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S. HRG. 108–673

NATIVE AMERICAN CAPITAL FORMATION AND

ECONOMIC DEVELOPMENT ACT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

ON

S. 519

TO ESTABLISH A NATIVE AMERICAN-OWNED FINANCIAL ENTITY TO

PROVIDE FINANCIAL SERVICES TO INDIAN TRIBES, NATIVE AMERICAN ORGANIZATIONS, AND NATIVE AMERICANS

JULY 21, 2004

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

BEN NIGHTHORSE CAMPBELL, Colorado, Chairman

DANIEL K. INOUYE, Hawaii, Vice Chairman

JOHN McCAIN, Arizona,

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

ORRIN G. HATCH, Utah

JAMES M. INHOFE, Oklahoma

GORDON SMITH, Oregon

LISA MURKOWSKI, Alaska

KENT CONRAD, North Dakota

HARRY REID, Nevada

DANIEL K. AKAKA, Hawaii

BYRON L. DORGAN, North Dakota

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

PAUL MOOREHEAD, Majority Staff Director/Chief Counsel

PATRICIA M. ZELL, Minority Staff Director/Chief Counsel

(II)
(III)

C O N T E N T S

Page

S. 519, text of ........................................................................................................... 2

Statements:

Anderson, David W., assistant secretary, Indian Affairs, Department of

the Interior .................................................................................................... 44

Apoliona, Haunani, chair, Board of Trustees, Office of Hawaiian Affairs ... 61

Brown, Mark F., chairman, Mohegan Indian Tribe ...................................... 51

Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, chairman,

Committee on Indian Affairs ....................................................................... 1

Carl, Chester, chairman, National American Indian Housing Council ....... 58

Kitka, Julie, president, Alaska Federation of Natives .................................. 53

Murkowski, Hon. Lisa, U.S. Senator from Alaska ......................................... 44

Spilde, Kate, Rancho Mirage, CA .................................................................... 62

APPENDIX

Prepared statements:

Anderson, David W. (with attachment) .......................................................... 73

Apoliona, Haunani (with attachment) ............................................................ 77

Brown, Mark F. ................................................................................................

Carl, Chester (with attachment) ..................................................................... 85

Kitka, Julie .......................................................................................................

Liu, Michael, assistant secretary, Public and Indian Housing, Department

of Housing and Urban Development ........................................................... 75

Spilde, Kate ....................................................................................................... 95

Additional material submitted for the record:

Richards, Sr., Howard D., chairman, Southern Ute Indian Tribe, letter .... 102

Stamps, Quanah Crossland, commissioner, Administration for Native

Americans, letter with responses to questions ........................................... 105

(1)

NATIVE AMERICAN CAPITAL FORMATION AND

ECONOMIC DEVELOPMENT ACT

WEDNESDAY, JULY 21, 2004

U.S. SENATE,

COMMITTEE ON INDIAN AFFAIRS,

Washington, DC.

The committee met, pursuant to notice, at 10:27 a.m. in room

485, Russell Senate Building, Hon. Ben Nighthorse Campbell

(chairman of the committee) presiding.

Present: Senators Campbell, Domenici, Dorgan, Inouye, Johnson,

and Murkowski.

STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S.

SENATOR FROM COLORADO, CHAIRMAN, COMMITTEE ON

INDIAN AFFAIRS

The CHAIRMAN. The committee hearing this morning is on legislation I introduced last year that would create the Native American

Development Corporation and carry out a number of other functions.

The committee held a hearing on this legislation in April 2003.

Yesterday, the committee held a forum of tribal leaders, bankers

and Indian development experts to discuss the generic question of

whether a tribally owned development corporation is worthwhile to

pursue. I believe it is very important and worthwhile and necessary if Indian country and the U.S. Government are serious

about raising the standard of living in Native America.

[Text of S. 519 follows:
2

1

II

108TH CONGRESS

1ST SESSION S. 519

To establish a Native American-owned financial entity to provide financial

services to Indian tribes, Native American organizations, and Native

Americans, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 5, 2003

Mr. CAMPBELL introduced the following bill; which was read twice and

referred to the Committee on Indian Affairs

A BILL

To establish a Native American-owned financial entity to

provide financial services to Indian tribes, Native American organizations, and Native Americans, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Native American Capital Formation and Economic De6 velopment Act of 2003’’.

7 (b) TABLE OF CONTENTS.—The table of contents of

8 this Act is as follows:
3

2

•S 519 IS

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purposes.

Sec. 4. Definitions.

TITLE I—NATIVE AMERICAN CAPITAL DEVELOPMENT

CORPORATION

Sec. 101. Establishment of the Corporation.

Sec. 102. Authorized assistance and service functions.

Sec. 103. Native American lending services grant.

Sec. 104. Audits.

Sec. 105. Annual housing and economic development reports.

Sec. 106. Advisory Council.

TITLE II—CAPITALIZATION OF CORPORATION

Sec. 201. Capitalization of the Corporation.

TITLE III—REGULATION, EXAMINATION, AND REPORTS

Sec. 301. Regulation, examination, and reports.

Sec. 302. Authority of the Secretary of Housing and Urban Development.

TITLE IV—FORMATION OF NEW CORPORATION

Sec. 401. Formation of new corporation.

Sec. 402. Adoption and approval of merger plan.

Sec. 403. Consummation of merger.

Sec. 404. Transition.

Sec. 405. Effect of merger.

TITLE V—OTHER NATIVE AMERICAN FUNDS

Sec. 501. Native American Economies Diagnostic Studies Fund.

Sec. 502. Native American Economic Incubation Center Fund.

TITLE VI—AUTHORIZATIONS OF APPROPRIATIONS

Sec. 601. Native American financial institutions.

Sec. 602. Corporation.

Sec. 603. Other Native American funds.

1 SEC. 2. FINDINGS.

2 Congress finds that—

3 (1) there is a special legal and political relation4 ship between the United States and the Indian

5 tribes, as grounded in treaties, the Constitution,

6 Federal statutes and court decisions, executive or7 ders, and course of dealing;
4

3

•S 519 IS

1 (2) despite the availability of abundant natural

2 resources on Indian land and a rich cultural legacy

3 that accords great value to self-determination, self4 reliance, and independence, Native Americans suffer

5 rates of unemployment, poverty, poor health, sub6 standard housing, and associated social ills to a

7 greater degree than any other group in the United

8 States;

9 (3) the economic success and material well10 being of Native Americans depends on the combined

11 efforts and resources of the United States, Indian

12 tribal governments, the private sector, and individ13 uals;

14 (4) the poor performance of moribund Indian

15 economies is due in part to the near-complete ab16 sence of private capital and private capital institu17 tions; and

18 (5) the goals of economic self-sufficiency and

19 political self-determination for Native Americans can

20 best be achieved by making available the resources

21 and discipline of the private market, adequate cap22 ital, and technical expertise.

23 SEC. 3. PURPOSES.

24 The purposes of this Act are—
5

4

•S 519 IS

1 (1) to establish an entity dedicated to capital

2 development and economic growth policies in Native

3 American communities;

4 (2) to provide the necessary resources of the

5 United States, Native Americans, and the private

6 sector on endemic problems such as fractionated and

7 unproductive Indian land;

8 (3) to provide a center for economic develop9 ment policy and analysis with particular emphasis

10 on diagnosing the systemic weaknesses with, and in11 hibitors to greater levels of investment in, Native

12 American economies;

13 (4) to establish a Native-owned financial entity

14 to provide financial services to Indian tribes, Native

15 American organizations, and Native Americans; and

16 (5) to improve the material standard of living

17 of Native Americans.

18 SEC. 4. DEFINITIONS.

19 In this Act:

20 (1) ALASKA NATIVE.—The term ‘‘Alaska Na21 tive’’ has the meaning given the term ‘‘Native’’ in

22 section 3 of the Alaska Native Claims Settlement

23 Act (43 U.S.C. 1602).

24 (2) BOARD.—The term ‘‘Board’’ means the

25 Board of Directors of the Corporation.
6

5

•S 519 IS

1 (3) CAPITAL DISTRIBUTION.—The term ‘‘cap2 ital distribution’’ has the meaning given the term in

3 section 1303 of the Federal Housing Enterprise Fi4 nancial Safety and Soundness Act of 1992 (12

5 U.S.C. 4502).

6 (4) CHAIRPERSON.—The term ‘‘Chairperson’’

7 means the chairperson of the Board.

8 (5) CORPORATION.—The term ‘‘Corporation’’

9 means the Native American Capital Development

10 Corporation established by section 101(a)(1)(A).

11 (6) COUNCIL.—The term ‘‘Council’’ means the

12 Advisory Council established under section 106(a).

13 (7) DESIGNATED MERGER DATE.—The term

14 ‘‘designated merger date’’ means the specific cal15 endar date and time of day designated by the Board

16 under this Act.

17 (8) DEPARTMENT OF HAWAIIAN HOME

18 LANDS.—The term ‘‘Department of Hawaiian Home

19 Lands’’ means the agency that is responsible for the

20 administration of the Hawaiian Homes Commission

21 Act, 1920 (42 Stat. 108 et seq.).

22 (9) FUND.—The term ‘‘Fund’’ means the Com23 munity Development Financial Institutions Fund es24 tablished under section 104 of the Riegle Commu-
7

6

•S 519 IS

1 nity Development and Regulatory Improvement Act

2 of 1994 (12 U.S.C. 4703).

3 (10) INDIAN TRIBE.—The term ‘‘Indian tribe’’

4 has the meaning given the term in section 4 of the

5 Indian Self-Determination and Education Assistance

6 Act (25 U.S.C. 450b).

7 (11) MERGER PLAN.—The term ‘‘merger plan’’

8 means the plan of merger adopted by the Board

9 under this Act.

10 (12) NATIVE AMERICAN.—The term ‘‘Native

11 American’’ means—

12 (A) a member of an Indian tribe; or

13 (B) a Native Hawaiian.

14 (13) NATIVE AMERICAN FINANCIAL INSTITU15 TION.—The term ‘‘Native American financial insti16 tution’’ means a person (other than an individual)

17 that—

18 (A) qualifies as a community development

19 financial institution under section 103 of the

20 Riegle Community Development and Regulatory

21 Improvement Act of 1994 (12 U.S.C. 4702);

22 (B) satisfies—

23 (i) requirements established by sub24 title A of title I of the Riegle Community
8

7

•S 519 IS

1 Development and Regulatory Improvement

2 Act of 1994 (12 U.S.C. 4701 et seq.); and

3 (ii) requirements applicable to persons

4 seeking assistance from the Fund;

5 (C) demonstrates a special interest and ex6 pertise in serving the primary economic develop7 ment and mortgage lending needs of the Native

8 American community; and

9 (D) demonstrates that the person has the

10 endorsement of the Native American commu11 nity that the person intends to serve.

12 (14) NATIVE AMERICAN LENDER.—The term

13 ‘‘Native American lender’’ means a Native American

14 governing body, Native American housing authority,

15 or other Native American financial institution that

16 acts as a primary mortgage or economic develop17 ment lender in a Native American community.

18 (15) NATIVE HAWAIIAN.—The term ‘‘Native

19 Hawaiian’’ has the meaning given the term in sec20 tion 201 of the Hawaiian Homes Commission Act,

21 1920 (42 Stat. 108).

22 (16) NEW CORPORATION.—The term ‘‘new cor23 poration’’ means the corporation formed in accord24 ance with title IV.
9

8

•S 519 IS

1 (17) SECRETARY.—The term ‘‘Secretary’’

2 means the Secretary of Housing and Urban Develop3 ment.

4 (18) TOTAL CAPITAL.—The term ‘‘total cap5 ital’’ has the meaning given the term in section 1303

6 of the Federal Housing Enterprise Financial Safety

7 and Soundness Act of 1992 (12 U.S.C. 4502).

8 (19) TRANSITION PERIOD.—The term ‘‘transi9 tion period’’ means the period beginning on the date

10 on which the merger plan is approved by the Sec11 retary and ending on the designated merger date.

12 TITLE I—NATIVE AMERICAN

13 CAPITAL DEVELOPMENT COR14 PORATION

15 SEC. 101. ESTABLISHMENT OF THE CORPORATION.

16 (a) ESTABLISHMENT; BOARD OF DIRECTORS; POLI17 CIES; PRINCIPAL OFFICE; MEMBERSHIP; VACANCIES.—

18 (1) ESTABLISHMENT.—

19 (A) IN GENERAL.—There is established

20 and chartered a corporation, to be known as the

21 ‘‘Native American Capital Development Cor22 poration’’.

23 (B) PERIOD OF TIME.—The Corporation

24 shall be a congressionally chartered body cor25 porate until the earlier of—
10

9

•S 519 IS

1 (i) the designated merger date; or

2 (ii) the date on which the charter is

3 surrendered by the Corporation.

4 (C) CHANGES TO CHARTER.—The right to

5 revise, amend, or modify the Corporation char6 ter is specifically and exclusively reserved to

7 Congress.

8 (2) BOARD OF DIRECTORS; PRINCIPAL OF9 FICE.—

10 (A) BOARD.—The powers of the Corpora11 tion shall be vested in a Board of Directors,

12 which Board shall determine the policies that

13 govern the operations and management of the

14 Corporation.

15 (B) PRINCIPAL OFFICE; RESIDENCY.—

16 (i) PRINCIPAL OFFICE.—The principal

17 office of the Corporation shall be in the

18 District of Columbia.

19 (ii) VENUE.—For purposes of venue,

20 the Corporation shall be considered to be a

21 resident of the District of Columbia.

22 (3) MEMBERSHIP.—

23 (A) IN GENERAL.—
11

10

•S 519 IS

1 (i) NINE MEMBERS.—Except as pro2 vided in clause (ii), the Board shall consist

3 of 9 members, of which—

4 (I) 3 members shall be appointed

5 by the President; and

6 (II) 6 members shall be elected

7 by the class A stockholders, in accord8 ance with the bylaws of the Corpora9 tion.

10 (ii) THIRTEEN MEMBERS.—If class B

11 stock is issued under section 201(b), the

12 Board shall consist of 13 members, of

13 which—

14 (I) 9 members shall be appointed

15 and elected in accordance with clause

16 (i); and

17 (II) 4 members shall be elected

18 by the class B stockholders, in accord19 ance with the bylaws of the Corpora20 tion.

21 (B) TERMS.—Each member of the Board

22 shall be elected or appointed for a 4-year term,

23 except that the members of the initial Board

24 shall be elected or appointed for the following

25 terms:
12

11

•S 519 IS

1 (i) Of the 3 members appointed by

2 the President—

3 (I) 1 member shall be appointed

4 for a 2-year term;

5 (II) 1 member shall be appointed

6 for a 3-year term; and

7 (III) 1 member shall be ap8 pointed for a 4-year term;

9 as designated by the President at the time

10 of the appointments.

11 (ii) Of the 6 members elected by the

12 class A stockholders—

13 (I) 2 members shall each be

14 elected for a 2-year term;

15 (II) 2 members shall each be

16 elected for a 3-year term; and

17 (III) 2 members shall each be

18 elected for a 4-year term.

19 (iii) If class B stock is issued and 4

20 additional members are elected by the class

21 B stockholders—

22 (I) 1 member shall be elected for

23 a 2-year term;

24 (II) 1 member shall be elected

25 for a 3-year term; and
13

12

•S 519 IS

1 (III) 2 members shall each be

2 elected for a 4-year term.

3 (C) QUALIFICATIONS.—Each member ap4 pointed by the President shall have expertise in

5 1 or more of the following areas:

6 (i) Native American housing and eco7 nomic development matters.

8 (ii) Financing in Native American

9 communities.

10 (iii) Native American governing bod11 ies, legal infrastructure, and judicial sys12 tems.

13 (iv) Restricted and trust land issues,

14 economic development, and small consumer

15 loans.

16 (D) MEMBERS OF INDIAN TRIBES.—Not

17 less than 2 of the members appointed by the

18 President shall be members of different, feder19 ally-recognized Indian tribes enrolled in accord20 ance with the applicable requirements of the In21 dian tribes.

22 (E) CHAIRPERSON.—The Board shall se23 lect a Chairperson from among the members of

24 the Board, except that the initial Chairperson

25 shall be selected from among the members of
14

13

•S 519 IS

1 the initial Board who have been appointed or

2 elected to serve for a 4-year term.

3 (F) VACANCIES.—

4 (i) APPOINTED MEMBERS.—Any va5 cancy in the appointed membership of the

6 Board shall be filled by appointment by the

7 President, but only for the unexpired por8 tion of the term.

9 (ii) ELECTED MEMBERS.—Any va10 cancy in the elected membership of the

11 Board shall be filled by appointment by the

12 Board, but only for the unexpired portion

13 of the term.

14 (G) TRANSITIONS.—Any member of the

15 Board may continue to serve after the expira16 tion of the term for which the member was ap17 pointed or elected until a qualified successor

18 has been appointed or elected.

19 (b) POWERS OF THE CORPORATION.—The

20 Corporation—

21 (1) shall adopt bylaws, consistent with this Act,

22 regulating, among other things, the manner in

23 which—

24 (A) the business of the Corporation shall

25 be conducted;
15

14

•S 519 IS

1 (B) the elected members of the Board shall

2 be elected;

3 (C) the stock of the Corporation shall be

4 issued, held, and disposed of;

5 (D) the property of the Corporation shall

6 be disposed of; and

7 (E) the powers and privileges granted to

8 the Corporation by this Act and other law shall

9 be exercised;

10 (2) may make and execute contracts, agree11 ments, and commitments, including entering into a

12 cooperative agreement with the Secretary;

13 (3) may prescribe and impose fees and charges

14 for services provided by the Corporation;

15 (4) may, if a settlement, adjustment, com16 promise, release, or waiver of a claim, demand, or

17 right of, by, or against the Corporation, is not ad18 verse to the interests of the United States—

19 (A) settle, adjust, and compromise on the

20 claim, demand, or right; and

21 (B) with or without consideration or bene22 fit to the Corporation, release or waive, in

23 whole or in part, in advance or otherwise, the

24 claim, demand, or right;
16

15

•S 519 IS

1 (5) may sue and be sued, complain and defend,

2 in any Federal, State, tribal, or other court;

3 (6) may acquire, take, hold, and own, manage,

4 and dispose of any property;

5 (7) may—

6 (A) determine the necessary expenditures

7 of the Corporation and the manner in which

8 those expenditures shall be incurred, allowed,

9 and paid; and

10 (B) appoint, employ, and fix and provide

11 for the compensation and benefits of such offi12 cers, employees, attorneys, and agents as the

13 Board determines reasonable and not inconsist14 ent with this section;

15 (8) may incorporate a new corporation under

16 State, District of Columbia, or tribal law, as pro17 vided in this Act;

18 (9) may adopt a plan of merger, as provided in

19 this Act;

20 (10) may consummate the merger of the Cor21 poration into the new corporation, as provided in

22 this Act; and

23 (11) may have succession until the designated

24 merger date or any earlier date on which the Cor-
17

16

•S 519 IS

1 poration surrenders the Federal charter of the Cor2 poration.

3 (c) INVESTMENT OF FUNDS; DESIGNATION AS DE4 POSITARY, CUSTODIAN, OR AGENT.—

5 (1) INVESTMENT OF FUNDS.—Funds of the

6 Corporation that are not required to meet current

7 operating expenses shall be invested in—

8 (A) obligations of, or obligations guaran9 teed by, the United States (or any agency of

10 the United States); or

11 (B) in obligations, participations, or other

12 instruments that are lawful investments for fi13 duciary, trust, or public funds.

14 (2) DESIGNATION AS DEPOSITARY, CUSTODIAN,

15 OR AGENT.—Any Federal Reserve bank or Federal

16 home loan bank, or any bank as to which at the time

17 of its designation by the Corporation there is out18 standing a designation by the Secretary of the

19 Treasury as a general or other depositary of public

20 money, may—

21 (A) be designated by the Corporation as a

22 depositary or custodian or as a fiscal or other

23 agent of the Corporation; and

24 (B) act as such a depositary, custodian, or

25 agent.
18

17

•S 519 IS

1 (d) ACTIONS BY AND AGAINST THE CORPORATION.—

2 Notwithstanding section 1349 of title 28, United States

3 Code, or any other provision of law—

4 (1) the Corporation shall be deemed to be an

5 agency covered under sections 1345 and 1442 of

6 title 28, United States Code;

7 (2) any civil action to which the Corporation is

8 a party shall be deemed to arise under the laws of

9 the United States, and the appropriate district court

10 of the United States shall have original jurisdiction

11 over any such action, without regard to amount or

12 value; and

13 (3) in any case in which all remedies have been

14 exhausted in accordance with the applicable ordi15 nances of an Indian tribe, in any civil or other ac16 tion, case, or controversy in a tribal court, State

17 court, or in any court other than a district court of

18 the United States, to which the Corporation is a

19 party, may at any time before the commencement of

20 the civil action be removed by the Corporation, with21 out the giving of any bond or security and by follow22 ing any procedure for removal of causes in effect at

23 the time of the removal—
19

18

•S 519 IS

1 (A) to the district court of the United

2 States for the district and division in which the

3 action is pending; or

4 (B) if there is no such district court, to the

5 United States District Court for the District of

6 Columbia.

7 SEC. 102. AUTHORIZED ASSISTANCE AND SERVICE FUNC8 TIONS.

9 The Corporation may—

10 (1) assist in the planning, establishment, and

11 organization of Native American financial institu12 tions;

13 (2) develop and provide financial expertise and

14 technical assistance to Native American financial in15 stitutions, including methods of underwriting, secur16 ing, servicing, packaging, and selling mortgage and

17 small commercial and consumer loans;

18 (3) develop and provide specialized technical as19 sistance on overcoming barriers to primary mortgage

20 lending on Native American land, including issues

21 relating to—

22 (A) trust land;

23 (B) discrimination;

24 (C) high operating costs; and
20

19

•S 519 IS

1 (D) inapplicability of standard underwrit2 ing criteria;

3 (4) provide mortgage underwriting assistance

4 (but not in originating loans) under contract to Na5 tive American financial institutions;

6 (5) work with the Federal National Mortgage

7 Association, the Federal Home Loan Mortgage Cor8 poration, and other participants in the secondary

9 market for home mortgage instruments in identify10 ing and eliminating barriers to the purchase of Na11 tive American mortgage loans originated by Native

12 American financial institutions and other lenders in

13 Native American communities;

14 (6) obtain capital investments in the Corpora15 tion from Indian tribes, Native American organiza16 tions, and other entities;

17 (7) act as an information clearinghouse by pro18 viding information on financial practices to Native

19 American financial institutions;

20 (8) monitor and report to Congress on the per21 formance of Native American financial institutions

22 in meeting the economic development and housing

23 credit needs of Native Americans; and

24 (9) provide any of the services described in this

25 section—
21

20

•S 519 IS

1 (A) directly; or

2 (B) under a contract authorizing another

3 national or regional Native American financial

4 services provider to assist the Corporation in

5 carrying out the purposes of this Act.

6 SEC. 103. NATIVE AMERICAN LENDING SERVICES GRANT.

7 (a) INITIAL GRANT PAYMENT.—If the Secretary and

8 the Corporation enter into a cooperative agreement for the

9 Corporation to provide technical assistance and other serv10 ices to Native American financial institutions, the agree11 ment shall, to the extent that funds are available as pro12 vided in this Act, provide that the initial grant payment,

13 anticipated to be $5,000,000, shall be made at the time

14 at which all members of the initial Board have been ap15 pointed under this Act.

16 (b) PAYMENT OF GRANT BALANCE.—The payment

17 of the remainder of the grant shall be made to the Cor18 poration not later than 1 year after the date on which

19 the initial grant payment is made under subsection (a).

20 SEC. 104. AUDITS.

21 (a) INDEPENDENT AUDITS.—

22 (1) IN GENERAL.—The Corporation shall have

23 an annual independent audit made of the financial

24 statements of the Corporation by an independent
22

21

•S 519 IS

1 public accountant in accordance with generally ac2 cepted auditing standards.

3 (2) DETERMINATIONS.—In conducting an audit

4 under this subsection, the independent public ac5 countant shall determine and submit to the Sec6 retary a report on whether the financial statements

7 of the Corporation—

8 (A) are presented fairly in accordance with

9 generally accepted accounting principles; and

10 (B) to the extent determined necessary by

11 the Secretary, comply with any disclosure re12 quirements imposed under section 301.

13 (b) GAO AUDITS.—

14 (1) IN GENERAL.—Beginning on the date that

15 is 2 years after the date of commencement of oper16 ation of the Corporation, unless an earlier date is re17 quired by any other law, grant, or agreement, the

18 programs, activities, receipts, expenditures, and fi19 nancial transactions of the Corporation shall be sub20 ject to audit by the Comptroller General of the

21 United States under such rules and regulations as

22 may be prescribed by the Comptroller General.

23 (2) ACCESS.—To carry out this subsection, the

24 representatives of the General Accounting Office

25 shall—
23

22

•S 519 IS

1 (A) have access to all books, accounts, fi2 nancial records, reports, files, and all other pa3 pers, things, or property belonging to or in use

4 by the Corporation that are necessary to facili5 tate the audit;

6 (B) be afforded full facilities for verifying

7 transactions with the balances or securities held

8 by depositaries, fiscal agents, and custodians;

9 and

10 (C) have access, on request to the Corpora11 tion or any auditor for an audit of the Corpora12 tion under subsection (a), to any books, ac13 counts, financial records, reports, files, or other

14 papers, or property belonging to or in use by

15 the Corporation and used in any such audit and

16 to any papers, records, files, and reports of the

17 auditor used in such an audit.

18 (3) REPORTS.—The Comptroller General of the

19 United States shall submit to Congress a report on

20 each audit conducted under this subsection.

21 (4) REIMBURSEMENT.—The Corporation shall

22 reimburse the General Accounting Office for the full

23 cost of any audit conducted under this subsection.
24

23

•S 519 IS

1 SEC. 105. ANNUAL HOUSING AND ECONOMIC DEVELOP2 MENT REPORTS.

3 Not later than 1 year after the date of enactment

4 of this Act, and annually thereafter, the Corporation shall

5 collect, maintain, and provide to the Secretary, in a form

6 determined by the Secretary, such data as the Secretary

7 determines to be appropriate with respect to the activities

8 of the Corporation relating to economic development.

9 SEC. 106. ADVISORY COUNCIL.

10 (a) ESTABLISHMENT.—The Board shall establish an

11 Advisory Council in accordance with this section.

12 (b) MEMBERSHIP.—

13 (1) IN GENERAL.—The Council shall consist of

14 13 members, who shall be appointed by the Board,

15 including—

16 (A) 1 representative from each of the 12

17 districts established by the Bureau of Indian

18 Affairs; and

19 (B) 1 representative from the State of Ha20 waii.

21 (2) QUALIFICATIONS.—Of the members of the

22 Council—

23 (A) not less than 6 members shall have ex24 pertise in financial matters; and

25 (B) not less than 9 members shall be Na26 tive Americans.
25

24

•S 519 IS

1 (3) TERMS.—Each member of the Council shall

2 be appointed for a 4-year term, except that the ini3 tial Council shall be appointed, as designated by the

4 Board at the time of appointment, as follows:

5 (A) Each of 4 members shall be appointed

6 for a 2-year term.

7 (B) Each of 4 members shall be appointed

8 for a 3-year term.

9 (C) Each of 5 members shall be appointed

10 for a 4-year term.

11 (c) DUTIES.—The Council shall—

12 (1) advise the Board on all policy matters of

13 the Corporation; and

14 (2) through the regional representation of mem15 bers of the Council, provide information to the

16 Board from all sectors of the Native American com17 munity.

18 TITLE II—CAPITALIZATION OF

19 CORPORATION

20 SEC. 201. CAPITALIZATION OF THE CORPORATION.

21 (a) CLASS A STOCK.—The class A stock of the Cor22 poration shall—

23 (1) be issued only to Indian tribes and the De24 partment of Hawaiian Home Lands;

25 (2) be allocated—
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25

•S 519 IS

1 (A) with respect to Indian tribes, on the

2 basis of Indian tribe population, as determined

3 by the Secretary in consultation with the Sec4 retary of the Interior, in such manner as to

5 issue 1 share for each member of an Indian

6 tribe; and

7 (B) with respect to the Department of Ha8 waiian Home Lands, on the basis of the num9 ber of current leases at the time of allocation;

10 (3) have such par value and other characteris11 tics as the Corporation shall provide;

12 (4) be issued in such a manner as to ensure

13 that voting rights may be vested only on purchase

14 of those rights from the Corporation by an Indian

15 tribe or the Department of Hawaiian Home Lands,

16 with each share being entitled to 1 vote; and

17 (5) be nontransferable.

18 (b) CLASS B STOCK.—

19 (1) IN GENERAL.—The Corporation may issue

20 class B stock evidencing capital contributions in the

21 manner and amount, and subject to any limitations

22 on concentration of ownership, as may be established

23 by the Corporation.

24 (2) CHARACTERISTICS.—Any class B stock

25 issued under paragraph (1) shall—
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26

•S 519 IS

1 (A) be available for purchase by investors;

2 (B) be entitled to such dividends as may

3 be declared by the Board in accordance with

4 subsection (c);

5 (C) have such par value and other charac6 teristics as the Corporation shall provide;

7 (D) be vested with voting rights, with each

8 share being entitled to 1 vote; and

9 (E) be transferable only on the books of

10 the Corporation.

11 (c) CHARGES AND FEES; EARNINGS.—

12 (1) CHARGES AND FEES.—The Corporation

13 may impose charges or fees, which may be regarded

14 as elements of pricing, with the objectives that—

15 (A) all costs and expenses of the oper16 ations of the Corporation should be within the

17 income of the Corporation derived from such

18 operations; and

19 (B) those operations would be fully self20 supporting.

21 (2) EARNINGS.—

22 (A) IN GENERAL.—All earnings from the

23 operations of the Corporation shall be annually

24 transferred to the general surplus account of

25 the Corporation.
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27

•S 519 IS

1 (B) TRANSFER OF GENERAL SURPLUS

2 FUNDS.—At any time, funds in the general sur3 plus account may, in the discretion of the

4 Board, be transferred to the reserves of the

5 Corporation.

6 (d) CAPITAL DISTRIBUTIONS.—

7 (1) DISTRIBUTIONS.—

8 (A) IN GENERAL.—Except as provided in

9 paragraph (2), the Corporation may make such

10 capital distributions as may be declared by the

11 Board.

12 (B) CHARGING OF DISTRIBUTIONS.—All

13 capital distributions under subparagraph (A)

14 shall be charged against the general surplus ac15 count of the Corporation.

16 (2) RESTRICTION.—The Corporation may not

17 make any capital distribution that would decrease

18 the total capital of the Corporation to an amount

19 less than the capital level for the Corporation estab20 lished under section 301, without prior written ap21 proval of the distribution by the Secretary.
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1 TITLE III—REGULATION,

2 EXAMINATION, AND REPORTS

3 SEC. 301. REGULATION, EXAMINATION, AND REPORTS.

4 (a) IN GENERAL.—The Corporation shall be subject

5 to the regulatory authority of the Department of Housing

6 and Urban Development with respect to all matters relat7 ing to the financial safety and soundness of the Corpora8 tion.

9 (b) DUTY OF SECRETARY.—The Secretary shall en10 sure that the Corporation is adequately capitalized and op11 erating safely as a congressionally chartered body cor12 porate.

13 (c) REPORTS TO SECRETARY.—

14 (1) ANNUAL REPORTS.—On such date as the

15 Secretary shall require, but not later than 1 year

16 after the date of enactment of this Act, and annually

17 thereafter, the Corporation shall submit to the Sec18 retary a report in such form and containing such in19 formation with respect to the financial condition and

20 operations of the Corporation as the Secretary shall

21 require.

22 (2) CONTENTS OF REPORTS.—Each report sub23 mitted under this subsection shall contain a declara24 tion by the president, vice president, treasurer, or

25 any other officer of the Corporation designated by
30

29

•S 519 IS

1 the Board to make the declaration, that the report

2 is true and correct to the best of the knowledge and

3 belief of that officer.

4 SEC. 302. AUTHORITY OF THE SECRETARY OF HOUSING

5 AND URBAN DEVELOPMENT.

6 The Secretary shall—

7 (1) have general regulatory power over the Cor8 poration; and

9 (2) promulgate such rules and regulations ap10 plicable to the Corporation as the Secretary deter11 mines to be appropriate to ensure that the purposes

12 specified in section 3 are accomplished.

13 TITLE IV—FORMATION OF NEW

14 CORPORATION

15 SEC. 401. FORMATION OF NEW CORPORATION.

16 (a) IN GENERAL.—In order to continue the accom17 plishment of the purposes specified in section 3 beyond

18 the terms of the charter of the Corporation, the Board

19 shall, not later than 10 years after the date of enactment

20 of this Act, cause the formation of a new corporation

21 under the laws of any tribe, any State, or the District of

22 Columbia.

23 (b) POWERS OF NEW CORPORATION NOT PRE24 SCRIBED.—Except as provided in this section, the new

25 corporation may have such corporate powers and at-
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30

•S 519 IS

1 tributes permitted under the laws of the jurisdiction of in

2 which the new corporation is incorporated as the Board

3 determines to be appropriate.

4 (c) USE OF NAME PROHIBITED.—The new corpora5 tion may not use in any manner the names ‘‘Native Amer6 ican Capital Development Corporation’’ or ‘‘NACDCO’’,

7 or any variation of those names.

8 SEC. 402. ADOPTION AND APPROVAL OF MERGER PLAN.

9 (a) IN GENERAL.—Not later than 10 years after the

10 date of enactment of this Act, after consultation with the

11 Indian tribes that are stockholders of class A stock re12 ferred to in section 201(a), the Board shall prepare, adopt,

13 and submit to the Secretary for approval, a plan for merg14 ing the Corporation into the new corporation.

15 (b) DESIGNATED MERGER DATE.—

16 (1) IN GENERAL.—The Board shall establish

17 the designated merger date in the merger plan as a

18 specific calendar date on which, and time of day at

19 which, the merger of the Corporation into the new

20 corporation shall take effect.

21 (2) CHANGES.—The Board may change the

22 designated merger date in the merger plan by adopt23 ing an amended plan of merger.

24 (3) RESTRICTION.—Except as provided in para25 graph (4), the designated merger date in the merger
32

31

•S 519 IS

1 plan or any amended merger plan shall not be later

2 than 11 years after the date of enactment of this

3 Act.

4 (4) EXCEPTION.—Subject to the restriction

5 contained in paragraph (5), the Board may adopt an

6 amended plan of merger that designates a date

7 under paragraph (3) that is later than 11 years

8 after the date of enactment of this Act if the Board

9 submits to the Secretary a report—

10 (A) stating that an orderly merger of the

11 Corporation into the new corporation is not fea12 sible before the latest date designated by the

13 Board;

14 (B) explaining why an orderly merger of

15 the Corporation into the new corporation is not

16 feasible before the latest date designated by the

17 Board;

18 (C) describing the steps that have been

19 taken to consummate an orderly merger of the

20 Corporation into the new corporation not later

21 than 11 years after the date of enactment of

22 this Act; and

23 (D) describing the steps that will be taken

24 to consummate an orderly and timely merger of

25 the Corporation into the new corporation.
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•S 519 IS

1 (5) LIMITATION.—The date designated by the

2 Board in an amended merger plan shall not be later

3 than 12 years after the date of enactment of this

4 Act.

5 (6) CONSUMMATION OF MERGER.—The con6 summation of an orderly and timely merger of the

7 Corporation into the new corporation shall not occur

8 later than 13 years after the date of enactment of

9 this Act.

10 (c) GOVERNMENTAL APPROVALS OF MERGER PLAN

11 REQUIRED.—The merger plan or any amended merger

12 plan shall take effect on the date on which the plan is

13 approved by the Secretary.

14 (d) REVISION OF DISAPPROVED MERGER PLAN RE15 QUIRED.—If the Secretary disapproves the merger plan or

16 any amended merger plan—

17 (1) the Secretary shall—

18 (A) notify the Corporation of the dis19 approval; and

20 (B) indicate the reasons for the dis21 approval; and

22 (2) not later than 30 days after the date of no23 tification of disapproval under paragraph (1), the

24 Corporation shall submit to the Secretary for ap25 proval, an amended merger plan that responds to
34

33

•S 519 IS

1 the reasons for the disapproval indicated in that no2 tification.

3 (e) NO STOCKHOLDER APPROVAL OF MERGER PLAN

4 REQUIRED.—The approval or consent of the stockholders

5 of the Corporation shall not be required to accomplish the

6 merger of the Corporation into the new corporation.

7 SEC. 403. CONSUMMATION OF MERGER.

8 The Board shall ensure that the merger of the Cor9 poration into the new corporation is accomplished in ac10 cordance with—

11 (1) a merger plan approved by the Secretary

12 under section 402; and

13 (2) all applicable laws of the jurisdiction in

14 which the new corporation is incorporated.

15 SEC. 404. TRANSITION.

16 Except as provided in this section, the Corporation

17 shall, during the transition period, continue to have all of

18 the rights, privileges, duties, and obligations, and shall be

19 subject to all of the limitations and restrictions, set forth

20 in this Act.

21 SEC. 405. EFFECT OF MERGER.

22 (a) TRANSFER OF ASSETS AND LIABILITIES.—On

23 the designated merger date—

24 (1) all real, personal, and mixed property, all

25 debts due on any account, and any other interest, of
35

34

•S 519 IS

1 or belonging to or due to the Corporation, shall be

2 transferred to and vested in the new corporation

3 without further act or deed; and

4 (2) no title to any real, personal, or mixed prop5 erty shall be impaired in any way by reason of the

6 merger.

7 (b) TERMINATION OF THE CORPORATION AND FED8 ERAL CHARTER.—On the designated merger date—

9 (1) the surviving corporation of the merger

10 shall be the new corporation;

11 (2) the Federal charter of the Corporation shall

12 terminate; and

13 (3) the separate existence of the Corporation

14 shall terminate.

15 (c) REFERENCES TO THE CORPORATION IN LAW.—

16 After the designated merger date, any reference to the

17 Corporation in any law or regulation shall be deemed to

18 refer to the new corporation.

19 (d) SAVINGS CLAUSE.—

20 (1) PROCEEDINGS.—The merger of the Cor21 poration into the new corporation shall not abate

22 any proceeding commenced by or against the Cor23 poration before the designated merger date, except

24 that the new corporation shall be substituted for the
36

35

•S 519 IS

1 Corporation as a party to any such proceeding as of

2 the designated merger date.

3 (2) CONTRACTS AND AGREEMENTS.—All con4 tracts and agreements to which the Corporation is a

5 party and which are in effect on the day before the

6 designated merger date shall continue in effect ac7 cording to their terms, except that the new corpora8 tion shall be substituted for the Corporation as a

9 party to those contracts and agreements as of the

10 designated merger date.

11 TITLE V—OTHER NATIVE

12 AMERICAN FUNDS

13 SEC. 501. NATIVE AMERICAN ECONOMIES DIAGNOSTIC

14 STUDIES FUND.

15 (a) ESTABLISHMENT.—There is established within

16 the Corporation a fund to be known as the ‘‘Native Amer17 ican Economies Diagnostic Studies Fund’’ (referred to in

18 this section as the ‘‘Diagnostic Fund’’), to be used to

19 strengthen Indian tribal economies by supporting invest20 ment policy reforms and technical assistance to eligible In21 dian tribes, consisting of—

22 (1) any interest earned on investment of

23 amounts in the Fund under subsection (d); and

24 (2) such amounts as are appropriated to the

25 Diagnostic Fund under subsection (f).
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•S 519 IS

1 (b) USE OF AMOUNTS FROM DIAGNOSTIC FUND.—

2 (1) IN GENERAL.—The Corporation shall use

3 amounts in the Diagnostic Fund to establish an

4 interdisciplinary mechanism by which the Corpora5 tion and interested Indian tribes may jointly—

6 (A) conduct diagnostic studies of Native

7 economic conditions; and

8 (B) provide recommendations for reforms

9 in the policy, legal, regulatory, and investment

10 areas and general economic environment of the

11 interested Indian tribes.

12 (2) CONDITIONS FOR STUDIES.—A diagnostic

13 study conducted jointly by the Corporation and an

14 Indian tribe under paragraph (1)—

15 (A) shall be conducted in accordance with

16 an agreement between the Corporation and the

17 Indian tribe; and

18 (B) at a minimum, shall identify inhibitors

19 to greater levels of private sector investment

20 and job creation with respect to the Indian

21 tribe.

22 (c) EXPENDITURES FROM DIAGNOSTIC FUND.—

23 (1) IN GENERAL.—Subject to paragraph (2), on

24 request by the Corporation, the Secretary of the

25 Treasury shall transfer from the Diagnostic Fund to
38

37

•S 519 IS

1 the Corporation such amounts as the Corporation

2 determines are necessary to carry out this section.

3 (2) ADMINISTRATIVE EXPENSES.—An amount

4 not exceeding 12 percent of the amounts in the Di5 agnostic Fund shall be available in each fiscal year

6 to pay the administrative expenses necessary to

7 carry out this section.

8 (d) INVESTMENT OF AMOUNTS.—

9 (1) IN GENERAL.—The Secretary of the Treas10 ury shall invest such portion of the Diagnostic Fund

11 as is not, in the judgment of the Secretary of the

12 Treasury, required to meet current withdrawals. In13 vestments may be made only in interest-bearing obli14 gations of the United States.

15 (2) ACQUISITION OF OBLIGATIONS.—For the

16 purpose of investments under paragraph (1), obliga17 tions may be acquired—

18 (A) on original issue at the issue price; or

19 (B) by purchase of outstanding obligations

20 at the market price.

21 (3) SALE OF OBLIGATIONS.—Any obligation ac22 quired by the Diagnostic Fund may be sold by the

23 Secretary of the Treasury at the market price.

24 (4) CREDITS TO FUND.—The interest on, and

25 the proceeds from the sale or redemption of, any ob-
39

38

•S 519 IS

1 ligations held in the Diagnostic Fund shall be cred2 ited to and form a part of the Diagnostic Fund.

3 (e) TRANSFERS OF AMOUNTS.—

4 (1) IN GENERAL.—The amounts required to be

5 transferred to the Diagnostic Fund under this sec6 tion shall be transferred at least monthly from the

7 general fund of the Treasury to the Diagnostic Fund

8 on the basis of estimates made by the Secretary of

9 the Treasury.

10 (2) ADJUSTMENTS.—Proper adjustment shall

11 be made in amounts subsequently transferred to the

12 extent prior estimates were in excess of or less than

13 the amounts required to be transferred.

14 (f) TRANSFERS TO DIAGNOSTIC FUND.—There are

15 appropriated to the Diagnostic Fund, out of funds made

16 available under section 603, such sums as are necessary

17 to carry out this section.

18 SEC. 502. NATIVE AMERICAN ECONOMIC INCUBATION CEN19 TER FUND.

20 (a) ESTABLISHMENT.—There is established within

21 the Corporation a fund to be known as the ‘‘Native Amer22 ican Economic Incubation Center Fund’’ (referred to in

23 this section as the ‘‘Economic Fund’’), consisting of—
40

39

•S 519 IS

1 (1) any interest earned on investment of

2 amounts in the Economic Fund under subsection

3 (d); and

4 (2) such amounts as are appropriated to the

5 Economic Fund under subsection (f).

6 (b) USE OF AMOUNTS FROM ECONOMIC FUND.—

7 (1) IN GENERAL.—The Corporation shall use

8 amounts in the Economic Fund to ensure that Fed9 eral development assistance and other resources

10 dedicated to Native American economic development

11 are provided only to Native American communities

12 with demonstrated commitments to—

13 (A) sound economic and political policies;

14 (B) good governance; and

15 (C) practices that promote increased levels

16 of economic growth and job creation.

17 (c) EXPENDITURES FROM ECONOMIC FUND.—

18 (1) IN GENERAL.—Subject to paragraph (2), on

19 request by the Corporation, the Secretary of the

20 Treasury shall transfer from the Economic Fund to

21 the Corporation such amounts as the Corporation

22 determines are necessary to carry out this section.

23 (2) ADMINISTRATIVE EXPENSES.—An amount

24 not exceeding 12 percent of the amounts in the Eco25 nomic Fund shall be available in each fiscal year to
41

40

•S 519 IS

1 pay the administrative expenses necessary to carry

2 out this section.

3 (d) INVESTMENT OF AMOUNTS.—

4 (1) IN GENERAL.—The Secretary of the Treas5 ury shall invest such portion of the Economic Fund

6 as is not, in the judgment of the Secretary of the

7 Treasury, required to meet current withdrawals. In8 vestments may be made only in interest-bearing obli9 gations of the United States.

10 (2) ACQUISITION OF OBLIGATIONS.—For the

11 purpose of investments under paragraph (1), obliga12 tions may be acquired—

13 (A) on original issue at the issue price; or

14 (B) by purchase of outstanding obligations

15 at the market price.

16 (3) SALE OF OBLIGATIONS.—Any obligation ac17 quired by the Economic Fund may be sold by the

18 Secretary of the Treasury at the market price.

19 (4) CREDITS TO FUND.—The interest on, and

20 the proceeds from the sale or redemption of, any ob21 ligations held in the Economic Fund shall be cred22 ited to and form a part of the Economic Fund.

23 (e) TRANSFERS OF AMOUNTS.—

24 (1) IN GENERAL.—The amounts required to be

25 transferred to the Economic Fund under this section
42

41

•S 519 IS

1 shall be transferred at least monthly from the gen2 eral fund of the Treasury to the Economic Fund on

3 the basis of estimates made by the Secretary of the

4 Treasury.

5 (2) ADJUSTMENTS.—Proper adjustment shall

6 be made in amounts subsequently transferred to the

7 extent prior estimates were in excess of or less than

8 the amounts required to be transferred.

9 (f) TRANSFERS TO ECONOMIC FUND.—There are ap10 propriated to the Economic Fund, out of funds made

11 available under section 603, such sums as are necessary

12 to carry out this section.

13 TITLE VI—AUTHORIZATIONS OF

14 APPROPRIATIONS

15 SEC. 601. NATIVE AMERICAN FINANCIAL INSTITUTIONS.

16 (a) IN GENERAL.—There are authorized to be appro17 priated to the Fund, without fiscal year limitation, such

18 sums as are necessary to provide financial assistance to

19 Native American financial institutions.

20 (b) NO CONSIDERATION AS MATCHING FUNDS.—To

21 the extent that a Native American financial institution re22 ceives funds under subsection (a), the funds shall not be

23 considered to be matching funds required under section

24 108(e) of the Riegle Community Development and Regu25 latory Improvement Act of 1994 (12 U.S.C. 4707(e)).
43

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•S 519 IS

1 SEC. 602. CORPORATION.

2 There are authorized to be appropriated to the Sec3 retary, for transfer to the Corporation, such sums as are

4 necessary to carry out activities of the Corporation.

5 SEC. 603. OTHER NATIVE AMERICAN FUNDS.

6 There are authorized to be appropriated such sums

7 as are necessary to carry out sections 501 and 502.

Æ
44

The CHAIRMAN. Senator, did you have an opening statement for

this?

Senator DOMENICI. Mr. Chairman, I was going to ask, is the Secretary coming to the meeting this afternoon?

The CHAIRMAN. Yes; apparently he is.

Senator DOMENICI. Thank you.

The CHAIRMAN. You bet.

Senator Murkowski, did you have an opening statement?

Senator MURKOWSKI. Yes, Mr. Chairman.

STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM

ALASKA

Senator MURKOWSKI. I do want to just make a few brief comments. I appreciate the hearing this morning, as well as the forum

yesterday afternoon on the problem of economic development in our

Indian communities.

It was several months ago, actually it was more than that, but

Julie Kitka who is the president of the Alaska Federation of Natives, approached me about bringing the World Bank and the International Development Banks to Alaska to see what our Alaska Native community can learn from them about how to bring the good

jobs to remote places.

I have to tell you that there were a lot of skeptics, a lot of people

questioned what we could actually get from this. Julie is going to

be here this morning to tell us about what happened at that conference, but I have to tell you it was a standing room only crowd

in one of Anchorage’s largest facilities. I do not want to steal her

thunder, but I will tell you that the skeptics were silenced. The

conference was the right thing to do at the right time.

Mr. Chairman, I think we know all too well that when we lack

economic opportunities in our villages, what we see is despair, is

lack of hope. It fuels self-destructive behaviors such as alcohol,

drug abuse, domestic violence, suicide. It truly puts our Native people in peril. It is through economic opportunities that we can break

this cycle.

So I am pleased that we will be able to hear this morning some

of the outcome of that conference.

I do understand, Mr. Chairman, there is probably still a fair

amount of work to be done on S. 519 before it is ready for consideration by the full committee, but I appreciate your efforts, as I am

sure do all of the people of our Native communities throughout the

country.

The CHAIRMAN. Thank you. We will now take the first panel of

one. That will be Dave Anderson, assistant secretary, Indian Affairs, Department of the Interior. Thanks for appearing, Dave, and

thanks for also going to Montana and meeting with the MontanaWyoming tribal leaders and giving a terrific speech to the young

graduates of our Indian school in Lame Deer, MT.

STATEMENT OF DAVID W. ANDERSON, ASSISTANT SECRETARY

FOR INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR

Mr. ANDERSON. Thank you. I enjoyed being there.
45

Good morning, Mr. Chairman, Mr. Vice Chairman, and members

of the committee. I am David Anderson, assistant secretary for Indian Affairs.

I want to thank you for the opportunity to present the views of

the Department of the Interior on S. 519, the Native American

Capital Formation and Economic Development Act of 2003. We understand that the committee will be significantly amending S. 519.

Therefore, our comments do not specifically speak to the provisions,

but rather address the concepts of the bill.

The Department supports exploring creative approaches to economic development in Indian country, and, specifically, we are encouraged that this bill is being put together. I think all of us understand that economic development on tribal reservations poses many

challenges. When I first came to the Department, I think most of

my meetings, initially, were just day after day, many different

tribes coming to my office. Every one of them had just a slew of

unmet needs or needs that they were facing within Indian Country.

One of the things that really stuck out very clearly to me was the

need for significant economic development. I really believe that this

bill addresses this need, so I am very encouraged by it.

Because the access to capital in Indian country is extremely limited. This shortage of capital represents one of the primary barriers

to comprehensive and lasting economic development. In addition,

there are few opportunities to generate capital on Indian reservations. Studies show that unemployment on or near Indian reservations commonly exceeds 50 percent and, in some areas, that figure

jumps to over 90 percent. Unemployment in Indian country has

placed more than 500,000 people who live on or near Indian reservations at or below the poverty level.

These obstacles are further compounded by the rural location of

most Indian reservations. As a result of these factors, Indian country accounts for many of the poorest areas in the United States. I

find that objectionable, that America’s first people would be on the

bottom rung of all social and economic problems that we face

throughout Indian country.

Although poverty and joblessness pose great obstacles to economic development and remote reservation settings, economic development is not impossible. Increasingly, tribes continue to overcome these obstacles and create growth in reservation economies.

Over the last few months, I have had an opportunity to be able to

travel throughout the United States and to visit some of these

tribes. We do have shining examples of tribes that have succeeded

in rural locations. Yesterday, I attended the forum that you sponsored. I was very encouraged to be in the midst of some tribal leaders, Philip Martin, the Oneidas, and the Chickasaws, that have

really succeeded economically.

It proves, and I really believe, that as Indian people that we can

stand up and we can be counted in the ranks of people who succeed

in economic development ventures.

Within the Bureau of Indian Affairs [BIA], we are working with

tribes to continue to discover creative and long-term solutions to

building sustainable tribal economies. Through the recent reorganization of the BIA, the offices of Indian gaming management, selfgovernance and self-determination were elevated to the assistant
46

secretary’s office under the newly created deputy assistant secretary for Policy and Economic Development. By elevating these

and other economic development programs, the BIA will emphasize

expanding reservation and tribal community business opportunities

and Indian employment. With the creation of the new deputy assistant secretary, the BIA hopes to maximize efficiency in assisting

tribal economic development.

One of my goals is something that I see that was severely missing within the Department. As I said when I first came on board,

we had an Office of Indian Education. We have a law enforcement

department. We work with the trees and the fish. But one of the

things that we have been missing is really a credible program that

helps develop the economic development policies, and helps coordinate other economic development opportunities with other departments within the BIA. That is an initiative I am making a priority

within the BIA.

Another challenge the BIA is working to address is the issue

raised by many investors and private lenders regarding the tribal

legal infrastructure, and inadequate or nonexistent legal and business codes. To address this issue, the BIA included in its fiscal year

2005 budget request for $1 million to help tribes develop tribal ordinances and commercial business codes. We view this as a positive

first step to help encourage more capital investment on tribal

lands.

The Department also encourages the use of self-governance programs as a method of encouraging tribal economic development.

Through self-governance programs, the tribes control administration of Federal programs to ensure the programs meet the needs

of individual tribes. For the tribes that choose to engage in self-governance or self-determination compacts and contracts, this direct

control creates tailor-made programs that lead to the creation of

viable and stable economies and tribal self-sufficiency. We will

work to continue with tribes to expand self-governance and self-determination as a way to find creative solutions to economic development.

Currently, the BIA independently administers a program that is

addressing some of the financing needs in Indian country. Since

1974, the BIA has successfully administered an Indian Guaranty,

Insured and Interest Subsidy Program. The mission of this program is to stimulate an increase in Indian entrepreneurship and

employment through the establishment, acquisition or expansion of

Indian-owned economic enterprises. The program guarantees loans

up to $20 million from the private sector to promote economic development of tribes, individual Indians and Alaska Natives. The

guaranteed and insured loan portfolio currently totals $271 million.

With the enactment of the fiscal year 2005 budget request, the

program expects to leverage private sector financing of 65 new

businesses and create 1,300 jobs on or near Indian reservations.

The guaranteed and insured loan program has achieved a success

rate of 93 percent in the number of businesses, without default for

all loans funded since fiscal year 1992. From 1992 to the present,

719 loans have been guaranteed and a total of only 51 loans have

defaulted.
47

While the BIA loan program is successful and takes steps toward

addressing the needs in Indian country, it does not fulfill every financing need. There is a gap between the small-scale financing

that the BIA can provide and funding required for economic development projects. This is where I believe this financing package we

are looking at is really needed. Because I really believe that as Indian people, we need to start thinking bigger. We need to be

dreaming bigger dreams for economic development. I find it frustrating sometimes when I am in budget meetings and here we are

with the brain trust of Indian country and we are arguing over millions of dollars, when we should be discussing billions.

I believe that within the black community that they have a goal

of getting knowledgeable and qualified black people on the boards

of directors of major corporations throughout America. As Indian

people, we have yet to reach that level. This is why this bill is so

important because we need to be able to access larger amounts of

money. We need to be able to access capital markets. I believe this

is a very important step toward that.

I just wanted to quickly comment, I keep pushing this idea out

there that I believe, as Indian people, if we are going to be economically self-sufficient, that we also become a nation of homeowners. I think being able to access Indian people’s financing

through home ownership helps build strong communities, and we

start learning the basic fundamentals of investing. One of the

things that I am working on is developing leadership academies

within the BIA, turning BIA schools into leadership academies. As

part of that concept, I want to start teaching our students investing

101, how to save and invest money.

When we start discussing concepts like the creation of capital

markets or being able to access capital markets through the investment community, that we are going to be knowledgeable in order

to do that. So that the investing community, the raising of investments for creating entrepreneurial economies, that it will not be a

foreign concept. Maybe we will not see the fruits of this within this

generation, but we are starting to address it, thinking long term.

Hopefully, my ideas with leadership academies and creating investing 101 courses within our school system will help begin to address

a larger need that we have throughout Indian country.

We welcome the opportunity to further work with this committee

regarding this bill. We are also willing to participate in further discussions regarding other innovative approaches to enhance economic development in Indian country. I feel that some of my background in economic development would be very well suited for this.

So I look forward to this bill and I look forward to working with

this committee.

Thank you.

[Prepared statement of Mr. Anderson appears in appendix.]

The CHAIRMAN. Thank you. I appreciate that.

You mentioned you have traveled extensively through Indian

country since your appointment, so I know you have probably seen

some really successful models and some common hurdles that Indian country faces in its quest for economic development. Could

you mention a couple of hurdles you have come across?
48

Mr. ANDERSON. I think one of the hurdles that I personally experienced is that while it is great to be able to create a program of

this nature, I think as Indian people, though, we need to start stepping up. For example, we have never taught success 101 in our

schools. When I was chief executive officer for my tribe, the Lac

Courte Oreilles, we had a number of businesses. We had a forest

products company. We had a grocery store. We had an auto center.

We had a print shop. We had WOJB–FM radio station.

For the most part, we were bleeding money like water going

through a sieve. Part of the problem that I recognized was if we

are going to be successful in business, we have to have, as part of

our mental framework, the understanding of success, achievement

and accomplishment. Because when you are faced with communities, as I have mentioned earlier, where we have high unemployment or high suicide rates, high dropout rates, high substance

abuse, the basic fundamental thinking of being successful, is almost a foreign concept.

I think nationwide, throughout Indian country, we need to start

cultivating the mental health of our Indian people in the areas of

being successful in business.

We need Indian people that get up in the morning at 5 a.m. that

are cheerful and enthusiastic and passionate about being successful. Sometimes when I am addressing these issues, it is not just

building another building, filling it full of inventory, and hanging

your sign out. We need to start cultivating Indian people that think

successfully, that are out there being solution-conscious, not problem-conscious. When we start doing that, I believe that a lot of our

economic development problems will be solved.

Again, I have seen tribes that have cultivated that mentality and

they are flourishing. We have successes as well as areas that need

improvement.

The CHAIRMAN. We have successes in my view, but they have

been uphill battles a lot of times because when you talk about initiating the attitude of success, we are dealing with a people who

have been told for 100 years they cannot be successful. You just

cannot turn that around overnight. I think many Indian tribes are

recognizing that and working very hard to promote that among

their youngsters.

You probably have also seen some models that have been successful. Would you like to mention if you see any common thing in

there that other tribes can use? I recognize there are some in rural

areas that do not have access to markets, for instance, or others

who do not have the same educational background in their framework. But there must be something that is emerging that could be

used as a model for other tribes.

Mr. ANDERSON. I believe that what you are suggesting is something that we are working on. We want to create a blue ribbon

panel, and I would be happy to work with this committee in the

formation of that, working with tribes like the Oneidas, who have

turned back BIA moneys and are now economically self-sufficient.

Philip Martin with the Mississippi Choctaws has done an incredible job with their economic development and their business ventures. I think in every case that you see is that they have been able
49

to successfully separate the business engine of the tribe from the

political arena of the tribe. I think that is important.

I also believe that the tribes that are flourishing are the ones

that have been able to stabilize their tribal governments and create

a sense of security where if you sign a contract with the tribe that

an outside investing group or an outside business knows that they

will be able to succeed without some sense of insecurity because a

particular political group is in power. I think being able to create

a foundation for security through knowing that if you do business

with an Indian tribe, that you are not going to be affected by the

political changing structure of the tribe.

The CHAIRMAN. You are perfectly right. Anybody that has visited

the old carpet factory at Crow or the electronics factory of the Navajos recognizes why some investors are reluctant to work with

tribes when they know that there is an unstable government.

I have some further questions I would like to put in writing to

you, but I think we will probably move along and ask Senator

Inouye if he has questions.

Senator INOUYE. I am always encouraged to listen to the testimony of Secretary Anderson. But Mr. Secretary, I would have to

be leaving because we just received a conference report from the

House on the defense appropriations, and we will try to finish that

up tomorrow. So I have been called to sign a few papers and make

decisions. So if you will excuse me, I would like to submit questions

in writing to you, sir.

And to all the other witnesses, Mr. Chairman, may I have permission to submit my questions?

The CHAIRMAN. Yes; the other committee members may also do

the same.

Senator INOUYE. I am especially saddened that I will not be here

to personally listen to the testimony of Haunani Apoliona, the

president and CEO of the Office of Hawaiian Affairs. I will read

your testimony.

The CHAIRMAN. She has probably talked to you on a good number

of times, face-to-face, I would imagine, Senator. You know part of

her testimony already by heart, I would guess.

Senator Murkowski, did you have questions of Secretary Anderson?

Senator MURKOWSKI. Just one very quick question. I appreciate

your focus on the culture of success and how we build that. I also

appreciate the chairman’s concern that it is difficult to do that in

the short term. It is something that has to be built. And of course,

it needs to be built from our young people on up. It needs to be

part of their makeup. Have you given any thought to how we can

instill that culture of success within our schools for our young native people? How do we urge them to set high expectations for

themselves and others?

Mr. ANDERSON. I am glad you brought that up. By the way, I am

planning on being in Alaska the second or third week in August

to fulfill my promise to you of getting up there and visiting Alaska.

Senator MURKOWSKI. We look forward to having you.

Mr. ANDERSON. I am glad you brought that up because I really

believe that if we are going to be successful in economic develop-
50

ment as Indian people, it has to start with our young people. We

need to start cultivating the attitude of success.

One of my initiatives are these leadership academies. Because

Bureau schools have always been almost secondary schools of

choice. One of the things that we are working on, in fact this week

we are convening a group of principals from the BIA schools and

we are starting the process of looking at identifying key schools

that we can use as prototypes to turn into leadership academies.

What we are looking at doing is challenging the human mind,

the human body and the human spirit. I really believe that people

who say that we need to dummy-down the standards of our children, that they cannot compete like other students, are performing

a disservice. I believe that is very bad thinking.

One of the things that I saw on CNN just a short while ago was

a feature that they did on an Asian school in Chinatown in New

York. If you were any well-to-do black person, you tried to get your

student in that school. If you were any well-to-do Jewish person,

you tried to get your student in that school. The reason is they had

the highest math scores, the highest economic scores and the highest science scores.

Now, I am a believer that Indian children are not born into this

world with any less brain cells than these Asian students. So what

is the difference? It is parent expectations and teacher expectations. One of my goals is to start, within our school system, the

framework for creating a success mentality, that, as Indian people,

we can achieve. It does not matter where you have been. It does

not matter what you have been through. In this great country that

we live in, if you have dreams and if you are a young person, and

you never, ever give up and you are willing to work hard, that you

can achieve your dreams.

In our leadership academies, we want parents to be able to sign

contracts with the teachers and the students that they will support

those students getting homework. We want our teachers to start

carrying cell phones, that if these students have any questions,

that they can ask a teacher or a tutor. We want to go so far that

the only way you can graduate is if you are accepted into college

or a vo-tech school.

We look at creating a mentoring opportunity with local businesses. We look at challenging the students with the ropes challenge courses, with rock climbing, winter camping, but not just

sports. We look at including a health and nutrition aspect as part

of the school. Just 2 weeks ago, I addressed 1,500 students at the

United National Indian Tribal Youth Organization. One of the fortunate things was a lot of the students were like this. I want to

encourage throughout this whole discussion that this is something

that we start addressing.

It is the success philosophy of what it takes. Because I think

throughout all of this, I have always heard that we have to create

the infrastructure. We have to create access to capital formation.

But fundamental before any of that, we need to have the success

and the willingness and the thinking to want to achieve.

This is something that I have made a priority. Understanding

that, you know, I never realized this, but being head of all our

school system, we have the ability to create a whole different model
51

for our school systems. I want to see success philosophies in every

one of our schools, in our cafeterias, in our gymnasiums.

These are just some of the ideas that I have had for revamping

what people consider the Bureau schools and to turning them into

leadership academies that are graduating young people who will

want to be successful in the arenas of business.

Senator MURKOWSKI. I like your ideas. We do not have the Bureau schools in Alaska. Our native students are educated in the

public school system there. So I would encourage you to work with

us to bring this idea of the leadership academies to Alaska to see

how we might be able to partner with you or benefit from the ideas

that you are implementing in the lower–48.

Mr. ANDERSON. Thank you.

Senator MURKOWSKI. Thank you.

The CHAIRMAN. Thank you, Mr. Anderson. Some other committee

members will probably submit some of the questions in writing.

Thank you for your appearance.

Mr. ANDERSON. Thank you.

The CHAIRMAN. Our next panel will be Mark Brown, chairman

of the Mohegan Indian Tribe; Julie Kitka, president of the Alaska

Federation of Natives in Anchorage; Chester Carl, chairman of the

National American Indian Housing Council; Haunani Apoliona,

chair of the Board of Trustees of the Office of Hawaiian Affairs;

and Kate Spilde from Rancho Mirage, CA.

If you folks would take your seats at the table there. Squeeze in

and move the microphone around if we have not quite enough

microphones.

We will proceed in the order that I mentioned your names. So

Mark, nice to see you again. Why don’t you go ahead and proceed.

STATEMENT OF MARK F. BROWN, CHAIRMAN, MOHEGAN

INDIAN TRIBE

Mr. BROWN. Thank you, Chairman Campbell.

Chairman Campbell, members of the committee, I am Mark F.

Brown, chairman of the Mohegan Tribe. I am here to speak about

the importance of self-determination and self-reliance.

In Mohegan, we learn first-hand about true self-determination

and how very closely bound it is to tribal economic development,

economic development that would benefit greatly by the concepts

introduced in this bill. The two concepts, first, removing legal and

practical obstacles to public and private investments in Indian

country; and second, identifying investment opportunities and

matching available capital resources with need.

Far too many times, the U.S. Government in trying to draft

something for Indian country drafts something that is all-inclusive.

But we are all sovereign nations. We have different ways we approach things, and this is not a one-fits-all type of situation.

Clearly, true self-determination comes from the inside out, and

the concepts within this bill will take care of that.

The Mohegan experience is a good example of a tribe who could

have benefitted from easy access to early capital. A little more than

a decade ago, the U.S. Government finally told us what we knew

our whole life, that we truly were a tribe. From that point, we have

moved forward. We found a business partner with a proven record
52

of destination resort success and we entered the field of gaming.

Many capital institutions were not too comfortable dealing with a

Native American tribe, so we had to educate our prospective lenders on reliable, predictable tribal laws and tribal government. We

had to prove we were about serious regulation. We hired a former

head of the DEA, assistant to the FBI, and then myself as a former

police officer. I am very critical about how we are about integrity.

With all these things in place, in 1995 the tribe went out for financing to do a $300-million facility. We were the first tribe to go

to Wall Street. When we went there, we were able to secure the

financing we needed at an effective rate of 18 percent. It is not

cheap money, but at that point in time it was the only way we

could get to the point we needed to be at today. We had one of the

most successful casinos nine miles to our east, and we had to compete, so we had to do what we had to do at that time.

A few years later, we decided to be totally self-determined and

break our ties with our managing partners. We decided to move

forward with an expansion phase. This required us to once again

go back to Wall Street. At that time, we were able to go by ourselves with no one else and secure a rate of approximately 8.3 percent.

More recently, we had a bond issuing, and that came in a 6.38-

percent. This is rarely the case in any financing, let alone in Indian

country, but it can be done.

Now that our expansion is fully operational, Mohegan Sun is

where we believe it should be on the market. We are looking to

bring our expertise that we have gained to other areas and other

tribes. This effort will help diversify our assets. It will also be improving the lives of other first Americans.

Nearly 2 years ago, I had an opportunity to meet with a man,

a father, a career soldier I had admired for many years. That man

told me that he and others in Washington wanted to see if IGRA

truly would help all tribes. His words were, prove to me IGRA

works; reach out and help other tribes. That man was Senator

John McCain. I took that to heart and we have a focus and a goal.

We found our first relationship with the Menominee Tribe of

Wisconsin, a proud people who want only the best for their own

8,000 members. We now look for the same things that people

looked for in us. We are looking at secure, stable government. We

are looking for good community ties with the outlying area. And we

are also looking to see what the available capital will be. This bill

can probably help that aspect to come to fruition.

Like any other corporation, we as Mohegan look at the

bottomline. But unlike a corporation, we are also a tribe. We Mohegan have adopted a buy-American philosophy. Whenever possible,

that is Native American. We are encouraging any future partners

to do the same. We buy our lobsters from tribes in Maine, our buffalo from tribes in the Midwest, and our natural gas from tribes

in the Southwest. Although these tribes are not in gaming, they

are working to provide for their people through self-determined economic development, which again would clearly benefit with S. 519.

S. 519 is a sound bill. We pledge to work with you and your colleagues to support enactment of as much of it as can be accom-
53

plished. We believe time is long overdue, and once again thank you

for your time. I will entertain any questions.

[Prepared statement of Mr. Brown appears in appendix.]

The CHAIRMAN. Thank you.

We will now go to Julie Kitka. Welcome, Julie.

STATEMENT OF JULIE KITKA, PRESIDENT, ALASKA

FEDERATION OF NATIVES

Ms. KITKA. Thank you, Mr. Chairman.

It is an honor for me to testify this morning. I appreciate the invitation. I will try to be condensed in our testimony, but I have a

lot of information that I want to share with the committee, so you,

Mr. Chairman, please feel free to cut me off if I go on too long.

First of all, before I respond to Senator Murkowski’s comments

on reporting on the recent leadership forum that we had on building knowledge-based economies, I first wanted to inform you, Mr.

Chairman and the committee, of why we are doing what we are

doing, and then I will get into sharing some of the exciting things

that we are involved with.

First off, we have just completed a 30-year trend analysis on a

whole lot of major indicators for our population. We are working

with the University of Alaska Institute of Social and Economic Research, and we would be glad to provide the 30-year trend analysis

to the committee so that you can see both the progress that has

been made, as well as some of the challenges that are still facing

us.

Basically in a nutshell, the 30-year trend analysis shows major

signs of improved living conditions for our people. Mortality is

down. Total death rate is down. Life expectancy is up. But when

we look at the economic aspects of our people, this is what we see,

that native income has increased every decade since 1960, even

after taking into account inflation. In the year 2000, real per capita

incomes were four-times higher than it was in the 1960’s. But the

growth rate in the 1990’s was only about 7 percent.

The second point is, native income remains far below that of nonnatives. In 2000, native per capita was less than one-half of nonnatives in our State.

The third point, one-half of our native families have income

below $30,000 a year. With our larger native families, that means

these incomes are supporting even more and more people.

The fourth point is incomes are low in remote areas, especially

in the very remote areas which are populated by at least 60 percent of Alaska Natives.

The fifth point, our most remote areas are also the places of the

highest living costs. Fuel costs, food costs, clothing costs, if you

name any cost, it is the highest in some of the areas that have the

lowest income.

The sixth point is Alaska Natives, we see much progress in the

last 30 years on poverty indicators. Thirty years ago, our poverty

rates for our people were in the mid to low, 60 percent of our population was below the Federal poverty rate. We are now down to

about 20 percent poverty rate, which is a huge improvement in the

living conditions for our people in the last 30 years. But the disparity is still there as the improvements are, because our poverty rate
54

is now 20 percent compared to 7 percent of non-natives. Our people

are three times more likely to live in poverty than non-natives in

our State.

We have also, another seventh finding is that families headed by

women are most likely to be poor in our State, and basically 25

percent of all our native families in remote villages live below the

poverty level. So that is the reason why we are putting a major emphasis on the economic arena, is these very hard statistics, both of

the success that has been accomplished, and I think that the members of the Congress that have spent their entire public careers

over this span of time in particular, our senators, Senator Stevens

and others, Senator Inouye, you know, 30-plus years in the Congress, have much to be proud of when you look at these improved

living conditions.

So what we are looking at is how do we close the gap and the

disparity? How do we make that next major inroad into these indicators that are not positive, and make progress for the next generation of people?

I will put a caveat. One of the things that we have been following

a lot of things that have been going on internationally. We feel very

strongly in Alaska that we have much to be grateful to for living

in the United States. When you look at one billion people in the

world living below $1 a day in income, and two billion people living

below $2 a day, you know, to say that you have these indicators

with the amounts of incomes in our families on that, it truly is relative. We can do more with what we have, but we also need government to be more responsive and put in place policies that are

more helpful to make that next inroad.

We are very strongly supportive of the Government’s policy on

self-determination. We credit that as one of the major changes over

the last 30 years which has helped us greatly, everything from

Alaska Natives taking over the Indian Health Service, where we

are running our hospitals and our regional hospitals and our clinics, and the whole system. Self-determination on every level has

contributed to the improved living conditions. So members of Congress that have been involved for a long time should be very proud

of their efforts.

But we would like to focus on what we are looking at right now

and what are some of the observations that we have which we

think can make some great improvements. So I have given you the

‘‘why’’ of why we are focusing on that.

We also believe that we stand on the shoulders of the people that

have come before us. What I testify about or what we prepare in

reports or testimony is not coming out of a vacuum. It is based on

our own leadership in our state and many generations of leaders

that have tried to improve things for our people. So I am just the

next person in the long list of people to convey to you our desires

and wishes and what we want to try to accomplish. So I do not

want to make any more of our comments other than that.

But basically, we feel very strongly that our people need a sense

of hope. We need to bring a sense of urgency to the concerns that

affect their daily lives, and not be lulled into false security because

of some of the successes that we have had on many areas. So the

urgency needs to continue and the Congress needs to help us enact
55

policies that bring the sense of urgency to the ground at the village

level.

We need the recognize that we do not work in isolation, that we

do have partnerships with the State. We do have partnerships with

the private sector. We need to build those partnerships and we

need to strengthen that. Government clearly has a role in opening

up our opportunities for greater private sector expansion in our

State, because we feel that with greater economic growth, that the

private sector can be an engine for the Government polices that

need to help set the infrastructure and the ground for them to expand.

We also feel that expanding the private sector is essential in our

state to overcome what has been characterized as distorted economies, economies which are primarily transfer economies of transfer

payments and government spending. We need to open up greater

opportunities for private sector involvement in economic growth because of the jobs that they create.

You look at our population, we are about 20 percent of the State

of Alaska. We are about 125,000 people. We are projected to double

every 23 years. I think we have projected that in the year 2020,

we will be up to about 165,000 in the State, quite a number out

of State.

We are also seeing some very disturbing trends. Our people are

people of the land. Our people have lived in many parts of the

State for nearly 10,000 years. You can see continuous occupancy in

many of our communities for many, many thousands of years. But

the disturbing trend is that we are seeing the migration from our

villages and off the land into the regional hubs and into the cities,

looking for job opportunities, looking for access to the health care

for their families, and education.

We have to, quite frankly, stem that trend. I am, for one, very

encouraging of people to explore all options for their families and

for their children, but to be having to relocate off the land and go

to a city and urban life because of lack of economic opportunity, to

me is a very big crime and it is something that we need to partnership with the Congress and the State to reverse that trend.

We are seeing trends as high as 40 percent of our population

moving off the land and into the cities. Again, you look at it, and

it is primarily lack of economic opportunities, lack of the infrastructure that we need to increase the private sector. That is one of the

reasons we are very interested in this bill is because we feel very

strongly that we need another tool in our arsenal to deal with the

problems our people face. That is an economic institution that has

a broad scope to deal with social development, cultural development, educational development, economic development.

We think a development entity, whether or not it is a development fund, a development bank, a development institution could

have that broad scope. We do not need any more institutions which

are silos that are just taking care of one sector of our population

or just one aspect. We need the broad scope that can encompass

education and economic development, that can encompass encouraging the private sector and analyze economic opportunities.

We really appreciate the consideration of the economic diagnostic

fund, the incubation fund, in addition to the technical assistance
56

fund on that. Because we cannot expect our people in our communities to analyze economic opportunities and make good choices if

they do not have the tools to analyze the opportunities in this global economy.

We very much recognize it is a global economy. So many decisions that are made in the economic realm are outside of our state

and are outside of our country. We need to recognize that. The

Congress needs to give Native Americans the tools to compete globally and not just compete against each other or compete isolated in

our own small areas.

We are also re-thinking Federal spending that is coming into our

state for our people, and re-thinking what can be done to improve

the effectiveness of the Federal resources that are coming in. We

have a number of recommendations that can be done on that. Basically, what we are looking at is trying to do more with what resources we have, to try to make it more effective. We are finding

that in some areas what we need is Federal resources that will

support the introduction of new ideas and champions for new initiatives, not flooding the area with lots of money, just the people

that are interested and the leadership in the areas that are interested in going forward economically and socially and culturally,

that they need the support to make the changes.

We are very interested in systemic change. We are very interested in growing success. If we see a successful program or project

which is effective in one village or effective in five villages, we

ought to have policies in place that grow that to affect 25 villages

and 100 villages. Success will breed success. We have a lot of shining stars of things that work in our state. The CDQ program is a

prime example of a successful economic policy decision that Congress helped enact, which in a very short period of time created $40

million in new wealth. It is now up to about $500 million in new

wealth for those coastal communities in vesting the local people

with percentages of the fish resources, and letting them engage in

the marketplace on that.

So there are successful models out there. We need to just grow

those ones.

Okay, now to the leadership forum we had. I said I will try to

keep my comments short on that because I am very enthusiastic

about that.

The CHAIRMAN. We have a vote in about 20 minutes, so we have

to move along, Julie. I hate to rush you.

Ms. KITKA. Okay. I will be very quick.

Basically, it was a very significant conference that was held, with

the help of our congressional delegation, Senator Murkowski, Senator Stevens and Congressman Young. We thank them very much.

We hosted a conference with Harvard University, the Center for

International Development, with the participation of the World

Bank, the Asian Development Bank and the Inter-American Development Bank. We were very interested in sharing experiences in

success, and we definitely found that there was common ground

and areas to work together on building toward a knowledge-based

economy.

I really urge the committee to take a look at the whole area of

knowledge-based economies as far as native economies, because we
57

believe very strongly that that is a direction that we need to move

forward in. Basically, the 30-second version of a knowledge-based

economy is an economy that innovates within itself, and that is

willing and able to accept innovation outside of the economy. I

think if we can move in the direction of supporting native economies to be able to create innovation internally and use the mind

and brainpower of our young people in particular, we will make

those breakthroughs that we need to have.

Lastly, like I said I could probably go on for a long time on this

because we have a number of positive things that came out. I will

bring to your attention the World Bank’s development marketplace

as a very innovative idea which we are going to be implementing

in the state. It is again putting money behind innovative ideas and

encouraging practical solutions to problems. We are very excited

about that.

But we would also like to urge the committee to work with us

on successful initiatives that the United States has used abroad

with the different multilateral institutions and the development

banks, and what the Bush administration has done in the Millennium Challenge Account initiative, in which the Congress has recently formed the Millennium Challenge Corporation now headed

up by Secretary Colin Powell.

This new entity and its mission, which manages currently about

$5 billion in assets, we believe that there is a role for a domestic

version of this, and this might be something that could be considered as you are reworking this piece of legislation, to take a look

at the strengths on that. But that recent initiative from the Bush

Administration we believe has a very strong component that could

be used domestically, especially with its emphasis on results-based

management. I think a results-based management approach is

something that we hear from OMB and everybody else that they

want to see us move forward on Federal resources.

There are some very innovative ways to do results-based management, and it is something we are very much interested in piloting in our state with some of the Federal resources that come up

there, because we think that the results-based management will

help us move from just building a health clinic and saying how we

are satisfied that we built a health clinic, but being able to say now

that we have a health clinic, we see these health indicators going

down; or building a school and not only saying we built a school,

but being able to say the education of our children is going up.

So we commend those as examples of some new parameters and

policies that I think will be fruitful for the coming year.

With that, I will wrap up my testimony, and appreciate the invitation to testify.

[Prepared statement of Ms. Kitka appears in appendix.]

The CHAIRMAN. I could not get to your last Alaska Federation of

Natives Conference. I am sorry I could not, but staff did go up, as

you know, and came back with some fine reports about the event.

They found it very educational and informative. Thanks for inviting us.

We will now move to Chairman Carl.
58

STATEMENT OF CHESTER CARL, CHAIRMAN, NATIONAL

AMERICAN INDIAN HOUSING COUNCIL

Mr. CARL. Chairman Campbell, again it is an honor to come before you. I would first like to thank you for all your leadership

these past few years. Certainly, being a member of the Navajo Nation, and at one time being nominated for the Indian Hall of Fame

with you, was an honor again likewise. Of course, Vice Chairman

Inouye, his strong support these years, and distinguished member

Murkowski.

On behalf of the National American Indian Housing Council,

thank you for this opportunity to address you today.

Across this country, thousands of native families are facing housing conditions similar to those of undeveloped countries. The problem is accelerated by the remoteness, the rural location of tribes,

many of which have few economic opportunities. As the mainstream American economy progresses, development has not extended to native communities, in part because of the land jurisdiction, but for many other reasons as well.

One of those is the Federal policies. So today, we find ourselves

in a situation seeking ways to help tribes take advantage of the

private market and develop their own economies without relying

solely on Federal subsidy or gaming. I understand the committee’s

purpose and this hearing is to evaluate the creation of a tribally

owned development corporation that could assist in developing tribal economies.

I have learned much through my work with the Navajo Nation

and my long career as an Indian businessman. As a businessman,

the key to economic success is to utilize rules that are proven to

work to build capital and to take advantage of them in ways that

other successful businessmen do.

Although tribes are unique and their structure and culture, I believe a solution to economic challenges can only come through

sound investment and business practices that integrate tribal

economies with the greater financial community. I believe that capital growth through a development corporation has the potential to

stimulate tribal economies in ways that could lead to less reliance

on the Federal Government.

While some tribes have been successful in economic community

development, this resourcefulness is often lacking on many American Indian reservations. It seems that over the course of hundreds

of years of dealing with Indian tribes, the Federal Government has

created unnaturally scarce resources of physical infrastructure, financing vehicles, and most important, land, all the things that

make an economy function, and replacing those functioning economics with a system of Federal subsidy.

Many people have unfairly criticized tribes for not being more

successful in a market-based system, when the government has in

fact isolated them from that system. We must look at some of the

goals. Our first goal must be to continue to eliminate the policies

that hinder economic growth on reservations in our Indian communities. For example, a tribal member goes to a lender to get a mortgage loan and is approved, pending title clearance of the land. Had

the loan been on fee land, the tribal member could expect to receive
59

a title status report in a matter of days. With trust or allotted land,

it takes many months to obtain a title status report.

While land title issues continue to be a major concern on reservations, they are not the only impediment to development. We are

told that efforts are under way at BIA to address this situation, but

the problem was not created overnight and will not be solved overnight.

The House Financial Services Committee, in response to frustration voiced by tribes at a congressional field hearing, is working

with the National American Indian Housing Council to develop legislation that would reinforce and more clearly define the ability for

tribes to choose to process land titles in-house.

The inability to create effectively a registration tracking system,

one that would allow tribal members across the country to engage

in trade and mortgage borrowing that most of the rest of us take

for granted is an example of how an inadequate legal infrastructure hampers economic development in Indian country. Later on, I

will propose an idea that I would like this committee to seriously

consider.

Lease recordation is only one of the challenges the tribes face.

Many businesses which have considered operating on the reservation have not done so because of concerns with legal infrastructure.

In some cases, the concerns are valid, and in others they are not.

Regardless, any businessman that is going to invest on tribal land

needs to know that they can get market rates back for their investment.

It is in diversification that our economy thrives, and I can understand the value of having an Indian-owned bank that can create

and maintain relationships in communities that facilitate interaction between potential consumers and the institution itself. Likewise, creating an Indian government- sponsored enterprise within

this corporation to purchase loans from such a bank would step up

mortgage activity. But it should not be to the exclusion of others.

Institutions like Fannie Mae connect Wall Street with lenders

and in doing so create a mechanism for investment capital to actually make loans more plentiful and affordable. We should find ways

to connect the tremendous capital resources of this country and the

global economy of Indian country. More important, all these large

institutions need their feet put to the fire in working in Indian

lands. For example, we have been working with Fannie Mae and

Freddie Mac to establish a real definite goal on how many mortgages they can process in Indian country. To date, that has not

happened.

As an alternative solution, we partner with them and other agencies to come out with a goal of producing 100 mortgages on either

new construction or rehab in Indian country.

Programs with a single purpose could be seen as a contributing

factor to the failure of many programs designed to assist tribes.

Successful models such as Public Law 93–638 provide assistance,

but also provide flexibility in implementation.

Community development through private investments are key for

certain native-owned corporations and could allow tribes to purchase assets and businesses and support housing. We know that

housing alone is not enough. Investment in housing is a tremen-
60

dous stimulus for American communities, but only when the opportunities and legal infrastructure exists. Simple housing alone just

provides a roof. Housing development with a manufactured housing

plant, with a roofing business, with a title plant, a hardware store,

or building supply store stimulates the local economy.

Home equity is one of the greatest builders of personal wealth,

and we must move from subsidized housing to home ownership to

allow tribal members to grow personal wealth. For example, on

Navajo, with our housing authority, we have developed a self-insurance program. We have been able to provide employment to seven

people, but more importantly establish $13 million in reserve from

savings by managing our own risk management program. We have

developed a cabinet company that has been able to gross close to

$1 million in sales a year, and continually for the last 6 years employs 30 people.

We have provided incomes through our mortgage program, which

is 100 percent guaranteed, by taking the NAHASDA grant and putting that into construction financing and then taking the home and

refinancing it and using the mortgage proceeds to provide additional income.

We have developed a manufacturing plant which is in the process of being constructed, which will use fly ash to build building

materials which will return back to the housing authority $28 million in 8 years.

So these are some of the examples of what we have done within

the Navajo housing authority. Additionally, we have developed a

modular home construction plant where we use volunteer labor to

produce a house for $35,000.

So as to providing some of the recommendations that this committee has asked for, I believe there are some recommendations I

would like to provide which may be very useful to this committee.

While many in this room may not immediately agree with my opinions, I believe personally that for business purposes we need to

really consider taking land out of reservation trust land and putting it into fee land, which would help tribes get mortgages or business leases executed.

By doing so, you develop a market, even though the individual

lot may have cost $40,000 to develop and put water and sewer and

electrical connections to that land. But if the land is worth $5,000,

that is the market. At least you know that would be the market.

If it contains trust land under lease, then there is no such way of

knowing what that asset would be worth. So you develop a market

for that.

One example is with the Flexcrete plant, we had to relocate off

the reservation, but close to the reservation, simply because we

would not be able to expect return on our investment in the property. So by purchasing land, we at least have a fallback to recoup

our investment in case the business went under.

We have other recommendations that I would like to offer. One

of them is to as Secretary Anderson discussed, look at the human

resource aspect. One of the problems I see in these businesses, is

that as a number one challenge to economic progress, a lack of

human resources, not just the monetary resources. There is a severe shortage of people in Indian country who have business sense.
61

Most of our people operate under the welfare mentality. The committee and the Congress has done very well in providing self-determination provisions in a lot of the legislation. However, we have

not promoted that same self-determination to Indian tribes, meaning that the Indian tribes themselves must also look at developing

self-determination provisions in their own statutes and their own

constitutions.

There is, however, the trust responsibility, but it only provides

for so much. In order for tribes to move forward, they need to also

look at a self-determination provision.

So looking again at the welfare mentality effectuated by Federal

policies, we need to be able to provide in the legislation technical

assistance that would allow internships similar to what Indian

Health Services does with doctors and nurses, develop scholarships

for our students to go into a business environment, even an internship with some of the large corporations, and bring that knowledge

back to the reservation at a salary which is competitive and not

necessarily based on the reservation pay scale.

The other recommendation I would like to also provide: This

committee is looking for an agency which this program can be

placed under. Although we do have our issues with Housing and

Urban Development, I believe that is one legislation that has been

a prime example of success being flexible, driven by tribal leaders

such as Chief Martin in negotiating rulemaking to get a lot of regulations changed, which makes it more tribally driven.

I believe that the proper agency may be HUD, but with some

minor twists. One of those may be to elevate the position of Deputy

Assistant Secretary to the Assistant Secretary’s position. Today, we

find some of the policy decisions coming up from the Assistant Secretary that do not necessarily agree with Indian country, only because we do not have direct contact with the Assistant Secretary.

Last, in closing, if we do not work to provide the opportunity, the

drain of resources from Indian communities, not only the business

investment, but the human investment, we will not be able to meet

the needs of our people down the road. I commend this committee

for taking the step to look at this legislation to allow opportunities

for Indian people.

I would again like to thank the members of this committee for

continued support of tribes for Indian housing programs and all of

the Indian tribes as well. I will be happy to answer any questions.

Thank you very much.

[Prepared statement of Mr. Carl appears in appendix.]

The CHAIRMAN. Thank you. We will have some questions.

Ms. Apoliona.

STATEMENT OF HAUNANI APOLIONA, CHAIR, BOARD OF

TRUSTEES, OFFICE OF HAWAIIAN AFFAIRS

Ms. APOLIONA. Mr. Chair, my name is Haunani Apoliona and I

am chairperson of the elected board of trustees of the Office of Hawaiian Affairs.

I would just like to take a moment to acknowledge others who

have traveled with me from Hawaii from the Office of Hawaiian Affairs: Trustee Stender, our administrator Clyde Namuo and Chip

McClellan, manager of our economic development program. I would
62

also like to acknowledge the presence of our Washington, DC bureau, chief, Office of Hawaiian Affairs, Martha Ross and two of her

interns, Mana and Helen, who are here this morning.

I would like to thank you for the opportunity to be present to

provide our comments on S. 519. We have basically one suggested

amendment, and that is in the findings sections of S. 519 the Congress defines Native Americans as either a member of an Indian

tribe or a Native Hawaiian. We ask that you consider amending

the definition in section four to use the definition of Native Hawaiians that is found in S. 344, the Native Hawaiian Government Reorganization Act of 2004.

We feel after reviewing S. 519 that it certainly will provide the

opportunity for productive economic development policy and analysis that can and will result in improving the material standard of

living of all Native Americans to include Native Hawaiians.

Development of unique programs, bringing the resources from

the Federal, State, and private sector together to create new or expand existing industries, business and economic development opportunities, establishing localized incubator and entrepreneurial

training programs, and providing policies and institutional support

to assure economic solvency for all Native Americans will be and

should be the major goals of this program.

In the interests of time, I will ask that my 3-page testimony be

entered for the record. Once again, we want to commend you,

Chairman Campbell, for developing such an important piece of legislation, and we do support continuing your efforts, as well as supporting our Native Hawaiian Government Reorganization Act of

2004.

The proposal in S. 519 will certainly complement the economic

self-determination for Native Hawaiians that we see in the near future horizon as we go forward. We want to thank you again for inviting Native Hawaiians to take a seat at this table among our indigenous people.

Mahalo.

[Prepared statement of Ms. Apoliona appears in appendix.]

The CHAIRMAN. Thank you. Your complete testimony will be in

the record.

Ms. Spilde.

STATEMENT OF KATE SPILDE, RANCHO MIRAGE, CA

Ms. SPILDE. Good morning, Mr. Chairman and distinguished

members of the committee. My name is Katherine Spilde and I am

currently a research fellow with the Kennedy School of Government at Harvard University. I am honored to be here today to participate in this discussion of the opportunities that could potentially be realized through the creation of a tribally owned development corporation. I will be very brief.

I want to commend the committee for undertaking the very important task of addressing the needs for access to capital in Indian

country. I am particularly excited about the committee’s interest in

creating a research component and economic data repository that

will address our lack of knowledge about the economic needs and

highlight the economic activities and best practices of native communities.
63

While my written testimony provides more detailed information

about my research on Indian gaming and its application to tribal

economic development, I will limit my remarks today to my support

for the committee’s interest in and commitment to economic needs

assessment and best practices in Indian country as it is expressed

in the concept of a tribally owned development corporation.

While we know a great deal about the obstacles to economic development in Indian country, including physical infrastructure deficits and the lack of human capital, among others, there is very little research that quantifies the economic needs of native communities. This lack of quantifiable data results in a lack of adequate

representation to governmental agencies and ultimately a lack of

sufficient funds to undertake meaningful development.

Of course, one reason for the lack of economic data on native

communities is the fact that there is no single agency charged with

assessing and then addressing economic needs. Additionally, any

economic figures that we do have access to, such as the NIGC’s

gross gaming revenue figure, are not well contextualized due to a

lack of benchmarks. For example, just last week the NIGC revealed

that the national 2003 gross gaming revenues for Indian gaming

topped $16.7 billion. While this is an impressive figure, we cannot

definitively state how sufficient or insufficient that revenue is with

regard to meeting the needs even of those tribes with gaming,

which of course represent only about one-third of all native communities.

So even those agencies that do attempt a systematic needs assessment find that one of the challenges is the lack of meaningful

benchmarks for comparisons between mainstream America and Indian country. So while I realize that the research component of this

economic development corporation is a small part of the overall

concept, I believe that its potential to contribute to our ability to

make quantified statements about economic needs in Indian country is one of its most meaningful features.

Regardless of which form a development corporation may take,

I support the committee in its goal of creating a unified economic

development strategy that includes research into economic needs

and best practices of native communities among its key features.

Thank you for the opportunity to present my ideas today.

[Prepared statement of Ms. Spilde appears in appendix.]

The CHAIRMAN. Thank you.

That was our call to vote so we are going to stand in recess about

10 minutes while I run over there and back.

[Recess.]

The CHAIRMAN. The committee will be back in session. We will

continue. I would like to ask a few questions. Did all of our witnesses come back, or did somebody have to leave? I guess maybe

they are all here.

Maybe just to start with Mark Brown. I was writing a few notes,

you mentioned that you had gone to Wall Street, three different

times, as I heard you say, and the first time you got some access

to capital for 18 percent and the next time it was 8 percent and

the last time was 6 percent. Do you attribute that to a reduction

in prime, them trusting you more, or what was it?
64

Mr. BROWN. It is the trust. I think one thing we have clearly

seen is banks are hesitant to work with sovereign nations because

they look at that as, what does that mean, are there controls, are

there protections.

What we have done besides the facility itself proving financially

it can provide the needs of the leverage ratios, we also as a tribe

have shown that the government structure is in such a way that

it is secure and competent and it is going to move forward.

The three questions I am asked every time, it has only been

three times, I go to Wall Street, they want to know how long my

term as chairman is, first, so they know that there is a stability

in government there. They want to know are our rolls closed, looking at maybe some changing dynamics of the leadership. And third,

what is your per capita plan, and is that stable. So with that, confidence that has built over the last few times we have been down

there.

Another key component is the personal contact. I am constantly,

consistently meeting with the bankers and so they know who I am.

So I represent the tribe. They get a comfort level with me as an

individual, and it also helps put that same comfort level with the

tribe. So I think it is important for tribal leaders to be involved in

these issues.

The CHAIRMAN. The last time I was up to visit you, it has been

quite some time ago, the new hotel and conference center was not

quite open. Has that been a success like your other endeavors with

the Mohegan Tribe?

Mr. BROWN. Everything is complete, running, and it is nice to

say ahead of budget, so we are happy with it. It is working very

well.

The CHAIRMAN. S. 519 I think is important to gaming tribes. Can

you tell us why a concept like S. 519 is so important for your particular tribe? Does it give you any advantage you do not have now?

Mr. BROWN. What it will do for us, as we reach out into Indian

country looking for it to help other tribes, maybe even doing gaming ventures or other businesses, it allows us to understand that

there will be financial stability there, financial resources for those

tribes when they move forward. We understand if we come to the

table because of our track record, that will give some strength to

their borrowing power. But S. 519 will add that extra component

so we can almost guarantee that as we try to move other projects

forward, there will be resources.

The CHAIRMAN. And so far have you invested capital with other

tribes to develop facilities?

Mr. BROWN. We are currently working with the Menominee Tribe

in Wisconsin, and that is working very well. We have also been approached by other tribes. As far as we are concerned, if we had that

core competency, right now of course it is gaming, and tribes want

to look to do that, it is nice to know that the Federal Government

will also be assisting us in some way to get tribes to where they

are going to be economically self-sufficient.

The CHAIRMAN. I am a big supporter of gaming, as you know. I

was here in 1988 when we wrote that bill. In fact in retrospect, I

guess we could have done a couple of things differently, but I think

it has been a tremendous success. But I have this feeling, I have
65

to tell you, Mark, that with roughly 30 more on the drawing boards

around the country, we are going to reach a saturation point at

some time. All tribes are not going to be equally successful.

I note with interest that some of the forward-thinking tribes are

already starting to divest money into other things. I think that is

really smart to do. Are the Mohegans also doing that?

Mr. BROWN. What we are doing, we are dividing two components.

One will be gaming, which we would be doing and the tribe itself

is looking at diversification also. I think that the gaming aspect,

though, is also the residual effect or the ripple effect of the other

products that we buy from Native American tribes. So we can actually help to assist in other ways through that venue, too.

The CHAIRMAN. You made the observation in the past that tribes

who exercise their sovereignty, I guess that means sort of selectively waive sovereignty, what did you mean by that? That word

‘‘sovereignty’’ around here, you know, ears perk up immediately

with our tribal people.

Mr. BROWN. Absolutely. There are tribes, and I have met with

tribes where they will not look to ever waive their sovereign immunity even on a limited basis to do business. Unfortunately, the

mechanisms for conducting business have been in place. It is up to

us to find the ways that we as Indian country can also participate.

If a tribe would not consider waiving its sovereign immunity in

a limited fashion, that can happen. The ability to waive sovereign

immunity is in a sense utilizing it. You are using that tool, that

ability. It is not giving it away. It is utilizing it for what it is needed.

I think that is something that has to be looked at more often,

knowing and understanding it.

The CHAIRMAN. Waiving it would mean if you waived it, it basically would mean if you had an investor and they lost money

through whatever reason, they would have an option to go to court

to sue to recover that money.

Mr. BROWN. Absolutely.

The CHAIRMAN. Julie, if I can move on to you, you have spoken

often about the native cultures, how important they are to the native economies. Could you explain to the committee what role native cultures would play in the establishment of a tribally owned

development corporation, traditional cultures?

Ms. KITKA. Thank you, Mr. Chairman. That actually is an example of a success that came out of this recent leadership forum, out

of both the Asian Development Bank and the Inter-American Development Bank, which is a concept of development with identity.

They have found some of the best success that they have had with

indigenous people is where they strengthen and enhance the culture. It gives the indigenous people an economic edge.

One of the benefits we see of a development entity such as what

is in the bill is having a broad scope of cultural, social, economic

and educational development so that you can mesh different aspects on that to be more effective in the niche that you are working

on.

Also, to respond to one of the benefits that we see of this, we

think it will provide what we describe as patient money. Many of

the economic opportunities are not viable on commercial banks,
66

and commercial banks will not go into them. But if you had the

ability to provide patient money, 30- and 40-year loans at zero percent interest with just a 1-percent fee such as the Asian Development Bank does in some of their areas that they need to stimulate

economic growth, or you had some very, very attractive rates on

that, you will see economic opportunities flourish in some areas

that have been very stubborn to create that.

The other benefit we see on this development identity is for the

Congress to vest it with the full faith and credit of the United

States. That is absolutely essential to this entity to have, and I

know that the Congress and the government is very hesitant of

doing that because it really makes it an extremely valuable tool,

but I would certainly insist that any entity coming out that it have

that ability because that is what is going to allow it to raise money

on the markets and grow the amount of money of capital that it

has.

The CHAIRMAN. You talked about rural villages in your testimony. I can see how S. 519, just in my own mind, could help with

some of the things that Mr. Carl mentioned, like a furniture factory

or something of that nature. What would be the benefit to some of

these real isolated communities that are in Alaska that might be

400 or 500 miles from the nearest metropolitan area, if I can even

use that word in Alaska. I guess the biggest city is really Anchorage, and some of them are, my gosh, 1,000 miles from Anchorage.

Ms. KITKA. We have had discussion of some of the benefits if

there was a pilot of the development entity in Alaska. One of the

first ideas that came out from one area was the idea of underwriting at zero percent interest a loan to start a second-hand clothing

store where you could employ people to scout for second-hand

clothes, but actually run that, but how that would translate in reducing the cost of living in villages where people are so cash-poor

that the idea of flying out of their village into a regional hub, flying

into Anchorage to buy school clothes for their children and Nike

tennis shoes and all this stuff is cost prohibitive.

So that does not sound like a very attractive idea investment

thing, but if you translate in practical terms how that will impact

people on the ground and how that will allow them to stretch their

resources and give more options for a very cash-poor community on

that, that to me is an attractive idea.

Also the idea of being able to do micro-loans, the $500 loans or

the $1,500 or the $5,000 loans. That is a model that is not used

widely in our state. I think that that, especially with our statistics

on poverty, that most of them are headed by women, the micro-loan

programs around the world, primarily actually a lot of them are

geared toward women and they have very strong track records on

paying the micro-loans back.

The CHAIRMAN. In India particularly.

I would think, too, correct me if I am wrong, but with a lot of

the Native Alaskan villages, they are so isolated. In one respect, it

is a little bit like the Navajo Reservation. Some of the people live

a long way from anybody. Home crafts have become a form of economic survivability. Micro-loans, it would seem to me, would have

a real advantage in that, where people need the materials to carve

or to make rugs or do whatever, and then sell them either through
67

a coop or through some intermediary so they can be taken to the

city.

Ms. KITKA. Yes; In fact, that one example that I used in my testimony, the development marketplace, our first theme on that in

Alaska is going to be to support native artists in both the marketing of their art as well as transmission of the skills and the knowledge from one generation to the next.

I did want to add one other component you might consider in

your bill as you reformulate it. In our very limited knowledge of

these big multinationals like the Asian Development Bank and the

World Bank is we see that they are moving to position themselves

not as just financial entities, but as entities that are considered

knowledge management entities, so the technical assistance that

they provide, the information that they have on successes and best

practices is just as important as the finance that they have. I

would recommend if there is a Native American development entity

that it also position itself as a knowledge management entity and

have that dual role.

Like I said, I just notice from our limited observation. I guess the

importance of that to me is sometimes it is not a matter of money,

it is a matter of ideas. We need to encourage the sharing of ideas

and things that give our people hope. For example, something that

is going on in the Navajo Nation that we in Alaska will not know

about, but just the sharing of best practices or information could

be just the spark that takes off in some area that had we not

shared the information.

The CHAIRMAN. Chairman Carl, you stated there is a value in

having a native-owned bank. Some people I think view this S. 519

as we have gotten some feedback on it, as creating some competition for native-owned banks. As I understand it, one of the panels

yesterday had some concerns that a tribal development entity

might or might not have a big impact on native-owned banks. Do

you have a feeling about that? It is really some kind of an enhancement mechanism, not a competitive mechanisms for native-owned

banks.

Mr. CARL. Right. Mr. Chairman, I appreciate that question. What

we see is that competition breeds performance. In this case, if there

is another native corporation, then that would provide competition

to native-owned banks. But we also see if we develop a narrow policy to have tribes rely on native-owned corporations, native-owned

banks, then it relieves the big financial institutions such as Fannie

Mae and Freddie Mac not to perform separately on behalf of Indian

country.

So we see that as an issue. In looking at this in broad perspective, we need to be able to connect the native-owned corporation,

native-owned banks with the bigger institution, again holding their

feet in the fire to perform as well.

The CHAIRMAN. In your testimony, you gave an example of how

difficult it can be to put into place business rules and regulations

because of cultural reasons, traditional reasons. That is certainly

understandable. I can understand why they may not want to pass

certain business laws that they have some concerns about it. Do

you see these business laws such as the Uniform Commercial Code
68

as necessary to encourage private sector capital development on

reservations?

Mr. CARL. One of the policies that has placed Indian country in

the position it is today is the welfare mentality or dependency

state. Congress with the help of tribal leaders has developed the

self-determination act, which allows the recognition of the trust responsibility on behalf of the Federal Government, but at the same

time you have to be able to incorporate self-sufficiency into your

program to leverage financial institutions to meet the needs of people on the reservation.

I believe that legislation has gone a long ways in recognizing

that dependency is not enough to meet the needs of your people.

So as a tribal leader, you have to go out and develop legislation

which would promote getting away from that dependency. Part of

those would be enactment of legislation that includes not only the

mortgage code, but the Uniform Commercial Codes that will promote those types of activities.

Just for an example, taking the trust lands out of trust and putting that into fee simple land. Right now, as an individual Indian

member of my tribe, I am restricted to one homesite lease. That

homesite lease really has no value other than the lease that is

held. So in this case, if you were to promote capitalism, if I see another homesite lease that is fee simple, if I have the capacity to buy

that fee simple, then I can buy it. I can develop that, or a business

site at least. So you promote Donald Trump activity on the reservation where you really do not have any, other than having the casino tribes and other tribes promote economic activity. You develop

the wealth of that individual Indian tribal member.

The CHAIRMAN. Well, we probably will not have to promote Donald Trump. He is quite capable of doing it all by himself. [Laughter.]

We have a delicate balance, of course, between trust responsibility and what I sometimes call forced dependency because traditional cultures did not want to be dependent on anybody, and here

they find themselves dependent on the Federal Government.

Sometimes we have this head-on collision when we talk about

getting Indian people less dependent, sometimes they construe that

to mean, oh, then is that going to let the government off the hook

from trust responsibility? I do not think it should, but certainly 150

years of mistakes the Federal Government has made to literally

make Indian people more and more dependent on grants from the

feds has not worked.

I was reminded yesterday by one of my staff, it is a little bit like

the old days where they got issuance of a beef allowance and blankets and pots and pans or something of that nature. Well, they are

still getting sort of an allowance, only now it is called commodities

or it is called Federal grants or it is something, but it is still a form

of dependency. Until we can allow tribes to develop their own resources and their own skills, that is always going to be in the background.

It seems to me we have to make sure that we allow them to get

more independent, but at the same time not let the Federal Government step back from its responsibilities under the treaties.
69

In September 2000, we had a representative from Kayenta Township testify on the Indian Tribal Development Consolidation Act.

That testimony was interesting. How is that Kayenta Township

doing?

Mr. CARL. Mr. Chairman, the Kayenta Township is the first creative idea outside the box of allowing the local government, in this

case the chapter, to provide its own taxation, to provide its own

zoning laws and provide its own leasing option. There have been

many challenges to that, but I believe it has been very successful.

Having to operate housing programs within that community, I

have to operate under their jurisdiction of government. It is a new

process, but it is also a form of self-sufficiency, being able to look

at ways to develop resources to meet the needs of the community.

So having street lights on the reservation is a commodity that is

not necessarily found on the reservations, so if you drive on a reservation most of the time at night it is very dark. But in this case,

they have been able, just for an example, been able to put street

lights on some of their streets. I believe that model is successful.

The CHAIRMAN. You also stated that taking land out of trust for

business purposes may help tribes, not hurt them. Should we do

that strictly for businesses, such as shopping centers, manufacturing and so on? Or should there be other reasons why we should

take it out of trust?

Mr. CARL. I believe it is still under control of the tribe as a sovereign government. We have done business deals with other outside entities, banks and so on through my housing authority. We

always rely on jurisdiction of the tribal court. There are issues with

licenses and stuff. We refer it to arbitration. But the reality is so

long as you have tribal control, whether it be tribal court or some

type of jurisdiction of the tribe, if you have that set up, why not

look at a new way of doing business? Having land acquisition in

the outside world, just for example in the Durango area, 5 acres

is worth now close to over $1 million. On the reservation, it is not

worth anything.

But even though it may cost some money to develop it, there is

still a market, however you cannot trade that market freely. You

still have to go back and terminate the lease, then you have to go

back through the tribe, through the BIA again to get another lease

approved. By the time you are done, you are 5 months or 2 years

down the road in getting that transaction. If you were to convert

that into fee simple land, then you just transact in fee simple land

that belongs to an individual within the tribal jurisdiction.

I know it is a new idea, but I think it is an idea based on capitalism, based on whoever has the funds to create those type of transactions.

The CHAIRMAN. Thank you.

Ms. Apoliona, you stated that the Office of Hawaiian Affairs approved a 2000–07 strategic plan and the plan has a two-part economic initiative impacting 7 percent of the Native Hawaiian population, and the second goal was obtaining return on investment

goals. What types of economic activities has the Office of Hawaiian

Affairs been involved in in implementing that plan?

Ms. APOLIONA. We have and continue to administer a Native Hawaiian revolving loan fund serving and providing capital to Native
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Hawaiian first-time business owners and/or business owners who

want to expand their businesses. In years past, we also have assisted in community-based economic development projects in the

State of Hawaii. That has been primarily the extent of our service

and support to Native Hawaiians who want to move forward in economic development.

We currently are looking at a project on the island of Maui that

has been longstanding for a marketplace. It is in the district of

Hana and that has been looked at as an opportunity for the community because it is a highly visited spot on the island of Maui,

and an opportunity for the community to establish storefront businesses that can serve the people traffic that comes as visitors to

Hana.

There is much more certainly that we can be involved in, and we

see the opportunities that S. 519 may be able to provide to be very

complementary to some of the future objectives.

The CHAIRMAN. You are helping in housing. You mentioned the

Native Hawaiians, some of them, have been priced out of conventional housing because the market is going up so fast. Would S. 519

offer some support for Native Hawaiians, to develop housing for

Native Hawaiians?

Ms. APOLIONA. Yes; providing always additional resources so people can afford to stabilize their housing situation is key. Certainly

with some of the thoughts and concepts in S. 519, that would help

a lot.

The CHAIRMAN. Thank you.

We will probably have some further questions in writing. Senator

Inouye may have and some of the other committee members may

have also. But I certainly appreciate everybody appearing today. I

am sorry to keep you when I had to run out.

Julie reminded me of something, though. I was just musing on

the way over when I voted and came back. As you probably know,

Senator Inouye and I have worked for 18 years on the new Museum of the American Indian. That was one of my first bills and

he took the lead on it here in the Senate when I was on the House

side. September 21, that whole week is the opening, as you know.

We had a meeting the other night with Rick West, who is the director, who told us they expect between 10,000 and 20,000 Native

Americans to be in Washington during that time, more than any

time in the history of America, which is really something. There is

going to be a procession from the Washington Monument to the

building where we will do the ribbon-cutting. We are of course encouraging people to wear their native dress.

But I got to thinking when I saw Julie that September might be

pretty hot for a parka. [Laughter.]

The CHAIRMAN. Native Alaskan people may have a particularly

difficult time.

Ms. KITKA. We have summer parkas. [Laughter.]

The CHAIRMAN. You have summer parkas. Those of us who wear

buckskins are worried about just even the buckskins, how hot it is

going to be.

Ms. APOLIONA. Senator, the Native Hawaiians coming from Hawaii, we come really light, dress really light. And we will be there

on the Mall as well.
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The CHAIRMAN. And you will be very comfortable, but those of

our friends from further north may be a little bit uncomfortable,

but it is going to be worth the trip and worth the day, so we are

really looking forward to seeing everybody.

Thank you for being here. This committee is adjourned.

[Whereupon, at 12:10 p.m. the committee was adjourned, to reconvene at the call of the Chair.]

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APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF DAVID W. ANDERSON, ASSISTANT SECRETARY, INDIAN

AFFAIRS, DEPARTMENT OF THE INTERIOR

Good morning, Mr. Chairman and members of the committee. I am David Anderson, assistant secretary—Indian Affairs. Thank you for the opportunity to present

the views of the Department of the Interior on S. 519, ‘‘The Native American Capital Formation and Economic Development Act of 2003.’’ We understand the committee will be significantly amending S. 519, therefore, our comments do not speak to

provisions of S. 519, but rather address the concepts of the bill. The Department

supports exploring creative approaches to economic development in Indian country.

Economic development on tribal reservations poses many challenges. Access to

capital in Indian country is extremely limited. This shortage of capital represents

one of the primary barriers to comprehensive and lasting economic development. In

addition, there are few opportunities to generate capital on Indian reservations.

Studies show that unemployment on or near Indian reservations commonly exceeds

50 percent and in some areas that figure jumps to over 90 percent. Unemployment

in Indian country has placed more than 500,000 people who live on or near Indian

reservations at or below the poverty level. These obstacles are further compounded

by the rural location of most Indian reservations. As a result of these factors, Indian

country accounts for many of the poorest areas in the United States.

Although poverty and joblessness pose great obstacles to economic development in

remote reservation settings, economic development is not impossible. Increasingly,

tribes continue to overcome these obstacles and create growth in reservation economies.

The Bureau of Indian Affairs [BIA] is working with tribes to continue discovering

creative and long-term solutions to building sustainable tribal economies. Through

the recent reorganization of the BIA, the offices of Indian Gaming Management,

Self-Governance, and Self-Determination were elevated to the Assistant Secretary’s

Office under the newly created Deputy Assistant Secretary, Policy and Economic Development. By elevating these and other economic programs, the BIA will emphasize

expanding reservation and tribal community business opportunities and Indian employment. With the creation of the new Deputy Assistant Secretary, the BIA hopes

to maximize efficiency in assisting tribal economic development.

Another challenge the BIA is working to address is the issue raised by many investors and private lenders regarding tribal legal infrastructure; inadequate or nonexistent legal and business codes. To address this issue, the BIA included in its

2005 budget request $1 million to help tribes develop tribal ordinances and commercial business codes. We view this as a positive first step to help encourage more capital investment on tribal lands.

The Department also encourages the use of self-governance programs as a method

of encouraging tribal economic development. Through self-governance programs, the

tribes control the administration of Federal programs to ensure the programs meet

the needs of the individual tribe. For the tribes that choose to engage in self-governance or self-determination compacts and contracts, this direct control creates tailor-
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made programs that lead to the creation of viable and stable economies and tribal

self-sufficiency. We will continue to work with tribes to expand self-governance and

self-determination as a way to find creative solutions to economic development.

Currently, the BIA independently administers a program that is addressing some

of the financing needs of Indian country. Since 1974, the BIA has successfully administered an Indian Guaranty, Insured, and Interest Subsidy Program. The mission of the program is to ‘‘stimulate and increase Indian entrepreneurship and employment through the establishment, acquisition or expansion of Indian-owned economic enterprises.’’ The program guarantees loans up to $20 million dollars from

the private sector to promote economic development of tribes, individual Indians and

Alaska Natives. The guaranteed and insured loan portfolio currently totals $271

million. With enactment of the fiscal year 2005 Budget Request, the program expects to leverage private sector financing of 65 new businesses and create 1,300 jobs

on or near Indian reservations. The guaranteed and insured loan program has

achieved a success rate of 93 percent in the number of businesses without default

for all loans funded since fiscal year 1992. From 1992 to the present, 719 loans have

been guaranteed, and of that total only 51 loans have defaulted.

While the BIA loan program is successful and takes steps toward addressing the

need in Indian country, it does not fulfill every financing need. There is a gap between the small scale financing the BIA can provide and the funding required for

other economic development projects.

We would welcome the opportunity to further discuss our program. Additionally,

we are willing to participate in further discussions regarding innovative approaches

to enhance economic development in Indian country. Thank you for the opportunity

to participate in the discussion today. I would be happy to answer any questions

you may have.

U.S. DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY,

Washington, DC, November 9, 2004.

HON. BEN NIGHTHORSE CAMPBELL,

Chairman, Committee on Indian Affairs,

U.S. Senate Washington, DC.

DEAR MR. CHAIRMAN: I am pleased to provide the responses prepared by the Bureau of Indian Affairs to the questions submitted following the July 21, 2004, hearing on S. 519, the ‘‘Native American Capital Formation and Economic Development

Act of 2003.’’

Thank you for the opportunity to provide this material to the committee.

Sincerely,

JANE M. LYDER,

Legislative Counsel,

Office of Congressional and Legislative

Affairs.

Question 1. Where do you think the Tribal Development Corporation [TDC]

should be housed? Do you see such a corporation as a new private entity or should

it be public in nature, such as a new department or Federal agency?

Answer. A Tribal Development Corporation, if created, should be well-managed

and accountable for results. We expect that the proposed Tribal Development Corporation Study Group, created under the revised version of S. 519, will consider

what sort of form would be most successful at ensuring these goals are met.

Question 2. At the Forum on Establishing a Tribally Owned Development Corporation, you spoke about the need for project development as the key to reservation

economic development. Should project development be the focus of the new tribal

development corporation?

Answer. Yes; project development, in the sense of locally controlled private entrepreneurial business, should be a focus of a Tribal Development Corporation.

Question 3. In your testimony on S. 519, you note that Tribal Self-Governance

has lead to the creation of stable and viable tribal economies. Do you believe that

the development of a tribal development corporation would promote a similar stability? If so, how?

Answer. If created, a Tribal Development Corporation would help promote stability. However, in order to promote stability and viability, the Tribal Development

Corporation would need to advocate and support such basic economic development

practices and institutional internal controls such as risk assessment and ensuring
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best business practices. A Tribal Development Corporation could also improve business strategies and relationships.

Question 4. Would you comment specifically on the concepts contained in title

VI of S. 519?

Answer. Title VI of S. 519 provided for the authorization for appropriations. Title

VI of the bill also provided a waiver of the matching funds requirements of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C.

4707(e)). This title has been struck from the amended version of the bill.

PREPARED STATEMENT OF MICHAEL LIU, ASSISTANT SECRETARY, PUBLIC AND INDIAN

HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Chairman Campbell, Vice Chairman Inouye, and members of the committee, I am

pleased to submit this testimony for the record. I welcome the opportunity to share

with you the Department of Housing and Urban Development’s perspective on many

of the concepts included in S. 519, the Native American Capital Formation and Economic Development Act of 2003, which has been introduced by Chairman Campbell.

My name is Michael Liu, and I am the assistant secretary for Public and Indian

Housing [PIH]. PIH is responsible for the management, operation and oversight of

HUD’s Native American programs. These programs are available to 562 federally

recognized, and a limited number of State-recognized Indian tribes. We serve these

tribes directly, or through tribally designated housing entities [TDHEs], by providing grants and loan guarantees designed to support affordable housing, and community and economic development activities.

In addition to those duties, my jurisdiction encompasses the public housing program, which aids the nation’s 3,000-plus public housing agencies in providing housing and housing-related assistance to low-income families.

I would like to express my appreciation for your continuing efforts to improve the

housing conditions of those who need it most. As you have heard from previous testimony, much progress is being made and tribes are taking advantage of new opportunities to improve the housing conditions of the Native American families residing

on Indian reservations, on trust or restricted Indian land, and in Alaska Native Villages. This momentum needs to be sustained as we continue to work together toward creating a better living environment throughout Indian country.

At the outset, let me reaffirm the Department of Housing and Urban Development’s support for the principle of government-to-government relations with Indian

tribes and our commitment to honoring this fundamental precept in our work. Although the Administration has concerns with some of the provisions in S. 519 as

introduced, we are pleased to have the opportunity—at the invitation or the chairman—to work closely with the committee to bolster the effort to build capital in the

Native American community.’’

Capital in Native America tends to come from four primary sources: tribal financial resources, Federal guaranteed loans, grants and tax credits, debt capital, and

equity investors. The latter is woefully inadequate for many reasons. Issues raised

by investors and private lenders include: The legal status of tribal lands; inadequate

or non-existent legal and business codes; insufficient understanding of issues related

to tribal sovereignty and sovereign immunity; a lack of technical assistance resources; uncertainty related to leadership changes in tribal governments, and a lack

of financial institutions and services on or in close proximity to Native American

communities.

HUD is committed to exploring new opportunities to surmount barriers to lending

on tribal land and to facilitating access to alternative sources of capital, financial

services and technical expertise. HUD’s Office of Native American Programs

[ONAP] is currently working with tribal governments, TDHEs, and lenders to increase private housing investments through the section 184 Indian Housing Loan

Guarantee Fund Program, and the title VI Tribal Housing Activities Loan Guarantee Fund.

Many tribes and TDHEs, as well as other tribally affiliated community and economic development organizations, use a project-by-project approach to housing and

economic development. There is a great need to create a more comprehensive approach to the creation of sustainable economies. There are clear roles that tribal

governments, Federal agencies and lending institutions can play in creating these

economies.

The promotion of capital development and economic growth for Native American

communities, through involvement of the private sector is in harmony with our approach to meeting the needs of Indian country.
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The proposed provision of technical assistance to Indian tribes, financial institutions, and other organizations is an on-going part of our efforts to increase mortgage

lending to Native American communities.

We have learned of many of the barriers through the work of a number of Federal

agencies inclusive of the USDA, BIA, the Community Development Financial Institutions Fund and, most recently, the six regional housing summits that HUD’s Office of Native American Programs is sponsoring for its tribal, public and private sector partners.

We recognize the need to increase the purchase of Native American mortgage

loans by the secondary market. We are already working with several entities to increase participation; for example, the Federal Home Loan Bank system and Fannie

Mae. The creation of a new Corporation raises several questions. The entity would

be allowed to enter into contracts, which could lead to the Federal Government

being implicitly responsible if the corporation was not able to fulfill its contractual

duties. While several objectives envisioned in the bill are positive, they can be accomplished through existing Government programs.

In summary, we encourage the development of new and innovate approaches to

meeting the needs of Indian country that advance private sector participation with

tribal nations. We agree with many of the findings as outlined in S. 519 and believe

that much of the poor performance of Native American economies correlates to the

absence of private capital and private financial institutions. We will continue to

work in partnership with tribal governments, Native American organizations, the

private sector, and other Government agencies to support private investment and

leveraging in Indian country. And, Mr. Chairman, EIM is prepared to work with you

to help overcome these barriers to accessing capital in Indian country.
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