1997Investigative Reporting

HUD program is changing - for better or worse

Eric Nadler, Deborah Nelson
and Alex Tizon
December 5, 1996
Index | DAY 1 | DAY 2 | DAY 3 | DAY 4 | DAY 5

Coni Wilson

As director of the Quinault Indian Housing Authority, Coni Wilson has helped transform the village of Taholah on the Olympic Peninsula into a town of modest, modern homes.

Day Five:
Thursday, December 5, 1996

HUD program is changing - for better or worse

Minding the rules, making them work

Before and after

What a time for the boss to leave town

What to do

Where to write

The future of federal housing aid for Native Americans may ride on how a new law is interpreted and enforced.

The law was passed in the final 10 minutes of Congress' 1996 session. On its face, it will give tribes even more freedom in deciding how to spend tax money intended for low-income Indian housing.

That could be disastrous, given the abuses described in The Seattle Times this week. In a national investigation, The Times found that many tribal leaders have taken advantage of relaxed oversight by the U.S. Department of Housing and Urban Development to benefit themselves, their friends and their relatives at the expense of more needy Indians.

But with strong enactment and enforcement of a few key regulations, proponents say, the new law could actually work to get more money to the people who need it most. They say it will cut administrative costs, leaving more money for lumber, nails and paint.

The law takes effect Oct. 1. Between now and then, beginning next week, a group made up mostly of Native Americans will write the regulations HUD and the tribes must meet to comply with the law.

It's also possible, particularly in light of The Times' findings and an investigation promised by HUD Secretary Henry Cisneros, that the new Congress will revisit the issue and amend the law before it takes effect.

An effort to save HUD

Although the new law figures to lessen HUD's role, it was actually inspired by a congressman's wish to save the agency from oblivion.

House Speaker Newt Gingrich wanted to dismantle the agency, but Rep. Rick Lazio, a moderate Republican from New York's Long Island who chairs a housing subcommittee, persuaded the speaker to back off. He did so, in part, by proposing a complete remake of HUD.

But Lazio managed to change only the Indian-housing program.

Under Lazio's legislation, housing aid to tribes will come in the form of block grants. The tribes will determine, without HUD intervention, what housing is built and for whom, as well as how much to spend and how much to charge tenants.

Day-to-day decisions will be made by a "tribally designated housing entity," which could be a tribal council, a housing authority or a nonprofit corporation.

The language in the law pushes HUD to the sidelines. For instance, it says federal officials may call for annual audits but only as thorough "as may be necessary or appropriate," and that HUD officials will visit housing agencies but only "insofar as practicable."

Meeting on new rules next week

The people writing regulations will meet for the first time Monday through Wednesday in Scottsdale, Ariz. That meeting will be watched closely by tribal leaders across the country.

Among those watching will be Erma Vizenor, a Harvard-educated reformer working to clean up her tribe, the White Earth Band of Chippewa. Three White Earth leaders were convicted last year of stealing nearly $900,000 from the Minnesota tribe, and the tribal-housing authority was part of their empire.

Vizenor, who now chairs her tribe's housing committee, says the crooked leaders might have done even more damage had the new law been in effect.

"What our tribes need is accountability to our own people," she said. "Yes, I believe in self-determination, self-governance and sovereignty, but all of those terms do not mean crime, corruption and abuse. Those terms mean responsibility, accountability, justice and fairness."

Others are more optimistic.

Chester Carl, executive director of the Navajo Nation's housing authority, believes the new law will benefit needy Native Americans by cutting costs.

"Any time you have government oversight, you have more bureaucracy, you have more costs," he said.

Last year, HUD commissioned a study by the Urban Institute, a policy-research organization in Washington, D.C. The 264-page blueprint supports the block-grant approach but warns of perils unless restrictions are imposed in key areas.

The study says HUD should prohibit "spending very large amounts on a small number of families while the majority of those in need remain unassisted."

The block-grant program is clearly more flexible. A tribe will get a single pot of money to cover all of its housing needs rather than worrying about individual grants for different programs.

On the other hand, the report says it would be dangerous to give "full authority and responsibility for housing development" to every tribe. Some are ready for it, and some need extra training and enforcement.

"We're heading toward a very fragile time," said Ruth Jaure, executive director of the National Association of Indian Housing Councils. "How do we design a program so we don't fall into a pit? If you have a program that invites corruption, then what have you gained? We hope the legislation will have safeguards and HUD will use them."

Where reform is needed

There is some agreement among tribal leaders, housing officials and others on reforms that are needed. Some are addressed by the new law and some are not. Concerns include:

  • Tribal politics. Powerful tribal leaders often force housing officials to grant inappropriate or illegal favors. HUD must protect directors from such influence and from tribal infighting, said David Selvage, executive director of the Sisseton-Wahpeton Indian Housing Authority in South Dakota.

    The new law doesn't address the problem. It requires HUD resources be given, primarily to tribal members making less than 80 percent of the local median income. But without enforcement, some money will be diverted, Selvage predicted.

    "You can't take people who need service and mix them with politics," said Rick Mitchell, executive director of the Penobscott Housing Authority in Maine. "It'll never work."
  • Accountability. HUD relies too heavily on unreliable private auditors to find abuses at Indian-housing authorities, said fraud examiner Ron Sells of Everett, who specializes in tribal accounting. HUD should hire better accountants or do the job itself, he believes.

    One example of the problem, from HUD documents: A private auditor, on contract for four years with the Keweenaw Bay Ojibwa Housing Authority in Michigan, didn't report that the housing-authority board hadn't met for two years, that the books were out of date, that building projects were way behind schedule, that rental files were incorrect and that the entire tenant file for the chairman of the housing-authority board was missing.

    Auditing standards were recently rewritten by HUD officials, but they aren't yet widely enforced. That should be a first step, critics say.

    The Lazio legislation adds a new wrinkle: The new housing entities will review their own performances and submit annual report cards to HUD.
  • Investigation. HUD's enforcement agency needs more staff.

    Upon learning of The Times' findings last week, Secretary Cisneros asked the HUD Inspector General's Office to investigate. But the independent, 500-person enforcement agency is straining under an enormous workload.

    "Something else will have to give," said Deputy Inspector General John Connors.

    His organization investigates fraud and administrative problems at HUD and at 8,800 other organizations that get HUD money. Despite a growing list of tasks, including dealing with violence at big-city housing projects, the inspector general's manpower has not increased in four years. At times, it has been cut back.

    The new law doesn't provide help.
  • Enforcement. Tribal sovereignty makes it difficult for outsiders to take tribal leaders to task for fraud and abuse.

    The new law offers some solutions: In extreme cases, HUD can rescind or reduce a grant, as long as the money hasn't already been spent. It can replace a housing agency with another organization, or sue a tribe. Of course, HUD must discover the problem in time to make a difference.

    As one congressional staff member said, the new law gives good housing agencies room to operate and bad ones enough rope to hang themselves. But the hanging too often occurs after poor people have been neglected or hurt.
  • Public disclosure. Because of sovereignty, tribal governments don't have to release documents to the public under provisions of the federal Freedom of Information Act.

    "They completely ignore you," said Ken White, a Native American legal aide who has been trying for years to obtain documents on tenant rights at the Yakama Tribe's housing agency in Central Washington.

    Louis Townsend, a HUD official in Seattle, said public disclosure is the key to oversight: "Rather than issuing more regulation and restrictions, we simply need to hold the local community responsible. You do that by requiring tribal leaders to disclose their plans to membership."

    The new law does require tribes to publicly distribute their housing plans and annual reviews. But it doesn't require disclosure either of backup documents that go into the reports, or of day-to-day records that reveal how a housing authority is run.
  • Middle-class housing. Privately financed housing is scarce on Indian reservations. Banks are reluctant to lend because they find it difficult to foreclose on Indian trust land when a borrower fails to make payments.

    The new law provides some incentives for mortgage lending. That might take some pressure off HUD and the Indian-housing authorities to provide houses to higher-income tribal members.

    The bill also allows Indian-housing officials to use HUD money to leverage private financing. That could produce more homes, but without proper oversight, it could also open the door to fraud.
  • Delinquent payments. Indian-housing authorities nationwide are crippled by backlogs of past-due rents and house payments. Some are broke as a result, and the problem makes it difficult for many to stay self-sufficient.

    Forty percent of the residents of HUD-subsidized houses on reservations are behind on payments. That's more than three times the delinquency rate in regular public housing.

    Critics say HUD must force tribal courts to collect the overdue bills or shut off the money. In the past five years, HUD has given more than $200 million to 42 tribes in which half the residents are delinquent on payments.

    John Bowannie, one of the most notorious HUD debtors in New Mexico, said he has made only a few payments in the 18 years he has occupied his HUD house in the Cochiti Pueblo because he wasn't satisfied with the way it was built. Although he has been employed most of that time, he owes around $29,000.

    His refusal to pay has directly affected Karla Duran's ability to get a HUD house at the nearby San Juan Pueblo. A mother of three with a disabled husband, Duran was told by the housing authority serving both pueblos that she would have to wait longer for a house because of the debt burden caused by such scofflaws as Bowannie.

    "Other people, I guess, just messed it up," said Duran, who now lives in a leaky trailer.

    HUD has been unable to collect the debt from Bowannie in part because the tribe is uncooperative and in part because the state attorney general declined to prosecute, said an attorney for the housing authority.

  • Training. Responsibility for planning, building and managing multimillion-dollar housing projects will fall to the tribes. But many tribes, particularly small tribes in rural areas, have housing staffs with little or no expertise.

    The Urban Institute report notes that HUD offers training but says substantially more is needed. It also recommends that HUD continue to provide more supervision to the less-capable tribes than to those with proven records.

Even the tribes with the best records are concerned that if the Indian-housing program is not adequately managed, they could lose it altogether.

"We build houses cheaper than anyone in the country per unit and better than anybody in the country," said Morris Carpenter, executive director of the Mississippi Band of Choctaws in Alabama, whose housing program is widely well-regarded. "But frankly, there's a lot of housing authorities that need to have monitoring. Somebody to keep an eye on what's going on. HUD's not really doing much of a job of that."

For the Mississippi Choctaw, it's not just a matter of having talent. It's how they use it.

They received federal tax dollars to build 90 new units - but are taking advantage of their proficiency to turn the money into 105 homes.

Contrast that to the Tulalip housing authority in Washington. Instead of building more homes with the tax money it received, it built bigger ones - including a 5,300-square-foot house for the executive director.

Many say the challenge ahead, with 100,000 Native Americans in need of decent safe housing, is to design a program that will produce more projects like the Choctaw and fewer like the Tulalip.