1997Investigative Reporting

Before and after

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

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

Congress this year passed legislation that will change the Indian-housing program operated by the U.S. Department of Housing and Urban Development. House Speaker Newt Gingrich had wanted to dismantle HUD, but Rep. Rick Lazio, R-N.Y., left, instead suggested a complete remake of the agency. Lazio succeeded in changing only the Indian-housing program, under a law that will take effect Oct. 1.

Here is how the system will operate under the new law after Oct. 1:

THE MONEY: Congress will appropriate a pot of money each year for Indian housing.

WHO WILL GET IT: The money will be divided among the nation's 550 recognized tribes according to need (26 in Washington state). The formula for determining need hasn't yet been decided.

WHO WILL SPEND THE MONEY: Each tribe will appoint a "tribally designated housing entity" to spend the HUD money.

HOW THE SPENDING WILL BE CONTROLLED: Each housing entity must submit a plan to HUD describing how the money will be used. If HUD raises no objections to a plan within a 60-day review period, it automatically will be in force.

WHO WILL MAKE SURE THE MONEY IS PROPERLY USED: For the most part, the housing entity designated by the tribe will audit its own performance. Each year, the entity will send a report on its accomplishments to HUD. Annual independent audits also will be done for HUD.

WHAT IF A HOUSING ENTITY FAILS TO DO THE JOB: HUD could reduce or terminate a grant, as long as the money hasn't already been spent. HUD also could name a new entity to oversee housing for the tribe. Before making a change, there would be a hearing. The government also could sue any tribe that violated the housing rules.

WHO WILL GET HOUSING AND HOW MUCH THEY WILL PAY FOR IT: The tribe will decide who will get housing, and how much to charge for rent or for house payments. The tribe could charge different people different amounts, based on its own rules. The payments could not exceed 30 percent of a family's adjusted monthly income.

HOW THE PUBLIC WILL GET INVOLVED: The new program will rely heavily on public exposure. The tribes will be required to make public their housing plans and their annual reviews. However, they will not be required to disclose other documents affecting the program, such as bids, billings, tenant lists, etc.

WHAT ELSE WILL CHANGE: The bill will make it easier for lending institutions to provide mortgages to Indians living on tribal trust lands. Banks were reluctant to lend there in the past. That should create more housing for middle-class people who can afford mortgages.

How the Indian-housing program works now:

THE MONEY: HUD distributes more than $500 million a year in grants and subsidies to tribal-housing authorities for specific purposes, such as new-housing construction, rehabilitation, administration and economic development.

WHO GETS IT: More than 200 tribes with sanctioned housing authorities can apply for HUD money. Grants are awarded largely on the basis of need and performance.

WHO SPENDS THE MONEY: The purse-string power is vested in Indian housing-authority boards, which are appointed but otherwise not directly controlled by the tribal councils.

HOW SPENDING IS CONTROLLED: Housing authorities apply for HUD grants on a project-by-project basis. HUD reviews the applications to see whether they meet the relevant program regulations before deciding which to fund.

WHO MAKES SURE THE MONEY IS PROPERLY USED: HUD is supposed to be the watchdog, although staff cutbacks and deregulation have removed much of its day-to-day oversight.

WHAT IF A HOUSING ENTITY FAILS TO DO THE JOB: HUD can freeze funding and reclaim misspent money. In severe cases, HUD can take control of the housing authority. More typically, HUD rates the housing authority a "high risk" and provides closer supervision and technical assistance.

WHO GETS HOUSING AND HOW MUCH DO THEY PAY FOR IT: HUD regulations and local housing-authority rules determine who gets priority for housing. Tribal members pay up to 30 percent of their monthly income for rental housing or 15 percent (plus maintenance and utilities) under the homeownership program. If they want to buy their houses outright, the housing authority sets the sales price.

HOW DOES THE PUBLIC GET INVOLVED: Housing authorities must hold public hearings on major programs, including proposed new developments and comprehensive plans for rehabilitation work.

WHAT'S CHANGED: Before deregulation, HUD signed off on everything from the size to the cost of new houses, and its staff conducted regular inspections. Housing authorities provided detailed accounting of how they spent their money, and HUD had greater say in day-to-day operations.