The Nooksack rent-to-own housing calamity
Gabriel S. Galanda
Round Valley Indian Tribes
Private investors have reaped millions of dollars in federal income tax savings from a United States low-income housing program over the last two decades. In exchange for those savings, low-income Indigenous Americans are promised they will eventually become homeowners. But that promise is not being fulfilled. Those Indigenous Americans are being denied home ownership.
That’s the predicament that seven Nooksack households now face. After decades of successfully renting to own their homes in rural Whatcom County, Washington, they are now facing unlawful eviction without good cause. They are participants in a costly and failed federal rent-to-own program: the Low-Income Housing Tax Credit Program (LIHTC, or “lie-tech”).
Indigenous communities suffer from the direst housing needs in the U.S. Indigenous families suffer from poverty, overcrowding, and deficient infrastructure. Many Indigenous people live in rural areas, where an outsized proportion of our country’s substandard housing lies.
At first glance, LIHTC seems like a program that could help address these glaring deficits. By some measures, the program has been a national success. HUD’s LIHTC database shows that over 50,000 projects and almost 3.5 million housing units were put into service between 1987 and 2020.
But from the start, the program was a compromise. The nation needed more housing for low-income people. Reagan-era conservatives preferred private incentives to public investment. So instead of building public housing projects directly, the government decided to give tax credits to developers to encourage investment in low-income housing. In 2001, Congress incentivized developers to not only provide low-income housing, but to also extend a promise of homeownership to tenant-homebuyers. Beginning in 2005, that promise was extended throughout Indian country.
The Internal Revenue Service allocates tax credits to the states based on population. The states then award the highly competitive credits to private developers. The Washington State Housing Finance Commission, for example, favors private developers who pledge home ownership to low-income people. Once awarded the credits, the developers sell them to outside investors, typically large financial institutions, to obtain construction capital. The credits give investors dollar-for-dollar reductions on federal corporate income taxes. Once the homes are built, low-income people get quality housing, and a promise of a deed. Through at least 26 tribal LIHTC deals in Washington, Indigenous Americans are promised deeds to their homes after fifteen years of good tenancy.
The program did not pan out as planned for the Nooksack households. Housing administrators originally told them that if they held up their end of the deal, they would own their homes on the 15 anniversary of the homes’ entry into the LIHTC program. These promises were just empty assurances. From the start, the developers put these promises at the center of their plans. The Nooksack Tribe partnered with a private consultant out of Kansas City, Missouri, Travois, Inc., and formed state-limited partnerships with Florida investment bank, Raymond James. These state partnerships, which hold title to the LIHTC homes, are 99.9 percent owned by Raymond James.
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The partners didn’t design the project for rental only. Instead, they proposed an “eventual homeownership” project to the Washington State Housing Finance Commission to secure the tax credits for four deals at Nooksack. Upon receipt of the tax credits, the partners agreed to pay equity into each homebuyer’s account over a 15-year period, and to fully comply with Washington low-income housing laws. Tribal housing administrators literally read policies detailing the “rent to own” promise to Nooksack households line-by-line, before the families got the keys to their homes. After 15 years, if those homebuyers did all that was required of them, they would get deeds to their homes.
The Nooksack families upheld their end of the bargain. They paid their monthly payments, maintained their property in good condition, and complied with other stringent requirements over time. But today, instead of getting deeds to their homes, they have gotten eviction notices. No deeds, no equity, just the threat of imminent eviction. Nooksack now claims the families no longer belong to the tribe, even though tribal membership was never a prerequisite for the LIHTC homes to begin with. The homes were also available to other low-income people in Deming.
The Nooksack deal’s architect agrees its intent is being subverted 15 years later—now that Raymond James has reaped its LIHTC reward. The families grieved to the Washington State Housing Finance Commission, expecting the agency would be troubled and take action. Instead, they learned that the agency never monitored the Nooksack partners’ eventual home ownership promises or plans over the 15-year period, as required by state law. The commission now realizes the partners never made any equity payments for the Nooksack households over that span, based on a determination by Raymond James that doing so would have increased its federal “tax liability.”
These astonishing failings do not appear unique to the Nooksack project. Public records show the commission realizing last year that eventual home ownership, as also promised in at least 22 other tribal LIHTC deals in Washington state, has never been realized anywhere else either. The commission has been asleep at the switch, which may explain why it, as of yet, has refused to take any action to enforce the Nooksack partners’ home ownership promises or prevent the evictions.
LIHTC’s home ownership promise for these and other Indigenous families now appears to be a great lie. But there is still time for officials in Washington state and Washington, D.C., to enforce that promise, especially with international actors paying close attention to this domestic human rights saga. Almost a year ago, the United Nations called on the United States to halt the evictions at Nooksack. To date, that call has gone unheeded by the Biden administration.
The commission shouldn’t participate in the lies—they should intercede and honor Congress’ intent and the developers’ homeownership promise to everyone involved. Congress should not sanction the lies. The Nooksack families deserve better. So potential homeowners throughout Indian country.
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