The Indian housing program, I grant you, is cumbersome; but it is a much appreciated, highly valued program desperately needed by America's poorest citizens, the American Indian.

For the second year in succession, the Department of Housing and Urban Development proposes a one-third cut in Indian housing assistance to the American Indian and Alaska Natives. The Fiscal Year 1981 budget request suggested an allocation of 4,000 Indian units, a 2,000-unit reduction since fiscal year 1980.

Although the initial HUD request submitted for 1980 was also 4,000 units, Members of the Congress recognized the inequity and restored the Indian allocation of 6,000 units, including $30 million in contract authority.

The Housing Community Development Act of 1974 provided for 6,568 units of Indian housing and 6,000 units per year for each of the next 5 years thereafter.

The long, tortuous process of building the pipeline over the past 5 years would be destroyed by the drastic reduction proposed in fiscal year 1981.

Substandard Indian housing is a persistent problem in our country. If it were economically possible, the amount of assistance for Indians should be augmented rather than diminished.

The National American Indian Housing Council has a membership composed of Indians and Alaska Native housing authorities. On behalf of this constituency, I vigorously protest the fiscal year 1981 reduction and ask this Senate Select Committee to recognize the unique funding requirements necessary in order to build housing on trust lands.

We request the committee to support the allocation of 6,000 fully funded units of Indian houses for fiscal year 1981.

Mr. Chairman, I would like also to submit on behalf of our constituents, the Association of Western Washington Indian Housing Authority, written testimony which we have submitted for the record. Thank you, Mr. Chairman, for this privilege and opportunity to testify.

Senator MELCHER. Thank you very much for your testimony. It is very helpful to the committee.

Without objection, the material which you submitted from the Association of Western Washington Indian Housing Authorities will be included in the record.1

[The prepared statement follows:]

PREPARED STATEMENT OF JOHNNYE CHOPPER, CHAIRMAN, NATIONAL

AMERICAN INDIAN HOUSING COUNCIL

Mr. Chairman and members of the Senate Select Committee on Indian Affairs. my name is Johnnye Chopper. I am chairman of the National American Indian Housing Council. Our council represents over 100 Indian and Alaskan Native Housing Authorities and over 600,000 Indians and Alaskans. On behalf of our constituency we express appreciation for the opportunity to testify before this committee.

In the interest of time, I plan to make a brief verbal statement and submit a complete written statement for the commitee records and considerations.

It is a great pleasure to have the opportunity to testify on behalf of Indian Housing. I know of no single program that is better received by Indian people.

1 See p. 89.

They recognize the importance of housing far more than do other members of our society simply because, prior to the Department of Housing and Urban Development involvement in Indian housing, housing opportunities for Indians living on trust properties were nonexistent. The economic condition of Indians is a substantial reason for this but the primary factor is the trust status of the land. This legal treatment of property, which is so vital and important to Indian sovereignty and cultural existence, effectively prohibits mortgaging of property, thereby eliminating any private, unassisted housing. Should the Department of Housing and Urban Development's program be cut back or hampered in any way, housing opportunities for Indians would be minimal, for there will be no opportunity for the private sector, bonding financing mechanisms, or State programs to step in to fill the gap.

It has taken 19 years to develop a delivery system for Indian housing capable of delivering 6,000 units or more per year. The Indian housing program was administratively created in 1961, but no Federal regulations were promulgated until 1976. These regulations have been revised and amended and we now have an adequate framework to construct quality housing on a timely basis.

In any evaluation of the cost effectiveness of Indian housing it is important to recognize that Indian mutual help projects do not receive any operating subsidy funds. Simply put, these projects cost the Federal Government far less than regular public housing projects. In many cases the operating subsidy paid over the life of the bonds of regular public housing projects have exceeded the initial capital investment. In contrast, mutual help projects require an initial capital investment only and the people themselves retire a portion of that debt. However, in instances of small authorities, use of operating subsidy may be necessary to fund a staff capable of complying with DHUD regulations.

Today funds are earmarked for each program reservation issued. In this day of high inflation it is imperative not only to proceed to construction as fast as possible, but to adequately fund projects at the program reservation stage. It is cruel and unfair to lead people to think they will receive a house or to cause a builder expense of preparing a proposal and in the end find inadequate funds to build a project. Serious consideration should be given to the use of current funds to fund old, existing program reservations. The practice of leaving units "twisting in the wind" serves the Federal Government, Indian Housing Authorities, developers, and last, but not least, the Indian families, no purpose. To simply call time out and reapply instead of using an existing program reservation causes undue delays of 4 to 6 months, delays none of us can afford.

Prototype costs applied to Indian housing present serious problems. Approximately 4 years ago, recognizing the need for a special Indian prototype, a system was developed in HUD's Region VIII for updating Indian prototype figures. This system was adopted, based upon a very modest Indian house, keeping in mind special needs related to geographical location. However, this year the data collected and submitted by HUD's own regional statisticians was not reflected in the published prototype figures. The National American Indian Housing Council feels that this system, which worked in the past, should continue. Incipient problems are already developing because regional prototype data have been ignored in preparing this year's Indian prototype costs.

An additional problem related to the use of prototype cost figures affects the timely delivery of Indian housing. There are two separate steps in the funding commitment process for a housing project. The first of these is the initial commitment made at the Program Reservation stage when a project is approved. This initial funding commitment is based upon prototype costs prevailing at that time. Several months later the project arrives at the Annual Contributions Contract (ACC) stage, when the final funding commitment is made. More specific project cost information available at this ACC stage often makes it necessary to revise the estimated project cost, usually upward. Although it is permissable to use prototype costs prevailing at the time of the ACC execution, changing the total fund commitment made at the Program Reservation is not possible without an amendment. HUD's amendment monies are extremely scarce and the only other alternative is to reduce the number of units in the project.

Mr. Chairman, the National American Indian Housing Council has consistently and repeatly advocated 6,000 fully funded Indian and Alaskan housing units. We request that the Department of Housing and Urban Development be directed to supply the necessary amendment funds to produce these units in a timely manner and that prompt steps be taken to remove such impediments which unnecessarily delay and complicate the Indian housing program.

Concerning the Interdepartmental Agreement, I do not know of a single house that was not built because of problems traceable to the Interdepartmental Agreement. Attributing Indian housing problems to the Agreement between the Departmen of Housing and Urban Development. Department of Interior, and Department of Health, Education, and Welfare is placing the blame for slow delivery of Indian housing where it does not belong. Housing units are built as a result of hardwork and cooperation between the Federal representatives and Indian Housing Authority people. Occasionally, there may be a specific individual who does not fulfill his job obligation, but this is not the fault of the Interdepartmental Agreement.

I would like to comment on criticisms concerning the high cost of Indian housing. A recent report implies that Indian housing throughout the United States is characterized by high costs. It is unjust to level such criticism. There is no greater housing need than that which exists among American Indians and Alaskan Natives. This need has been recognized by Congress and a commitment has been made to assist Indian people to obtain better housing, principally through the program administered by the Department of Housing and Urban Development. While the program is complicated and cumbersome, for their part, with very few exceptions Indian people bend over backwards to assure that these housing benefits reach as many needy Indian families as possible. Every effort is made to keep high costs of this housing down. It has been my personal observation that those factors which cause Indian housing to be costly are either due to complicated regulations imposed by the Department of Housing and Urban Development or they are costs which are beyond the control of the Housing Authority. Moreover, cost comparisons are often carelessly prepared, ignoring differentiations between single family and multifamily dwellings as well as other factors specific to building dwellings on reservation land. The Indian housing program, I grant you, is cumbersome, but it is a much appreciated, highly valued program, desperately needed by America's poorest citizen, the American Indian. It is also the least expensive way the U.S. Government can dispense its housing obligation to Indians.

For the second year in succession the Department of Housing and Urban Development proposed a one-third cut in housing assistance for American Indians and Alaskan Natives. The fiscal year 1981 budget request suggested an allocation of 4,000 Indian units, a 2,000-unit reduction since fiscal year 1980. Although the initial HUD request submitted for fiscal year 1980 was also 4.000 units, Members of Congress recognized the inequity and restored the Indian allocation to 6,000 units, including $30 million in Contract Authority.

The Housing and Community Development Act of 1974 provided for 6.568 units of Indian housing and 6.000 units per year for each of the next 5 years thereafter. The long tortuous process of building a pipeline over the past 5 years would be destroyed by the drastic reductions proposed in fiscal year 1981.

Substandard Indian housing is a persistent problem in our country. Past allocations have barely kept pace with annual increases in the number of Indian families living in substandard dwellings; the overall number actually grew. If it were economically possible, the amount of assistance for Indians should be augmented, rather than diminished. Certainly, as the number of Indian families living in deplorable housing continues to escalate a budget cut of the magnitude proposed is totally unjustified.

Our organization, the National American Indian Housing Council, has a membership composed of Indian and Alaskan Native Housing Authorities. On behalf of this constituency, we vigorously protest the fiscal year 1981 reductions and ask the Senate Select Committee to recognize the unique funding rquirements necessary in order to build housing on trust lands.

We request the committee to support an allocation of 6,000 fully funded units of Indian housing for fiscal year 1981.

The following section of written testimony is submitted by the National American Indian Housing Council on behalf of the Association of Western Washington Indian Housing Authorities.

Item 1.-The need to maintain the U.S. Government housing assistance programs for Indian people: In western Washington, there is a need for approximately 1,500 new housing units for members of the 21 recognized Tribes. Neither private financial institutions nor most Federal programs other than the DHUD Indian housing program and the BIA Housing Improvement Program are contributing to meet that need. To withdraw Indian owned land from

trust status is to sound the death knell of Indian Tribes. The U.S. Government needs to continue assistance in such a way that the trust status of Indian land is guaranteed. The HUD Mutual Help program has provided an excellent opportunity for ownership and realistic payment by Indian families. The Turnkey III program does not afford families an opportunity to pay off their homes at a quicker rate by making higher payments.

Item 2.-Needed changes within the DHUD Indian Housing Program: (a) Full reimbursement of IHA's for the cost of purchasing land for housing.— CFR 805.219 (C)(4) restricts the amount for which an IHA may be reimbursed for the cost of land for housing. The value of the land "shall be discounted to obtain an estimate of the value of the leasehold interest which is alienable. An acceptable estimate of the value of the leasehold shall not exceed two-thirds of the estimate of the value as if alienable in fee." Waivers of this rule are reserved to the Assistant Secretary for Housing and have proven impossible to obtain. This rule is not just because PHA's are reimbursed fully for the cost of purchasing land. It is not fair to Tribes to have to provide from their small land holdings the land needed from housing. It is more unfair for poor, landless Tribes, to have to absorb the portion of the cost of purchasing land for housing that is not reimburseable according to CFR 805.219(C)(4). Tribes should be reimbursed from the development budget for the full price of land bought for housing.

(b) Compensation of IHA Commissioners.-Currently IHA Commissioners can not be compensated for their time spent on IHA business. This harms the quality and effectiveness of many IHA's because it creates difficulties in getting qualified people to serve as IHA Commissioners and puts economic burden on many who do agree to serve. The HUD argument has been that since PHA Commissioners are not compensated, IHA Commissioners should not be. That argument does not wash because of the difference in financial wealth between PHA and IHA Commissioners; the latter are generally poor or low-incomed. IHA Commissioners should be compensated.

(c) Davis-Bacon Act.-The Davis-Bacon Act is by statute applicable to the Indian housing program. It militates against employment of Indians in construction because it forces wages higher than the skills of Indian workers warrant. Indians therefore do not become employed except for those few who are journeymen craftsmen. The DOL training programs do not offset this problem because they contain requirements that are not practical except on the larger reservations. The application of Davis-Bacon to Indian housing needs to be modified in order for Indian people to work on Indian housing projects construction.

(d) Prototype Cost Limits.-Congress by statute has attempted to limit construction costs of public housing projects by the prototype cost limit system. The method does not work because, in order to attract construction firms into the program, profit rewards have to be generous. Prototype cost limits have served very often to delay projects or to encourage the practice of burying construction costs in site development. When they delay projects, the prototype cost limits usually effect the production of fewer units and waste rather than save tax dollars. The fear that the removal of prototype cost limits would cause IHA's to build extravagant projects is not justified. In any event, prototype cost limits should be removed and, if limits are judged necessary, other methods to impose limits should be enacted.

(e) Publishing of Prototype Cost Limits and Total Development Cost in the Advertisement for Bids.-CFR 805.203 (g) requires that when the IHA advertises for construction bids it include the prototype cost limits and total development budget. The HUD rationale for this is to discourage bids in excess of the development budget. IHA's have experienced a disinterest in bidding when contractors have been busy and much interest when contractors are idle. This rule, first published in November 1979, will probably stop or delay construction of Indian housing projects when contractors have an abundance of work. It is a bad rule that will do harm to the Indian housing program.

(f) Negotiating by IHA's with Contractors.-As the program now operates, IHA's must advertise publicly for Contractors to submit sealed bids to be opened at a public meeting. Though this system is intended to promote competition and maintain fairness of approach to private enterprise, it in fact does harm to the Indian housing program. The harm consists in IHA's being forced to employ undesirable contractors who base low bids on a policy of substituting low quality material and workmanship for materials specified. Though building inspectors enforce the required specifications, delays, frustrations, and conflicts arise.

Six month delays in occupation mean more interest paid on notes, loss of revenue for the IHA's from rental receipts, disillusion among families hoping for new housing and no real penalty to the contractor. If IHA's were free to negotiate with contractors, in the Conventional as well as Turnkey method of development, they would avoid undesirable contractors, possibly involve contractors otherwise not interested, and better the quality of Indian housing without additional expense. In Washington State, the Turnkey method of production subjects the contractor to sales tax, which would strip 5.4 percent from the project. It would be a very desirable change to allow IHA's to negotiate with specific contractors.

(g) Bonding of Contractors.-Contractors are required to be bonded in order to guarantee that the project will be completed. It is necessary to guarantee completion of a project. Unfortunately, small contractors who could build a project less expensively but cannot obtain a large bond are thereby excluded from building Indian projects. It seems that alternate methods to bonding to guarantee completion of a project could be devised and allowed.

(h) Performance Funding and Subsidies.-Operational subsidies are made available through performance funding, which serves as a carrot to reward compliance with HUD management requirements. This has served to withhold subsidies from IHA's that have failed to satisfy HUD requirements. No assistance is provided the failing IHA's, threats and refusal to allocate more housing are the sticks by which those IHA's are punished. Consequently, poorly performing IHA's tend to sink deeper into their quicksand and successful IHA's reap rich rewards. The statutory mandate to house low-income families is ignored. The performance funding basis for subsidies needs to be changed for IHA's. Those with management difficulties need assistance in order to overcome deficiencies. Those running successfully should be rewarded with appropriate subsidies.

Small IHA's, those with fewer than 150 units in management, need operational subsidies for hiring necessary staff. The current formula for budgeting for staff leaves small IHA's without adequate funds to hire adequate staff. Because small IHA's serve small Tribes who are poor, the Tribes can not subsidize their IHA's. If HUD expects IHA's to provide the sort of administration it requires, HUD should subsidize small IHA's for staff employment. What now happens is that small IHA's either manage poorly or rely on more expensive consultants who can be subsidized, at greater cost to the U.S. Government. It would be more economical for HUD to help IHA's employ adequate staff than for IHA's to rely on expensive consultants.

(i) Housing for Singles.-The HUD IHA program does not allow for housing for single adults except for seniors. Since there is no housing available on reservations, adult single Indians usually continue living with parents. Some IHA's have expressed a desire for apartments for singles. Since the HUD Indian housing program must be a comprehensive program, it should include opportunity for singles.

(j) Energy Alternatives.-As energy costs rise, Indian families increasingly need low cost energy. Pathetically little is being done to alleviate this problem. The HUD Indian program should include special allowances for the use of solar, wind, wood, and other sources of energy.

(k) HUD Reorganization of Indian Programs.-For years, IHA's have been requesting an Office of Indian Programs within HUD. At last this is being achieved, but creation of the Office of Indian Programs provides no guarantee for better delivery of housing to Indian families. The key to success in that new Office lies in the quality of leadership, administration, and personnel it employs. No one should be allowed to work in that Office who is not known for professional ability, empathy with Indian needs and desires, and acceptable to the Indian community. The Civil Service regulations should be revised in order to allow the IHA's of each region to have a voice in the selection of HUD Office of Indian Programs personnel, especially at the administrative level, and to allow the IHA's on a national level to have a voice in the selection of the Director of the Office of Indian Programs in the Central Office in Washington.

(1) Rental Units to Ownership.-Universally Indian families prefer to own their homes instead of renting. Though it may not be possible or adviseable to eliminate the rental program, it should be possible and easily feasible for Indian families to change their rental units to ownership when they become economically capable of owning a home. When a rental project is paid off, homes still being rented should become, with IHA consent, the property of the resident family.

(m) Interagency Agreement.-Along with HUD, the BIA and IHS contribute to HUD Indian housing projects. The coordination of three agencies, each with