§4196 Demonstration Program for Guaranteed Loans to Finance Tribal Community and Economic Development Activities

Summary

The Secretary of Housing and Urban Development can guarantee loans or bonds that Indian tribes or tribally designated housing entities issue to pay for projects on reservations and other Indian areas, if Congress provides the money and the tribe approves. The Secretary can guarantee loans for no more than 4 tribes or tribal housing entities in each HUD Office of Native American Programs region. At least 70 percent of the money a tribe gets because of a guarantee must be used to help low-income families. Each guarantee covers 95 percent of the unpaid principal and interest. The Secretary must set rules for who qualifies and what fees to charge to keep the program financially safe. Fees must be enough, but not higher than needed, to maintain a negative credit subsidy as determined by the Secretary. Loans can have terms the Secretary sets, but guarantees cannot be denied just because the repayment period is proposed, unless it is over 20 years or creates an unacceptable financial risk. Tribes must sign a repayment contract, show the loan fits their finances, and provide security if the Secretary asks (for example, local tax income or sale proceeds), but the security can’t include certain grant funds. The United States pledges its full faith and credit for these guarantees. The program could provide training and information. Limits: up to $200,000,000 in guarantee commitments each year for fiscal years 2009–2013, $1,000,000 authorized each year for credit subsidy for those years, and no more than $1,000,000,000 outstanding in total guaranteed obligations. If 50 percent of that total limit is reached, the Secretary may cap any one tribe’s annual guarantees at $25,000,000 or ask Congress to raise the total cap. A report to Congress was required 4 years after October 14, 2008. No new guarantees could be made after October 1, 2013.