improve its capability for the development and management of HUDassisted housing. Our Denver office, as well as all of the others, remains committed to assisting and working cooperatively with the tribes and Indian housing authorities to resolve problems that exist and to assist them in qualifying for further housing units.

Considerable emphasis has been placed upon the enhancement of administrative capability of both public housing agencies in the public housing program and Indian housing authorities in the Indian housing program. HUD is currently working closely with the National American Indian Housing Council to develop a manager certification program for Indian housing authority managers. When the program has been developed, the National American Indian Housing Council will receive accreditation from HUD to train and certify managers and assistant managers of Indian housing authorities.

In addition, HUD is currently implementing several programs to meet special Indian housing needs. For instance, two proposals for congregate housing projects have been approved for fiscal year 1979 and are in operation. Four additional proposals are under review for fiscal year 1980 funding. The Department has also reserved funds for a demonstration project comprising 24 small group homes for mentally and physically handicapped Indian people, including elderly and children. These group homes are to be constructed and equipped as part of a joint initiative between HUD and the Department of Health and Human Services. HUD has also funded three Indian housing authorities to develop and implement their own project based budgeting and accounting systems.

Despite our progress, the Department is sensitive to the fact that there are special problems unique to the construction and development of Indian and Alaska Native housing. Foremost is the problem of cost. The Department's attempts at cost containment with respect to Indian housing must, however, consider several reasons for higher Indian housing costs, reasons which go beyond general inflation and over which we have little or no control.

Principally, the reasons for higher Indian housing costs are:

Transporting materials and attracting labor to remote locations is very expensive. These costs are further aggravated in Alaska by reason of the shorter construction season and dependence upon terrain and weather conditions.

HUD assumes costs for water and sewer treatment systems located within the boundaries of the project.

The primary type of shelter built is scattered site, single-family detached units designed to accommodate large families under the mutual help homeownership opportunity program.

Compared to the rental program, the homeownership program has a shorter term of annual contributions contract and higher interest rates which therefore require a higher per unit annual contribution. There are unique risks associated with construction on Indian land. Access to trust land and inability to secure ownership of sites are risks which often cause developers to inflate their prices. The inability for mechanics liens to be invoked creates higher insurance costs and higher subcontract amounts.

Finally, Indian housing costs are often higher because contractors for mutual help projects must factor into their cost estimates additional expenses for the supervision and training of often unskilled mutual help participants who elect to contribute their required mutual help contributions through working on the project.

The Department is addressing the high-cost issues which we face in Indian areas in several ways, which include the following:

To insure that prototype cost limits are based upon actual, supportable and current data, the Department has established separate prototype cost schedules for Indian areas which reflect the factors and considerations unique to each area. Further, the Department is considering actions in order to alleviate the problems associated with the delay in the publication of the annual updates of prototype cost limits. Presently, upon evidence of the need for a cost increase, an Indian housing authority can request a revision of the prototype cost. HUD will agree to revise the prototype cost if the design cannot be modified to reduce the cost sufficiently, and evidence firmly supports the request. Starting in calendar year 1981, per-unit prototype cost schedules will be published twice a year instead of once. This should relieve the need for interim revisions except for unforeseen or unusual circumstances.

In an attempt to control and reduce the cost of Indian housing development, the Department is in the process of publishing a proposed rule which will establish total development cost limitations for each of the identified prototype cost areas. The proposed rule will establish regulatory limitations for the total development cost of any given dwelling unit or project. Another way in which we anticipate reducing development cost is related to the field restructuring described earlier. The reorganization and relocation of HUD field office staff serving Indian housing authorities will allow for an increased level of technical assistance to the authorities and for more expeditious handling by the field office of Indian housing development processing. The resultant improvement in the local authorities' administrative effectiveness and the compressing of the housing development pipeline should necessarily impact upon the cost of Indian housing development.

Mr. Chairman and members of the committee, I appreciate this opportunity to discuss with you the directions in which the Department is moving to improve its Indian and Alaska Native housing programs and to increase housing production in the area. As you can see, we have taken measures at the central office level, in the field, and with other Federal agencies to help meet Indian and Alaska Native housing needs. We have reached out to various groups and organizations in order to solicit their views and better understand their special needs. We hope in the future to further improve upon our current record and make our Indian housing programs even more responsive to the need that exists.

I have with me today Mr. Thomas Sherman, Acting Director of the Office of Indian Housing. He and I will be happy to answer any questions you may have.

Senator MELCHER. Thank you. I do have a couple of questions. I will ask them, and I hope you can give me brief answers to them.

What is the status right now of the Department's efforts to hire a Director for Indian housing programs? I note you have the Acting Director with you, but what is the status to hire a Director?

Ms. ROCHE. The qualified list came to the Assistant Secretary around March or April of this year. The General Deputy under the Assistant Secretary for Housing and I interviewed the six qualified applicants around 2 months ago. We have now made a recommendation from the Assistant Secretary to the Secretary. It is the Secretary's appointment. Senator MELCHER. When did he make the recommendation?

Ms. ROCHE. I am not exactly sure when the Assistant Secretary actually sent the paper up, but I would say it was within the last 2 weeks.

Senator MELCHER. It probably will be acted upon within the next 2 weeks then?

Ms. ROCHE. Well, I would hope so.

Senator MELCHER. In February of this year HUD's region VIII office set down four general criteria that really have the impact of regulations. Some of the tribes, or most of them in region VIII, do not really believe that this rulemaking is proper.

Has this been reviewed to see whether it violates the Federal Administrative Procedures Act?

Ms. ROCHE. We are aware of the policies which have been implemented by the Denver regional office. We are of the opinion that they are in accordance with the HUD regulations.

Senator MELCHER. If they are, have you used them in other regions? Ms. ROCHE. I think I will ask Mr. Sherman to answer that.

Mr. SHERMAN. Yes; not exactly in the same detail but similar requirements under the same general rules.

Senator MELCHER. Those are based on the same rules. However, they vary from one region to the other?

Mr. SHERMAN. The general rule that we promulgated is in our HUD Indian housing regulation, 24 CFR 805.

Senator MELCHER. I understand that. But these have gone a little bit beyond that. So, if they are the same regulation, how do the rules vary from one region to another?

Mr. SHERMAN. For example, the general rule is that there shall be administrative capability in both development and management. The way that the Denver office specifically identifies what constitutes administrative capability in both development and also management phases is not precisely the same as other regions do.

Senator MELCHER. Are the amendments to ACC contracts appropriate?

Mr. SHERMAN. Yes, sir, I think so, from the standpoint that when need for amendments are the result of excessive delay by Indian housing authorities in the development of projects which could have been avoided.

Senator MELCHER. What did you say?

Mr. SHERMAN. If the need for amendments are the direct result of the delay in the development process, then that is a bona fide reason because, if the projects had moved in a reasonable time frame, then you would have precluded the need for those amendments. That does not mean to say that all amendments should be treated in that fashion. Senator MELCHER. The Blackfeet Tribe was told they were not getting any new housing allocation this year because they had amendments the ACC contracts.

Mr. SHERMAN. I believe that was one of several reasons.

Senator MELCHER. Well, if they are supposed to amend them and then, if they do amend them, they do not get any housing for this particular year, do you not think that that is a strange way of operating?

Mr. SHERMAN. If I understand correctly, sir, they have units in the pipeline which have not been completed; and there are various reasons for those units not being completed, one of which the Denver office felt was the lack of reasonable administration of development by the housing authority. As soon as those units are caught up, then they of course will be given additional units.

Senator MELCHER. Is it true that HUD told the Blackfeet Tribe it will not get any new housing allocation this year because they had amendments to the ACC contracts? Is that true or not?

Mr. SHERMAN. That was one of the reasons, yes, sir.

Senator MELCHER. Well, HUD told the committee staff that the real reason was to help the Blackfeet Indian Housing Authority, because they have a heavy workload and need catchup time.

It seems to us that we are getting one slant on this and that the Blackfeet Tribe is getting a different slant. We would appreciate it if you would give us both the same answer, both the tribe and the committee, and be just as candid with each of us on just what you are trying to do.

Under what process, if they did catch up, would they get any housing in the next fiscal year?

Mr. SHERMAN. I believe the regional administrator has sent some people out to look at the Blackfeet project.

Senator MELCHER. Can you give us a report on what that has brought about then?

Mr. SHERMAN. Yes, sir.

Senator MELCHER. Without objection, it will be inserted in the record at this point.

[Subsequent to the hearing the following information was received:] The HUD Regional Administrator in Denver (Region VIII) directed that a review be made of the situation at the Blackfeet Indian Housing Authority. A trip was made to the Blackfeet Reservation after which a conference was held with the Regional Administrator.

As a result, the following letter was sent to the Blackfeet Indian Housing Authority clarifying, explaining and reaffirming HUD's position.

Ms. CONNIE BREMNER,

Executive Director,

Blackfeet Indian Housing Authority,

P.O. Box 790,

Browning, Mont.

JULY 30, 1980.

DEAR MS. BREMNER: The purpose of this letter is to clarify and explain to you the position of the Department of Housing and Urban Development (HUD) with regard to funding of additional housing units to the Blackfeet Indian Housing Authority (IHA). This letter is a followup to written and verbal communications we have had with you and with other parties interested in this subject. Background

On April 16, 1980, HUD advised the Housing Authority that units would not be allocated to it for fiscal year 1980 because of difficulties experienced in developing the projects already assigned to it. Although all of these items were not in the

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letter of explanation, these were the factors that went into that decision by the HUD staff:

1. a large number of projects in development,

2. multiple construction contracts in each project, adding to the administrative burden on the Housing Authority,

3. a significant number of claims by contractors against the Authority, 4. litigation involving the Authority, contractors and homebuyers,

5. consistent budget overruns requiring large annual contributions contract (ACC) amendments, and

6. construction contract time overruns.

The last two points were specific items in HUD's strategy for allocating fiscal year 1980 units, and it was on these items that Blackfeet's application failed to meet minimum requirements.

After reviewing the status of the various projects, HUD staff concluded that the Blackfeet Indian Housing Authority had more than it could handle. To add more units and more problems-would not be in the best interests of either the Housing Authority or HUD. The HUD staff concluded that the sheer volume of work required to keep up with so many projects and so many construction contracts was impeding the Authority's ability to function effectively in administering these contracts. The HUD analysis showed that the Authority was attempting to handle many more contracts than any of the other 24 IHAs in our Region. Technical Assistance

To the extent that staff and other resources permit, HUD is required to provide technical assistance to Indian housing authorities. We have attempted to carry out this responsibility by the following actions:

1. Mr. Frank Richmond, Construction Analyst, has been inspecting and assisting in contract management at least once a month and a week at a time as needed. 2. Mr. Ray Heap, Chief, Architecture and Engineering, has conducted reviews three of four times and has developed a more positive approach to soils testing and foundation engineering that should solve some construction problems. The Office of Indian Programs (OIP) has also developed the Critical Path Inspection Procedure that offers the first thorough system for inspections.

3. OIP field reviews have discovered and eliminated some inferior material, for instance, particle board for floors, vinyl asbestos tile in kitchens and baths, 16inch sheet rock on ceilings and wood foundations, to name a few.

4. The OIP Architectural Section has revised the criteria for architects' fees eliminating overcharges of the past.

5. OIP cost and plan reviews have minimized overdesign and have, therefore, caused less loss of quality items at negotiation stages.

6. OIP conducts all preconstruction conferences and, thereby, instructs contractors and subcontractors of all requirements and paperwork that they will be involved with, making the housing authority's job easier.

We expect to provide more assistance in the area of maintenance if we are able to hire a maintenance engineer as is now planned.

Current Status

As a part of our technical assistance effort, Mr. Heap and Mr. Richmond made an intensive review July 23–25, 1980, of the status of the various construction activities at Blackfeet. In outline form this is what they reported:

1. Project MT 8-15 is 2 years late. The IHA is attempting to finish up the work defaulted by Nicholas and Sons. Attempts will continue to try to get the bonding company back in the picture. Hedreen's suit against the Authority is being handled by James Wagenlander, your attorney.

2. Projects MT 8-17 and 8-18 are now about a year over the contract time. It should be possible to complete them by the end of the fiscal year. We do not know if Paul/Strand will follow through on its threat to sue because of alleged deficiencies in the plans and specifications.

3. Project MT 8-19 is due to be completed by September 1, 1980, but it will probably not be finished until October or November.

4. Project MT 8-20 was due to be completed July 12, 1980. It too will not be finished until October or November, at least partly because of the inability of Poitra Development to finish its five units. We have not had a response from the Authority to our requests for information about how this failure came about and the disposition of the letter of credit.

5. Projects MT 8-9, 8-10 and 8-16 are to be repaired using some $400,000 in ACC amendment money. Work is about to get underway. This will take care of the lawsuit filed by the homebuyers.