Battling Washington to try to help her tribe

WINDOW ROCK — By any standard, Aneva “AJ” Yazzie inherited a mess when she became chief executive officer of the Navajo Housing Authority in early 2007.

Her predecessor, Chester Carl, had resigned during a federal investigation into allegations he accepted bribes from a contractor who did millions of dollars of business with the tribe.

More than a dozen major projects were in chaos on the reservation. Non-profit subcontractors who’d been paid millions of dollars through the NHA to build homes broke their promises and went bankrupt.

And the U.S. Department of Housing and Urban Development’s inspector general was cracking down on misappropriations, delays, overspending, procurement violations and shoddy workmanship.

To make matters worse, Yazzie said in interviews, the NHA had a glaring lack of know-how, technology, staffing and data. Even though its coffers overflowed, there was no blueprint for the future, or even a grasp of housing needs.

“I really did step into a hornet’s nest,” Yazzie said. “It’s been a long haul. ... When I saw how everything was entangled, it almost seemed impossible. So we had to address it project by project.”

Yazzie said she had no choice but to freeze tribal projects and ban most of the previous subcontractors. The NHA tried to reform with new standards for planning, finances and ethics. The moratorium lasted at least three years, Yazzie said, as HUD funds designated for the NHA continued to swell.

Agency records show not a single new home or rental property was built from 2008 to 2011.

Then-Navajo Nation President Joe Shirley Jr. grew so frustrated with federal criticism and threats to take back money that in 2011 he persuaded HUD to transfer oversight responsibility from HUD’s Arizona offices to the department’s Northern Plains Office, based in Denver.

It didn’t matter.

By 2012, the NHA had $477 million sitting in a federal account. Unused.

HUD RESCINDS MILLIONS

Plans to spend down that surplus were suspect. HUD’s Denver office concluded that the NHA wildly misrepresented the number of homes it was building and refurbishing, according to records obtained by The Arizona Republic. For example:

Although NHA paperwork showed $56 million earmarked to build 188 rental units, HUD found only $4.8 million was spent — on just 30 dwellings in 2012.

The NHA reported it would spend $23 million to modernize homes for 246 families. Instead, $5 million was spent to assist 156 families in 2012.

Federal officials sought the return of $96 million to the U.S. Treasury for distribution to other tribes because the NHA did not use the money as required. The NHA balked, and the legal fight continues.

A federal administrative law judge in December 2015 sided with HUD. Alexander Fernandez ruled there is “no dispute” that the NHA failed to accomplish 10 of its proposed projects and that HUD was within its right to impound the money.

But he also was sympathetic to the housing agency.

“The Navajo Nation, like many American Indian tribes, struggles with economic disadvantages that are almost unparalleled in American history,” Fernandez wrote. “There is critical need for affordable housing in the Navajo community. HUD’s termination of $96 million in grant funds therefore takes resources away from those who need it most.”

The judge decided the NHA “misunderstood what was required of it” and that “HUD asks the Navajo to pay a heavy price for that confusion.” He added that the NHA’s confusion was due in part to HUD’s “imprecise instructions.”

The Housing Authority appealed that ruling to HUD’s secretary, who upheld it in May. A month later, the NHA filed an appeal with the 9th U.S. Circuit Court of Appeals in San Francisco. The NHA’s opening brief is due in January, Yazzie said.

Yazzie insisted HUD bears much of the blame for botched projects and unspent funds, because federal officials failed to provide adequate oversight, guidance and training.

“All those years, they just had not been as attentive as they should be,” she said.

Except for two brief interviews, HUD leaders repeatedly declined to answer detailed questions about the Navajo Nation’s situation. But in court motions and letters to the NHA obtained under the Freedom of Information Act, HUD disagreed with Yazzie’s assessment.

Department administrators noted, for example, a special strike team was created to help the Navajos with reports, finances and regulations. The NHA stopped taking part in the sessions in 2013. HUD noted the NHA had problems before and after Yazzie took over.

On top of the $96 million repayment demanded from 2012, HUD rescinded $1.3 million of NHA funding in 2014, and $12.2 million last year. The reason, according to HUD records: Money was not properly used for housing projects on Yazzie’s watch.

Although the NHA submits an annual performance report to HUD, those records do not break down in detail how money is spent. Yazzie declined requests to review her agency’s detailed budget.

CONFLICTING REPORTS

Federal regulators aren’t the NHA’s only critics.

NHA is directed by an eight-person Board of Commissioners. There has been extensive turmoil, litigation and procedural changes involving the selection of board members. Today, a committee of all Navajo Nation Council delegates is responsible for appointing the eight commissioners, which it most recently did in 2014. The NHA chief executive, Yazzie, was appointed in 2007 and works under the direction of the Board of Commissioners. 

By 2012, some Navajo leaders were so frustrated by failures and the threatened loss of grants they launched a campaign to strip the NHA’s designation as the tribal housing entity. That initiative barely lost in a vote of the Tribal Council. Similar legislation is back before the Tribal Council, but a vote has not occurred.

There also were efforts to overturn the Housing Authority’s board, which succeeded, and to get Yazzie fired, which failed.

In 2012, the NHA hired a Scottsdale design firm, Swaback Partners, to develop a new approach for development on the reservation. The firm has declined to say how much it’s been paid. NHA records obtained by The Republic also do not disclose the contract terms.

The following year, the NHA began spending down surplus funds. But records show roughly half of that year’s $142 million in expenditures went to “administration and planning.”

The Housing Authority issues annual performance reports with data on spending and homebuilding. Most years, by the NHA’s own admission, the numbers prove wrong and reports have been amended.

Today, the NHA’s statements and public records tell conflicting stories about how many houses actually have been built on the Navajo Reservation. For example:

• In an open letter to Congress in March 2015, Yazzie said the NHA had built 580 units the previous two years. However, her agency’s “annual performance reports,” which Yazzie authorized and submitted to HUD, show less than half that number constructed from 2013 to 2015. Available records indicate 268 single-family or rental homes were built over that three-year period at a cost of $98 million. During that time, the agency spent another $104.6 million on planning and administration.
• The Housing Authority’s report to HUD identified a Kayenta women’s shelter as one project that “will be completed” in 2014. In fact, it was first built in 1998-99, but remained closed until this year. In September, the shelter started taking some people in with outside assistance.

A CALL TO HOLD AGENCY’S ‘FEET TO THE FIRE’

Some tribal leaders, including Navajo Nation President Russell Begaye, said they have grown weary of excuses.

“We need to hold NHA’s feet to the fire because they are not doing what they’re supposed to be doing,” Begaye said. “We want them to address our housing needs.”

He said if the NHA loses the $96 million to HUD then Yazzie and the NHA board should resign.

“If something goes belly up on your watch, you shouldn’t be there,” Begaye said. “If we lose any money ... there needs to be a restructuring.”

Navajo Council Delegate Jonathan Hale is pushing legislation to strip the NHA of its certification to receive HUD money. Hale said the Housing Authority needs a complete overhaul, with greater transparency.

“They’re still keeping it behind closed doors, with curtains shut,” said Hale, who represents Oak Springs/St. Michaels. “To my knowledge, no homes have been built (in recent years). Just remodeling, but no new homes in my area.”

Public records suggest HUD remains skeptical of the NHA’s data and projections.

“In spite of the provision of significant amounts of funding, NHA has failed to provide needed affordable housing to its tribal members,” one HUD attorney wrote.

Yazzie contends Native sovereignty is being violated by congressional calls to reduce funding for the NHA, and by HUD’s efforts to recoup Navajo grant funds.

She insists the NHA is on the road to financial integrity, and the surplus has been cut in half.

“So what’s the problem?” Yazzie asked. “And where was HUD the first 10 years, when all of this built up? ... Give me until 2017 to bring that unexpended balance down.”

In late November, HUD adopted a new rule that would take money from a tribe if its balance was greater than three times the sum of the prior three years’ allocations. The Navajos would lose money if their surplus exceeded $253 million.

The NHA's balance stood at $234 million in November.

CHESTER CARL

POLACCA — Housing expert Chester Carl by 2006 had spent a dozen years as director of the Navajo Nation agency responsible for providing homes for nearly 200,000 tribal members on the sprawling reservation.

Carl also served as president of the National American Indian Housing Council, and touted his skills for getting much-needed dwellings built.

Then the federal Department of Housing and Urban Development’s inspector general conducted a detailed audit.

A federal grand jury indicted Carl in 2009, accusing him of a criminal conspiracy with developer William Aubrey of Lodgebuilder Inc. Aubrey’s Nevada-based company built dozens of reservation homes in Chilchinbeto, Ariz., and South Shiprock, N.M., with federal funds channeled through the Navajo Housing Authority.

The South Shiprock project was a bust: Just one of 91 homes built ever was occupied. The rest sat vacant and have since been torn down.

U.S. prosecutors alleged Aubrey used some federal grant money to pay off gambling debts and some as bribes in the form of Las Vegas casino chips given to Carl.

Aubrey was found guilty of misappropriating funds from a tribal organization. He began serving a 4 1/2-year prison sentence on Feb. 5, 2016, after the 9th U.S. Circuit Court of Appeals upheld his 2013 conviction.

Carl, who denied taking pay-offs, was acquitted.

// Carl became // Today, Carl is executive director of the neighboring Hopi Housing Authority in Polacca, // where he worked until September 2016.//  The Hopi agency has a $20 million surplus — the third-largest amount of unspent federal housing grants in the country. Only the NHA, with its roughly quarter-billion dollar surplus, and the Lumbee Tribe of North Carolina, with a $20.3 million surplus, sit on larger pools of funds.

Carl described Aubrey as a close friend. He tells stories of helping him cash his poker chips after gambling and then handing him the cash. But he said that he never took a bribe. Aubrey could not be reached for comment.

Carl said he has become a scapegoat for Navajo Nation housing woes — unfairly blamed for incompetence and inaction at the NHA after he left.

“I did good for a lot of people,” he insisted.

HUD records show the NHA had a surplus of at least $250 million when Carl left office. He acknowledged problems with some non-profits and contractors during his tenure, but said HUD’s move to rescind $96 million in Navajo housing money following allegations the agency did not properly use federal funds substantiates his view.

Since Aneva “AJ” Yazzie took over in February 2007, Carl asked, “How many houses have they built? Where has the money gone?”

NHA records compiled by The Republic show each CEO spent about nine years running the organization.

Under Carl, at least 3,706 homes or rental units were built from 1998 to 2006. Under Yazzie, at least 543 homes or rental units were built from 2008 to 2016. In 2007, when each ran the agency for part of the year, 215 unit were built.

Republic photographer Michael Chow contributed to this article.