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The Most Wasteful Government Agency You've Never Heard Of

The Navajo Housing Authority has a long and storied history of waste, fraud, and abuse of federal funds.

Abandoned home Peter Kim/DreamstimeThe Navajo Housing Authority (NHA) brags on its website that it is "the largest Indian housing authority in the country", managing 8,500 housing units across Navajo nation in the southwestern American states of Utah, Arizona, and New Mexico.

The NHA is also probably the most wasteful and scandal-ridden governmental entity in the United States today.

Multiple media reports, governmental audits, and one investigation by the Office of Senator John McCain (R – Ariz.) describe an agency that has received over $1.6 billion from the Department of Housing and Urban Development's Indian Housing Block Grant (IHBG) program, while delivering projects over-budget, years-delayed, or unfinished.

According the NHA's 2011 estimates, the authority needs to build some 34,000 homes and significantly repair another 34,000 to address the Navajo reservation's chronic housing problems, something it says will cost nearly $9 billion.

Since 1998, NHA has received an average of $95.6 million a year from HUD to address these needs. Over the past decade, NHA has spent $803 million of program funds, and built 1,010 housing units in that time.

That works out to about $723,000 for each new housing unit, or about the median home price in ultra-expensive Seattle. The median home price on the Navajo reservation community of Keyenta, Arizona is $67,000.

To top it all off, the NHA now has to pay back some $26 million to HUD for ten housing developments that it promised to build, but never completed, according to a settlement reached in September and first reported by AZCentral Wednesday.

"The settlement follows years of costly and time-consuming litigation," said HUD spokesperson Elena Gaona in a statement to Reason, saying that the $26 million was the "largest enforcement action" ever taken against a recipient of IHBG funds.

In 2012 NHA received $215 million from HUD to build 17 housing projects. By 2013, the NHA had spent $66 million completing seven of the projects. The other ten projects were chronically underfunded by NHA, receiving less than 40 percent of the money that had been earmarked for them. The NHA, under certain restrictions, can keep block grant funds that it does not spend in a single year.

After seeing the lack of progress, HUD that year demanded NHA give back $96 million, setting off a long and contentious court battle between the housing authority and its federal paymaster. The two eventually agreed to a $26 million settlement.

"The agreement will allow HUD and Navajo Housing Authority staff and members to focus on meeting the housing needs of Navajo families," Gaona says. It's a pretty rosy prognosis, given how frequently NHA has failed to meet those housing needs in the past.

Investigations of NHA reveal where much of the federal money wound up.

In 2002, the NHA had spent $4.4 million on a housing complex for the future staff of a school that never opened. In 2008 they spent $2 million renovating the complex in the hopes of renting it out to low income tenants. No one ever moved in.

Another $2.8 million went to building a woman's shelter in 1999. After completion, the shelter stood empty for nearly 18 years, despite receiving up to $1 million in yearly grants and contributions. When reporters from the Arizona Republic visited the site as part of a 2016 story on NHA, they found a homeless woman sleeping outside the completed but empty shelter.

Then there is the Bluestone Development project, described by the McCain investigation as "a bigger disaster than originally thought." Bluestone was a planned 200-unit community in Houck, Arizona. The project was initially estimated to cost $60 million and be completed by 2016. Since then, costs have risen to $125 million, and the first 30 units are not expected to be completed until 2018.

The McCain investigation also found considerable good old-fashioned executive abuse of discretionary funds, including travel per diems of $355 and taxpayer underwritten professional development trips to Las Vegas and Hawaii.

"If NHA were a business, it would have defaulted years ago," said the authority's own vice-president, Johnathan Nez back in June.

Indeed, the taxpayer-funded NHA has experienced very few consequences for its record of fraud, waste, and abuse. The leadership of NHA resigned in June 2017, following the publication of McCain's investigation, but little else has changed.

The NHA still receives annual appropriations of around $80 million from HUD, the most of any Native American tribe.

The $26 million that NHA has had to pay back in its recent settlement with HUD will go into the general IHBG fund, and will be reapportioned in 2018. When asked by Reason if NHA would be eligible to receive some of that $26 million in 2018, HUD spokesperson Gaona said yes.

Even if NHA were a better managed organization (it's hard to imagine it being more poorly managed), the root problems of housing on reservations would still remain says Chris Edwards, of the Cato Institute.

Says Edwards, "there is very little economic development on many reservations because of federal rules and regulations and the fact that Indian reservations don't have property rights."

One estimate puts the percentage of privately-held reservation land at 5 percent of total reservation land. The other 95 percent is held in trust by the federal government, and is managed either by tribal bureaucracies or individuals.

According to Edwards, this trust land cannot generally be leased, mortgaged, or transferred without approval from the Bureau of Indian Affairs. Thanks to this trust status, most tribal land cannot be easily developed or used as collateral for loans.

Reservations are cut off from normal market forces that build housing and maintain housing for the rest of the country, Edwards says. The long-term solution, he tells Reason, is moving to "a system of property rights on reservations which will generate economic development on reservations, so that the Indians can generate their own incomes and tax revenues for their own housing programs or anything else they want."

Without crucial property rights, tribal citizens on the Navajo reservation will continue to depend on the serially inept NHA and an ennabling HUD to meet their increasingly dire housing needs.

Photo Credit: Peter Kim/Dreamstime

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  • Citizen X - #6||

    After seeing the lack of progress, HUD that year demanded NHA give back $96 million

    Something something Indian giver.

  • Otis B. Driftwood||

    RAAAAAAAAAAAAYCISSSSSSSSSSSSSS!!!1!1!!1!

  • Lily Bulero||

  • Red Rocks White Privilege||

    Knowing how Indian reservations operate, especially out west, a lot of that money probably went straight into the pockets of a few high-ranking tribal members.

  • DJF||

    I am familiar with a couple in the east and they operate the same

  • BestUsedCarSales||

    The reservations are the face of true socialism in America.

  • ||

    So, how come the residents don't get rid of them? Do the like what's going on?

  • DaveSs||

    Same reason inner city folk vote for democrats.

    Promise free goodies, and its someone else's fault that your lives are shit.

  • Uncle Jay||

    RE: The Most Wasteful Government Agency You've Never Heard Of
    The Navajo Housing Authority has a long and storied history of waste, fraud, and abuse of federal funds.

    1. This can't be right. The State has never been guilty of waste, fraud or abuse. Just ask any proggie.
    2 If you really want to read a depressing book about Native Americans, read "The Second Trail of Tears."

  • Devastator||

    Your sarcasm is very weak, repetitive, and pointless. You need to be more original. You need to up your game.

  • ||

    Years back I knew a guy who was part of the leadership on a reservation in Oklahoma. He mentioned one reason (among the many others) you'll see dilapidated buildings on the rez is that every-now-and-then the feds will request a bit of land that isn't being used and isn't part of that rare, privately owned reservation property. Of course the tribe doesn't want to give it up, so to show the land is being used they go out on the wanted property, slap up a wooden shack and call it a sweat lodge. Then the feds back off and the shack is forgotten.

  • Jima||

    Last year we drove through a Navajo reservation, and 90% of the construction I saw met the definition of your sweat lodge. You could buy every Navajo on the land a nice RV and give them a check for gas money and still be ahead. Plus, they could move wherever they wanted to live... What a concept. It may not be flattering to say so, but from what I saw, the thing most missing from all the dwellings I saw was motivation to keep them up and not have a yard full of shit like old tires, appliances, etc. Unless you can purchase self respect and motivation and hand that out, I don't see Federal dollars changing much. Nobody is trying to hold the red man back now. They can be all they can be, or they can live in a shack - I mean sweat lodge. It's a sort of free country now...

  • Lily Bulero||

    I think there's a reason the phrase "leaving the reservation" entered the language.

    Many of the ambitious people tend to leave those areas.

  • HillTown Trader||

    Ambition and striving by average peoples for something better is seen as a threat to the power and control of Tribal Elders. One is suppose to know one's place and stay in it.

  • Devastator||

    Most of the Navajo I know who made a success of themselves, at least economically, "got off the rez" .

  • ||

    Also: Every-Now-and-Then is a great Indian name.

  • CE||

    My favorite was Old-Man-Afraid-of-His-Horses

  • HillTown Trader||

    A variation of the delapidated housing issue is that housing is assigned by tribal elders or committees. If you fix up the shack they assigned to you, in not too long, the house you fixed up will be reassigned to a more connected family.

    Many homes that look awful on the outside, are nice on the inside. The tenants don't want to offend neighbors or draw the attention of more highly ranked families.

  • Longtobefree||

    Isn't this a chapter from The Fountainhead?

  • n00bdragon||

    This is what you get when you insist you can't put a price on the land and the water.

  • Jay Dubya||

    Way to gloss over that whole european invasion/occupation/genocide thing. Plus pretty sure that Karl Marx wasnt so influential among First Peoples. Socialism does not equal nomadic tribalism.

  • BSL1||

    What's nomadic about staying idle and waiting for an outside organization to send you a check each month? Pretty predictable circumstance.

  • Curt||

    "The NHA is also probably the most wasteful and scandal-ridden governmental entity in the United States today."

    I stopped here. This is a blatant, obviously inaccurate statement. For those of you who read further, is there any point to reading on?

  • Curt||

    The next paragraph says they've received over $1.6B. They could literally have that money delivered as cash, spread it on the floor, shit all over it, scoop it up, and burn it... and it still wouldn't come close to being the most wasteful gov't entity.

  • Braunasaurus||

    *You could buy every Navajo on the land a nice RV and give them a check for gas money and still be ahead. Plus, they could move wherever they wanted to live.* Rom racial appropriation lol

  • Eric Bana||

    THERE'S

  • Eric Bana||

    THERE'S NOTHING LEFT TO CUT!!! THE CUPBOARDS ARE BARE!!!

  • Unicorn Abattoir||

    $9 billion to build/repair 68,000 homes.

    $140K/home? Why not give them the damn land and $20 - 30K in cash, and tell them they're on their own?

    Seriously, these people are capable of taking care of themselves. Let them create their own jobs, build their homes however they want, get a mortgage, and join the rest of the world.

  • BestUsedCarSales||

    It would remove the power from the Tribal leaders and the government. My guess is, unfortunately, that the citizens of the reservation would not trust such a show either. We do need to shit or get off the pot with reservation land though.

  • HillTown Trader||

    Yes, the reservations are sitting on millions of acres rich in natural resouces, ag, water, hydro carbons, and tourist potential.

    The challenge is that legally, Native Americans on reservations are "wards of the Federal Government" and lands are set aside for their use in trust. Don't get me started on how patronizing that stance is.

    But that is the current and standing decision from the US Supreme Court. While four of the five pillars of the Dred Scott decision have been struck down, the fourth still stands.

    Tribal Elders have become pros at exploiting the "poor indian" and "ward of the federal government" for person gain. Why work to create a mine, a farm or a business, when you have a SCOTUS decision that makes you a ward of the state forever?

  • Devastator||

    Or in the meanwhile audit and see where all that money is going and make a few arrests. someone is paying off contractors somewhere who aren't doing anything other than collecting free government money. No doubt a lot of paperwork has been "lost or misplaced". Throw the people who lost and misplaced it and their bosses in prison.

  • DaveSs||

    According the NHA's 2011 estimates, the authority needs to build some 34,000 homes and significantly repair another 34,000 to address the Navajo reservation's chronic housing problems, something it says will cost nearly $9 billion.

    As near as I can tell there's only like 200,000 Navajo roughly who actually live on the reservation.

    Figuring their typical household size being 3-4 persons you are looking at 60,000 houses or so.

    So they are basically saying they need to build or repair almost every single one of the houses on the reservation.

  • Paper Wasp||

    FFS, why are they bothering with stick-built houses at all? They don't live in earthquake or hurricane country...you could have bought every Navajo alive a decent prefab house with that money, including delivery.

    Screw the NHA, just abolish HUD altogether. HUD needed to go a long time ago. It's been nothing but a swirling toilet bowl of waste, graft, sloth, incompetence, and embezzlement.

  • georgekaplan||

    This is outrageous, and the Authority needs to be shut down. Each family would be better off if the money had been proportionately disbursed.

  • HillTown Trader||

    At my local Rez, residents get on average $9,000/year, plus free housing, schooling, and healthcare. Due to some law suit settlement, that was bumped up another $16,000.

  • JFDeplorable||

    If I understand correctly, then, residents are provided 25K a year that is mostly disposable income (you're not spending on housing or medical care, so food, clothing and utilities would be the only expenses you have.) Those folks have the ability to live better than the average American working stiff. Unless the gub-mint restricts them from having unearned income coming into the household, every person on that reservation could build a nice, chunky portfolio of stocks, bonds and other assets, all with taxpayer money.

  • Devastator||

    They give them that money with no training on how to budget, save, or spend it so it gets spent quickly and they come back for more handouts. Teach a man to fish. This is just throwing it on a fire.

  • HillTown Trader||

    On the Rez, poverty is a growth industry.

    The more poverty/addiction/violence that can be demonstrated, the more federal grants can be justified -- and the cash goes in elder family and consulting company pockets. Elders don't want the rez residents to prosper, referring the those who work had a "apples."

  • Grumpy Old Guy||

    ALL government needs to be shut down, except the court system and such.

  • CE||

    Private courts would be better.

  • L.G. Balzac||

    It must cost a lot to ship all those houses to INDIA! That's where the "INDIANS" are.
    sheesh

  • Henry Baker||

    "Says Edwards, 'there is very little economic development on many reservations because of federal rules and regulations and the fact that Indian reservations don't have property rights.'"

    There's the entire problem exposed in one simple single sentence.

    Why the hell is the federal government still playing Big Nanny to Indians?

    The reservation land should belong to the Indians, Big Nanny Government should give them free and clear title to it, get its corrupt, incompetent ass off their property and let them run their own lives.

    They may rise to a decent standard of living or they may sink into abject poverty, but at least they'll do either with some modicum of dignity.

  • Johnimo||

    I think James Watt summed it up perfectly many, many years ago. As he famously opined:(paraphrased) "Indian reservations are failed experiments in socialism."

  • CE||

    Let me guess what the problem is: too many chiefs, not enough....?

  • No Yards Penalty||

    This story describes, nearly detail for detail, how it works in Canada, too.
    Federal government gives Indians billions. Reservation politicians and their families pocket the money. Housing for run-of=the-mill Indians remains decrepit or non-existent. Indians whine for more. Federal government gives Indians more. Zero accountability.
    Rinse. Repeat.

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