Big Dollars for Housing From HUD Title VI Program

Mark Fogarty

The Department of Housing and Urban Development’s Section 184 Indian mortgage program has far outstripped HUD’s second Indian loan program, Title VI, loaning more than $4.5 billion to date to Title VI’s approximately $200 million. But Title VI can be a potent factor in building new homes in Indian country.

Title VI loans have ranged from the modest (the smallest has been $151,300 to an Alaska Native tribe) to the gigantic, $50 million to the Cherokee Nation of Oklahoma. Most of them are on the smaller side, but some have been able to put a dent in tribes’ housing problems.

A case in point is the Yakama Nation in Washington, which received two Title VI loans totaling $15.8 million, financing the biggest part of 68 new three- and four-bedroom homes on their reservation.

Title VI works by a tribe pledging some of its federal housing money (called the Indian Housing Block Grant or IHBG) as collateral for a loan by a private lender. It is a way to use federal assistance to attract outside finance.

Rodger Boyd, deputy assistant secretary of HUD’s Office of Native American Programs, explained the concept in testimony last year before the Senate Committee on Indian Affairs.

“HUD has encouraged tribes to use leveraging as one possible tool to build capacity and maximize the impact of their IHBG funds through the Title VI program,” he said.

Boyd, Navajo, told the Senators “Under Title VI, HUD can guarantee 95 percent of outstanding principal and interest on a loan made by a private lender to an IHBG recipient for affordable housing activities. Borrowers pledge a portion of their current and future IHBG funds as security for the repayment of the federally guaranteed financial obligation.”

Yakama used one of its Title VI loans, for $4.4 million, to address a very common problem in Indian housing development, lack of infrastructure. That loan went towards construction of infrastructure (which can include water, roads and sewer systems) for the Adams View development in Wapato, Washington. The second Title VI loan, for $11.4 million, went to construct the 68 houses. Both Title VI loans were made by Bank of America. Additional financing was provided through the federal Low Income Housing Tax Credit program.

Mercy Housing Northwest, an affordable housing developer, teamed with Yakama Nation Housing Authority (headed at the time by James Berg, Oglala Lakota) on the project.  Key Bank bought $12.2 million of LIHTC credits through syndicator Raymond James Tax Credit Funds.

According to Teresa Garcia, senior writer for San Francisco-based Novogradac & Company LLP, writing in one of its publications in 2013, the 45-acre Adams View development piggybacked on an earlier 30-unit development there.

“A team from Seattle-based ARC Architects designed Adams View with six different floor plans for one- or two-story units. The units include three or four bedrooms, two baths, two car garages and large patios,” Garcia wrote.

Adams View “sites homes around a large 11.3 acre center green. The green has two basketball courts, bleachers, picnic tables, a one-mile walking path that winds through the park and the surrounding neighborhood. There’s a conventional playground for toddlers and older children and a second ‘natural’ play area with logs from Yakama Forest Products, a tribal enterprise,” Garcia wrote.

She noted the project was 100 percent occupied at the time of her article in 2013 and much of it had been constructed by tribal workers. The units went to “households that earn between 30 percent and 60 percent of the area median income. The 68 homes are required to be rented for 15 years, and then there are options for the tribe to continue renting out the units or to sell the homes.”

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