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HUD hold on housing millions defies belief for Senate committee

The leadership of the Senate Committee on Indian Affairs flat-out refused to believe that a May 25 ruling in a Colorado courtroom over $400,000 in formula funds forced a decision at Housing and Urban Development to withhold $300 million from tribal housing programs nationwide.

At the June 28 oversight hearing on Native housing programs, HUD Assistant Secretary for Public and Indian Housing Orlando J. Cabrera kept explaining that the U.S. District Court decision on Fort Peck’s housing inventory raises a court-

compliance problem for potentially all Indian Housing Block Grants that have ever been made under the Native American Housing Assistance and Self-Determination Act. To distribute any funding under the same formula would violate a judicial stay, according to Cabrera. In response, Sen. John McCain, R-Ariz., the committee chairman, said he was “fully aware” of all that but kept insisting that he won’t stand for any form of prolonged delay in distributing the funds appropriated by Congress for Indian housing.

“Mr. Cabrera, we’ll be getting involved in this. ... We owe more than that to Native Americans.”

He added that corrective legislation is a possibility if no swifter solution can be found, a hint Cabrera discouraged and McCain repeated.

Sen. Byron Dorgan, D-N.D., the committee vice chairman and ranking Democrat, was, if possible, even more agog than McCain at HUD’s decision, announced to tribal leaders in an inscrutable epistle of June 9, signed by Cabrera. Dorgan denied that HUD had to withhold the $300 million at all because it could have created a reserve fund and drawn from that until the court dispute can be resolved. Cabrera said no, he had thought of that right off and consulted attorneys about it. Dorgan suggested attorneys might be the problem, and later said HUD must have gotten “bad advice.” Cabrera described a variety of efforts are going forward to make sure the interim in funding is brief. Dorgan replied that there never should have been an interim.

The committee met with HUD again that afternoon after the hearing, but the outcomes, if any, could not be ascertained by press time. Meanwhile, in a news conference at the offices of the National American Indian Housing Council, newly installed chairman Marty Shuvraloff said tribal housing authorities without a reserve fund or other rainy-day resources might have to close their doors in the interim.

Tax-exempt bonding bill reaches Senate as IRS, critic reach agreement

A bill has been introduced in the Senate to reform tribal tax-exempt bond issuing authority. Co-sponsored by Sens. Gordon Smith, R-Ore., and Max Baucus, D-Mont., the bill begins to make good on Smith’s vow at a May 23 Senate subcommittee hearing to vigorously pursue reform measures in the current 109th Congress.

Unlike state and municipal governments, tribal governments can issue tax-exempt bonds only to finance “essential government functions” as defined by the Internal Revenue Service. The distinction in the tax code creates cost barriers, in the capital markets, for tribes that would issue bonds to foster economic development and build infrastructure, community centers, housing, schools and health facilities. Tribal leaders, Indian financial professionals, and allied tax and bond specialists have long sought equal standing for tribes with states and municipalities in the tax-exempt bond market.

In a development unrelated to the legislative process but perhaps significant for the bill, the IRS and a key witness in the case for reform have agreed on a reason for the difference in their numbers on audit rates of tribally issued tax-exempt bonds. Gavin Clarkson, of the University of Michigan, has been asked to submit comments on the Smith – Baucus bill. Testifying at the May 23 hearing, Clarkson said the IRS audited 40 percent of tax-exempt bonds directly issued by tribal governments between 2002 and 2005, but less than 1 percent of tax-exempt bonds issued by municipal governments.

The IRS disputed the figure and pulled its reporting forms to support its position that it audited fewer than 1 percent of the tribal bonds.

Now it appears that the difference in so-called “hazard rate” audits is due to private sector refinements in the definition of debt obligations that the IRS does not factor in for audit purposes. Cliff Gannett, acting director of the IRS tax-exempt bond division, said of discussions between Clarkson and the IRS since the May 23 hearing, “I think we’ve kind of come to an agreement that we were comparing apples and oranges to an extent.”

The tax code, for instance, treats bonds issued to finance multimillion-dollar water treatment plants in the same way as bank debt or a lease to finance the installation of portable outhouses, Clarkson said, adding that the IRS does not distinguish between the different debt instruments for audit purposes. Private sector bond market analysts account for bond issuances, but are oblivious to bank debt and finance leasing. The IRS, constrained by statutory language, cannot make that choice in analyzing tribal debt obligations for taxable income. One result of the blind spot on both sides is that IRS reporting forms exaggerate tribal tax-exempt bond issuing activity.

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When the number of forms reported to the IRS as tribal tax-exempt financings is culled for those bond financings that are taken to the capital markets, Clarkson explained, “Direct tribally issued bond indentures are more than 30 times more likely to be audited than those issued by their state and local counterparts.”

Gannett did not offer an opinion of that number. “However he’s drawing his assumptions, I wouldn’t want to say it’s inappropriate or whatever. That’s fine. That’s for him to defend. I wouldn’t want to challenge his basis.”

Cobell settlement legislation adds backing, but settlement number still uncertain

Congressional efforts to reach a legislated settlement of the Cobell v. Norton lawsuit gained new endorsements following a recent Indian organizational meeting in Montana. The Council of Large Land-Based Tribes, the InterTribal Monitoring Association and the Inter-Tribal Economic Alliance join the United South and Eastern Tribes, the Great Plains Tribal Chairman’s Association, the National Congress of American Indians and Affiliated Tribes of Northwest Indians in supporting a legislated solution.

Many of the tribes represented by the organizations appreciate the efforts of Elouise Cobell, the plaintiff class and its attorney team in forcing the Interior Department to account for the Individual Indian Money trust. But especially for the smaller tribes that make up the membership of USET and ATNI, Interior’s reaction has proved far-reaching, affecting whole tribes in their ability to manage their natural resources and provide services.

There is no telling now whether all the same tribes that support a legislated solution to Cobell will still support it once a dollar sum is supplied in settlement.

In the Senate, Sen. John McCain, R-Ariz., is close to plugging a dollar sum into proposed settlement legislation, according to Capitol Hill sources who required anonymity as a condition for speaking because the issue is highly contentious and the McCain bill has not been finalized. If the bill is enacted into law by Congress, the sum would serve to award IIM account holders for losses from their accounts in return for legally settling their accounts, so that no further legal claims of similar nature could be filed against the government. An SCIA staff member said the committee has a number in mind, but as to the specific number he would only add that it includes a zero. A Washington lawyer-lobbyist on Indian affairs, also requiring anonymity because of the issue’s contentiousness, said the number is not likely to be $10 billion, but more like $6 billion to $8 billion.

Yet another Capitol Hill informant who required anonymity before speaking on the sensitive issue said that Rep. Richard Pombo, R-Calif., chairman of the Resources Committee in the House of Representatives and sponsor of a companion bill in the House that is identical to McCain’s – even down to the left-out settlement sum – has not become comfortable yet with a range of settlement numbers that are still on the table.

DHHS agrees to document flexibility for Medicaid IDs

In a final decision issued as a fact sheet June 9, the Department of Health and Human Services included certificates of Indian blood and tribal identification cards among the documents that can be used to establish identity and citizenship under the Medicaid program.

A 2005 law had specified official birth certificates in determining citizenship. Many American Indians, especially in senior generations, were born on reservations and lack birth certificates. On the Navajo Nation, according to Anslem Roanhorse Jr., executive director of the Navajo Division of Health, a majority of 17,500 people over the age of 60 do not have birth certificates. Nor do many people under the age of 60, he added.

Rep. Rick Renzi, R-Ariz., advocated for the policy clarification after the potential exclusion from Medicaid of otherwise eligible Natives and others without birth certificates came to his attention. In a statement released by his office, Renzi stated that the DHHS decision ensures American Indians will not be denied health care on a technicality.

Abramoff report offers recommendations on tribal election, political donation laws

In the recently issued report on its investigation into the misdeeds of prison-bound lobbyist Jack Abramoff, the Senate Committee on Indian Affairs expresses concern about the impact of wealth and outside contracts on the integrity of tribal elections. Abramoff and his also-felonious associate, Michael Scanlon, subverted several tribal elections in order to obtain lucrative contracts for themselves, and the committee considers the episodes a warning worth learning from.

Maintaining that elections are internal tribal affairs, the committee goes on to offer a number of recommendations on page 355 of the online report (available at The report recognizes that some tribes have already enacted “comprehensive election laws that address these issues, including prohibiting nontribal members from making monetary contributions to tribal elections. The committee commends these efforts as further examples of strong tribal governance and encourages tribes that have not yet adopted laws governing tribal elections to do so.”

The Abramoff scandal also highlighted tribal political donations, which Abramoff seems to have deployed as a tool for defrauding tribes and rewarding his circle of political friends and activists. As a direct result, the committee has heard calls for new restrictions on tribal donations; but the report states that greater transparency for all political contributions will preserve public trust in the election system along with tribal participation. The committee ultimately recommends, either as congressional law or as a matter of rule-making by the Federal Election Commission, that donor tribes register with the FEC and receive a unique identifier, that their contributions be made in the tribe’s name as found on the FEC registration and that recipients report contributions in the tribe’s name.