Luna Reyna
Underscore Native News + ICT
SEATTLE — After a 2024 Washington state audit determined that a program designed to help Native tenants become homeowners had failed its mission, state officials deflected blame but acknowledged the program’s shortcomings and the need for new policies as lawmakers demanded answers and critics decried the findings as another example of broken promises to Native peoples.
The updated policies, released in July, are intended to improve a program that has left hundreds of eligible homes from completing the transfer process to Native ownership on the heels of the audit, which revealed a two decades-long absence of policies, oversight and guidance, compounded by the Washington State Housing Finance Commission’s failure to enforce its own agreements with Native housing authorities.
Reserve accounts — obscure financial tools that were supposed to help tenants eventually buy their homes — were also understood differently by all parties.
The state housing commission is responsible for managing the federal Low-Income Housing Tax Credit’s Eventual Tenant Ownership program in Washington through agreements with tribal housing authorities. Advocates say the program holds life-changing potential by creating pathways for generational wealth building and housing security through home ownership among Native tenants who complete the 15-year compliance period.
The audit determined that 135 homes were eligible for ownership by 2023 through LIHTC Eventual Tenant Ownership. According to documents obtained by Underscore + ICT, the actual number of homes was 160 and none had been conveyed or transferred and sold.
As of this year, there are now 301 eligible homes for ownership.
As of September, the housing commission has approved a tenant transfer plan for the Tulalip Tribal Housing Department, where 91 homes are eligible for ownership, and the Spokane Indian Housing Authority, where 25 homes are eligible for ownership.
Colville Indian Housing Authority, where 45 homes are eligible for ownership, and Nooksack Indian Housing Authority, where 85 homes are eligible for ownership, are in the final steps for transfer plan approval.
Quinault Housing Authority, where 35 homes are eligible for ownership, and Lower Elwha Housing Authority, where 20 homes are eligible for ownership, are working on their transfer plans.
Following the new housing commission policies, Democratic state Rep. Gerry Pollet said the next necessary step is legislation to ensure accountability and oversight of the program.
“I’m very worried that without any external eyes, nothing will actually happen,” Pollet said.
Housing injustice concerns brought to light
The program’s shortcomings were illuminated through a widely publicized disenrollment dispute between Nooksack tribal government officials and disenrolled Nooksack citizens. In December 2021, Nooksack Indian Tribe began working to evict families that had been disenrolled in 2016. The evictions at housing projects managed by the tribe raised concerns about tenant purchase options and, more widely, the LIHTC program.
Gabe Galanda, a citizen of the Round Valley Indian Tribes and founder of Indigenous rights law firm Galanda Broadman, represented Nooksack citizens facing disenrollment, publicly speaking out against disenrollment and the later evictions of the disenrolled, while submitting public records requests and prompting deeper scrutiny of the LIHTC program.
As a result of Galanda’s efforts, Pollett and fellow Washington state Democratic Rep. Chris Stearns, Navajo, in 2023 requested an audit of the program, which examined the commission’s oversight of housing projects in Native nations across Washington state that offer tenant purchase options.
“[The commision] claimed that they didn’t have any problems at all with this program and we wouldn’t know that there was a problem if it wasn’t for Gabe Galanda and his public records requests,” Pollet said in an interview, noting that Galanda continued demanding records “despite the denials” from state housing officials.
The state housing commission is responsible for requesting progress reports every five years to inform the process but, according to the audit, didn’t request one until 2022, a concern raised by at least one commission employee as early as 2016.
“The Housing Finance Commission was forced — because of those record disclosures by Gabe — to admit, ‘Oh yes, we never did our follow-up every five years to make sure the homeownership agreements were on track,’ which is what their own programmatic requirements were,” Pollet continued.
The commission has consistently claimed that the federal Eventual Tenant Ownership program hasn’t been successful anywhere in the country, an assertion echoed by the commission’s executive director, Steve Walker, at a Dec. 4, 2024 legislative hearing.
“Nowhere in the country is there a stand-up eventual tenant ownership component to the tax credit program that is being celebrated for tremendous success,” Walker said.
“They simply screwed up, and they won’t admit it,” Galanda said. “And so it’s very convenient to blame the program, to blame the tribes, to blame anybody but themselves, while gaslighting the public about the real nature of this program. They’ve done nothing but obfuscate rather than spotlight eventual tenant ownership issues.”
The updated policies implemented this year are too late for cases like Olive Oshiro, who may have owned her home in 2020 if there had been proper oversight. Oshiro’s home was a LIHTC home in 2005, so she could have owned her home after 15 years. She died before the four-year legal battle with Nooksack Indian Tribe to keep her home of two decades was over.
“What the whole Nooksack fiasco and audit revealed to me is that the people in Washington state, particularly Democrats and progressives who espouse a commitment to low-income housing opportunity and homeownership, aren’t actually committed to low-income housing opportunity and homeownership,” Galanda said.
Audit highlights failures
The Washington State Auditor’s Office called the findings from the Nov. 19, 2024 audit “disappointing,” but added that the “failure to deliver on the possibility of homeownership is not the result of state management.”
According to documents obtained by Underscore + ICT, the audit incorrectly claimed that only 135 homes were eligible for homeownership by 2023. A total of 160 homes were eligible for homeownership by 2023, according to data provided by the commission. None of them had begun the process of ownership transfer at the time of the audit.
The audit also shared that by 2030, approximately 250 homes will become eligible for tenant purchase. Further investigation by Underscore + ICT revealed that 454 homes will be eligible for conveyance by 2030, according to information shared by the commission.
The audit stated that the commission followed the rules for the tenant purchase option in the LIHTC program. State auditors explained that the federal code governing the program doesn’t include oversight requirements for tenant ownership. Since there were no federal or state regulations for this, the auditors concluded that, despite the commission’s lack of action, it wasn’t at fault.
“The intent behind that language is really that we did not identify noncompliance with relevant laws or regulations on the commission’s part that contributed to the lack of guidance,” Brenton Clark, Washington State Auditor Office’s senior performance auditor, told Underscore + ICT.
In other words, although the commission has legal written agreements with eight sovereign Native nations to oversee the program and facilitate compliance checks every five years, the audit determined that federal code supersedes that and therefore the commission was not at fault but a “contributing factor.”
“I think that the lack of guidance and the lack of oversight of the commission side certainly was a contributing factor [to program failures],” Clark said.
The fact that the commission failed to meet its own agreements with Native nations, which required oversight of tribal housing authorities’ progress toward fulfilling the tenant purchase option, is mentioned later in the audit: “The commission did not follow its own plan for monitoring project owners’ progress toward tenant purchases.”
The audit also details that, “Although one employee raised the lack of progress updates as an issue in 2016, commission managers said their focus during the first 15 years is on compliance with tax program rules that take priority, such as ensuring tenants meet income eligibility requirements and that project owners comply with health and safety standards.”
The auditors did not request further information from the commission about any other employee concerns or complaints.
Even with at least one employee raising awareness of the lack of updates in 2016, no policies and procedures were created for employees to monitor the eventual tenant ownership program until 2022.
The first 25 properties reached eligibility for tenant purchase in 2018. No progress toward conveyance was made. By 2020, a total of 73 properties had reached the 15-year eligibility for tenant purchase, during the global COVID-19 pandemic. Onsite compliance waivers for in-person inspection, eviction moratoria and tenant recertification waivers were authorized, which prevented the commission from doing full compliance reviews until 2022, when physical inspections were reinstated.
“There’s no good answer to why we didn’t get updated reports,” Lisa Vatske, director of multi-family housing and community facilities for the commission, told Underscore + ICT. “My sense is, if we had asked for updated reports, there wouldn’t have been updated reports, right? Because nobody was really making progress, and for us, it wasn’t a milestone until year 15.”
The audit also revealed that the commission didn’t develop sufficient guidance for each Native nation’s housing authority to implement tenant purchase options and had only given tenants some general information about the option but not specific details.
Staff from the Tulalip Housing Department and the Yakama Nation Housing Authority explained to the commission that they would appreciate more guidance, like training or a sample tenant transfer plan, since tenant purchase was a new process for them.
The auditors held two small focus groups “with nine or fewer tenants,” all of whom were not identified by name — one group in eastern Washington, with people living in homes managed by Yakama Nation Housing Authority, and one in western Washington, with people living in projects managed by the Lower Elwha Housing Authority. The focus groups revealed that tenants wanted to own their homes; some even had plans for future renovations. However, they were unclear on how the program worked, some not even realizing their homes could be owned one day.
One said they thought they were in Section 8 housing, and another said they had “never heard anything about rent to own.”
Tenants wanted to know more, in writing, about everything from financing, to the actual purchase process, to information about ongoing maintenance activities and costs currently handled by the housing authority.
“Financials is a big piece for me,” a person in a focus group said, according to transcripts included in the audit. “I’m a single income parent of two. Making sure [the] cost is affordable, not needing to work multiple jobs to pay for the mortgage.”
“I have a daughter, grandson and granddaughter that would like to own my house if I die, but I’m not sure who will get it,” another person said.
According to the audit, housing authorities are responsible for providing the information and support that tenants need to understand their purchase options, but the commission must first develop sufficient guidance for each housing authority to implement tenant purchase options.
Underscore + ICT were unable to reach any of the Native housing authorities involved in the ownership program for this story.
The state auditor’s office gave two main recommendations for progress toward fulfilling the tenant purchase option. The first called for an updated process that should include a schedule for progress reports and reported changes in a timely manner that aligns with other existing monitoring processes and documenting the reporting processes in written policies and procedures.
The second called for clearer guidance from the commission to housing authorities so they can effectively meet program goals by developing guidance and clearer expectations for Native housing authorities on how to develop and implement their tenant purchase plans. These include providing a timeline for tenant education and when homes will be available to buy, the method for calculating the selling price of eligible units and more.
Strengthened program oversight
The August 2024 Eventual Tenant Ownership program Guide for Property Owners and Residents and the July 2025 updated commission housing tax credit policies meet all the auditor’s recommendations.
The commission contacted all the ownership program participants in 2022 to check on compliance and progress on homeownership transfers. In early 2023, the commission shared a new compliance framework for housing authorities to follow. This same framework was finalized into the 2024 ownership program guide in 2024, which is the final framework for housing authorities to follow, guiding them through updating their ownership plans and preparing for sales to tenants.
After approval, the commission sent notifications to each housing authority regarding the policy changes, and each housing authority was invited to an information session on May 29, 2024, to discuss the new policies.
“We’ve learned a lot,” Vatske said. “We’ve restructured and reframed from the beginning, so any new applicants who are coming in will now have much more of a roadmap and a framework.”
Under the new policies, the commission will require yearly certifications to ensure that homeownership progress is moving forward. Starting in year 13, more detailed notifications will be required for residents including information on the purchase option, property inspections and any major maintenance. The commission has also created a lease rider that explains the eventual tenant ownership program, so that residents are aware of it from day one.
“All the [homes] that have reached the 15-year period are making progress,” Wubet Biratu, director of the asset management and compliance division at the Washington Housing Finance Commission, told Underscore + ICT.
The next step after the approval of the tenant transfer plan is for the housing authority to complete a spreadsheet of the homes they intend to convey and return it to the housing commission. No housing authority had returned this as of early September.
“We are working with them to update their conveyance plan, and we have given them the framework, and so they are working towards updating their transfer plan and also providing financial education and homeownership education to the residents,” Biratu said.
According to Biratu, there’s also now a case worker who works with each housing authority throughout the life of the program, from annual certifications to compliance. The property manager is also included in every annual certification so that even if the property manager for the tenant ownership homes changes, the initial mission and purpose of the tenant ownership program is realized.
“We have incorporated those checks and balances,” Biratu said. “Fifteen years is a long time and that was not taken into consideration at the beginning.”
The new policies require commission and housing authority communication with the tenant that supports an ongoing understanding of what a transfer plan will need to look like at year 15 when the investor exits the agreement and transfers ownership to the Native housing authority, who supports conveyance to the new homeowner. This transfer process takes at least 90 days, according to Biratu.
During the years of Nooksack eviction proceedings, Galanda consistently contacted state representatives hoping they would take an interest. Only Pollett and Stearns would sign the 2023 letter requesting the audit. Nobody else in either the state Senate or the House from either party signed the letter — not even U.S. Sen. Maria Cantwell, a former chair of the Senate Indian Affairs Committee and champion of the federal LIHTC program.
“The United States has not lived up to its [trust] responsibility to provide housing [for federally recognized Native nations],” Stearns, who represents the 47th Legislative District, said. [Housing is] a basic function of living a good life, living a healthy life. We’re also trying to fight homelessness. Here’s a tool that would do just that.”
Stearns, Navajo, went on to explain that was why the tenant ownership program and policy changes are so important to him moving forward.
“It just shows when it comes to eventual tenant ownership, or Black and Brown people achieving the American dream of homeownership, their words are hollow,” Galanda said. “They’re not actually committed to it. Some might say this whole Low-Income Housing Tax Credit program concocted during the Reagan administration to gut HUD, candidly much like we’re seeing now in the Trump administration in general, is a farce. It is intended to make developers and investors richer based on the annual direct offset of federal corporate income taxes, while maintaining the status quo for Black and Brown people.”
Housing Program Explained
The Low-Income Housing Tax Credit program, which assists in the development of low-income rental housing, is a federal program facilitated in Washington state by the Housing Finance Commission. In 1986, the Tax Reform Act mandated that all states administering the LIHTC Program include tenant ownership, which allows the project units to be available for ownership by residents after the 15-year compliance period, as a component of the program.
The commission allocates federal income tax credits to a developer who then enters into a limited liability partnership with an investor who then gives money to the developer, in exchange for that tax credit. The federal tax credit reduces the amount of income tax the investor owes, reducing it dollar for dollar for the amount invested in building LIHTC tenant ownership homes in each nation. This accumulates to millions of dollars in tax credits for the investor over the 15-year period.
Each Native nation’s housing authority manages the daily operations and maintenance of the property, but the investor owns 99.99 percent of the property until year 15, when the transfer of ownership process should begin.
According to the commission, it has 1,300 LIHTC projects, and 18 of them chose the eventual tenant ownership option. Of those 18, 17 of the projects encompass 531 houses across eight separate Native nations that participate in the tax credit program for eventual tenant ownership.
During an interview with Underscore + ICT, Vatske, the director of multi-family housing and community facilities for the commission, insisted that the commission’s programs, like their single-family mortgage down payment assistance division, are structured to support home ownership and down payment assistance but said the tax credit program may not be the best tool to accomplish homeownership for Native nations.
However, as her colleague, Margret Graham, commission communications manager, pointed out during the same interview, the lack of available homes to purchase on Native land is what makes the tax credit program appealing in Indian Country. Partnership with investors provides the funding necessary to build the required infrastructure and housing.
Disagreement over purchase vs. conveyance
The commission and resident advocates never agreed on the process for the successful transfer of ownership of the tenant ownership homes in Washington.
“It was always contemplated that the tenant had to purchase the property,” Vatske said. “It was never meant to be like you rent for 15 years and then you’re just given the property.”
But the transfer of the property can happen in any number of ways, according to each Native housing authority’s preference and needs. Nooksack Indian Housing Authority only requires one additional dollar of consideration for the conveyance or transfer and sale of the properties.
During the December 2024 hearing, Galanda disagreed with Vatske’s assertions.
“This is not a ‘purchase option,’” Galanda said. “This is, in fact, an absolute right of conveyance, considering that nominal consideration for $1 when matched with what was supposed to be equity reserve account payments made by tax credit investors and developers and 15 years of monthly rent.”
David Bland, retired president and chief executive officer of Travois, Inc. from 1995, when the company was formed, until 2016, also disagreed with Vatske’s claim that after 15 years the tenants had to purchase the home. Bland explained that how Native housing authorities choose to transfer the homes at year 15 is their own decision.
“The tribe doesn’t have to make a profit,” Bland said. “They don’t have to recoup anything. They can just give the houses away if they want to.”
Bland explained that Travois, a firm that partners with tribal nations “to create affordable housing and economic developments that reflect their vision for the future,” generally advised their clients to convey the house to the tenants — no purchase necessary. Because the tenant has been paying into eventual tenant ownership through the tenant ownership program, Bland said, there is no concern about phantom income or a tax liability for the new homeowner.
“To my knowledge, the IRS has never come back and said there’s phantom income as a result of the transfer of these houses to the tenant,” Bland continued.
Bland explained that, as a consultant, his job wasn’t to dictate how each Native nation transferred the homes.
“The goal is we want to create homeowners,” Bland said. “We want the families to have some opportunity to create wealth that they can break the cycle of poverty and then have something that they could then borrow against to put a kid through college or to start a business or to otherwise just build their own personal financial wealth.”
Complicated reserve accounts
Underscore + ICT first asked the commission in January how many of the tenant ownership homes mentioned tenant reserve accounts. The commission said Nooksack was the anomaly, but after reviewing their records to respond to Underscore + ICT requests, they revealed that 11 of the 17 tenant ownership projects with Native nations were meant to include reserve accounts.
The commission claims it was their understanding that each Native nation was going to establish the reserve accounts from the money received from the tax credits to build the project.
According to Brenton Clark, Washington State Auditor Office’s senior performance auditor, the audit did not look into the reserve account maintenance.
“That was something that we heard about,” Clark told Underscore + ICT. “It just ended up just not being something that we had time to look at.”
When asked what time constraints there were on the audit, Clark said there were no externally imposed deadlines that they were required to meet.
There are operating and capital reserves accounts that are set up by the housing authority for any unexpected costs for repairs and maintenance. The confusion is around what the original ownership plans refer to as Home Ownership Reserve Accounts.
In a March 15, 2022 letter from the commission to Nooksack Indian Housing Authority, recapping a March 11 conversation between commission staff and housing authority staff and its consultant, RTHawk Housing Alliance, Nooksack housing authority explained that the Home Ownership Reserve Accounts described in the Eventual Tenant Ownership Plan were not funded based on a determination made by the tax credit investor, Raymond James, that the funding of those accounts would result in a tax liability to the partnership.
That means Raymond James chose not to fund the required reserve accounts, or advised Nooksack housing authority not to fund them, to avoid any tax liability.
Underscore + ICT has repeatedly attempted to reach Raymond James for comment.
According to Bland, “the reserve account was always a sort of a pretty nebulous concept.”
There are 11 projects encompassing 296 houses across five Native nations originally requiring a reserve account in their original ownership plans, according to documents shared by the commission. The language in these original ownership plans for each housing authority are almost identical to each other because the Native housing authorities were relying on the same consultants, often Travois and RTHawk Housing Alliance, to develop their LIHTC applications.
“Our advice to the tribes was almost uniformly to put aside some amount of the tenants’ rent every month into a reserve account,” Bland said.
Each of the 11 original ownership plans that include Home Ownership Reserve Accounts state that the Native housing authorities will establish a reserve account which will be updated annually in the name of each family. After each year of successful and uninterrupted occupancy, each family should have received a statement detailing the amount accrued in the reserve to be credited toward the sale price of the home at year 15. The reserve account money that was set aside would act as the down payment for the house.
If the reserve accounts weren’t being maintained, it was the commission’s job to make sure that changed, but because of the two decade-long absence of policies, oversight and guidance by the commission, each Native nation’s housing authority struggled to implement tenant purchase options.
Galanda doesn’t believe that requiring the Native nations to maintain the Home Ownership Reserve Accounts was ever fully understood or sustainable for smaller tribes.
Bland and Margret Graham, communications manager for the Washington Housing Finance Commission, agreed that homeownership could still be achieved without fulfilled reserve accounts.
In 2022, Nooksack Indian Housing Authority changed its purchase price for each unit, because the reserve accounts weren’t funded, and decided not to use them in the future. Instead, the purchase price was set to $1.00.
According to Graham, so far no Native nation has chosen to continue to include tenant reserve accounts in their new transfer plans.
Moving forward
While the new procedures are an important step forward, without being able and willing to maintain compliance none of it will matter, according to Pollet.
In the past, when any Native housing authority or investor was out of compliance, the commission has claimed that its only option for accountability has been to notify the IRS of noncompliance.
This did not sit well with Pollet.
“I’d like to urge you to take a look at how you represent your findings, because you basically said the only solution is the IRS taking action, when in fact, the State Housing Finance Commission has a pretty big hammer for someone who violates their regulatory agreements,” Pollet said during the Dec. 4, 2024 legislative hearing.
Pollet went on to assert that, if the terms of an agreement are violated with a state agency for funding, the commission can determine them ineligible for additional funding, and that the private investor who has benefited from that violation would be debarred from having any further low-income housing tax credits and the Native nation in violation could be refused other development supports since they violated the terms of the agreement with the state.
“The [Housing Finance Commission] has just fallen flat on its face in this regard,” Pollett told Underscore + ICT. “They’re just washing their hands and saying, “Oh, well, we wrote to the IRS.’”
Since 2013, when the Nooksack Indian Tribe began attempting to disenroll 306 of its citizens, the commission has claimed that it has no authority to intervene due to tribal sovereignty. The commission would typically enforce the rules of the federal tenant ownership program, and did tell the housing authority that it was out of compliance with federal and state LIHTC laws, but took no further action — even when Nooksack housing authority began evicting residents from tenant ownership homes they may have owned had the commission been performing their oversight responsibilities.
“I’m a huge advocate for tribal sovereignty, but they’re basically trying to hide behind the word sovereignty when they have every right to limit additional agreements and they just won’t do anything,” Pollet said.
“They’d like to conflate the issue of whether or not the Nooksack have the right to adjudicate evictions on their reservation — they want to conflate that with whether or not, as a state agency, they have an obligation to ensure that the terms of their agreements are being made,” Pollet continued.
Galanda believes that Raymond James also hides behind tribal sovereignty.
“[Raymond James] set up limited liability partnerships under state law that they own and control to the tune of 99.99 percent but they hide behind the .01 percent tribal interest to shield themselves from state inquiry, obviously judicial inquiry, IRS inquiry,” Galanda said. “They push the tribe out to the front, even though it has a minuscule, decimal point of an ownership percentage, and then they just hide, shield themselves from accountability.”
When the commission finally reached out to each Native nation in 2022 to check on compliance, Nooksack housing authority did not respond to requests for information. The commission notified the IRS of noncompliance in April of 2023, years after the 85 houses reached the 15-year tax credit threshold. The IRS will only get involved within the 15 tax credit years that the home is in the program.
“So they were only submitting them to the IRS for noncompliance under their own policies, knowing full well the IRS isn’t going to do anything either, including hold Raymond James to account,” Galanda said.
A 2017 testimony before the committee on finance, U.S. Senate of the LIHTC program by the Government Accountability Office revealed that IRS oversight of the LIHTC program was minimal. The 2015 GAO report found that the IRS had only conducted seven audits of allocating agencies, like the Washington Housing Finance Commission, from 1986, when the program started, through May 2015.
Galanda and Bland believe that even with the new policies, the way to get to homeownership under this program is state legislation. Pollet plans to introduce legislation for next session that “debars” any private tax credit arranger or beneficiary who does not fulfill requirements to provide for transfer of ownership to tenants.
Pollet also plans to ask for a follow-up management report from the commission on whether they improved oversight and ensured additional housing providers are on schedule to move tenants into ownership at 15 years.
“The Legislature must now consider legislating some enforcement remedy to prevent the types of abuse of these tax credits that we have seen in Nooksack for the last nearly 20 years, and more importantly, to fulfill the state’s homeownership promises to Indigenous homebuyers in Washington,” Galanda said at the December 2024 hearing.
The state auditor’s office says it may perform a follow-up to its performance audit since there is interest from legislators.
Pollet plans to introduce an accountability bill in January during the next legislative session.
“I expect substantial interest and support,” Pollet said.
The LIHTC tenant ownership option was meant to provide a genuine pathway to homeownership for families who have long been denied this opportunity. In Indian Country, where housing shortages are dire and generational financial wealth is rare, the program’s promise carries even greater weight. However, without a legislative push to hold agencies and investors accountable, that promise remains unfulfilled.