Community Developments Investments (September 2016)

Fostering Economic Growth in Native American and Other Underserved Communities

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Tish Secrest, Chief Community Reinvestment Act Officer, Bank of America

Pueblo of San Felipe construction crews build homes. Construction jobs have been created by Bank of America's investment. (Bank of America)

Today, more than 20 percent1 of the nation's Native American2 population lives on tribal lands—often remote, rustic areas, frequently without running water, electricity, wired telephones, cell coverage, or Internet access, where living conditions accommodate only the most basic needs. This, paired with a shortage of decent affordable housing on reservations, has created overcrowding in challenging conditions.

These issues have persisted for many years. They are among the reasons why Bank of America continues its long-standing commitment to community development for low- and moderate-income (LMI) individuals and neighborhoods, including promoting neighborhood revitalization in Native American communities.

In 2009, Bank of America renewed this commitment with a 10-year, $1.5 trillion community development goal of lending and investing in LMI communities, including $50 billion dedicated to help build up rural and Native American communities. From January 2009 through December 2015, approximately $797 billion has been funded as part of the community development goal, including $35 billion supporting rural and Native American programs. Leveraging its expertise in credit, banking, and investment management, Bank of America has delivered much-needed loans through nonprofit organizations, such as community development financial institutions, community development corporations, financial intermediaries, and tax-exempt entities that promote neighborhood revitalization on Native American land.

Lending and investing over the past few years has been challenging, however, due to the economic and housing market downturn, decreased credit demand, and tightened regulatory requirements. While this has caused some banks to abstain from lending in Native American communities, Bank of America has leaned on its experience and relationships with Native American tribes to continue to provide support.

Leveraging Resources

During the past five years, Bank of America has provided 12 Community Reinvestment Act qualified loans and 28 investments totaling $69 million to tribes and organizations serving Native Americans. The bank has also provided eight community development services, such as financial literacy training to attendees at the National Indian Youth Leadership Project in Gallup, N.M., as well as board leadership and service to the Four Directions Development Corporation. These efforts have helped revitalize communities on reservations and tribal lands across the country, providing housing to relieve overcrowding and job development opportunities for those hired to construct the homes on-site.

Through these lending experiences, Bank of America has gained valuable knowledge in how to address challenges specific to Native American communities, including navigating their unique legal status. Each Native American tribe exists as its own sovereign nation and has the power to make and enforce laws affecting business, property, secured transactions, and the conduct of its tribal members and non-members on the reservation. When considering a tribe as a borrower, lenders must also consider who in the tribal government has the power to act on behalf of the tribe, as well as the risk that governmental changes may affect loan repayment.

Because of unique challenges such as these and other unanticipated issues that can often arise as the relationship deepens and progresses, it is helpful for a lender to consider all of the resources that can be brought to bear in addressing a situation.

Maria Barry, a Bank of America Merrill Lynch Community Development Banking executive, credits the bank's holistic offerings in helping navigate these challenges successfully.

"The issues facing Native American communities today have, unfortunately, been around for a long time," said Ms. Barry. "And while the challenges aren't necessarily new, we felt, based on our deep expertise in community development lending, that it was important to approach the needs of each community differently—acknowledging that, while the common denominator was often lack of access to traditional financing, the solution for each community might vary."

The following two projects illustrate Bank of America's lending approaches to help revitalize neighborhoods in Native American communities.

Pueblo of San Felipe

The Pueblo of San Felipe is a federally-recognized sovereign nation in New Mexico. Over 60 percent of the community members on the reservation fall into the LMI category, with more than half of all families living in substandard housing.

In 2011, the San Felipe Pueblo Housing Authority (SFPHA), a tribal entity of the pueblo, applied for housing rehabilitation under the Indian Community Development Block Grant Program (ICDBG) and the Indian Housing Block Grant (IHBG) Program, both administered by the U.S. Department of Housing and Urban Development (HUD).3 To be approved for funding, a tribal entity must undergo an extensive review process that includes an audit of its finances, an environmental assessment, receipt of housing plans, and confirmation that it is in good standing with the Bureau of Indian Affairs. When Bank of America was introduced to SFPHA, the entity had been approved for a project loan that used HUD's Title VI Loan Guarantee (Title VI) Program.4

Title VI loans were established to encourage banks to lend on tribal land by providing a 95 percent principal and interest guarantee from the federal government. After an initial lender backed out, Bank of America leveraged its long-standing experience with these communities to quickly fill the gap, making a $2.8 million project loan to SFPHA through the Title VI program.

The pueblo project included 28 houses financed by Bank of America in 2011 and successfully paid off in 2013, creating in 2015 a second phase of financing for 21 additional houses. All of these homes will be part of the pueblo's Black Mesa View subdivision. The loan also contributed to economic growth within the community by creating 70 jobs.

Pueblo of San Felipe construction crews add landscaping to a home funded by Bank of America through the Title VI program. (Bank of America)

"Bank of America was the only lender that took the time to work with us through what can be a long and complex process, and our community has benefitted tremendously from their willingness and dedication to help," said SFPHA Executive Director Isaac Perez. "The bank's financing has provided homes for nearly 50 families in the community so far, with more homes expected to be financed by the bank and built in 2016."

The project demonstrates the necessary level of commitment in these situations for guaranteeing success, from both the tribal community seeking to secure financing as well as the lender working to ensure that the community's financial needs are met.

Tohono O'odham Nation

The Tohono O'odham Nation is a federally recognized tribe in southwestern Arizona. With 28,000 members and a land base approximately the size of Connecticut, the Tohono O'odham Nation is the country's second-largest reservation in both population and geographical size.

Similar to New Mexico's Pueblo of San Felipe, the nation had a long housing renovation waiting list of LMI families living in substandard housing. In 2014, the Tohono O'odham Ki:Ki Association, the tribally designated housing entity for HUD purposes, received a $2.5 million Title VI guaranteed loan from Bank of America. The association also received $4.2 million in equity awarded through the Low-Income Housing Tax Credit program, the federal government's primary program for encouraging investment of private equity in the development of affordable rental housing for low-income households. Following receipt of the tax credits, the tribe asked the bank to manage a second loan, demonstrating the strength of the bank's relationship with the tribe. Bank of America purchased the tax credits as the investor, and the combined funds went toward the renovation of 60 single-family houses located on tribal land in Sells, Ariz.

A typical Tohono O'odham Nation home in Sells, Ariz., financed by Bank of America. (Bank of America)

Lessons Learned

These case studies, as well as the 10 loans that Bank of America provided to Native American reservations and LMI communities, offer useful insights that can be leveraged when working with this unique type of borrower. The lender must demonstrate a strong commitment to understanding the client's distinctive governance structure, its challenges in the face of multiple stakeholders, and its needs when seeking to secure funding. Taking the time to develop and deepen the relationship often translates into valuable rewards.

For more information, contact Tish Secrest at

1 "Profile: American Indian/Alaska Native," U. S. Department of Health and Human Services, Office of Minority Health.

2 In the United States, "Native American" refers to a person belonging to one of three primary groups: Native Hawaiians, Alaska Natives, and American Indians (residents of the contiguous United States). The Title VI program, highlighted in this Investments, is applicable to federally recognized tribes and tribally designated housing entities located within Alaska and the contiguous United States. Therefore, "Native American," in this context, refers only to Alaska Natives and American Indians.

3 For more information, see the ICDBG program web page and the IHBG program web page.

4 Refer to 25 USC 4101 et seq. and 24 CFR 1000.

This publication is part of:

Collection: Community Developments Investments

Deputy Comptroller
Barry Wides

Editorial Staff
Ammar Askari
Janet Fix

Design Staff
Victor Battista
Vincent Harris

On the cover
Native American totem pole with photos (from top to bottom) of a construction worker building a home in Eagle Butte, S.D., a home under construction, and newly completed homes on the Pine Ridge Indian Reservation in Nebraska. (Photos courtesy of the Housing Assistance Council.)

For questions or comments, call (202) 649-6420 or email This and previous editions are available on the OCC's website at

Articles by non-OCC authors represent the authors' own views and not necessarily the views of the OCC.

Deputy Comptroller
Barry Wides

Editorial Staff
Ted Wartell
Bill Reeves
David Black
Dan Gibbard

Design Staff
Rick Shacklette
Cheryle Robison

For questions or comments, call (202) 649-6420 or email This and previous editions are available on the OCC's website at

Articles by non-OCC authors represent the authors' own views and not necessarily the views of the OCC.