointed and has qualified.
fC)4 The Council shall name one of the Commissioners as Chairman of the Board. The Board shall elect from among its members a Vice-Chairman, a Secretary, and a Treasurer; and any member may hold two of these positions. In the absence of the Chairman, the Vice-Chairman shall preside; and in the absence of both the Chairman and Vice-Chairman, the Secretary shall preside.
(d)s A member of the Board may be removed by the appointing power for serious inefficiency or neglect of duty or for misconduct in office. but only after a hearing before the appointing power and only after the member has been given a written notice of the specific charges against him at least 10 days prior to the hearing. At any such hearing, the member shall have the opportunity to be heard in person or by counsel and to present witnesses in his behalf. In the event of removal of any Board member, a record of the proceedings, together with the

See footnotes at end of article.


charges and findings thereon, shall be filed with the appointing power and a copy thereof sent to the appropriate office of the Department of Housing and Urban Development.
(e)6 The Commissioners shall not receive compensation for their services but shall be entitled to compensation for expenses, including travel expenses, incurred in the discharge of their duties.
(f) 7A majority of the full Board (i.e., notwithstanding the existence of any vacancies (shall constitute a quorum for the transaction of business, but no Board action shall be taken by a vote of less than a majority of such full Board.
(g) The Secretary shall keep complete and accurate records of all meetings and actions taken by the Board.
(h) The Treasurer shall keep full and accurate financial records, make periodic reports to the Board, and submit a complete annual report, in written form, to the Council, as required by article VII, Section 1, or this ordinance.
2. Meetings of the board shall be held at regular intervals as provided in the bylaws. Emergency meetings may be held upon 24 hours actual notice and business transacted, provided that not less than a majority of the full Board concurs in the proposed action.
1. The Authority shall have perpetual succession in its corporate name.
2. The Council hereby gives its irrevocable consent to allowing the Authority to sue and be sued in its corporate name, upon any contract, claim or obligation arising out of its activities under this ordinance and hereby authorizes the Authority to agree by contract to waive any immunity from suit which it might otherwise have; but the Tribe shall. not be liable for the debts or obligations of the Authority.
3. The Authority shall have the following powers which it may exercise consistent with the purposes for which it is established:
(a) To adopt and use a corporate seal.
(b) To enter into agreements, contracts and understandings with any
governmental agency, Federal, state or local (including the Council) or with any person, partnership, corporation or Indian tribe; and to agree to any
conditions attached to Federal financial assistance.
(c) To agree, notwithstanding anything to the contrary contained in this.
ordinance or in any other provision of )aw, to any conditions attached to Federal financial assistance relating to the determination of prevailing Salaries or wages or payment of not less than prevailing salaries or wages or compliance with labor standards, in the development or operation of projects; and the Authority may include in any contract let in connection with a project stipulations requiring that the contractor and any subcontractors comply with requirements as to minimum salaries or wages and maximum hours of labor, and comply with any conditions which the Federal Government may have attached to its financial aid to the project.
(d) To obligate itself, in any contract with the Federal government for
annual contributions to the Authority, to convey to the Federal government possession of or title to the project to which such contract relates, upon the occurrence of a substantial default (as defined in such contract) with respect to the covenants or conditions to which the Authority is subject; and such contract may further provide that in case of such conveyance, the Federal government may complete, operate, manage ', lease, convey or otherwise deal with the project and funds in accordance with the terms of such contract: Provided, That the contract requires that, as soon as practicable after the Federal government is satisfied that all defaults with respect to the project, have been cured and that the project will thereafter be operated in accordance with the terms of the contract, the Federal government shall reconveN to
the Authority the project as then constituted.
(e) To lease property from the Tribe and others for such periods as ai-e
authorized by law, and to hold and manage or to sublease the same.
(f) To borrow or lend money, to issue temporary or long terni eNidence of
indebtedness, and to repay the same. Obligations shall be issued and repaid
in accordance with the provisions of Article VI of this ordinance.
( ) To pledge the assets and receipts of the Authority as security for dehts:
anYto acquire, sell, lease, exchange, transfer or assign personal property or
interests therein.


h) To purchase land or interests in land or take the same by gift; to leas(
land or interests in land to the extent provided by law.
i) To undertake and carry out studies and analyses of housing needs, tc
prepare housing plans, to execute the same, to operate projects and tc provide for the construction, reconstruction, improvement, extension, alter
ation or repair of any project or any part thereof.
(j) With respect to any dwellings, accommodations, lands, buildings oi
facilities embraced within any project (including individual cooperative oi condominium units); to lease or rent, sell, enter into lease-purchase agree.
ments or leases with option to purchase; to establish and revise rents or re.
quired monthly payments; to make rules and regulations concerning the selection of tenants or homebuyers, including the establishment of priorities
and condemning the occupancy, rental, care and management of housing
units; and to make such further rules and regulations as the Board may deen nccesary and desirable to effectuate the powers granted by this ordinance
Sk) To finance purchase of a home by an eligible homebuyer in accordance
with regulations and requirements of the Department of Housing and Urbat
() To terminate any lease or rental agreement or lease-purchase agreement
when the tenant or homebuyer has violated the terms of such agreement, oi failed to meet any of its obligations thereunder, or when such termination is otherwise authorized under the provisions of such agreement; and
to bring action for eviction against such tenant or homebuyer.
(m) To establish income limits for admission that insure that dwelling
accommodations in a housing project shall be made available only to person,
of low income.
n) To purchase insurance from any stock or mutual company for any
pilopert y or against any risk or hazards.
() To invest such funds as are not required for immediate disbursement, (p) To establish and maintain such bank accounts as may be necessary oi
(q) To employ an executive director, technical and maintenance personnel
and( such other officers and employees, permanent or temporary, as the Authority may require; and to delegate to such officers and employees such
powers or duties as the Board shall deem proper.
(r) To take such further actions as are commonly engaged in by public
bodies of this character as the Board may deem necessary and desirable to
effectuate the purposes of the Authority.
(s) To join or cooperate with any other public housing agency or agencies
operating under the laws or ordinances of a State or another tribe in the exercise, eit her jointly or otherwise, of any or all of the powers of the Authority and such other public housing agency or agencies for the purpose of financing (including butt not limited to the issuance of notes or other obligations and giving security therefor), planning, undertaking, owning, constructing, operating, or contracting with respect to a housing project or projects of the Authority or such other public housing agency or agencies. For such purpose, the Authority may by resolution prescribe and authorize any other public housing agency or agencies, so joining or cooperating with the Authority, to act on the Authority's behalf with respect to any or all powers, as the Authority's agent or otherwise, in the name of the Authority or in the name
of such agency or agencies.
(I1) To adopt such bylaws as the Board deems necessary and appropriate.
4. It is the purpose and intent of this ordinance to authorize the Authority to do any and all things necessary or desirable to secure the financial aid or cooperation of the Federal government in the undertaking, construction, maintenance, or operation of any project by the Authority.
5. No ordinance or other enactmtent of the Tribe with respect to the acquisition, operation, or disposition of Tribal property shall be applicable to the Authority in its operations pursuant to this ordinance.
1. The Authority may issue obligations from time to time in its discretion foi any of its purposes anl may also issue refunding obligations for the purpose ol paying or retiring olligations previously issued by it. The Authority may issue