INDIAN HOUSING IN THE UNITED STATES

INTRODUCTION

Because of exceptionally low incomes and unique land tenure problems, Indian people especially those on reservations—have had to rely primarily on subsidized Federal housing programs to meet their housing needs.' The bulk of this subsidized housing on Indian lands has been developed by the Department of Housing and Urban Development (HUD) under the public housing program (1937 U.S. Housing Act; 42 USC 1401 et seq., as amended). In addition, the Bureau of Indian Affairs (BIA) operates a Housing Improvement Program (HIP) which provides assistance to Indians who are unable to obtain housing assistance from any other source. Finally, in addition to HUD and BIA housing programs, Indian people have also received some housing assistance under various loan programs of the Farmers Home Administration (FmHA), Veterans' Administration (VA), and various other public and private sources. However, the number of units constructed in Indian areas under these loan programs has been small and production has not been carried out on a continuing basis. Despite the existence of all of these programs Indian housing needs remain critical.

The table below summarizes the national pattern in terms of selected characteristics of Indian housing as reported in the 1970 Census. In almost every characteristic, Indian housing was far below average. Almost half the Nation's Indian households occupied units which either lacked essential plumbing facilities or were overcrowded, or both—the incidence of housing which lacked plumbing facilities or was overcrowded among Indian households was more than three times as high as non-Indian households. The situation was even worse in rural areas where over 70 percent of the Indian households were inadequately housed even by this limited measure (which does not consider either the condition of the structure or the proportion of the family's income that is being paid to occupy it).2

1 For a general summary of the basic Federal housing programs available to Indians, see "Community Development: A Manual on Tribal Housing Enterprises and Resources." Prepared by the Non-Profit Housing Center, Inc., Washington, D.C., 1973.

2 For further interpretation of this and some related information, see George W. Rucker, "Indian Housing: A Background Paper," prepared for the Rural Housing Alliance's 8th Annual Meeting, Rapid City, South Dakota, October 1973, see Appendix III, pp. 123-39.

SELECTED CHARACTERISTICS OF INDIAN HOUSING, 1970, INSIDE AND OUTSIDE STANDARD METROPOLITAN STATISTICAL AREAS (SMSA's)

Source: 1970 Census of Housing, HC(7)-9, "Housing of Selected Racial Groups," HC(7)-1, "Housing Characteristics by Household Composition," and HC(2)-1, "Metropolitan Housing Characteristics.'

In light of these alarming statistics, the BIA began to examine the total needs of Indian housing with a view toward establishing a production goal. Using the various Federal programs mentioned above, it was determined that substandard Indian housing could be substantially eliminated by the end of the 1970's. It is becoming increasingly clear that this goal will not be realized under present Indian housing programs. 3

As indicated in the table below, at the end of fiscal year 1973, the BIA reported 106,702 Indian families under its jurisdiction who were occupying less than 72,000 units-more than 60 percent of which were rated "substandard." In short, the BIA estimated its backlog of housing needs at something over 71,000 units-two-thirds of which

3 A similar conclusion was reached by the General Accounting Office in their 1971 Report to the Congress, "Slow Progress in Eliminating Substandard Indian Housing," see Appendix II, p. 31.

would have to be new construction. During that same year (fiscal year 1973) there were 9,339 new construction starts and rehabilitations in areas under BIA jurisdiction. Due to the increase in the number and size of Indian families and other factors of change, the result was a net decrease in housing need among BIA Indian households of only 1,506 units. Using these 1973 figures as a benchmark, it is indicated that 7,800 starts and rehabilitations will be needed every year just to stay even. At this rate of improvement, it will take nearly 50 years to do the job.4

HOUSING CONDITIONS FOR INDIANS UNDER BIA JURISDICTION, MID-1973

It is the purpose of this report to review the major Indian housing programs; to discuss the history, characteristics, and problems of the current housing delivery system; and to suggest some possible policy alternatives to help meet Indian housing needs.

HUD INDIAN HOUSING PROGRAMS

While the Housing Act brought public housing to much of the country in 1937, this basic act was amended and funded for some 25 years before its public housing programs were made available to American Indians in 1961–62. It was not until then that it was administratively determined that Indian tribes had legal authority to establish, under Indian law, the tribal housing authorities which could develop and operate low-rent public housing projects. This determination, and the legal opinion accompanying it, had the effect of creating the first real housing program on reservations and other restricted lands.5

4 George W. Rucker, "Indian Housing: A Background Paper," see Appendix III, p. 124.

5 For copies of both documents, see Appendix VIII, pp. 213-19.

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Under the 1937 act, as amended, HUD is authorized to make loans and pay annual contributions to local housing authorities to assist in developing and acquiring low-rent public housing projects and achieving and maintaining the low-rent character of such projects. Where a tribe under its constitution and bylaws has an established governing body with police power for its reservation (that is, the legislative power to promote peace, health, safety, and morals on the reservation) that governing body can perform the legal functions that are otherwise performed by the State legislature and local government. Specifically, such a tribal governing body is legally competent to enact an ordinance creating a housing authority. In several States, primarily Oklahoma, Texas, and Maine, where some tribes do not have such police power, the State legislatures have enacted statutes to provide for the establishment of tribal housing authorities.

Indian housing authorities are important elements of the Indian housing delivery system in that they administer the three HUD public housing programs which comprise the backbone of the Indian housing effort. These programs are Low-Rent, Mutual-Help Homeownership, and Turnkey III Homeownership. Additionally, HUD also established a Modernization Program in 1968 specifically for improving low-rent housing projects by (1) correcting extensive physical deterioration of the site, structures, or equipment, (2) replacing outmoded equipment or outmoded aspects of structures, and (3) improving the grounds, structures, or equipment by alteration or providing additional structures or equipment.

1. Low-Rent Program

The Low-Rent public housing program for American Indians is essentially the same as the Low-Rent public housing program for non-Indians. Under this program the housing is constructed either by the "conventional" or "turnkey" method by a building contractor, selected by a local housing authority, and is thereafter operated as rental housing by that housing authority. Under the "conventional" method of construction, the housing authority acquires the property and hires its own architect to develop building plans and specifications and then employs a contractor to build the units using the plans and specifications provided him. Under the "turnkey" method, the builder acquires the property himself and develops his own plans and submits them to the housing authority for its consideration. To finance the development costs of the projects, the housing authority sells up

HUD agrees to make such annual contributions sufficient to amortize the development and financing costs of a housing project in an Annual Contributions Contract (ACC), entered into with the housing authority for each project. Normally, the amortization period for a rental project is 40 years, and for a homeownership project (whether Mutual-Help or Turnkey III) either 25 or 30 years. While the entire development of a housing project with HUD funds is too complicated a process to be described here in detail, a short summary of its financing may be helpful.

HUD makes a short-term loan to the authority to enable it to hire the necessary personnel to get the housing project underway. Under HUD supervision the housing authority then issues temporary notes, called Project Notes, of up to 12 months maturity to private investors. The money thus generated is used by the authorities to repay these initial loans to HUD. Ultimately, the notes may be incorporated into what is referred to by HUD as a more "permanent" means of financing, in the form of bonds with up to 40 year maturities. Bonds of shorter maturities for homeownership projects are presently not sold. Whether notes or bonds, after the units are occupied, HUD then pays directly to the Paying Agent named by the purchaser an amount sufficient, but not above that stipulated in the ACC, to take care of the annual debt service on the securities, until they are retired. Where the projects continue to be financed by the sale of Project Notes, old notes are refinanced by a sale of new notes, in effect capitalizing interest costs. As can be seen, the entire process involves both a loan and an annual contribution arrangement. Leased units are also provided for in anACC. However, since under the leasing programs the housing authorities are not building or purchasing the units, this elaborate financing scheme is unnecessary.

7 To avoid confusion, where discussed in this report, "Low Rent" will refer only to those units of public housing developed to serve as rented dwellings as opposed to those intended to be ultimately owned by the occupant.

to 40-year bonds to private investors (see footnote 6). 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 authority bonds, thereby enabling them to be sold at unusually low interest rates. Also, by Federal law, these bonds are exempt from Federal taxation-thus creating an additional incentive for investors.

After construction, the dwelling units are rented by the housing authority to low income families at rents based on their incomes. The rents theoretically must be sufficient in total to pay the housing authority's operating expenses-except that additional operating subsidies can be made by HUD under certain conditions to help insure the low rent character of the project.

2. Mutual-Help Homeownership Program

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The Mutual-Help Homeownership Program was established by HUD in 1964 in cooperation with the BIA in an effort to provide an ownership alternative to rental housing. The basis of the mutualhelp concept is to provide an opportunity for ownership which will be a strong incentive for participants to aid in the building and maintenance of their own homes. Under this plan, a group of participating Indian families contribute their labor in the physical construction of the houses. In addition, the participants, or the tribe, contribute the building site and, where feasible, local building materials. The participants operate on a lease-purchase type of option and receive equity credit, in amounts approved by HUD, toward the purchase of their homes in lieu of cash for their contributions. Theoretically at least, an incentive for the participants to make as great a contribution as possible exists under this program because the greater the portion of the development cost represented by the equity credit received, the shorter is the period of time before the mutual-help participant becomes a home owner.9

HUD contracts to pay annual contributions at the highest authorized annual rate to help repay the funds borrowed by the housing authority for the development of the Mutual-Help Housing project. Once the homes are built, participants are responsible for the maintenance and utility costs for the unit and pay a fee for the operation and administration of the tribal housing authority.

On the basis of income, participants are required to make additional payments which increase their equity toward ownership. Should a participant fail to properly maintain his home, the housing authority may have the necessary work done and pay for it out of funds obtained by deductions from the equity payments and mutual-help contribution made by the participant. Obviously, such deductions reduce the participant's equity in the unit and increase the period of time until ownership is realized.

A major element in the Mutual-Help Program is the assistance provided by the BIA on reservations. In many instances the BIA has provided the tribal housing authorities with administrative guidance and assistance as well as with construction supervision for the participants and the professional help employed by the housing authorities.10

See Appendix VIII. pp. 221-36 for documents establishing the Mutual-Help Program.

See Appendix II p. 117 for General Accounting Office comments regarding some of the problems encountered in the assignment of equity credit under the Mutual-Help program.

10 The BIA estimates that they spent approximately $2.6 million between 1963-67 in this capacity. This is in addition to the funds spent on the BIA's own Housing Improvement Program established in 1965.