![](media/image1.wmf){width="0.5659722222222222in"
height="0.5493055555555556in"} **U. S. Department of Housing and Urban
Development**

**Public and Indian Housing**

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**Special Attention of: Notice** PIH 2008 - 8 (ONAP)

ONAP Administrators;

Tribes; and Tribally Issued: January 25, 2008

Designated Housing Entities

Expires: January 31, 2009

Cross Reference(s):

24 CFR PART 1000

PIH Notice 2006-34

PIH Notice 2005-19

**Subject:** Limiting Housing to Indian Families or Tribal Members when
using Indian Housing Block Grant (IHBG) funds.

1.  **Purpose**.

> This Notice reissues Notice PIH-2006-34 (TDHEs) and explains when
> tribes or tribally designated housing entities (TDHEs) (referred to in
> this Notice as 'Tribe') may limit housing assistance to Indian
> families or tribal members. This notice outlines how the requirements
> are different if only IHBG funds are used or if IHBG funds are
> leveraged or combined with funds from other sources.

2.  **Background.**

> The IHBG program, created by the Native American Housing Assistance
> and Self-Determination Act (NAHASDA), authorizes annual formula block
> grants to Indian tribes for affordable housing activities, to
> primarily benefit low-income Indian families. Section 201(b)(5) of
> NAHASDA permits a preference to serve tribal members.
>
> Title VI of the Civil Rights Act of 1964 prohibits recipients of
> federal financial assistance from excluding from participation,
> denying benefits, or otherwise subjecting to discrimination a person
> on the ground of race, color, or national origin in the program or
> activity receiving such assistance. Title VIII of the Civil Rights Act
> of 1968, as amended, is called the Fair Housing Act. It prohibits
> discrimination in the sale, rental or advertising of dwellings, in the
> provision of brokerage services, or in the availability of residential
> real estate related transactions because of race, color, national
> origin, religion, sex, familial status, or disability. Residential
> real estate related transactions include making loans or providing
> financial assistance for the purchase of residential real estate.
>
> However, Section 201(b)(6) of NAHASDA states that Title VI of the
> Civil Rights Act of 1964, and the Fair Housing Act "shall not apply to
> actions by federally recognized tribes and the tribally designated
> housing entities of those tribes under this Act." This provision also
> applies to recipients established under the Alaska Native Claims
> Settlement Act and to State-recognized tribes that receive grants
> under NAHASDA.

3.  **Definitions.**

> *Affordable housing:* Housing that meets the requirements of Title II
> of NAHASDA, including housing units developed under the United States
> Housing Act of 1937, housing units developed under NAHASDA, and other
> housing units that are not assisted under NAHASDA, but which meet the
> requirements of Title II of NAHASDA.
>
> *Combined Funds:* For purpose of this notice, funds are considered
> combined when IHBG funds are used with other funds for both eligible
> affordable housing for low-income Indian families and other housing
> that may not meet the requirements of NAHASDA.
>
> *Fair Housing Act:* Title VIII of the Civil Rights Act of 1968, as
> amended, is also called the Fair Housing Act. It prohibits
> discrimination in the sale, rental, and financing of dwellings, and in
> other housing-related transactions, based on race, color, national
> origin, religion, sex, familial status, or disability.
>
> *Indian Area:* The area within which an Indian tribe or its TDHE, as
> authorized by one or more Indian tribes, provides assistance under
> NAHASDA for affordable housing as stated in its Indian Housing Plan
> (IHP).
>
> *Leveraging Funds:* Leveraged funds, in the context of section
> 102(c)(3) of NAHASDA, are additional resources used with IHBG funds
> for affordable housing activities under NAHASDA for low-income Indian
> families.
>
> *Low-income family:* A family whose income does not exceed 80 percent
> of the median income for the area, as determined by the Secretary with
> adjustments for smaller and larger families, except that the Secretary
> may, for purposes of this paragraph, establish income ceilings higher
> or lower than 80 percent of the median for the area on the basis of
> the findings of the Secretary or the agency that such variations are
> necessary because of prevailing levels of construction costs or
> unusually high or low family incomes.
>
> *NAHASDA:* The Native American Housing Assistance and
> Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.), as amended.
>
> *Sovereignty/civil jurisdiction:* Authority to exercise governmental
> powers within a limited area.
>
> *Title VI of the Civil Rights Act of 1964 (Title VI):* This law
> prohibits discrimination against beneficiaries of federally assisted
> programs based on race, color, or national origin (42 U.S.C. 2000
> (d)).
>
> **4. Applicability of the Civil Rights Act of 1964 and Fair Housing
> Act regarding NAHASDA.**
>
> Under NAHASDA, IHBG recipients do not violate Title VI of the Civil
> Rights Act or the Fair Housing Act when limiting assistance to
> low-income Indian families or providing preference to tribal members
> if:

-   the affordable housing-project is on land where the tribe has
    sovereignty/civil jurisdiction regardless of any other funding that
    may have been used;

-   the affordable housing project is funded solely with IHBG funds and
    is located on land subject to State of local law; or

-   the affordable housing project is funded with IHBG funds and
    leveraged with non-federal funds and located on land subject to
    State or local law.

> **5. Housing Activity Outside of land governed by Tribal
> sovereignty/civil jurisdiction.**

If the Tribe uses NAHASDA funds for a housing activity with other funds
and the project is on land where the Tribe has no sovereignty/civil
jurisdiction and some of the housing units in the project do not meet
NAHASDA affordable housing requirements, then the Tribe can only
designate a proportionate percentage of the housing units, which must be
NAHASDA-assisted units, in the project for Indian families or Tribal
members only.

If the funds used with NAHASDA are combined from Federal program funds
that have statutory program-specific non-discrimination requirements,
such as HOME Investment Partnership (HOME) and Community Development
Block Grant (CDBG) funds, then only the NAHASDA-assisted housing units
in the project can be set aside for Indian families or Tribal members.
The Tribe and/or its TDHE must comply with NAHASDA requirements and all
other applicable Federal requirements, whether the housing programs are
funded solely with IHBG funds under NAHASDA.

**6. Role of the Recipient**.

> The tribe and/or its TDHE must comply with NAHASDA requirements and
> all other applicable federal requirements, whether its housing
> programs are funded solely with IHBG funds under NAHASDA, or with IHBG
> funds and other funding sources.

7.  **Tribal Sovereignty.**

> There exists a unique relationship between the United States and
> Indian tribes. Indian tribes have sovereignty and exercise
> jurisdiction over their territory and their members.
>
> **On lands where an Indian tribe exercises sovereignty, the tribe can
> limit housing to Indian families or tribal members regardless of the
> funds used to construct or otherwise assist the housing.**
>
> HUD recognizes tribal sovereignty/civil jurisdiction over tribal trust
> land within a reservation, other tribal trust land, individual trust
> or allotted land, and fee land reacquired by the tribe within the
> boundaries of the reservation.

8.  **Location of Housing Funded with IHBG Funds under NAHASDA.**

> NAHASDA authorizes affordable housing activities in Indian areas.
> Assistance is not limited to reservations. Essentially, an "Indian
> area" under NAHASDA is anywhere a tribe undertakes affordable housing
> activities.

9.  **Ownership of Housing Assisted under NAHASDA.**

> NAHASDA encourages the involvement of the private sector in affordable
> housing activities. NAHASDA's requirement to primarily limit
> beneficiaries to low-income Indian families applies to all housing
> assisted with IHBG funds, regardless of who or what entity owns the
> housing.

10. **Leveraged Funds.**

> NAHASDA encourages using IHBG funding with other funds for affordable
> housing activities. When IHBG funds and other funds are used for
> affordable housing in accordance with NAHASDA requirements, the funds
> are said to be "leveraged."
>
> When housing is located on land where the tribe has sovereignty/civil
> jurisdiction, and the housing is funded with IHBG and other federal
> funds (such as HOME and USDA Rural Housing Development funds), the
> housing can be limited to Indian families or tribal members without
> violating nondiscrimination requirements.
>
> However, when housing is located on land where the tribe **does not**
> have sovereignty/civil jurisdiction, and such housing is funded with
> IHBG and other federal funds, tribes are limited in their authority to
> designate such housing as Indian-only, if the other federal funds have
> program-specific nondiscrimination requirements in their program
> statute, i.e., CDBG and HOME programs.
>
> If this is the case, the funds are combined funds and the tribe must
> determine which units are funded by each program, and can only
> designate the NAHASDA-assisted units as restricted to Indian families
> or tribal members. (If the units are similar in size and features, the
> number of units funded by each source can be determined on a pro-rata
> basis. Pro-rating examples can be found below.)
>
> Private funds for Low Income Housing Tax Credit (LIHTC) projects and
> the credits themselves are not federal financial assistance,
> therefore, are not subject to Title VI. The use of IHBG funds with
> private funds for LIHTC projects would be considered leveraging, and
> Indian preference applies.

11. **Combined Funds.**

> If other funds are combined with IHBG funds but are not used for
> eligible affordable housing for low-income Indian families, the tribe
> must determine how it will meet the requirements of NAHASDA to serve
> only Indian families and also meet the requirements of the other
> programs which may require that all families must be served. The
> housing units funded under each program must be determined. If the
> housing units are located on land where the tribe has
> sovereignty/civil jurisdiction, there is no need to be concerned about
> different program requirements because the housing may be limited to
> Indian families or tribal members and there is no violation of Title
> VI of the Civil Rights Act or the Fair Housing Act.

12. **Leveraged or Combined Funds**

> If the housing is located on land where the Tribe does not have
> sovereignty/civil jurisdiction and the Tribe will use other funds for
> the project, it must determine if the other funds will be leveraged or
> combined funds. When housing is located on land where the Tribe does
> not have sovereignty/civil jurisdiction and the housing is funded with
> IHBG and other Federal funds with statutory program-specific
> nondiscrimination requirements, the funds are considered combined
> funds. HOME and CDBG funds will always be considered combined funds
> when used on non-Tribal sovereign land. The housing units funded under
> each program must be determined. The Tribe can only designate the
> NAHASDA-assisted units restricted for Indian families or Tribal
> members. If the units are similar in size and features, the number of
> units funded by each source can be determined on a pro-rata basis.
>
> In other cases, where the Federal funds do not have statutory
> program-specific nondiscrimination requirements, but are instead
> subject to Title VI and Fair Housing Act, the Tribe and the source of
> the other funds determines if the funds will be combined or leveraged.
> If other funds are combined with IHBG funds, but are not used for
> affordable housing for low-income Indian families, the Tribe must
> determine how it will meet the requirements of NAHASDA to serve Indian
> families and meet the requirements of the other programs which may
> require that all families must be served.

13. **Determining if funds without statutory nondiscrimination
    requirements used from different sources are leveraged or
    combined.**

> This decision will generally be based on the goals of the housing. For
> example, where due to great need, all housing units in a rental
> project will be occupied by low-income Indian families in accordance
> with NAHASDA requirements, the funds will be leveraged. Where the goal
> is to not isolate Indian families from non-Indian families and the
> rental project will be occupied by both low-income Indian and
> non-Indian families, the funds will be combined. Where the goal is to
> integrate families of different incomes and the housing in a rental
> project will be occupied by both low-income Indian families and
> families who are not low income (mixed income project), the funds will
> be combined. Of course, the use of the other funds will be subject to
> whatever requirements apply to the funds, but at minimum, the housing
> will be subject to the Fair Housing Act.
>
> NAHASDA encourages the involvement of the private sector in affordable
> housing activities. The requirement to primarily limit beneficiaries
> to low-income Indian families assisted with IHBG funds regardless of
> the entity that owns the housing. Private funds for LIHTC projects and
> the credits themselves are not considered Federal financial assistance
> and not subject to Title VI. The use of IHBG funds with private funds
> for LIHTC projects would be considered leveraging and Indian
> preference applies.

14. **Allocating Costs and Identifying NAHASDA-Assisted Units in Rental
    and Homeownership Projects.**

> Following are instructions on how to use IHBG funds, in combination
> with other funds, to develop housing projects that meet the
> requirements of each program. The examples show how to determine the
> minimum number of NAHASDA-assisted units in a project and how to
> allocate costs to the IHBG program. The tribe can start with either
> the number of housing units it wants to assist with IHBG funds (and
> determine the total amount of IHBG funds for the housing) or start
> with the total amount of IHBG for the housing (and determine the
> minimum number of NAHASDA-assisted units).
>
> The IHBG program distinguishes between those units in a project that
> have been assisted with IHBG funds and those that have not.
>
> IHBG funds may only be expended for units that are or will be occupied
> by low-income Indian families. Therefore, IHBG funds may be used in a
> mixed-funding project to assist the units in the project that will be
> occupied by low-income Indian families.

A.  **"Fixed" and "Floating" NAHASDA Designations for Housing Units.**

> A tribe must determine the minimum number of units that will be
> designated NAHASDA-assisted. In general, this designation must be
> based on the actual NAHASDA investment in a unit or project. A tribe
> may choose to require that a greater number of units be designated as
> NAHASDA-assisted to maximize the number of affordable units in the
> jurisdiction over time. A tribe may, on a project-by-project basis,
> choose to use either a fixed or a floating NAHASDA-assisted
> designation to track housing units.

-   A "fixed designation" means that the tribe determines from the
    outset which housing units are NAHASDA-assisted. For instance, in a
    10-unit housing project, if the tribe designates units 1, 2, 3, 4,
    and 5 as the NAHASDA-assisted units, these specific units (1
    through 5) remain NAHASDA-assisted units throughout the useful life
    and must be occupied by NAHASDA income-eligible families.

-   A "floating designation" gives a tribe the flexibility to maintain a
    certain number of NAHASDA-assisted units throughout the useful life,
    although the specific units so designated may vary with
    availability. For example, the tribe could designate five units as
    NAHASDA-assisted units, and at any given point in time throughout
    the useful life, five units must have the NAHASDA-assisted
    designation, and be occupied by NAHASDA income-eligible families.
    Substituted units must be comparable in size and features to the
    originally designated units.

> A system of floating units is advantageous when a tribe wants to
> ensure that assisted units are indistinguishable from and
> interchangeable with market-rate units. In addition, the system of
> floating units provides consistency with the system required in
> projects developed with LIHTC.

B.  **NAHASDA Project Rules**

> NAHASDA projects are subject to rent/homebuyer payment and occupancy
> requirements. A recipient shall not charge a low-income tenant or
> homebuyer rent/homebuyer payments that exceed 30 percent of the
> adjusted income of the family.
>
> Noncompliance with the project income-targeting requirement is
> permissible when the non-compliance is caused by an increase in a
> family's income. For example, in rental housing, if a unit is made
> available for occupancy by a family that is a low-income family, and
> the tribe's policies and the tenant's lease require the family to move
> out if they are no longer low-income, then the family would have to
> move. Otherwise, the family would be permitted to stay in the unit. In
> a lease-purchase agreement for existing housing or housing to be
> constructed, if the family is low-income at the time the agreement is
> entered into and the family's income increases, the family may stay in
> the unit.
>
> When a project has floating NAHASDA-assisted designations, the next
> comparable unit that becomes available in the project must be provided
> to a NAHASDA income-eligible family. That unit then becomes the
> NAHASDA-assisted unit, and the rent/homebuyer payment must be
> structured accordingly. When the income of a family in a
> NAHASDA-assisted unit rises above 80 percent of the area median, that
> family may be required to pay more than 30 percent of its income for
> the monthly payment, except that, in projects where NAHASDA units
> float, the family's monthly payment may not exceed the fair market
> rent or the value of the unit.

C.  **Allocating costs to NAHASDA-Assisted Units.**

> IHBG funds may only pay actual costs of NAHASDA-assisted housing.
>
> If the units in a project are comparable (in terms of size, features,
> and number of bedrooms), then the actual costs can be determined by
> pro-rating total (NAHASDA-eligible) development costs. IHBG funds can
> only pay the pro-rated share of the NAHASDA-assisted units.
>
> When units are not comparable, the tribe must allocate the NAHASDA
> costs on a unit-by-unit basis, charging only actual costs to the IHBG
> program, as described below. Because units in projects with the
> floating NAHASDA designation must be comparable, a tribe should always
> pro-rate costs in these projects. When units are generally comparable
> but vary slightly in size or amenities, a combination of the two
> approaches may be used.
>
> The basic considerations for allocation costs to NAHASDA-assisted
> units are as follows:
>
> \(1\) *Comparability in Unit Size*. Comparability in size is defined
> by the bedroom count and square footage of individual units. Not all
> units with the same number of bedrooms are comparable in size. If
> there is a substantial difference in the square footage of two units
> with the same number of bedrooms, the units are not considered
> comparable.
>
> \(2\) *Amenities*. Comparability in amenities means similar fixtures,
> appliances and other features. In many mixed-income projects, to
> demand varying rents, the quality and types of amenities may vary
> among units. For instance, a project manager can demand a higher rent
> for a unit with wall-to-wall carpeting, garbage disposal, dishwasher
> and finer fixtures than for a unit without these amenities. This type
> of project does not typically have comparability of units, unless
> there is an equal distribution of assisted and non-assisted units that
> have these amenities.
>
> \(3\) *Common Costs.* Common costs are costs incurred for acquisition
> of improved or unimproved real property that benefit all residents of
> units in a project; rehabilitation or construction of shared systems
> (heating, plumbing, roofing) or shared facilities (community rooms,
> laundry facilities located in residential buildings); and on-site
> improvements. Costs associated with a project's on-site management
> office or the apartment of a resident manager may also be counted as
> common costs. The manner in which the costs for common elements of a
> project may be charged is dictated by the method chosen for allocating
> costs.

D.  **Pro-Rating Cost Allocation Method.**

> To use the pro-rating method of allocating costs, there must be
> comparability between the total inventory of NAHASDA-assisted and
> non-assisted units in a project.
>
> For example, consider a 12-unit building in which 6 of the units have
> 1 bedroom and 6 have 2 bedrooms. The one-bedroom units are all
> comparable to each other and the two-bedroom units are all comparable
> to each other. Half of the building is NAHASDA-assisted. In this case,
> there should be an equal proportion of one- and two-bedroom units
> designated as assisted and non-assisted---three one-bedroom units, and
> three two-bedroom units.
>
> Another example: consider the same 12-unit building in which one-third
> of the units are NAHASDA-assisted. You would need a total of four
> units designated (one-third of 12), so you must designate two
> one-bedroom units, and two two-bedroom units.
>
> When assisted and non-assisted units are comparable, total eligible
> development costs (including acquisition, development hard costs to
> construct or rehabilitate the unit, and project soft costs), may be
> pro-rated to determine the NAHASDA share of the total costs.
>
> Thus, all eligible project costs may be distributed between the IHBG
> program and other funding sources, provided that the NAHASDA share
> does not exceed the maximum per unit limit. This means NAHASDA can pay
> any eligible cost, and the tribe can pro-rate the NAHASDA share in
> relation to the total eligible costs to determine the minimum number
> of NAHASDA-assisted units.
>
> For example, consider a tribe that buys land with \$100,000 in IHBG
> funds. Then, that Tribe uses \$900,000 of private funds to construct a
> housing project on that land. The total cost of the project is \$1
> million. A minimum of one-tenth of the units in the project must be
> designated as NAHASDA-assisted, because IHBG funds provided one-tenth
> of the total funding. If the assisted and non-assisted units are
> comparable in size and distribution, a prorated share of the cost of
> common elements attributable to the NAHASDA-assisted units may be paid
> with IHBG funds.
>
> For example, consider a tribe with a 24-unit building with 8
> NAHASDA-assisted units (one-third of the units). The assisted units
> are comparable to the non-assisted units. The tribe replaces the
> heating system and the roof. In this case, the tribe may pay one-third
> of these total common costs with NAHASDA funds because one-third of
> the units are NAHASDA-assisted.
>
> The ratio of the NAHASDA investment to the total eligible development
> cost is equivalent to the ratio of the minimum number of units that
> must be NAHASDA-assisted to the total number of units.

E.  **Unit-by-Unit Cost Allocation Method.**

> When NAHASDA-assisted and non-assisted units in a project are NOT
> comparable, the tribe must determine and charge the IHBG program for
> the actual costs incurred for the acquisition and development of the
> NAHASDA units, plus any common costs that can be attributed to the
> NAHASDA portion of the project.
>
> To allocate these costs, the tribe must designate the NAHASDA-assisted
> units and track the costs for each unit.
>
> Common costs attributable to NAHASDA-assisted units are determined by
> calculating the total square feet in NAHASDA units as a percentage of
> the total square feet in the project. IHBG funds can pay for that
> percentage of the common costs.
>
> The actual cost for each unit is charged to the IHBG program. The
> actual cost is charged, regardless of whether it is more or less than
> the pro-rated cost would be.
>
> For example, a tribe proposes to construct a new 60-unit, mixed-income
> development:
>
> • One-third, or 20, of the units will be deluxe units, with total
> development costs of \$2 million.
>
> • Another third, 20 upgraded units, will be marketed to middle-income
> families (between 100 and 120 percent of the area median income), with
> total development costs of \$1.5 million.
>
> • The final third will be 20 basic units with few amenities and will
> be marketed to low-income families; the total development costs are
> \$1 million.
>
> Because the units in this project are not comparable, the tribe may
> only use IHBG funds for the cost of the units that will meet the
> NAHASDA requirements. Therefore, it may invest up to \$1 million in
> IHBG funds to construct the 20 units for eligible low-income families,
> provided that the tribe's per unit limit equals at least \$50,000. All
> 20 units will be designated as NAHASDA-assisted.
>
> In another example, a tribe proposes to use IHBG funds and local funds
> to rehabilitate a 15-unit building it already owns. Ten units are
> two-bedroom and are non-assisted; five units are efficiencies and are
> NAHASDA-assisted. In this case, NAHASDA can only pay the actual
> rehabilitation costs, up to the per unit limit, of the units
> designated as NAHASDA-assisted.

F.  **Maximum Per Unit Cost.**

> Housing developed, acquired, or assisted under NAHASDA is subject to
> limitations on cost or design standards. IHBG-assisted housing must
> meet the moderate design requirements.

15. **Additional Information**

> If you have any questions, or require further information, please
> contact your Area Office of Native American Programs.

[/s/ \_\_\_\_\_\_\_\_]{.underline}

Paula O. Blunt, General Deputy Assistant Secretary

for Public and Indian Housing