Dennis Wagner and Craig Harris

The Arizona Republic

WINDOW ROCK, Ariz. — A Navajo Nation housing agency that has struggled for years to provide dwellings for tribal members, and was the subject of a recent Arizona Republic investigation, is under scrutiny again by the federal Department of Housing and Urban Development.

HUD officials, including a deputy administrator and federal grants specialists, visited the reservation for a week in March after sending a letter to Navajo Housing Authority officials seeking information on construction projects that had failed or were severely flawed.

The Republic in a December 2016 series found the NHA, which has received more than $1.66 billion in federal funds since 1998, built fewer than 300 new residences in the past five years. Just as alarming, however, were revelations of more than $100 million in waste in projects that were built. Among the glaring failures: 36 igloo-shaped townhouses in Tolani Lake, built for $7 million over a decade ago, were never occupied and are decaying.

As the new federal inquiry was being launched, The Republic obtained records of other questionable expenditures from the NHA. Among them:

The housing authority reported that it paid $54.9 million during fiscal 2016 to modernize 50 dwellings — an average of nearly $1.1 million per unit as calculated by The Republic.

Troubled Navajo housing agency's board to be replaced

The Navajo Nation accepted more than $1 billion for houses. So, where did it go?

NHA records show $19.6 million was spent last year to complete 26 new homes, for a price tag of roughly $750,000 each.

The agency awarded a contract of more than $76 million to supply and install manufactured houses. If all 170 are completed, the price works out to nearly $450,000 each. That includes no real-estate expense, because the dwellings are being placed on tribal trust lands.

The NHA since 2012 has paid $3.9 million to Swaback Partners, a Scottsdale consulting company, to survey the reservation and develop new housing strategies and plans. The authority has identified no residential units that resulted from those plans.

"HUD's staff will seek to fulfill its responsibilities to the public by ensuring our funding is being used in compliance with our required policies and in a timely and appropriate manner," HUD spokesman Hang Liu said of the recent federal investigation on the reservation. "We will then use the information we gather to determine if any corrective actions may be necessary in the future."

HUD officials indicated they intended to examine at least 10 failed or questionable housing projects, including the demolition of 90 unfinished homes in South Shiprock, N.M., and the construction of a women's shelter in Kayenta that sat unopened for years.

The HUD team presented its findings to NHA officials on March 17. Liu declined The Republic's request to attend that meeting. HUD eventually will produce a final monitoring report on its findings that may include corrective action by the NHA.

Accounting for the spending

Aneva "AJ" Yazzie, NHA's chief executive, has repeatedly blamed the failures on corruption and mismanagement before she took over in 2007, and on a gantlet of development challenges unique to tribal lands. Simultaneously, Yazzie has said, her agency is under intense pressure to spend down a massive reserve fund, with some in Congress proposing to cut the tribe's annual housing appropriation because so much remains unused.

Yazzie said she is in the middle of a five-year plan to use up money and produce more homes.

In late February, Yazzie led a media tour of NHA projects. She seemed shocked when asked about her agency's reported cost to repair 50 homes in 2016.

"It wouldn't be a million dollars per unit," she said of the modernization expenditures. "Nor would it be $755,000" for each new home, even though that is what her agency reported.

Yazzie and Mellor Willie, NHA adviser on government affairs, said the report on completed homes does not include hundreds of dwellings that were under construction in 2015 and 2016, but not finished in those years. As a result, they said, per-unit costs are inflated.

Willie, former executive director of the National American Indian Housing Council, added that data on expenditures for each dwelling can get confusing: "You have hundreds and hundreds of housing projects in various stages," he noted.

HUD's Liu said it is likely that part of 2016’s funding was spent on modernization work that will be reported as complete in future years. He also said it's possible that, depending on the date that NHA received and paid bills for previously finished work, part of 2016’s funding was used to modernize units that were reported as completed in 2015.

"HUD is absolutely committed to ensuring that NHA spends public funding in an appropriate manner, and we recognize the housing and infrastructure needs present in the Navajo Nation, and in tribal communities across the country. We will continue working with NHA to support the principle of tribal self-determination and to best serve Navajo families and their communities," Liu said.

The Navajo Nation housing crisis is so severe that experts say tribal members need 34,000 new homes and an equal number of refurbishments. The NHA gets about $85 million in federal tax dollars each year from HUD to build and improve homes. Yet, the NHA has been so dysfunctional in spending the money that it had accrued an unused surplus of nearly $500 million by 2012.

With congressional critics and tribal members questioning the size of the surplus, the NHA has gone on a spending binge over the past several years, cutting the reserve by more than half, to $210 million.

How that money was spent has not always been clear.

NHA records compiled by The Republic show that the NHA spent $5 million to modernize 200 homes in 2012. That's about $25,000 in repairs per home.

During the next four years, the NHA reported that it spent $148.4 million to modernize 678 homes. That's an average of almost $219,000 for each refurbishment, or nearly nine times the cost of 2012.

Last year, NHA planned to fix 350 homes, but records show only 50 were modernized.

In documents filed with HUD, the housing agency blamed its failure to upgrade more dwellings on the Navajo Tribal Utility Authority. The NHA said the utility "does not have capacity to keep up with installation of electric and natural gas infrastructure," causing delays by issuing new requirements late in the construction phase.

Utility officials said they are not to blame.

Deputy General Manager Rex Kotz said the NHA's "push to spend" causes quality-control issues, and the housing authority does not anticipate infrastructure planning needed for refurbishments.

"We've spoken to them about the importance of pre-planning and coordination. However, they have been under a lot of pressure to spend the funding and their time is limited," he said.

In 2015, the NHA reported that it had planned to renovate 241 homes, but completed only 105. The NHA also stated that year that 339 units were under construction, being 10% to 65% complete. The NHA said those homes would be carried into 2016 with other projects.

Who else makes money

The NHA is quasi-independent from tribal government and has autonomy to hire consultants to help it carry out its mission. That too has become a subject of Navajo Nation controversy.

Former Navajo Nation President Peterson Zah has for several years been employed by the NHA for lobbying and public-relations services.

Yazzie emphasized Zah's persuasive credibility with tribal members and political leaders. But she declined to divulge how much he's been paid even though the Navajo Nation Code lists compensation of government contractors as information that "must be disclosed.”

The Navajo Times, which obtained Housing Authority invoices, reported that Zah has received over $342,000.

Zah's primary employment is as executive assistant to Navajo President Russell Begaye, positioned to support the NHA if Tribal Council members propose reform legislation directed at the agency. Zah joined Yazzie during a recent meeting with The Republic to talk about Navajo housing issues. He refused, however, to disclose his contract terms.

The NHA also has employed a Scottsdale consulting company, Swaback Partners, since 2012 to survey the reservation, develop a new housing strategy and draft plans for new housing communities.

Housing authority records show the company to date has been paid $3.9 million. Although Swaback has offered residential development blueprints for several locations, none of those proposals resulted in residential construction.

Yazzie said projects Swaback envisioned have been stymied by shifting Navajo politics, including leadership changes on NHA's board, the Tribal Council and at 55 of the 110 chapter houses.

"So that's where it's kind of stayed, and that's where it kind of stalled," Yazzie explained. "Swaback wasn't hired to build homes. They were just hired to provide a smarter planned community. And they've done that."