Case Study

LIHTC Need in Indian Country May Be 25,000 Units

6 min read

Tribal LIHTC Developers Leading the Way

The Low Income Housing Tax Credit is making inroads into a challenging market with a huge need for affordable housing development: Indian Country.

The housing need for several hundred tribes, more than 200 Alaskan Native villages and Native Hawaiian populations is enormous. The Department of Housing and Urban Development, in 2017, estimated an immediate need for 68,000 new or rehabilitated units for Native Americans and Native Alaskans. That did not include Hawaii, which has more than 20,000 Native applications for residential leases on Hawaiian Homelands remaining on a waitlist.

Tribal nations, advisors and syndicators, such as Travois, RT Hawk Housing Advisors, Raymond James Affordable Housing Investments, Hunt Capital Partners, Red Stone and RBC Community Investments have taken an interest in Indian Country LIHTC deals despite barriers, such as land status, poverty, remoteness and lack of available infrastructure. And states like California and Michigan have added tribal set-asides so at least one Native deal a year can be financed, to encourage Indian Country affordable housing in those states.

The LIHTC could play a big role in meeting some of those housing needs. According to Elizabeth Bland Glynn, chief executive of market leader Travois in Kansas City, the need for additional LIHTC units in Indian Country could be another 25,000 units, “easily.”

Glynn says, “It would be a huge resource for affordable housing in any tribal community, but especially for those whose resources are limited.”

Travois, active in the LIHTC market over the last 30 years, is responsible for more than 6,000 LIHTC units in 215 projects in Indian Country (in recent years it has also taken up the New Markets Tax Credit and has done 41 economic development deals). Between the two credits, the firm’s Indian Country partners are responsible for more than $1 billion of equity flowing into Native areas.

Glynn, who has taken over running the company from Travois’ founder, her father David Bland, salutes the LIHTC program for its versatility. “It can build homes and apartments for families, but also for employee housing, for younger working professionals and for elders,” she says.

Travois supplies consulting and architecture services to tribes, who act as developers. It is an acknowledgment of tribal sovereignty (the rights of Native Nations to govern themselves) and it also blends with the Travois philosophy.

“Our philosophy is our clients know best. We support them and follow their lead,” says Glynn. “That’s worked well for us for the past 28 years, and we think it’s the right thing to do.”

Low Market Risk and Strong Operational Guidelines
A key to success in getting investors to take a chance on these often-remote, little-known tribes is that many of the deals have no hard debt, strong operational guarantees and high demand according to Travois. Often the only financing is tax credit equity and money from the tribe’s federal housing assistance. The tribal financial commitment to the project and the lack of debt provide comfort to investors.

The Yurok Homes 3 development in Arcata, CA is a good example of Travois’ methods. The Yurok Indian Housing Authority is the developer and property manager, while Travois offered consulting and architecture services.

The northern California project received an award of nine percent LIHTCs from the Native American Apportionment from the California Tax Credit Allocation Committee in 2020 and completed construction in 2022. It is fully leased up, says Alexandria Murnan, Travois’ affordable housing director.

Murnan, who is an enrolled citizen of the Cherokee Nation, says Yurok Homes 3 is “a unique development.”

While the land is within the Yuroks’ ancestral footprint, it is off their reservation and was built on fee simple land the Tribe bought from a developer who started a project in Arcata but didn’t finish it. The adjacent utility infrastructure was a big positive.

Yurok Homes 3 is designed to help house all segments of Yurok society, with eight single-family homes with attached Additional Dwelling Units for elders, and four two-story five-plexes for families and singles, for a total of 36 units. The five-plexes include ten two-bedroom apartments and ten three-bedroom townhomes.

“There’s a large Indian Health Services clinic in the area that employs and serves a lot of Tribal members. So, there was a strong desire to build some housing there due to the high cost of housing in the area,” says Murnan.

Yurok Homes 3 is a very low-income development. “The project committed to ten units at 30 percent of area median income, four at 40 percent and 22 at 50 percent. And because it is a Yurok Indian Housing Authority project, it is subject to their policies and procedures, which ensures that no household will pay more than 30 percent of their adjusted gross income in rent,” says Murnan.

The total development cost was just north of $19 million, of which the majority was paid for from tax credit equity. RBC Community Investments was the syndicator while Freddie Mac was the upper-tier investor.

The remainder of the finances are covered by a 95 percent guaranteed HUD Title VI construction loan from Native American Bank to Yurok Indian Housing Authority. Under the HUD Title VI Loan Guarantee program, tribes can leverage their current and future Indian Housing Block Grant Funds as collateral for the loan. Lastly, the housing authority was also awarded a permanent, take-out loan and grant funds totaling $6.1 million from the Affordable Housing and Sustainable Communities Program through the California Department of Housing and Community Development. “Yurok Indian Housing Authority is the first tribal entity in California to be awarded these funds from the California Department of Housing and Community Development,” Murnan says.

Amenities include a fitness room, community center and laundry room. The Tribe is offering two permanent services to the tenants: domestic violence support and homebuyer counseling.

Despite Progress, Demand High
Glynn sees Travois’ volume growing about 20 percent year over year, and others are starting to become interested.

A Native-owned firm has gotten into the LIHTC field, and there’s no reason others couldn’t follow.

RT Hawk Housing Alliance has facilitated recent tax credit projects for the Grand Traverse Bay tribe in Michigan and the Port Gamble S’Kallam tribe in Washington State. It is owned by Wilbur Red Tomahawk, a member of the Standing Rock Sioux Tribe.

Glynn would like to see more LIHTC dollars available nationwide. “There’s not enough of the resource available. Way more needs to be dedicated to Indian housing. It’s still the best resource out there,” she says.

Glynn also acknowledges the difficulty of developing affordable housing in Indian country but notes it isn’t easy anywhere.

“Barriers remain,” she says. “The cost of construction is high right now and remains high. Even more so in Indian country than in other communities, given the distance for materials to be moved or sometimes the lack of labor, but, in general, these costs are similar to what all developers face elsewhere in the country.” 

“Our clients have been doing affordable housing in one way or another for decades now and while it might not have had the LIHTC name on it, it’s the same product and the same families.”

Mark Fogarty has covered housing and mortgages for more than 30 years. A former editor at National Mortgage News, he has written extensively about tax credits.