RAPID CITY, S. D. ? Barriers to homeownership on tribal land are still formidable, but lenders, tribal governments and federal agencies are looking for ways to overcome them.
One of the many bridges explored at the recent Great Plains Native American Housing Summit here involved tax credits. This approach requires a partnership between tribes and investors and families.
Julien Colvin, acquisitions director for Enterprise Social Investment Corporation, uses tax credits to encourage investors to invest in housing projects on tribal land. He told the conference there is a "broad ugly ditch between an investor's view of what investment is and doing business on the reservations.
"From the investor's perspective there are difficulties in investing on Indian land. They don't know how to create communication, let alone invest," Colvin said.
Tax-exempt bonds are not widespread in Indian country, but they have been used by the Red Lake Band of Ojibwe and the Leech Lake Band in Minnesota, the Standing Rock Sioux in South Dakota, and the Nez Perce and the Salish and Kootenai tribes in Idaho and Montana. Red Lake has far more tax credit investors than any other tribe.
"We have more things in common than separate us. That broad ugly ditch can be bridged if we communicate. There should be no human life without a decent place to live," Colvin said.
Tax credits are used to a large extent outside reservation boundaries, but Colvin said there is little usage in Indian country.
"Some deals will not find investors, but the deal has to be structured to find the investor. The tribe has to show stable leadership of housing authority," he said.
A tax credit deal will last for 15 years. The average tribal housing authority changes leadership every three years, Colvin said. This turnover means that five different administrations must learn about the principals of the tax credit requirements for their housing projects.
Tax credit investments come with rules the housing authority has to live by. Working as a business is the most important, Colvin said.
The tribes that are successful with tax credit investments have stable housing authorities and fully integrated systems that understand the system. Red Lake, for example, has a resident architect who oversees the design of the projects. At Red Lake the homes are built by a tribally owned business.
Tax credit money will be responsible for building more than 550 homes on the various reservations.
Tax credits are limited partnerships by law. The investor does little or nothing but provide the funding. The housing authority and family must do all the paper work for the project and also maintain the property and collect rent on a timely basis. If many of those things are not in place, the investor will not release any funding, Colvin said.
"We look for stability and continuity. If you have a housing authority where the director changes every five years the investors will not be interested. We want someone who is going to be driving the bus who has experience and will drive this through to conclusion. If you change leadership often it will make it harder to attract investors.
"We want to know you have good financial accounting. We want to help improve housing on your reservation. We want a housing authority staff that knows why they are doing their work when an investor comes to your reservation," Colvin said.