More than $100 million has been squandered on projects that never housed anyone. Some housing developments sit empty years after they were built. In the northern Arizona community of Tolani Lake, nearly $7 million was wasted on igloo-shaped fourplexes that still sit empty.
The Navajo Nation accepted more than $1 billion for houses. So, where did it go?
SHIPROCK, N.M. – Carletta Begay and her family thought they were getting their big break.
They’d been living in a flat-topped box home on the Navajo Reservation. All six were crammed into a few hundred square feet, paying rent to a local housing corporation.
But one spring, a contractor for the Navajo Housing Authority started work on vacant lots sprinkled throughout the South Shiprock neighborhood. New houses were going up, 91 in all. Begay believed one could be hers.
The project was part of a federal housing-support program that directs hundreds of millions of dollars to tribal communities across the country.
The Native American Housing Assistance and Self-Determination Act, or NAHASDA, took effect in 1998 to ease housing shortages in Indian country. The Navajo Nation, the country’s largest tribe and whose reservation is one of the poorest places in America, gets the biggest share — $1.66 billion since it was enacted.
Despite that, an Arizona Republic investigation found the Navajo Housing Authority, the agency responsible for that money, has failed in ways almost too numerous to count.
- More than $100 million has been squandered on projects that never housed anyone. Some housing developments sit empty years after they were built. In the northern Arizona community of Tolani Lake, nearly $7 million was wasted on igloo-shaped fourplexes that still sit empty.
- Much of the money received for Navajo housing simply sat unspent, collecting until the surplus was so large federal officials began pushing to take it back. Currently, there’s close to a quarter-billion dollars sitting in the tribe’s federal account.
- Federal pressure to lower the surplus caused the housing authority to go on a spending binge the past several years, yet few homes were built. In 2016, for example, the NHA spent $152 million, but built just 26 new houses. The majority of the funds was spent on modernizing existing residences.
- Among projects that actually were completed and occupied, many allegedly are plagued with construction problems. In Aneth, Utah, for example, $3.3 million was spent to build 23 homes that residents claim are beset by construction defects.
- The NHA spent much of its federal money on things that don’t directly house anyone. In Fort Defiance, Ariz., about $6.7 million was spent to open a 17,000-square-foot youth center with a gym and computer room last year.
A low point arguably came in 2007 when HUD investigators determined that the NHA repeatedly allowed misappropriations, price-gouging and excessive delays.
Auditors for the Office of Inspector General found that $53 million went to 14 housing projects that were either unfinished or never started. Contractors were hired without competitive bids. Procurement codes were ignored. Building inspections were not done. Homes were built without access to roads. Workmanship was so flawed, and building materials so shoddy, some homes were ruled unsafe to inhabit.
Mismanagement led to corruption and chaos, followed by lawsuits and bankruptcies.
Federal housing funds for Navajos pile up and are squandered while residents of the reservation still suffer from inadequate shelter. Michael Chow/azcentral.com
Problems did not end after the inspector general’s report, despite new NHA leadership and pronouncements about a reform campaign to meet Navajo housing needs.
Nearly a decade after the 2007 investigation, there is little to show. Only several hundred new homes have been built.
Over the last several years, HUD has issued fines and rescinded NHA funds. Members of Congress have pushed to cut Navajo housing allocations. And some tribal leaders are now pressing to shut down the agency.
Today, the NHA touts a new vision in pamphlets illustrated with glossy images. Plans call for construction of 200 units near Houck, Ariz., a rural outpost 35 miles west of Gallup, N.M. But after more than two years of talk, no earth has been turned and locals say the proposed project has no water supply.
In terms of sheer waste, however, nothing compares to what happened in Carletta Begay’s neighborhood.
A DIRE HOUSING NEED, AND AN AGENCY MEANT TO HELP
Begay’s home is so crammed with a table, freezer and TV that the washing machine stands next to the kitchen stove. There’s no room for a full sofa. Baseboards peel, windows don’t shut, and some interior panels are held up with duct tape.
To say that many Navajos live this way would be an understatement.
On the reservation, a swath of real estate the size of West Virginia and home to more than 173,000 people, housing arrangements are more a function of fate than choice.
The poverty rate is 43 percent, double that of Mississippi, which is worst among the 50 states. Navajo unemployment hovers at 42 percent — six times that of Alaska, the highest among the states. The median household income of $20,005 is so low that nearly every Navajo family qualifies for food stamps.
Tourists from around the world flock here to see the Monument Valley, Painted Desert and Canyon De Chelly, mostly overlooking the families living in distant hogans and dilapidated government housing. Navajos often take what is handed down or available for housing, because of the high unemployment and low-wage jobs.
Begay’s family had some stability. Her husband’s truck-driving job produced regular income. But they stayed in their drafty two-bedroom rental.
In Shiprock, an outpost where dogs and horses roam the streets, there were few other alternatives. And what is available isn’t much better than Begay’s home.
In far-flung tribal communities, scattered across mesas and prairies, thousands of Navajos haul water by hand to houses where they keep warm beside wood stoves.
Fewer than half of all homes have finished bathrooms or kitchens. More than one third have no electricity. Some homes glow at night with kerosene lanterns in places where power lines never were strung.
Because most reservation land is held in federal trust, it can’t be easily bought or sold, so there’s little mechanism for private builders to invest in new housing developments. Even if families have means, most of the Navajo Reservation is far from construction resources.
Federal dollars are allocated each year to address those needs.
When Congress began channeling new money to tribes in 1998, the NHA took responsibility for spending it on the Navajo Reservation.
Depending on family size, tribal members with household incomes below $40,000 are generally eligible for NHA rental subsidies or home-buying assistance.
Many qualify. But potential occupants need to earn enough to pay rent or a mortgage, and utilities.
Applicants say it can take years — sometimes more than a decade — to get a place.
Hundreds are on waiting lists. Few get new homes. And to many, the Housing Authority seems like one more impenetrable bureaucracy. Skepticism is pervasive.
When Begay first heard, around 2004, that the NHA was coming to South Shiprock with money and plans, she might have resigned herself to disappointment.
And yet, that year, there was progress.
Ninety-one new houses began to take form right outside her window.
As the new dwellings arose, so did an idea. People in the neighborhood would apply for the houses, to buy them, rent them, somehow. And Begay’s family might get one.
She could finally find a way to move up in Shiprock.
An old sign at the entrance to Begay’s neighborhood announces “South Shiprock Estates and Gardens.” But there are no obvious gardens, no homes that would reasonably be called estates.
The development always had more of a feeling of being half-built, half-abandoned.
Cars and trucks pulled up to dirt front yards. Empty lots pockmarked the place.
Though everybody lives on a road, none of the homes has ever had a street address. Nobody ever bothered to put up street signs.
With new houses going in, though, it was easy to picture things changing.
Begay saw gleaming appliances, plumbing fixtures, sinks and cabinets going into the homes.
And whoever got them would have something special: Each house came with its own driveway, fresh concrete poured right from the curb, leading up to its two-car garage.
Maybe, Begay thought, when all the homes were done, there would even be street signs.
HOUSING NEEDS MULTIPLY DESPITE 18 YEARS OF FUNDING
The idea of federal housing assistance for Indian tribes is rooted in two centuries of history.
From the earliest days of the colonies, Native Americans were subjugated, their lands and homes often taken. Many tribes ultimately were assigned to reservations.
The U.S. government accepted a “trust responsibility” for what now are 566 federally recognized Indian tribes. Those obligations include dwellings, and for decades the government funneled money to tribes through the U.S. Department of Housing and Urban Development.
The funding system changed in the 1990s after news media investigations and congressional oversight of HUD exposed financial scandals involving abuse and mismanagement throughout Indian country.
What emerged was NAHASDA.
In 1998, when HUD first started issuing block grants to tribes, the Navajo Housing Authority estimated nearly 21,000 families on the reservation needed new homes.
More than a decade later, despite hundreds of millions of tax dollars spent, a housing survey concluded the Navajo Nation needs 34,100 new units and another 34,300 refurbishments.
“This housing is lower quality than tents or shacks, and may be interpreted to indicate a possibly desperate situation,” concluded the 2011 report by RPI Consulting of Colorado.
The Republic reviewed housing records from the NHA to calculate how many homes have actually been built since 1998. In the final accounting, it was clear why the numbers weren’t getting better.
The Housing Authority had been spending money for 18 years to chip away at the need.
And each year, on average, it built 235 dwellings. Not one home or rental unit was built from 2008 to 2011.
NHA Chief Executive Aneva “AJ” Yazzie was appointed in 2007, inheriting what she says was a dysfunctional organization.
An industrial engineer with federal and state housing experience, Yazzie was raised on the reservation in a two-room homestead with no running water or electricity.
After nine years as the NHA’s leader, she says the lack of progress stems from entrenched obstacles to tribal development, but also from HUD’s failed oversight prior to her administration.
Projects were in such disarray she put a temporary moratorium on building. And then it took years to evaluate the tribe’s housing needs, reform the NHA, plan for the future and clean up old messes.
“There’s a process, yet I keep doing the Whac-A-Mole,” Yazzie says. “It’s been a constant crisis mode. … I wanted to quit so many times. I thought, ‘I’ve gotten in too deep.’ I just kept trudging forward.”
The bottom line: No more than 758 residences have been built under Yazzie’s leadership, records show.
SO MUCH MONEY, SO LITTLE PUT TO USE
New residences accounted for about 30 percent of the NHA’s spending.
The rest of the money spent went to new administrative offices, planning, youth facilities and to refurbish or maintain existing NHA homes across the reservation.
But much of the cash languished, unspent.
Each year, tribes must tell federal authorities how much of their NAHASDA money they plan to spend and save, partly to ensure the funds are properly used.
Nearly two decades of financial reports show the NHA misreported its anticipated spending year after year by tens of millions of dollars.
In 2011, for example, the NHA projected expenditures of $88 million — all of that year’s federal housing allotment. But in a follow-up, the authority reported “no activities or projects have been implemented.”
Some tribes intentionally accrue funding while they plan major developments. But none comes close to the Navajo Housing Authority’s surplus. At one point, it had amassed nearly $500 million.
The most recent federal records available show tribes nationwide had a combined $787 million of unspent housing funds as of early September.
Tomasita Duran, executive director of the Ohkay Owingeh Housing Authority in northern New Mexico, said the Navajo surplus remains a sore point with some smaller Indian nations that have to cobble HUD money together with other funds just to build a few homes.
“It’s a little frustrating when you hear about the Navajos, with their millions that they get and the money not being spent,” Duran said. “We understand there is a dire need and they are much larger than other tribes, but for the amount of money they are getting, why are their needs not met?”
Yazzie said the NHA has a plan to spend down the entire surplus, which was drawn down to $234 million as of early November. She noted that $152 million was expended this past year.
How that money is being spent is less than clear.
The NHA’s 2016 annual report, filed in early December, does not have precise breakdowns of how much was spent on each housing project and there is not a detailed budget on how nearly $15 million was spent for planning and administration.
One significant investment was expected to be a 200-home community in Houck, where the NHA is planning a grand neighborhood of single-family houses, apartments, group homes, parks, trails and a community center.
A groundbreaking ceremony was staged in August 2014, and construction was supposed to start last year. But the Houck project is behind schedule and on hold.
Locals say there’s no drinkable water supply, and few qualified Navajos have shown an interest in moving to a rural outpost with no jobs or stores.
Yazzie said the design phase of the development is 95 percent complete, and the infrastructure is sufficient for electrical and water needs.
As unspent funds built up, so did the ire of some members of Congress.
They demanded to know why the money was not being used. And, unsatisfied with the answers, some pushed legislation to cut the Navajos’ allocation and give more to other tribes.
“How can cash just be sitting in their account for years? Who is that helping?” asks Rep. David Schweikert, R-Ariz.
A public hearing on the future of the Navajo Housing Authority and who will manage about $85 million a year in federal housing funds is scheduled for 9 a.m. Wednesday at the Navajo Nation Museum in Window Rock.
Legislation that has moved through the Navajo Nation Council would strip the NHA’s status as the tribally designated housing entity accepting U.S. Department of Housing and Urban Development funds. Federal dollars would instead flow to the tribe’s Division of Community Development.
Tribal leaders have become frustrated with NHA’s inability to build more homes on the sprawling reservation.
Navajo Nation Speaker LoRenzo Bates will facilitate the hearing. Organizers plan for a daylong hearing.
Some Tribal Council members also lost patience, in part because of threatened federal cutbacks, but also because they’ve seen people like Begay suffer from decade-long housing waits — if they bothered applying.
“We’re not spending money for things we need — desperately need — and those are homes,” says Navajo Nation President Russell Begaye, who grew up in Shiprock.
“No more excuses. No more saying it’s because of deadlines or because of federal regulations,” Begaye said. “Build those homes.”
The NHA previously has survived efforts by the Tribal Council to take over housing funds and development. This year, delegates introduced another measure. It calls for the removal of the NHA as the tribe’s federally designated housing entity, effectively shutting down the organization. However, it has not passed.
HUD Secretary Julian Castro recently told The Republic he looks forward to working with the NHA to get homes built for Navajos.
”I believe the Navajo Nation wants to do the right thing.” Castro said. “They have taken some steps to do the right thing …”
Rick Lazio, a former New York congressman who wrote the NAHSDA legislation, said it’s brought progress to Indian country, but not without stumbles.
“NAHSDA is a significant step forward, but there are still huge underlying problems,” Lazio said. “There’s still not a lot of experience in terms of building a public infrastructure that is accountable and works.”
Lazio, now an affordable-housing lawyer, said the Navajos could use some outside experts on training and technology.
ENDLESS WAIT FOR A NEW HOUSE IN SHIPROCK
Sometime after the colorful roofs went up and garage doors were hung in Shiprock Estates, construction suddenly stopped.
Carletta Begay wondered, what’s going on?
In the background, far from her neighborhood, an audit and a criminal case unfolded.
HUD’s inspector general was investigating then-NHA Executive Director Chester Carl, who ran the agency for more than a decade before Yazzie.
In 2009, a federal grand jury indicted Carl as well as William Aubrey, who owned Lodgebuilder Inc., the company that built the homes in Shiprock and elsewhere.
Prosecutors alleged Aubrey diverted federal money from the housing projects to himself, using it for gambling, horse racing, furs, jewelry and for paying bribes to Carl.
The NHA shut down the Shiprock project, $11.75 million already spent.
Aubrey was found guilty of misappropriating funds and was sentenced to 4½ years in prison. Carl denied taking payoffs and was acquitted.
The houses sat empty.
After a while, crews put up chain-link fences to keep trespassers out. Vandals broke in anyway.
The new toilets and plumbing fixtures were carted off, stolen one by one. Teenagers skipping class used the houses as hangouts.
Squatters moved in, escaping the cold. Fires started. Some houses burned down. Others stood, charred shells of a project.
Begay was bewildered why so many houses were mostly built and then just abandoned. What if they had let families move in and finish the work themselves? What was going to happen to them?
One day a few years ago, she looked out across the neighborhood and saw what the Housing Authority was going to do with the houses.
Bulldozers had arrived.
IN THE END, ONLY ONE HOME STANDING
Crews knocked down the stucco walls and the garage doors and hauled away the debris. They dug the water lines out of the ground. They tore out the concrete foundations.
They bladed everything down to the dirt, including driveways.
Begay wondered why they didn’t even leave a concrete slab. It could have been used as a basketball court.
By the time the NHA was finished tearing down the houses, it had spent another $1 million on demolition.
Yazzie, the NHA director, said it had to be done: The homes were in such bad shape they were a potential health hazard to the community.
HUD eventually assessed a nearly $12 million penalty, saying the NHA failed to use the money as required for “eligible affordable housing activities.”
The Housing Authority paid that penalty in the face of a HUD threat to involve the Justice Department.
In a 2014 letter to HUD, Yazzie protested, “There is no genuine effort to truly understand the unique and difficult issues we face, nor is there a sincere attempt to come up with a better workable solution.”
Today, a single house with a slanted roof and garage remains in Shiprock Estates. Among the 91 erected years ago, this one was rebuilt with insurance money after a fire. Today, it stands as a lone reminder of what might have been.
The Navajo Housing Authority spent nearly $12 million to build 91 new homes. All but one later were torn down, prompting a financial settlement with federal housing officials. Michael Chow/azcentral.com
According to HUD records, the family living there does not qualify for low-income housing.
Begay, her husband and four daughters had moved across the neighborhood in 2006 to another flat-roofed rental, where termites crawl up through holes in the floor. They still live there, paying $650 a month to the project manager.
Out her back window, Begay sees bare earth where several of the 90 homes once stood.
She leads a tour of the area. All that remains are curb cuts, hints of driveways that once were there.
No one ever put up street signs.
“They should have stuck with the plan,” Begay says. “Instead, they just got everyone’s hopes up. … A total waste.”
Free Range Report