After review by the Office of Management and Budget, HUD published the final rule implementing NAHASDA on March 12, 1998; it went into effect on April 13, 1998. NAHASDA eliminated 9 of HUD’s 14 separate Indian housing programs, replacing them with a single block grant program with one set of funding criteria for HUD to administer and, according to HUD officials, one system for managing and accounting for funds. HUD Used Competitive and Noncompetitive Processes to Provide Indian Housing Grant Funding

Prior to NAHASDA, HUD provided funding directly to Indian housing authorities and tribes through 14 programs for which a total of $2.8 billion was appropriated in fiscal years 1993 through 1997. For the other five programs, HUD allocated funds to Indian housing authorities or tribes noncompetitively through a formula or on a first-come, first-served basis. The formula also did not factor in $929 million provided in past years but not yet spent by the Indian housing authorities and tribes. According to HUD’s Office of General Counsel, there is no provision under NAHASDA allowing HUD, when awarding block grant funding under the act, to consider Indian housing authorities’ failure to comply with requirements and regulations that are no longer in effect. However, HUD does have the authority and has, in several instances, placed conditions, such as additional monitoring and oversight, on the use of grant funds by a housing entity that has a history of poor performance in administering federal grant programs. In future fiscal years, regulations permit HUD, when dispensing new grants, to consider how well housing entities have managed past NAHASDA grants. Unspent Indian Housing Funding Was Not a Factor in Calculating Fiscal Year 1998 NAHASDA Block Grants

The unspent $929 million in Indian housing funding was not a factor in calculating the fiscal year 1998 block grants because, according to HUD officials, the unspent funding addresses needs that continue to exist. Housing entities report these unspent funds and the plans for their use as part of the Indian housing plans they submit for HUD’s approval. To receive grants from the $590 million available for the NAHASDA program in fiscal year 1998, each of the 575 housing entities had to submit an Indian housing plan by July 1, 1998. HUD had received plans representing over 97 percent of the entities by the deadline. For the fiscal year 1999 program, HUD requested $600 million from the Congress. We point out that most of the unspent funding was appropriated over a recent 5-year period—fiscal years 1993 through 1997. Scope and Methodology

To determine how HUD awarded and allocated funding to Indian housing authorities and tribes before NAHASDA’s enactment, we reviewed regulations governing HUD’s grant award programs. To determine the amount, type, and “age” of unspent Indian housing program funds, we analyzed data obtained for us by HUD from its Program Accounting System. Major contributors to this report are listed in appendix V.

Grant Award Criteria and Fiscal Year 1997 Funding for Competitive and Noncompetitive Indian Housing Programs

Fiscal year 1997 funding (dollars in millions)
For scoring and ranking proposals — Bureau of Indian Affairs housing needs assessment  — Percentage of the area’s total need — Estimated number of units to be funded — Weighted average cost of developing housing within each area — Indian housing authority established under state law or a HUD-approved tribal ordinance — Indian housing authority had the capacity to administer the program as demonstrated by compliance with HUD standards for housing development, modernization, and operations — Indian housing authority met performance eligibility thresholds to apply for housing development funding: environmental review, fiscal closeout, final site approval and control, utility supplier’s firm commitment, and preconstruction certification — Relative unmet need for housing — Relative Indian housing authority occupancy rate compared with the occupancy rates of other eligible Indian housing authorities — Time since last Development grant was approved compared with that for other eligible Indian housing authorities — Current Indian housing authority development “pipeline” activity already in progress — For fiscal year 1997, HUD applied additional factors for scoring and ranking that included clear Indian housing authority demonstration of preplanning housing project activities, site selection that results in cost savings, and innovative approaches to development or financing that reduce housing delivery time or increase the number of units — $1 million base amount for each field office — Additional amount calculated by a formula that considered the latest Census data for the eligible Native American population residing in each area and the extent of poverty and housing overcrowding — Reasonableness of project’s cost  — Project’s appropriateness for intended use — Project can be achieved within 2 years — Tribe’s administrative, managerial, and technical capacity — Tribe’s past grants administration — Tribe’s actions to impede development of housing for low- and moderate-income individuals — Outstanding block grant obligations to HUD — Need for project and its design — Project planning — Leveraging of block grant funding (continued)
Fiscal year 1997 funding (dollars in millions)
Comprehensive Improvement Assistance Program for modernization(Nonemergency)
Degree to which — project addressed the housing needs of the tribe and maximized benefits to low-income families — tribe had taken the financial, administrative, and legal actions necessary to undertake the proposed project and had the administrative staff to carry out the project — tribe would use other sources of funding, such as state grants, private mortgage insurance, private contributions, and other federal grants, to leverage funding for the project — Plan for evaluating activities — Plan for establishing a relationship with local law enforcement entities — Coordination with empowerment zone and welfare reform efforts — Description of use of community facilities and bringing back community focus to housing authority properties — Assurance that Indian housing authority has a broad range of tools for making and maintaining a safe community — Indian housing authority’s administrative capacity and relevant experience — Problem’s extent — Support of residents, local government, and community in implementing activities — Soundness of proposed plan — Extent of coordination and participation with other organizations in community planning (continued)
Fiscal year 1997 funding (dollars in millions)
For scoring and ranking proposals — Formula calculating emergency shelter needs for tribes within each field office area — Form, timeliness, and completeness of application — Tribe’s eligibility as determined by Department of Treasury Office of Revenue Sharing — Eligibility of persons to be served for program assistance — Tribe’s building compliance with disability requirements — Tribe’s capacity to carry out the proposed activities successfully and within a reasonable time — Tribe’s service to the homeless population that is most difficult to reach and serve — Existence of an unmet need for the proposed project — Appropriateness of proposed activities to meet the needs of the served population — Extent of coordination with other community programs — 51 percent or more of the residents included in the proposed project are affected by welfare reform — Proposed activities must take place in a community facility that is easily accessible for applicants — Community resources must be firmly committed to the project — Indian housing authority’s compliance with current programs — Troubled housing authority must use a contract administrator — Indian housing authority’s administrative capacity and relevant experience — Extent of problem and need for project — Soundness of program approach and methodology — Indian housing authority’s ability to leverage project resources — Extent of coordination with community to identify and address problems — Funding provided to field offices to assist Indian housing authorities in providing funds for eligible families — Families, not Indian housing authorities or tribes, must be eligible for assistance — Funding provided to field offices to assist Indian housing authorities in providing funds for eligible families (continued)
Fiscal year 1997 funding (dollars in millions)
For scoring and ranking proposals — Funding awarded directly to organizations by HUD’s Office of Public and Indian Housing — 51 percent or more of the residents included in the proposed project are affected by welfare reform — Signed agreement between the applicant and the housing authority describing each of their roles and responsibilities  — Proposed activities must take place in a community facility that is easily accessible for applicants — Must use the services of a contract administrator or mediator — Must be a registered nonprofit organization — Compliance with current programs and no unresolved audit findings — Contract administrator must not be in default — Letters of support from project participants — Certification of resident organization board elections — Resident organization’s administrative capacity to carry out the project and its relevant experience — Need for the project and extent of the problem — Soundness of program approach and methodology — Resident organization’s ability to leverage project resources — Extent that project reflects a coordinated community-based process identifying and addressing the problem — HUD ONAP awarded a small portion of the funding using a lottery system Fiscal year 1997 funding (dollars in millions)
Comprehensive Improvement Assistance Program for modernization(Emergency)
For allocating funding to Indian housing authorities or tribes — Funding allocated directly to field offices by HUD’s Office of Public and Indian Housing — HUD approval of Indian housing authority’s comprehensive plan identifying all physical condition and management improvements of existing housing and action plan for achieving them — Coordination with local officials in developing comprehensive plan — Indian housing authority board resolution approving comprehensive plan — Additional assurances or information required from HUD monitoring, audit findings, civil rights compliance findings, or corrective action orders — Formula calculating housing modernization needs of Indian housing authorities — Funding allocated directly to field offices by HUD’s Office of Public and Indian Housing — Indian housing authorities must meet HUD financial management and occupant income requirements — Performance Funding System formula for calculating what a well-managed Indian housing authority would need to operate its housing programs — Compliance with Fair Housing, Civil Rights, and environmental statutes — Housing projects have to be fully available for occupancy — All eligible applications funded subject to the availability of funds — HUD does not allocate funding for loan guarantees to field offices — Tribe must have developed eviction and foreclosure procedures — HUD guarantees loans made by private lenders to applicants that meet loan qualifications (continued)
Fiscal year 1997 funding (dollars in millions)

Formula Used to Allocate NAHASDA Block Grant Funding

Using the block grant formula established under the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), the Department of Housing and Urban Development (HUD) allocates funds to Indian housing entities for (1) the costs of operating and modernizing existing housing units and (2) the need for providing affordable housing activities.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of Housing and Urban Development's (HUD) implementation of the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), focusing on: (1) how HUD allocated funding to Indian housing authorities and tribes before NAHASDA's enactment, and how much was appropriated for Indian programs in fiscal years (FY) 1993 through 1997; (2) identifying the factors HUD used to allocate Indian housing block grant funding to tribes and tribally designated housing entities under NAHASDA, and whether HUD considered current tribal housing needs, past tribal housing management performance, and the magnitude of unspent housing grant funding for incomplete housing projects; (3) the amount, type, and age of unspent funding for incomplete housing projects; and (4) the status of HUD's Indian housing block grant funding for fiscal years 1998 and 1999.

What GAO Found

GAO noted that: (1) before NAHASDA became effective, HUD distributed funding to Indian housing authorities and tribes through 14 different programs, each having its own criteria for awarding and allocating grant funding; (2) for nine of these programs, funding was awarded competitively, requiring the Indian housing authorities or tribes to submit project proposals, which HUD then scored and ranked; (3) for the other five programs, HUD allocated funding to Indian housing authorities or tribes noncompetively, using formulas or distributing the funds on a first-come, first-serve basis; (4) over fiscal years 1993 through 1997, HUD provided a total of $2.8 billion to Indian housing authorities and tribes through these 14 programs; (5) after NAHASDA went into effect for FY 1998, eliminating 9 of the 14 separate Indian housing programs and replacing them with a single block grant program, HUD used the act's noncompetitive allocation formula to determine the grant amounts for the 575 Indian housing entities; (6) the formula has two components: (a) the costs of operating and modernizing existing housing units; and (b) the need for providing affordable housing activities; (7) the allocation formula does not include a factor for past management performance; (8) HUD's rationale was that there is no authority under the new act for it to consider the authorities' failure to comply with requirements and regulations that are no longer in effect; (9) relying on other guidance, HUD has placed conditions on the use of NAHASDA grant funds if a housing entity has a history of problems with administering other federal grant programs; (10) in subsequent years, HUD can consider performance under NAHASDA when dispensing new grants; (11) the block grant formula also did not consider the approximately $929 million in total unspent Indian housing program funding awarded in previous years because the funding addresses needs that continue to exist; (12) most of the unspent funds were provided in fiscal years 1993 through 1997 through two programs--Development and Modernization; (13) entities must report their planned use of those funds to HUD as part of their Indian housing plans; (14) for FY 1998, $590 million was appropriated for the Indian housing block grants awarded under the new act; (15) as of July 1, 1998, over 97 percent of the housing entities had submitted the required Indian housing plans to HUD describing their planned use of block grant funds and HUD approved 327 of those plans; and (16) for FY 1999, HUD requested $600 million for the program.