U.S. Department of Housing and Urban
Development![](media/image1.png){width="1.0333333333333334in"
height="0.9993055555555556in"}

Office of Public and Indian Housing

+-----------------------------------+-----------------------------------+
| Special Attention of:             | **NOTICE PIH 2003-2 (TDHEs)**     |
+-----------------------------------+-----------------------------------+
| Administrators, Offices of Native | Issued: January 30, 2003          |
| American Programs; Tribal         |                                   |
| Government Leaders; Tribally      | Expires: Indefinite               |
| Designated Housing Entities       |                                   |
+-----------------------------------+-----------------------------------+
|                                   | Cross References: 24 CFR Part     |
|                                   | 1000                              |
|                                   |                                   |
|                                   | 24 CFR part 1005                  |
+-----------------------------------+-----------------------------------+

**Subject:** Implementation of Statutory Changes to the Native American
Housing

Assistance and Self-Determination Act of 1996 (NAHASDA)

**Summary:** In calendar year 2000, three laws were enacted which
amended NAHASDA: the Fiscal Year (FY) 2001 HUD Appropriations Act,
Public Law 106-377, approved October 27, 2000; the *Omnibus Indian
Advancement Act*, Public Law 106-568, Title X -- Native American
Homeownership approved December 27, 2000; and the *American
Homeownership and Economic Opportunity Act of 2000*, Public Law 106-569,
Title V -- Native American Homeownership approved December 27, 2000.
With minor exception, the two laws approved on December 27, 2000 contain
identical provisions. However, because the two laws enacted on December
27, 2000, cannot both amend NAHASDA, HUD considers the first -- the
*Omnibus Indian Advancement Act*, Public Law 106-568 -- to contain the
operative amendments.

The Department has identified those provisions that may be implemented
through administrative Notice and identified those provisions that the
Department has determined require rulemaking to implement. Rulemaking is
required whenever the Department determines it is necessary to develop
policy governing the implementation of a statutory provision.

**Consultation with Tribal Governments:** In accordance with Executive
Order 13175, *Consultation and Coordination with Indian Tribal
Governments*, and the Department's *Tribal Government-to-Government
Consultation Policy* (published in the Federal Register on September 28,
2001), the Department provided tribal leaders with an outline of the
statutory amendments and HUD's proposed method for implementing the
amendments. Approximately 800 copies of the proposed language were
mailed to Indian tribal governments and tribally designated housing
entities (TDHE) to solicit feedback in accordance with the Department's
*Tribal Government-to-Government Consultation Policy*. February 11, 2002
was established as the date for receipt of feedback. Written and
electronic feedback was provided by one tribal government, six TDHEs,
one attorney on behalf of six TDHEs, and two housing associations.

Several responders objected to the Department's Consultation Policy,
which provides for consultation methods other than negotiated
rulemaking. The Department consulted extensively during the development
of its Consultation Policy and acknowledges that tribal housing
officials do not universally embrace the Consultation Policy. The
Department believes the method of consultation employed for this topic
provided an appropriate opportunity for tribal government officials to
have input into the determinations made by the Department regarding
implementation of statutory revisions to NAHASDA.

It is important to note that this Notice does not amend program
regulations but simply advises how the Department is proceeding with
implementing the statutory amendments. Some responders questioned the
need for the Department to administratively implement statutory
amendments, asserting that the amendments were effective with the law.
To avoid confusion, it is important for the Department to inform the
public on the steps to be taken to implement the changes to NAHASDA. For
certain provisions, the Department believes that rulemaking is necessary
to implement the statutory amendments. For other provisions, the changes
can be implemented administratively with conforming rule changes to be
made at a later date. Upon completion of the consultation process, the
Department believes that many of the determinations presented in the
proposed language continue to be appropriate. However, we have
reconsidered our position on two amendments based on tribal comment. The
Department is now taking the position that both the amendment to sec.
101(c) regarding the waiver on Local Cooperation Agreements and the
amendment to sec. 104(b) related to Labor Standards can be implemented
administratively. This Notice is implementing the Local Cooperation
Agreement provision and a conforming rule will be published in the
future. A separate Notice will be issued related to the Labor Standards
provision.

The following discusses the implementation of the statutory amendments
to NAHASDA:

**Amendments to NAHASDA:**

1.  Sec. 1003(a)(1) of P.L. 106-568 amended sec. 101(b)(2) of NAHASDA.
    Sec. 101(b)(2) allows the Secretary to waive applicability of
    requirements of the Indian Housing Plan in whole or in part if the
    Secretary finds the Indian tribe has not complied or cannot comply
    due to circumstances beyond the tribe's control. This amendment
    limits the waiver period to not more than 90 days and requires the
    circumstances for the waiver to be "exigent." Sec. 101(b)(2) now
    reads:

> "(2) WAIVER.\-- The Secretary may waive the applicability of the
> requirements under paragraph (1), in whole or in part, for a period of
> not more than 90 days, if the Secretary determines that an Indian
> tribe has not complied with, or is unable to comply with, those
> requirements due to exigent circumstances beyond the control of the
> Indian tribe."
>
> This Notice is implementing the above provision and a conforming rule
> will be published in the future.

2.  Sec. 1003(a)(2) of P.L. 106-568 amended sec. 101(c) of NAHASDA by
    providing the Secretary with the authority to waive the requirements
    of this subsection if the recipient has made a good faith effort and
    agrees to pay user fees or make payments in lieu of taxes. Sec.
    101(c) now reads:

> "(c) LOCAL COOPERATION AGREEMENT. -- Notwithstanding any other
> provision of this Act, grant amounts provided under this Act on behalf
> of an Indian tribe may not be used for rental or lease-purchase
> homeownership units that are owned by the recipient for the tribe
> unless the governing body of the locality within which the property
> subject to the development activities to be assisted with the grant
> amounts is or will be situated has entered into an agreement with the
> recipient for the tribe providing for local cooperation required by
> the Secretary pursuant to this Act. The Secretary may waive the
> requirements of this subsection and subsection (d) if the recipient
> has made a good faith effort to fulfill the requirements of this
> subsection and subsection (d) and agrees to make payments in lieu of
> taxes to the appropriate taxing authority in an amount consistent with
> the requirements of subsection (d)(2) until such time as the matter of
> making such payments has been resolved in accordance with subsection
> (d)."

This Notice is implementing the above provision and a conforming rule
will be published in the future.

3.  Sec. 1003(b) of P.L. 106-568 amended sec. 102(c) of NAHASDA by
    adding a new component to the Indian Housing Plan regarding non
    low-income families. The following language was added to sec. 102(c)
    of the 1-Year Plan:

> "(6) CERTAIN FAMILIES -- With respect to assistance provided under
> section 201(b)(2) by a recipient to Indian families that are not
> low-income families, evidence that there is a need for housing for
> each such family during that period that cannot reasonably be met
> without such assistance."
>
> This Notice is implementing the above provision and a conforming rule
> will be published in the future.

4.  Sec. 1003(c) of P.L. 106-568 amended sec. 102 of NAHASDA by removing
    paragraph (f) that outlined the plan requirements for small tribes;
    provided a waiver provision for small tribes; and provided the
    Secretary with the ability to define small tribes. Sec. 102(f) has
    been removed and subsection 102(g) has been redesignated as (f).

Indian Housing Block Grant regulations do not establish separate
requirements for small tribes. Therefore, this Notice can implement the
provision eliminating the requirements for small tribes. No conforming
rule will be required.

5.  Sec. 1003(d) of P.L. 106-568 amended sec. 105 of NAHASDA to allow
    the Secretary to waive, under limited circumstances, procedural
    errors made by a recipient in complying with environmental review
    requirements under the Act. Sec. 105(d) was added to read:

> "(d) ENVIRONMENTAL COMPLIANCE. \-- The Secretary may waive the
> requirements under this section if the Secretary determines that a
> failure on the part of a recipient to comply with provisions of this
> section---

(1) will not frustrate the goals of the National Environmental Policy
    Act of 1969 (42 U.S.C. 4331 et seq.) or any other provision of law
    that furthers the goals of that Act;

(2) does not threaten the health or safety of the community involved by
    > posing an immediate or long-term hazard to residents of that
    > community;

(3) is a result of inadvertent error, including an incorrect or
    incomplete certification provided under subsection (c)(1); and

> \(4\) may be corrected through the sole action of the recipient."
>
> This language cannot be fully implemented without rulemaking because
> it applies to the "recipient" (which is defined in section 4(18) of
> NAHASDA to mean the tribe or the TDHE that is authorized to receive
> the grant on behalf of the tribe) whereas section 105(a)(1) authorizes
> the Indian tribe to assume environmental review responsibility.
> Rulemaking is required to implement the provision where the TDHE
> receives the grant since the TDHE cannot be the responsible entity
> under sec. 105. The Department is implementing this provision to the
> extent possible now without a rule so that waivers may be granted in
> those situations where a tribe directly administers a grant.

6.  Sec. 210 of P.L. 106-377 amended sec. 201(b) of NAHASDA to enable
    recipients to provide housing or housing assistance to law
    enforcement officers. A similar change is in P.L. 106-568. Because
    the language in these two amendments differs and the FY 2001
    Appropriations Act was enacted first, it was determined that the
    language in the HUD Appropriations Act is operative. Sec. 201 of
    NAHASDA was amended by redesignating paragraphs (4) and (5) as
    paragraphs (5) and (6) respectively and inserting after
    paragraph (3) the following new paragraph so that sec. 201(b)(4)
    reads as follows:

> "(4) LAW ENFORCEMENT OFFICERS.\-- Notwithstanding paragraph (1), a
> recipient may provide housing or housing assistance provided through
> affordable housing activities assisted with grant amounts under this
> Act to a law enforcement officer on the reservation or other Indian
> area, who is employed full-time by a Federal, State, county, or tribal
> government, and in implementing such full-time employment is sworn to
> uphold, and make arrests for violations of Federal, State, county, or
> tribal law, if the recipient determines that the presence of the law
> enforcement officer on the Indian reservation or other Indian area may
> deter crime."

This Notice is implementing the above provision and a conforming rule
will be published in the future.

7.  Sec. 1003(f)(1) of P.L. 106-568 amended sec. 209 of NAHASDA to
    remove the requirement that HUD take specific remedies if assisted
    housing is not maintained as affordable under the Act. Sec. 209 now
    reads:

> "Sec. 209. NONCOMPLIANCE WITH AFFORDABLE HOUSING REQUIREMENT\-- If a
> recipient uses grant amounts to provide affordable housing under this
> title, and at any time during the useful life of the housing the
> recipient does not comply with the requirement under section
> 205(a)(2), the Secretary shall take appropriate action under section
> 401(a)."
>
> There is no corresponding provision in program regulations. This
> Notice is implementing the above provision and a conforming rule will
> not be required.

8.  Sec. 1003(f)(2) of P.L. 106-568 amended sec. 405 of NAHASDA by
    modifying several provisions of the section. Sec. 405 now reads:

> "Sec. 405. REVIEW AND AUDIT BY SECRETARY.

(a) REQUIREMENTS UNDER CHAPTER 75 OF TITLE 31, UNITED STATES CODE.\-- An
    entity designated by an Indian tribe as a housing entity shall be
    treated, for purposes of chapter 75 of title 31, United States Code,
    as a non-Federal entity that is subject to the audit requirements
    that apply to non-Federal entities under that chapter.

(b) ADDITIONAL REVIEWS AND AUDITS.---

    1.  IN GENERAL.\-- In addition to any audit or review under
        subsection (a), to the extent the Secretary determines such
        action to be appropriate, the Secretary may conduct an audit or
        review of a recipient in order to---

        A.  determine whether the recipient---

            i.  has carried out---

                I.  eligible activities in a timely manner; and

                II. eligible activities and certification in accordance
                    with this Act and other applicable law;

            ii. has a continuing capacity to carry out eligible
                activities in a timely manner; and

            iii. is in compliance with the Indian housing plan of the
                 recipient; and

        B.  verify the accuracy of information contained in any
            performance report submitted by the recipient under section
            404.

    2.  ON-SITE VISITS.\-- To the extent practicable, the reviews and
        audits conducted under this subsection shall include on-site
        visits by the appropriate official of the Department of Housing
        and Urban Development.

(c) REVIEW OF REPORTS.---

    1.  IN GENERAL.\-- The Secretary shall provide each recipient that
        is the subject of a report made by the Secretary under this
        section notice that the recipient may review and comment on the
        report during a period of not less than 30 days after the date
        on which notice is issued under this paragraph.

    2.  PUBLIC AVAILABILITY.\-- After taking into consideration any
        comments of the recipient under paragraph (1), the Secretary---

        A.  may revise the report; and

        B.  not later than 30 days after the date on which those
            comments are received, shall make the comments and the
            report (with any revisions made under subparagraph (A))
            readily available to the public.

(d) EFFECT OF REVIEWS.\-- Subject to section 401(a), after reviewing the
    reports and audits relating to a recipient that are submitted to the
    Secretary under this section, the Secretary may adjust the amount of
    a grant made to a recipient under this Act in accordance with the
    findings of the Secretary with respect to those reports and audits."

> Sec. 405(a) specifies that tribally designated housing entities are
> subject to the Single Audit Act requirements. Because the Single Audit
> Act applies by its own terms to tribally designated housing entities,
> this requirement is already set forth in the program regulations at
> §1000.544. The Department proposes no additional action.
>
> Sec. 405(b)(1) no longer requires annual reviews and audits to be
> conducted by HUD. Instead, this paragraph now permits reviews and
> audits to the extent the Secretary determines such action to be
> appropriate.
>
> Sec. 405(d) modified the statute by removing the words "reduce, or
> withdraw grant amounts, or take other action as appropriate".
> Additionally, the revised statute no longer contains the following
> language: "except that grant amounts already expended on affordable
> housing activities may not be recaptured or deducted from future
> assistance provided on behalf of an Indian tribe."
>
> Rulemaking (changes to Subpart F of the regulations) is required to
> fully implement the statutory changes. Tribes will be consulted on the
> regulatory changes. Pending full implementation of the statutory
> changes through rulemaking, HUD will: determine the frequency of
> reviews in accordance with section 405(b), offer recipients notice and
> opportunity for a hearing before taking actions under section 405
> (currently implemented in §1000.532), and limit the actions to those
> now permitted by section 405.

9.  Sec. 1003(g) of P.L. 106-568 amended sec. 302(d)(1) of NAHASDA to
    revise the formula beginning in 2001 for tribes with less than 250
    units developed under the United States Housing Act of 1937. Sec.
    302(d)(1) was amended and now reads:

> "(1) FULL FUNDING.---

A.  IN GENERAL.\--Except with respect to an Indian tribe described in
    subparagraph (B), the formula shall provide that, if, in any fiscal
    year, the total amount made available for assistance under this Act
    is equal to or greater than the total amount made available for
    fiscal year 1996 for assistance for the operation and modernization
    of public housing developed or operated pursuant to a contract
    between the Secretary and an Indian housing authority pursuant to
    the United States Housing Act of 1937, the amount provided for such
    fiscal year for each Indian tribe for which such operating or
    modernization assistance was provided for fiscal year 1996 shall not
    be less than the total amount of such operating and modernization
    assistance provided for fiscal year 1996 for such tribe.

B.  CERTAIN INDIAN TRIBES.\--With respect to fiscal year 2001 and each
    fiscal year thereafter, for any Indian tribe with an Indian housing
    authority that owns or operates fewer than 250 public housing units,
    the formula shall provide that if the amount provided for a fiscal
    year in which the total amount made available for assistance under
    this Act is equal to or greater than the amount made available for
    fiscal year 1996 for assistance for the operation and modernization
    of the public housing referred to in subparagraph (A), then the
    amount provided to that Indian tribe as modernization assistance
    shall be equal to the average annual amount of funds provided to the
    Indian tribe (other than funds provided as emergency assistance)
    under the assistance program under section 14 of the United States
    Housing Act of 1937 (42 U.S.C. 1437l) for the period beginning with
    fiscal year 1992 and ending with fiscal year 1997."

> The Department believes that a regulatory change is needed to
> implement this provision. The regulatory change will be made through
> the negotiated rulemaking process on formula issues. The Department is
> currently in the process of selecting members for the negotiated
> rulemaking committee which will meet in Denver in early 2003.

10. Sec. 1003(h) of P.L. 106-568 amended sec. 401(a) of NAHASDA to
    expressly permit HUD to take certain actions before conducting a
    hearing, subject to procedural requirements: Section 401(a) now
    reads:

> "Sec. 401. REMEDIES FOR NONCOMPLIANCE.

(a) ACTIONS BY SECRETARY AFFECTING GRANT AMOUNTS.\--

> \(1\) IN GENERAL.\-- Except as provided in subsection (b), if the
> Secretary finds after reasonable notice and opportunity for hearing
> that a recipient of assistance under this Act has failed to comply
> substantially with any provision of this Act, the Secretary shall --
>
> \(A\) terminate payments under this Act to the recipient;

(B) reduce payments under this Act to the recipient by an amount equal
    to the amount of such payments that were not expended in accordance
    with this Act;

(C) limit the availability of payments under this Act to programs,
    projects, or activities not affected by such failure to comply; or

> \(D\) in the case of noncompliance described in section 402(b),
> provide a replacement tribally designated housing entity for the
> recipient, under section 402.

(2) CONTINUANCE OF ACTIONS.\-- If the Secretary takes an action under
    subparagraph (A), (B), or (C) of paragraph (1) the Secretary shall
    continue such action until the Secretary determines that the failure
    to comply has ceased.

(3) EXCEPTION FOR CERTAIN ACTIONS.---

> \(A\) IN GENERAL.\-- Notwithstanding any other provision of this
> subsection, if the Secretary makes a determination that the failure of
> a recipient of assistance under this Act to comply substantially with
> any material provision (as that term is defined by the Secretary) of
> this Act is resulting, and would continue to result, in a continuing
> expenditure of Federal funds in a manner that is not authorized by
> law, the Secretary may take an action described in paragraph (1)(C)
> before conducting a hearing.

(B) PROCEDURAL REQUIREMENT\-- If the Secretary takes an action described
    in subparagraph (A), the Secretary shall---

> \(i\) provide notice to the recipient at the time that the Secretary
> takes that action; and
>
> \(ii\) conduct a hearing not later than 60 days after the date on
> which the Secretary provides notice under clause (i).

(C) DETERMINATION.\-- Upon completion of a hearing under this paragraph,
    the Secretary shall make a determination regarding whether to
    continue taking the action that is the subject of the hearing, or
    take another action under this subsection."

> Rulemaking (changes to Subpart F of the regulations) is required to
> implement the statutory changes. Tribes will be consulted on the
> regulatory changes.

11. Sec. 1003(i) of P.L. 106-568 amended sec. 401(b) of NAHASDA to
    require a performance agreement should HUD determine that a failure
    to comply with the requirements of the Act is due to technical
    incapacity of the recipient not caused by a pattern or practice of
    activities constituting a willful noncompliance. Sec. 401(b) now
    reads:

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(b) "NONCOMPLIANCE BECAUSE OF TECHNICAL INCAPACITY.---

    1.  IN GENERAL- If the Secretary makes a finding under subsection
        (a), but determines that the failure to comply substantially
        with the provisions of this Act --

        A.  is not a pattern or practice of activities constituting
            willful noncompliance, and

        B.  is a result of the limited capability or capacity of the
            recipient, the Secretary may provide technical assistance
            for the recipient (directly or indirectly) that is designed
            to increase the capability and capacity of the recipient to
            administer assistance provided under this Act in compliance
            with the requirements under this Act, if the recipient
            enters into a performance agreement with the Secretary that
            specifies the compliance objectives that the recipient will
            be required to achieve by the termination date of the
            performance agreement.

    2.  PERFORMANCE AGREEMENT- The period of a performance agreement
        described in paragraph (1) shall be for 1 year.

    3.  REVIEW- Upon the termination of a performance agreement entered
        into under paragraph (1), the Secretary shall review the
        performance of the recipient that is a party to the agreement.

    4.  EFFECT OF REVIEW- If, on the basis of a review under paragraph
        (3), the Secretary determines that the recipient---

        A.  has made a good faith effort to meet the compliance
            objectives specified in the agreement, the Secretary may
            enter into an additional performance agreement for the
            period specified in paragraph (2); and

        B.  has failed to make a good faith effort to meet applicable
            compliance objectives, the Secretary shall determine the
            recipient to have failed to comply substantially with this
            Act, and the recipient shall be subject to an action under
            subsection (a)."

> There is no relevant provision in the existing program regulations.
> This Notice implements the statutory amendment. The Department will
> determine whether to include an implementing regulation for section
> 401(b) when doing rulemaking to revise Subpart F of the regulations to
> implement the other revisions to section 401 and to section 405.

12. Sec. 1003(k) of P.L. 106-568 outlines the Technical and Conforming
    Amendments. The first amends the table of contents of NAHASDA; the
    second repeals sec. 206 of NAHASDA---the Certification of Compliance
    with Subsidy Layering Requirements; and the third is titled
    "Terminations" and relates to the formula and tenant-based housing.

> This Notice is implementing provisions one and two above. Sec. 1(b) of
> NAHASDA was amended in the table of contents by striking the item
> relating to section 206 and by striking the item relating to section
> 209 and inserting the following:
>
> "Sec. 209. Noncompliance with affordable housing requirement."
>
> Sec. 502(a) of NAHASDA is amended by adding language at the end of
> 502(a). This section now reads as follows:
>
> "(a) TERMINATION OF ASSISTANCE.\--After September 30, 1997, financial
> assistance may not be provided under the United States Housing Act of
> 1937 or pursuant to any commitment entered into under such Act, for
> Indian housing developed or operated pursuant to a contract between
> the Secretary and an Indian housing authority, unless such assistance
> is provided from amounts made available for fiscal year 1997 and
> pursuant to a commitment entered into before September 30, 1997. Any
> housing that is the subject of a contract for tenant-based assistance
> between the Secretary and an Indian housing authority that is
> terminated under this section shall, for the following fiscal year and
> each fiscal year thereafter, be considered to be a dwelling unit under
> section 302(b)(1)."
>
> The Department believes that a regulatory change is needed to
> implement this provision. The regulatory change will be made through
> negotiated rulemaking on formula issues. The Department is currently
> in the process of selecting members for the negotiated rulemaking
> committee.

13. Sec. 227 of P.L. 106-377 amended sections 184(a) and 184(b)(2) of
    the Housing and Community Development Act of 1992, as amended by
    Title VII of NAHASDA, as follows:

Sec. 184(a) was amended by striking "or as a result of a lack of access
to private

financial markets".

> The existing sec. 184 regulation at 24 CFR 1005.15 (f) imposes a
> burden upon a Section 184 borrower, if the property is not on Trust or
> restricted land, that they "\...must certify that the borrower lacks
> access to private financial markets." The statutory amendment
> eliminates the need for this certification from tribal members
> interested in participating in the 184 loan program in the fee simple
> land areas primarily in Alaska and Oklahoma or on fee simple lands
> where an Indian housing authority or Indian tribe is authorized to
> provide housing.

Sec 184(b)(2) was amended by inserting "refinance," after acquire. It
now reads:

> "Eligible Housing. The loan shall be used to construct, acquire,
> refinance, or rehabilitate 1-to-4 family dwellings that are standard
> housing and are located on trust land or land located in an Indian or
> Alaska Native area."
>
> The current regulation at 24 CFR 1005 does not allow refinance of an
> existing mortgage in Indian Country. The amendment allows eligible
> tribal members to use the 184 Loan Guarantee Program to refinance
> existing higher rate home loans and/or access existing equity in their
> home.

This Notice is implementing the above provisions and a conforming rule
will be published in the future.

\_\_\_/s/\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Michael Liu

> Assistant Secretary

Office of Public and Indian Housing