HUD’s Potemkin Villages on Minnesota reservations

By Bill Lawrence and Clara NiiSka

 According to documents recently received by Press/ON, the Department of Housing and Urban Development, Eastern/Woodlands Office of Native American Programs (EWONAP) spent more than $58 million for Indian Housing Block Grants and Community Development Block Grants on eight Minnesota reservations during Fiscal Years 1998-2001.  The State of Minnesota also spends more than a million dollars a year on Indian reservation housing through the Minnesota Housing Finance agency.

 During the past four years, HUD granted: $5.4 million to Bois Forte, $14 million to Fond du Lac, $1.3 million to Grand Portage, $12.6 million to Leech Lake, $.6 million to Lower Sioux, $14 million to Mille Lacs, $2 million to Upper Sioux, and $8.5 million to White Earth Reservation.  Grants to Red Lake were not included in HUD’s Minnesota Indian reservation summary—Press/ON has asked HUD for this information.  A spokesperson at HUD’s Chicago regional office indicated that HUD may not have funded any recent programs in the relatively wealthy Shakopee and Prairie Island Indian communities.

 The average expenditure per Indian adult for HUD Minnesota reservation housing and economic development programs during the past four years was about $8,728.  The highest per capita expenditure was in the Upper Sioux community—$58,849; the lowest was at White Earth—$4,294.  Press/ON calculated expenditures using 2000 census data.  HUD is actually spending more per person, since tribal members residing on their own reservation are the only people eligible for reservation housing programs.

George Myers, Affiliate Support Manager for Habitat for Humanity in Minnesota, told Press/ON that the statewide average cost for a Habitat for Humanity home in Minnesota is $48,000.  This often includes the expense of land purchase (up to $20,000 per lot), as well as salaries for certain skilled labor and for supervisors of volunteers.

By building homes on tribally-owned land, using locally-available timber, and working with volunteers and vocational-training programs, HUD expenditures during the past four years could have paid for, or nearly paid for, a new home for every adult Indian at Boise Forte ($19,219), Fond du Lac ($18,160), and Mille Lacs ($21,730), as well as at Upper Sioux.  At press time, the documents available to Press/ON did not detail the number of homes actually provided by HUD programs on Minnesota Indian reservations.  However, 1998 HUD construction and administration costs at White Earth were in excess of $90,000 for a three-bedroom “mutual help” home and an average of about $75,000 for a 3-4 bedroom “low rent” home.  Under HUD’s the “block grant” funding protocol, income eligibility guidelines for tribally-administered HUD housing are flexible.

 Despite the advent of the “new buffalo,” gambling, we have not been able to identify any tribal funds expended for reservation housing programs.

 “HUD has also received information that suggests further serious contractual violations.  … Moreover, … WERHA may have failed to follow its own waiting list in the assignment of units. …”

 In its Declaration of Substantial Breach, HUD informed WERHA that it no longer existed, and “advised” Michael Heisler, Executive Director, and his Board of Directors that, “you no longer have signature authority for financial matters of the WERHA and that the Depository Banks that do business with the WERHA have been advised of the findings of Substantial Breach and Substantial Default …”  On November 6, 1996, EWONAP took physical control of Indian Housing Authorities, including the White Earth housing authority.  Three weeks later, the Seattle Times published a five-part series detailing severe problems with HUD programs on Indian reservations across the country, including White Earth.  The Seattle Times won a Pulitzer Prize for its investigative reporting in that series.

 In 1996, WEHRA administered twenty-five Section 8 vouchers, 268 Low Rent units, and 150 “homeownership units” on the White Earth reservation.  The agency had received two additional grants totaling $4.4 million, to construct 50 units.  According to EWONAP reports, the White Earth Housing “Authority spent $3.9 million and completed only 8 livable units … forty-two other partially completed units are being severely damaged by weather.  Construction of the development was awarded without bidding, and to a company that was partially owned by the Tribal Chairman [Darrell “Chip” Wadena].  Based upon the Chairman’s order, the Executive Director awarded the contract even though he was aware it was illegal.  The company’s work was substandard …”

 In a series of reports derived from site visits between September 1996 and January 1998, HUD records describe the extensive legacy of White Earth Housing Authority problems, and EWONAP’s efforts to address them.

 Among the more serious problems acknowledged in EWONAP’s reports:

·   “… a review of 1996, 1995, and 1994 checks … indicated that there is evidence of inappropriate check signing procedures …”

·   … serious structural problems, including “sub flooring is very soft 7/16" plywood” … “basement foundation wall cracked in various location of the walls”

·   homes … “that were 60-85% complete and in danger of suffering major damage due to the severely cold weather …”

·   “… walls were cracking showing 3 inches vertical gaps or more.”

·   “People still in the house 70% done = No plumbing, electrical, no stair, basement not poured, no city sewer connection.”

·   Housing constructed on property titled “under names other than the Tribe or IHA,” and other land title problems.

·   Tenant eligibility problems and ‘inconsistent’ waiting lists.

Other problems faced by EWONAP included attempts to “obtain … a court order to gain access to the warehouses of convicted contractor” and former White Earth tribal council district representative “Rick Clark since many tribal members believe that the warehouses are full of furniture and equipment purchased with IHA [Indian Housing Authority] funds.”  In June of 1996, Clark was convicted of fraud, falsifying ballots in the 1994 elections, and receiving phony payments.  In June 1997, a search warrant was finally executed and “several hundreds of thousands of dollars in materials were recovered from Mr. Clark’s warehouses.”  Clark was never prosecuted for his involvement in the theft of IHA property, and shortly after he was released from federal prison in the fall of 1998, Clark was allowed to “buy back” items seized from his warehouses for $30,000, even though he has never repaid hundreds of thousands of dollars in court-ordered restitution to the White Earth members.

During 1997, EWONAP struggled to find funding to complete the partially-constructed houses.  In January 1997, EWONAP field investigators reported, “we have not yet found any additional funds to complete the projects … we need approximately 2 million dollars for this purpose, the [tribal] council was asked if they would be willing to contribute tribal funds but this question was met with a resounding NO! … There continue to be many unanswered questions regarding the IHA and what happened to the funding and how the projects will be completed that we simply cannot answer at this time.”  HUD eventually “reformulated” the budgets and “assigned a new project number” and additional budgeting.  EWONAP’s reformulated budgets at White Earth eventually exceeded $1.7 million.

 The EWONAP summaries at White Earth report that by 1998, 44 of the fifty homes taken over from two WERHA home-building projects in 1996 had been constructed or were still under construction.  Twenty-eight of them had been completed and were occupied; the “remaining 16 units are from 72% to 93% complete.”  Other documents in the EWONAP report indicate that by 1998 HUD had been involved with construction and/or repair of 284 houses on the White Earth Indian reservation, sixteen of which had been burned or were vacant.

In 1998, there were 13 vacancies in HUD-administered housing on White Earth Reservation, and a waiting list of 212 housing applications.

 In December 1996, the Seattle Times reported that, “Interviews and records show that while some members of the White Earth Band lived in squalor, leaders made rich by the tribe’s casino rewarded their friends with HUD-subsidized houses and remodeling grants, and illegally helped themselves to a lucrative HUD building contract …”

 EWONAP, an agency of HUD, then spent more than a year addressing the housing abuses at White Earth, and in 1998 was still conducting “on-site inspections,” reviewing Housing Authority files, and conducting a Cash Management Review.  More than half of the uncompleted houses had been finished and were occupied.

 On September 26, 1997, Press/ON reported that HUD authorities were looking for $4.5 million alleged to be missing from the White Earth reservation’s housing program.  Additional evidence of criminal mismanagement was uncovered during EWONAP’s intensive efforts to resolve the problems at White Earth.  After three former tribal officials at White Earth were convicted of other federal offenses, HUD’s Inspector General launched a criminal investigation.  HUD investigators named more than 25 people whom they believed to be involved in the theft of between $5 million and $8 million from HUD at White Earth.  However, by March of 2000, the only people charged in conjunction with the multi-million dollar thefts were the non-Indian brothers Chad and Jason Smeby, owners of a lumberyard in McIntosh, Minnesota.  The Smebys were indicted in 1999 for over-billing the White Earth reservation housing programs, and pled guilty in a plea-bargain agreement.  In November 2000, Press/ON reported that the U.S. Attorney’s office had decided not to prosecute others involved in the White Earth Indian housing program thefts.  Press/ON is seeking copies of that investigation.