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[House Report 110-363]
[From the U.S. Government Publishing Office]

110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-363

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NATIVE AMERICAN ECONOMIC DEVELOPMENT AND INFRASTRUCTURE FOR HOUSING ACT 
                                OF 2007

                                _______
                                

October 2, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 3002]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3002) to establish a demonstration program to 
authorize the Secretary of Housing and Urban Development to 
guarantee obligations issued by Indian tribes to finance 
community and economic development activities, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     3
Hearings.........................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     5
Performance Goals and Objectives.................................     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Constitutional Authority Statement...............................     7
Applicability to Legislative Branch..............................     7
Earmark Identification...........................................     7
Section-by-Section Analysis of the Legislation...................     7

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Native American Economic Development 
and Infrastructure for Housing Act of 2007''.

SEC. 2. DEMONSTRATION PROGRAM FOR GUARANTEED LOANS TO FINANCE TRIBAL 
                    COMMUNITY AND ECONOMIC DEVELOPMENT ACTIVITIES.

  (a) Authority.--To the extent or in such amounts as are provided in 
appropriation Acts, the Secretary of Housing and Urban Development (in 
this section referred to as the ``Secretary'') may, subject to the 
limitations of this section and upon such terms and conditions as the 
Secretary may prescribe, guarantee and make commitments to guarantee, 
the notes and obligations issued by Indian tribes or tribally 
designated housing entities (as such term is defined in section 4 of 
the Native American Housing Assistance and Self-Determination Act of 
1996 (25 U.S.C. 4103)) with tribal approval, for the purposes of 
financing activities, carried out on Indian reservations and in other 
Indian areas, that under the first sentence of section 108(a) of the 
Housing and Community Development Act of 1974 are eligible for 
financing with notes and other obligations guaranteed pursuant to such 
section 108.
  (b) Low-Income Benefit Requirement.--Not less than 70 percent of the 
aggregate funds received by an Indian tribe or tribally designated 
housing entity as a result of a guarantee under this section shall be 
used for the support of activities that benefit low-income Indian 
families (as such term is defined for purposes of the Native American 
Housing Assistance and Self-Determination Act of 1996) on Indian 
reservations and other Indian areas.
  (c) Financial Soundness.--The Secretary shall establish underwriting 
criteria for guarantees under this section, including fees for such 
guarantees, as may be necessary to ensure that the program under this 
section for such guarantees is financially sound. Such fees shall be 
established in amounts that are sufficient, but do not exceed the 
minimum amounts necessary, to maintain a negative credit subsidy for 
such program, as determined based upon risk to the Federal Government 
under such underwriting requirements.
  (d) Terms of Obligations.--Notes or other obligations guaranteed 
pursuant to this section shall be in such form and denominations, have 
such maturities, and be subject to such conditions as may be prescribed 
by regulations issued by the Secretary. The Secretary may not deny a 
guarantee under this section on the basis of the proposed repayment 
period for the note or other obligation, unless the period is more than 
20 years or the Secretary determines that the period causes the 
guarantee to constitute an unacceptable financial risk.
  (e) Limitation on Percentage.--A guarantee made under this section 
shall guarantee repayment of 95 percent of the unpaid principal and 
interest due on the notes or other obligations guaranteed.
  (f) Security and Repayment.--
          (1) Requirements on issuer.--To ensure the repayment of notes 
        or other obligations and charges incurred under this section 
        and as a condition for receiving such guarantees, the Secretary 
        shall require the Indian tribe or housing entity issuing such 
        notes or obligations to--
                  (A) enter into a contract, in a form acceptable to 
                the Secretary, for repayment of notes or other 
                obligations guaranteed under this section;
                  (B) demonstrate that the extent of such issuance and 
                guarantee under this section is within the financial 
                capacity of the tribe; and
                  (C) furnish, at the discretion of the Secretary, such 
                security as may be deemed appropriate by the Secretary 
                in making such guarantees, including increments in 
                local tax receipts generated by the activities assisted 
                by a guarantee under this section or disposition 
                proceeds from the sale of land or rehabilitated 
                property, except that such security may not include any 
                grant amounts received or for which the issuer may be 
                eligible under title I of the Native American Housing 
                Assistance and Self-Determination Act of 1996.
          (2) Full faith and credit.--The full faith and credit of the 
        United States is pledged to the payment of all guarantees made 
        under this section. Any such guarantee made by the Secretary 
        shall be conclusive evidence of the eligibility of the 
        obligations for such guarantee with respect to principal and 
        interest, and the validity of any such guarantee so made shall 
        be incontestable in the hands of a holder of the guaranteed 
        obligations.
  (g) Training and Information.--The Secretary, in cooperation with 
Indian tribes and tribally designated housing entities, shall carry out 
training and information activities with respect to the guarantee 
program under this section.
  (h) Limitations on Amount of Guarantees.--
          (1) Aggregate fiscal year limitation.--Notwithstanding any 
        other provision of law and subject only to the absence of 
        qualified applicants or proposed activities and to the 
        authority provided in this section, to the extent approved or 
        provided in appropriations Acts, the Secretary may enter into 
        commitments to guarantee notes and obligations under this 
        section with an aggregate principal amount not to exceed 
        $200,000,000 for each of fiscal years 2008 through 2012.
          (2) Authorization of appropriations for credit subsidy.--
        There are authorized to be appropriated to cover the costs (as 
        such term is defined in section 502 of the Congressional Budget 
        Act of 1974) of guarantees under this section such sums as may 
        be necessary for each of fiscal years 2008 through 2012. No 
        funds appropriated under this Act shall be expended for the 
        benefit of the Cherokee Nation of Oklahoma until the Secretary 
        shall have certified to the Congress that the Cherokee Nation 
        of Oklahoma is in compliance with the Treaty of 1866 and fully 
        recognizes all Cherokee Freedmen and their descendants as 
        citizens of the Cherokee Nation.
          (3) Aggregate outstanding limitation.--The total amount of 
        outstanding obligations guaranteed on a cumulative basis by the 
        Secretary pursuant to this section shall not at any time exceed 
        $1,000,000,000 or such higher amount as may be authorized to be 
        appropriated for this section for any fiscal year.
          (4) Fiscal year limitations on tribes.--The Secretary shall 
        monitor the use of guarantees under this section by Indian 
        tribes. If the Secretary finds that 50 percent of the aggregate 
        guarantee authority under paragraph (3) has been committed, the 
        Secretary may--
                  (A) impose limitations on the amount of guarantees 
                pursuant to this section that any one Indian tribe may 
                receive in any fiscal year of $25,000,000; or
                  (B) request the enactment of legislation increasing 
                the aggregate outstanding limitation on guarantees 
                under this section.
  (i) Report.--Not later than the expiration of the 4-year period 
beginning on the date of the enactment of this Act, the Secretary shall 
submit a report to the Congress regarding the utilization of the 
authority under this section by Indian tribes and tribally designated 
housing entities, identifying the extent of such utilization and the 
types of projects and activities financed using such authority and 
analyzing the effectiveness of such utilization in carrying out the 
purposes of this section.
  (j) Termination.--The authority of the Secretary under this section 
to make new guarantees for notes and obligations shall terminate on 
October 1, 2012.

                          PURPOSE AND SUMMARY

    H.R. 3002, the Native American Economic Development and 
Infrastructure for Housing Act of 2007, authorizes a 
demonstration program to be administered by the Department of 
Housing and Urban Development (HUD) to provide for guarantees 
to loans for economic development associated with housing, and 
housing infrastructure located in Indian Country.

                  BACKGROUND AND NEED FOR LEGISLATION

    Economic development and infrastructure related to housing 
are vital to any successful housing project (private or 
public), particularly in remote, isolated areas that make up 
much of Indian Country. However, because of the risk associated 
with economic development and housing infrastructure in such 
parts of the country, private financial institutions will not 
make loans for such activities. Therefore, loans guaranteed by 
the Federal Government to allow for economic development and 
the building of infrastructure for housing is an invaluable 
tool for successful housing in these areas.
    Loan guarantee programs require a relatively small 
appropriation in the form of a credit subsidy to leverage 
private money for public purposes. Federal loan guarantees 
provide the full faith and credit of the federal government so 
private lenders and bond investors have confidence to extend 
credit to worthwhile projects. The appropriation of a credit 
subsidy covers the risk of the project and protects the U.S. 
Treasury from claims.
    HUD currently operates the Section 108 loan guarantee 
program under the Community Development Block Grant (CDBG), and 
the Title VI loan guarantee program under the Native American 
Housing Assistance and Self-Determination Act (NAHASDA). These 
programs, however, do not provide for economic development and 
housing infrastructure loans in Indian Country.
    Section 108 works with the CDBG ``entitlement communities'' 
that receive direct funding from CDBG. The Section 108 program 
guarantees loans or bonds for these communities for up to five 
times their annual CDBG allocation for economic development 
activities. Despite the need for financing of activities 
eligible under Section 108, tribes cannot access the program. 
Indian Country receives a set-aside under CDBG, but tribes 
access the funds in the set-aside through an annual 
competition. Because no tribe receives a set annual CDBG 
allocation, they do not qualify for the Section 108 program.
    NAHASDA created the Indian Housing Block Grant (IHBG). 
While similar to CDBG in its basic structure, the use of IHBG 
funds is limited to housing. Title VI of NAHASDA was copied 
from the Section 108 statute and allows tribes to borrow or 
issue bonded debt up to five times their annual NAHASDA 
allocation for housing purposes described in the NAHASDA 
statute. Title VI does not permit the loan guarantees to cover 
economic development or infrastructure.
    The demonstration program created by H.R. 3002 has a 
similar effect to the loan guarantee programs described above--
providing guarantee authority for the same economic development 
purposes as Section 108, but does not involve the pledging of 
NAHASDA funds under Title VI.
    It is the Committee's intention that the demonstration 
program provide for loan guarantees to small tribes as well as 
large tribes. It is the Committee's desire that HUD will 
guarantee loans under this program for small tribes on an 
annual basis and that such guarantees make up at least 15 
percent to 25 percent of the program.

                                HEARINGS

    No hearings were held on H.R. 3002 in the 110th Congress.

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
July 26, 2007, and ordered reported H.R. 3002, the Native 
American Economic Development and Infrastructure for Housing 
Act of 2007, favorably reported to the House, as amended, by a 
voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken in conjunction with the consideration 
of this legislation. A motion by Mr. Frank to report the bill, 
as amended, to the House with a favorable recommendation was 
agreed to by a voice vote. During the consideration of the 
bill, the following amendment was considered:
    An amendment by Mr. Watt, No. 1, Cherokee Nation 
limitation, was agreed to by a voice vote.

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 3002, the Native American Economic Development and 
Infrastructure for Housing Act of 2007, authorizes a 
demonstration program to be administered by the Department of 
Housing and Urban Development to provide for guarantees to 
loans for economic development associated with housing and 
housing infrastructure located in Indian Country with the goal 
of increasing affordable housing opportunities in Indian 
Country.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 6, 2007.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3002, the Native 
American Economic Development and Infrastructure for Housing 
Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Daniel 
Hoople.
            Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 3002--Native American Economic Development and Infrastructure for 
        Housing Act of 2007

    H.R. 3002 would establish a pilot program within the 
Department of Housing and Urban Development (HUD) to guarantee 
loans or bonds issued by Indian tribes and other entities for 
certain economic development purposes. Under the bill, 
participating tribes and housing entities would be charged fees 
in the amount necessary to cover the full subsidy cost of the 
program. Based on the expected demand and historical spending 
patterns of similar guarantee programs, CBO estimates that 
implementing this legislation would cost about $4 million over 
the 2008-2012 period for administrative expenses. Enacting H.R. 
3002 would not affect direct spending or revenues.
    H.R. 3002 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments. 
The bill would benefit tribal governments that receive federal 
loan guarantees to develop housing. Any costs to those tribes 
would be incurred voluntarily as a condition of receiving 
federal assistance.
    The legislation would direct the Secretary of HUD to 
establish a five-year pilot program to guarantee 95 percent of 
the value of loans and bonds issued by federally recognized 
Indian tribes and certain housing entities for economic 
development projects. Eligible projects would include acquiring 
and rehabilitating improved or unimproved property, 
constructing and rehabilitating housing, and assisting private 
entities engaged in neighborhood revitalization, job-creation, 
and other economic development activities.
    H.R. 3002 would authorize the appropriation of whatever 
amounts are necessary for the subsidy cost to guarantee up to 
$200 million in borrowing per year (with no more than $1 
billion outstanding at any given time). CBO estimates this new 
loan guarantee program would have a 2 percent to 3 percent 
subsidy cost. That estimate is based on historical data for 
comparable HUD programs such as the Indian and Native Hawaiian 
Housing Loan Guarantee programs and the Section 108 guarantee 
program. Those programs require borrowers to secure debt with 
local tax receipts or funds received from federal grant 
programs. Under the bill, each borrower would be charged a fee 
to fully offset the subsidy cost of its loan guarantee--
resulting in no significant net cost to the federal government.
    Based on expected demand and historical spending patterns 
of similar programs, CBO estimates that administering this new 
program would cost about $4 million over the 2008-2012 period, 
subject to appropriation of the necessary amounts.
    The CBO staff contact for this estimate is Daniel Hoople. 
This estimate was approved by Theresa Gullo, Chief, State and 
Local Government Cost Unit, Budget Analysis Division.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    H.R. 3002 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    The Native American Economic Development and Infrastructure 
for Housing Act of 2007.

Sec. 2. Demonstration program for guaranteed loans to finance tribal 
        community and economic development activities

    (a) Authority.--Grants the Secretary of HUD the authority 
to guarantee notes and obligations to tribes or their 
designated housing entities for eligible purposes under Section 
108(a) of the Housing and Community Development Act of 1974 
(which include economic, community and business development, 
infrastructure support and housing).
    (b) Low-Income Benefit Requirement.--Requires that 70 
percent of the funds received by a tribe as a result of the 
guarantee benefit low-income Indian families on Indian 
reservations or other Indian areas.
    (c) Financial Soundness.--Establishes the authority of the 
Secretary to establish underwriting criteria for such 
guarantees and the authority to charge fees to ensure the 
program will have a negative credit subsidy.
    (d) Terms of Obligations.--Limits the repayment period of 
guaranteed projects to 20 years.
    (e) Limitation on Percentage.--Establishes the guarantee 
under the program at 95 percent of the unpaid principal and 
interest of the project.
    (f) Security and Repayment.--
    (1) Requirements on Issuer.--Grants the Secretary the 
authority to require borrowers to (A) enter into a contract 
approved by the Secretary; (B) demonstrate their ability to 
repay the loan; (C) furnish any securities required by the 
Secretary including tax receipts generated by activities 
assisted by the guarantee or the sale of property but 
specifically prohibits the use of NAHASDA block grants from 
being used as security.
    (2) Full Faith and Credit.--Establishes the guarantees are 
backed by the full faith and credit of the U.S. government.
    (g) Training and Information.--Provides for training to 
carry out the purposes of the Act.
    (h) Limitations on Amount of Guarantees.--
    (1) Aggregate Fiscal Year Limitation.--Limits total 
activity under the program to $200 million per year for fiscal 
years 2008 through 2012.
    (2) Authorization of Appropriations for Credit Subsidy.--
Provides for such sums as may be necessary to operate the 
program to be appropriated for fiscal years 2008 through 2012.
    (3) Aggregate Outstanding Limitation.--Limits the total 
outstanding debt guaranteed under the program to $1 billion.
    (4) Fiscal Year Limitations on Tribes.--In the event that 
50 percent of the annual debt limitation has been reached, 
allows the Secretary to (A) impose limitations on the size of 
individual guarantees to $25 million or (B) request additional 
borrowing authority from the Congress.
    (i) Report.--Requires the Secretary to submit a report on 
the effectiveness of the program four years after enactment of 
the program.
    (j) Termination.--Terminates the authority for new 
guarantees on October 1, 2012.

                                  
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