[House Report 110-363]
[From the U.S. Government Publishing Office]
110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-363
======================================================================
NATIVE AMERICAN ECONOMIC DEVELOPMENT AND INFRASTRUCTURE FOR HOUSING ACT
OF 2007
_______
October 2, 2007.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Frank of Massachusetts, from the Committee on Financial Services,
submitted the following
R E P O R T
[To accompany H.R. 3002]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 3002) to establish a demonstration program to
authorize the Secretary of Housing and Urban Development to
guarantee obligations issued by Indian tribes to finance
community and economic development activities, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 3
Hearings......................................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 5
Performance Goals and Objectives................................. 5
New Budget Authority, Entitlement Authority, and Tax Expenditures 5
Committee Cost Estimate.......................................... 5
Congressional Budget Office Estimate............................. 5
Federal Mandates Statement....................................... 7
Advisory Committee Statement..................................... 7
Constitutional Authority Statement............................... 7
Applicability to Legislative Branch.............................. 7
Earmark Identification........................................... 7
Section-by-Section Analysis of the Legislation................... 7
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Native American Economic Development
and Infrastructure for Housing Act of 2007''.
SEC. 2. DEMONSTRATION PROGRAM FOR GUARANTEED LOANS TO FINANCE TRIBAL
COMMUNITY AND ECONOMIC DEVELOPMENT ACTIVITIES.
(a) Authority.--To the extent or in such amounts as are provided in
appropriation Acts, the Secretary of Housing and Urban Development (in
this section referred to as the ``Secretary'') may, subject to the
limitations of this section and upon such terms and conditions as the
Secretary may prescribe, guarantee and make commitments to guarantee,
the notes and obligations issued by Indian tribes or tribally
designated housing entities (as such term is defined in section 4 of
the Native American Housing Assistance and Self-Determination Act of
1996 (25 U.S.C. 4103)) with tribal approval, for the purposes of
financing activities, carried out on Indian reservations and in other
Indian areas, that under the first sentence of section 108(a) of the
Housing and Community Development Act of 1974 are eligible for
financing with notes and other obligations guaranteed pursuant to such
section 108.
(b) Low-Income Benefit Requirement.--Not less than 70 percent of the
aggregate funds received by an Indian tribe or tribally designated
housing entity as a result of a guarantee under this section shall be
used for the support of activities that benefit low-income Indian
families (as such term is defined for purposes of the Native American
Housing Assistance and Self-Determination Act of 1996) on Indian
reservations and other Indian areas.
(c) Financial Soundness.--The Secretary shall establish underwriting
criteria for guarantees under this section, including fees for such
guarantees, as may be necessary to ensure that the program under this
section for such guarantees is financially sound. Such fees shall be
established in amounts that are sufficient, but do not exceed the
minimum amounts necessary, to maintain a negative credit subsidy for
such program, as determined based upon risk to the Federal Government
under such underwriting requirements.
(d) Terms of Obligations.--Notes or other obligations guaranteed
pursuant to this section shall be in such form and denominations, have
such maturities, and be subject to such conditions as may be prescribed
by regulations issued by the Secretary. The Secretary may not deny a
guarantee under this section on the basis of the proposed repayment
period for the note or other obligation, unless the period is more than
20 years or the Secretary determines that the period causes the
guarantee to constitute an unacceptable financial risk.
(e) Limitation on Percentage.--A guarantee made under this section
shall guarantee repayment of 95 percent of the unpaid principal and
interest due on the notes or other obligations guaranteed.
(f) Security and Repayment.--
(1) Requirements on issuer.--To ensure the repayment of notes
or other obligations and charges incurred under this section
and as a condition for receiving such guarantees, the Secretary
shall require the Indian tribe or housing entity issuing such
notes or obligations to--
(A) enter into a contract, in a form acceptable to
the Secretary, for repayment of notes or other
obligations guaranteed under this section;
(B) demonstrate that the extent of such issuance and
guarantee under this section is within the financial
capacity of the tribe; and
(C) furnish, at the discretion of the Secretary, such
security as may be deemed appropriate by the Secretary
in making such guarantees, including increments in
local tax receipts generated by the activities assisted
by a guarantee under this section or disposition
proceeds from the sale of land or rehabilitated
property, except that such security may not include any
grant amounts received or for which the issuer may be
eligible under title I of the Native American Housing
Assistance and Self-Determination Act of 1996.
(2) Full faith and credit.--The full faith and credit of the
United States is pledged to the payment of all guarantees made
under this section. Any such guarantee made by the Secretary
shall be conclusive evidence of the eligibility of the
obligations for such guarantee with respect to principal and
interest, and the validity of any such guarantee so made shall
be incontestable in the hands of a holder of the guaranteed
obligations.
(g) Training and Information.--The Secretary, in cooperation with
Indian tribes and tribally designated housing entities, shall carry out
training and information activities with respect to the guarantee
program under this section.
(h) Limitations on Amount of Guarantees.--
(1) Aggregate fiscal year limitation.--Notwithstanding any
other provision of law and subject only to the absence of
qualified applicants or proposed activities and to the
authority provided in this section, to the extent approved or
provided in appropriations Acts, the Secretary may enter into
commitments to guarantee notes and obligations under this
section with an aggregate principal amount not to exceed
$200,000,000 for each of fiscal years 2008 through 2012.
(2) Authorization of appropriations for credit subsidy.--
There are authorized to be appropriated to cover the costs (as
such term is defined in section 502 of the Congressional Budget
Act of 1974) of guarantees under this section such sums as may
be necessary for each of fiscal years 2008 through 2012. No
funds appropriated under this Act shall be expended for the
benefit of the Cherokee Nation of Oklahoma until the Secretary
shall have certified to the Congress that the Cherokee Nation
of Oklahoma is in compliance with the Treaty of 1866 and fully
recognizes all Cherokee Freedmen and their descendants as
citizens of the Cherokee Nation.
(3) Aggregate outstanding limitation.--The total amount of
outstanding obligations guaranteed on a cumulative basis by the
Secretary pursuant to this section shall not at any time exceed
$1,000,000,000 or such higher amount as may be authorized to be
appropriated for this section for any fiscal year.
(4) Fiscal year limitations on tribes.--The Secretary shall
monitor the use of guarantees under this section by Indian
tribes. If the Secretary finds that 50 percent of the aggregate
guarantee authority under paragraph (3) has been committed, the
Secretary may--
(A) impose limitations on the amount of guarantees
pursuant to this section that any one Indian tribe may
receive in any fiscal year of $25,000,000; or
(B) request the enactment of legislation increasing
the aggregate outstanding limitation on guarantees
under this section.
(i) Report.--Not later than the expiration of the 4-year period
beginning on the date of the enactment of this Act, the Secretary shall
submit a report to the Congress regarding the utilization of the
authority under this section by Indian tribes and tribally designated
housing entities, identifying the extent of such utilization and the
types of projects and activities financed using such authority and
analyzing the effectiveness of such utilization in carrying out the
purposes of this section.
(j) Termination.--The authority of the Secretary under this section
to make new guarantees for notes and obligations shall terminate on
October 1, 2012.
PURPOSE AND SUMMARY
H.R. 3002, the Native American Economic Development and
Infrastructure for Housing Act of 2007, authorizes a
demonstration program to be administered by the Department of
Housing and Urban Development (HUD) to provide for guarantees
to loans for economic development associated with housing, and
housing infrastructure located in Indian Country.
BACKGROUND AND NEED FOR LEGISLATION
Economic development and infrastructure related to housing
are vital to any successful housing project (private or
public), particularly in remote, isolated areas that make up
much of Indian Country. However, because of the risk associated
with economic development and housing infrastructure in such
parts of the country, private financial institutions will not
make loans for such activities. Therefore, loans guaranteed by
the Federal Government to allow for economic development and
the building of infrastructure for housing is an invaluable
tool for successful housing in these areas.
Loan guarantee programs require a relatively small
appropriation in the form of a credit subsidy to leverage
private money for public purposes. Federal loan guarantees
provide the full faith and credit of the federal government so
private lenders and bond investors have confidence to extend
credit to worthwhile projects. The appropriation of a credit
subsidy covers the risk of the project and protects the U.S.
Treasury from claims.
HUD currently operates the Section 108 loan guarantee
program under the Community Development Block Grant (CDBG), and
the Title VI loan guarantee program under the Native American
Housing Assistance and Self-Determination Act (NAHASDA). These
programs, however, do not provide for economic development and
housing infrastructure loans in Indian Country.
Section 108 works with the CDBG ``entitlement communities''
that receive direct funding from CDBG. The Section 108 program
guarantees loans or bonds for these communities for up to five
times their annual CDBG allocation for economic development
activities. Despite the need for financing of activities
eligible under Section 108, tribes cannot access the program.
Indian Country receives a set-aside under CDBG, but tribes
access the funds in the set-aside through an annual
competition. Because no tribe receives a set annual CDBG
allocation, they do not qualify for the Section 108 program.
NAHASDA created the Indian Housing Block Grant (IHBG).
While similar to CDBG in its basic structure, the use of IHBG
funds is limited to housing. Title VI of NAHASDA was copied
from the Section 108 statute and allows tribes to borrow or
issue bonded debt up to five times their annual NAHASDA
allocation for housing purposes described in the NAHASDA
statute. Title VI does not permit the loan guarantees to cover
economic development or infrastructure.
The demonstration program created by H.R. 3002 has a
similar effect to the loan guarantee programs described above--
providing guarantee authority for the same economic development
purposes as Section 108, but does not involve the pledging of
NAHASDA funds under Title VI.
It is the Committee's intention that the demonstration
program provide for loan guarantees to small tribes as well as
large tribes. It is the Committee's desire that HUD will
guarantee loans under this program for small tribes on an
annual basis and that such guarantees make up at least 15
percent to 25 percent of the program.
HEARINGS
No hearings were held on H.R. 3002 in the 110th Congress.
COMMITTEE CONSIDERATION
The Committee on Financial Services met in open session on
July 26, 2007, and ordered reported H.R. 3002, the Native
American Economic Development and Infrastructure for Housing
Act of 2007, favorably reported to the House, as amended, by a
voice vote.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
record votes were taken in conjunction with the consideration
of this legislation. A motion by Mr. Frank to report the bill,
as amended, to the House with a favorable recommendation was
agreed to by a voice vote. During the consideration of the
bill, the following amendment was considered:
An amendment by Mr. Watt, No. 1, Cherokee Nation
limitation, was agreed to by a voice vote.
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held hearings and
made findings that are reflected in this report.
PERFORMANCE GOALS AND OBJECTIVES
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
H.R. 3002, the Native American Economic Development and
Infrastructure for Housing Act of 2007, authorizes a
demonstration program to be administered by the Department of
Housing and Urban Development to provide for guarantees to
loans for economic development associated with housing and
housing infrastructure located in Indian Country with the goal
of increasing affordable housing opportunities in Indian
Country.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act.
COMMITTEE COST ESTIMATE
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
CONGRESSIONAL BUDGET OFFICE ESTIMATE
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 6, 2007.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3002, the Native
American Economic Development and Infrastructure for Housing
Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Daniel
Hoople.
Sincerely,
Robert A. Sunshine
(For Peter R. Orszag, Director).
Enclosure.
H.R. 3002--Native American Economic Development and Infrastructure for
Housing Act of 2007
H.R. 3002 would establish a pilot program within the
Department of Housing and Urban Development (HUD) to guarantee
loans or bonds issued by Indian tribes and other entities for
certain economic development purposes. Under the bill,
participating tribes and housing entities would be charged fees
in the amount necessary to cover the full subsidy cost of the
program. Based on the expected demand and historical spending
patterns of similar guarantee programs, CBO estimates that
implementing this legislation would cost about $4 million over
the 2008-2012 period for administrative expenses. Enacting H.R.
3002 would not affect direct spending or revenues.
H.R. 3002 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The bill would benefit tribal governments that receive federal
loan guarantees to develop housing. Any costs to those tribes
would be incurred voluntarily as a condition of receiving
federal assistance.
The legislation would direct the Secretary of HUD to
establish a five-year pilot program to guarantee 95 percent of
the value of loans and bonds issued by federally recognized
Indian tribes and certain housing entities for economic
development projects. Eligible projects would include acquiring
and rehabilitating improved or unimproved property,
constructing and rehabilitating housing, and assisting private
entities engaged in neighborhood revitalization, job-creation,
and other economic development activities.
H.R. 3002 would authorize the appropriation of whatever
amounts are necessary for the subsidy cost to guarantee up to
$200 million in borrowing per year (with no more than $1
billion outstanding at any given time). CBO estimates this new
loan guarantee program would have a 2 percent to 3 percent
subsidy cost. That estimate is based on historical data for
comparable HUD programs such as the Indian and Native Hawaiian
Housing Loan Guarantee programs and the Section 108 guarantee
program. Those programs require borrowers to secure debt with
local tax receipts or funds received from federal grant
programs. Under the bill, each borrower would be charged a fee
to fully offset the subsidy cost of its loan guarantee--
resulting in no significant net cost to the federal government.
Based on expected demand and historical spending patterns
of similar programs, CBO estimates that administering this new
program would cost about $4 million over the 2008-2012 period,
subject to appropriation of the necessary amounts.
The CBO staff contact for this estimate is Daniel Hoople.
This estimate was approved by Theresa Gullo, Chief, State and
Local Government Cost Unit, Budget Analysis Division.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
CONSTITUTIONAL AUTHORITY STATEMENT
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate commerce).
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
EARMARK IDENTIFICATION
H.R. 3002 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
The Native American Economic Development and Infrastructure
for Housing Act of 2007.
Sec. 2. Demonstration program for guaranteed loans to finance tribal
community and economic development activities
(a) Authority.--Grants the Secretary of HUD the authority
to guarantee notes and obligations to tribes or their
designated housing entities for eligible purposes under Section
108(a) of the Housing and Community Development Act of 1974
(which include economic, community and business development,
infrastructure support and housing).
(b) Low-Income Benefit Requirement.--Requires that 70
percent of the funds received by a tribe as a result of the
guarantee benefit low-income Indian families on Indian
reservations or other Indian areas.
(c) Financial Soundness.--Establishes the authority of the
Secretary to establish underwriting criteria for such
guarantees and the authority to charge fees to ensure the
program will have a negative credit subsidy.
(d) Terms of Obligations.--Limits the repayment period of
guaranteed projects to 20 years.
(e) Limitation on Percentage.--Establishes the guarantee
under the program at 95 percent of the unpaid principal and
interest of the project.
(f) Security and Repayment.--
(1) Requirements on Issuer.--Grants the Secretary the
authority to require borrowers to (A) enter into a contract
approved by the Secretary; (B) demonstrate their ability to
repay the loan; (C) furnish any securities required by the
Secretary including tax receipts generated by activities
assisted by the guarantee or the sale of property but
specifically prohibits the use of NAHASDA block grants from
being used as security.
(2) Full Faith and Credit.--Establishes the guarantees are
backed by the full faith and credit of the U.S. government.
(g) Training and Information.--Provides for training to
carry out the purposes of the Act.
(h) Limitations on Amount of Guarantees.--
(1) Aggregate Fiscal Year Limitation.--Limits total
activity under the program to $200 million per year for fiscal
years 2008 through 2012.
(2) Authorization of Appropriations for Credit Subsidy.--
Provides for such sums as may be necessary to operate the
program to be appropriated for fiscal years 2008 through 2012.
(3) Aggregate Outstanding Limitation.--Limits the total
outstanding debt guaranteed under the program to $1 billion.
(4) Fiscal Year Limitations on Tribes.--In the event that
50 percent of the annual debt limitation has been reached,
allows the Secretary to (A) impose limitations on the size of
individual guarantees to $25 million or (B) request additional
borrowing authority from the Congress.
(i) Report.--Requires the Secretary to submit a report on
the effectiveness of the program four years after enactment of
the program.
(j) Termination.--Terminates the authority for new
guarantees on October 1, 2012.