If you're unclear about the way housing works on First Nations reserves in Canada, you're in good company. Even auditor general Sheila Fraser has described it as "fundamentally different and more complex than off-reserve housing."
So here is a primer pieced together from audits, consultant reports, interviews with First Nations' members and housing managers, and information provided by Indian and Northern Affairs Canada and Canada Mortgage and Housing Corporation.
The article also relies heavily on an aboriginal housing road map prepared for the Times Colonist by Glenn Lawson of Lawson Tessier, a Comox-based consultant who has been helping First Nations set up housing programs and navigate government bureaucracies for 18 years.
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THE PLAYERS
CHIEF AND COUNCIL: This is the governing body, which is usually elected by the band membership. The band receives money from the federal government under funding agreements to pay for services such as education, economic development, health and housing. The band also may have its own sources of revenue from leases or economic development projects. On some reserves, the council doubles as the housing board or committee. On others, council delegates responsibility to an arms-length housing committee.
HOUSING OFFICER: Also known as the housing manager or housing co-ordinator, this person runs the housing department for the First Nation. It's a tricky job, since most, if not all the people, on a reserve are related to one another. Lawson maintains that the only way the job can be done properly is if the band has set up a strong housing committee that makes decisions without being influenced by personal relationships. In a 2007 report for the B.C. government on aboriginal housing, Palmer and Associates found that a significant number of First Nation communities -- 30 per cent of those surveyed -- had only a part-time person or no housing manager.
HOUSING COMMITTEE: Also known as the housing authority or housing board, this is the body that sets and enforces housing policies on reserves. It is designed to take the politics out of housing by working at arms-length from the elected chief and council. However, a lot depends on how the committee is established. Lawson says the committee works best if the chief and council delegate authority and responsibility to the committee to manage housing free of political interference. On reserves where the housing committees merely make recommendations to council, or where chief and council still operate as the housing committee, the membership may view the decisions as being political, Lawson said.
INDIAN AND NORTHERN AFFAIRS CANADA (INAC): A federal government department that provides advice and financial assistance to First Nations to build and repair homes, get rid of mould, and construct sewer, water and other infrastructure.
CANADA MORTGAGE AND HOUSING CORPORATION (CMHC): A Crown corporation that also provides financial assistance, technical expertise and training to help First Nations build, maintain and repair homes.
BEFORE GETTING STARTED
One of the key points to remember about First Nations housing is that legal title to reserve land is held by the Crown, and that the Indian Act prevents the seizure of reserve property. Banks, therefore, are reluctant to lend bands money, because the bands have nothing to put up for security.
In most cases, the bands have to get something called a "ministerial guarantee" before receiving a loan. The minister of Indian and Northern Affairs gives the bank a guarantee that the money will be repaid, and the band, in turn, gives the minister a similar guarantee. If the homeowner fails to make the loan payments, the band is liable for the remainder.
INAC says that each year it provides 60 to 70 ministerial guarantees to B.C. bands and receives two or three "default" notices from banks or other lending institutions.
"In most cases the defaults are remedied by the First Nation," INAC spokesman Karl Freeborn said. "B.C. Region has not paid out a defaulted loan in the past four years."
The Palmer Report, however, found that a number of bands do not even apply for ministerial guarantees, because they did not want to take on liability on behalf of band members. "Some communities felt that they simply could not afford to take on the risk."
THE MYTH: First Nations get "free" housing.
THE REALITY: Indian and Northern Affairs Canada provides a grant of $20,000 to $40,000 per house. The exact size of the grant varies depending where the First Nation is located. Those in areas with the most difficult access receive the highest subsidies. The grants have remained the same for years even as housing costs have skyrocketed.
"INAC's capital grant usually amounts to approximately 15 per cent to 20 per cent of the total house cost," Lawson said.
The band or band member has to find a way to cover the rest of the cost.
FIVE WAYS THAT HOUSES GET BUILT ON RESERVES
1 SOCIAL HOUSING: The band uses its INAC grant as a down payment, applies for and receives a ministerial guarantee, and then obtains a bank loan for the remaining cost of the house.
Once the houses are built, the band decides who lives in them, charges rent, and uses the money to pay some of the operating costs, which include loan repayments, insurance, maintenance and administration.
Canada Mortgage and Housing Corporation (CMHC) provides a social housing subsidy to cover the balance of the operating costs over the life of the loan. As with the INAC grant, the amount of CMHC subsidy depends on the band's geographic location.
Lawson said that, in 2008, most CMHC subsidies ranged from $6,710 to $7,294 annually per house over 25 years.
He gave the example of a First Nation receiving a $150,000 loan and making loan repayments through CMHC of about $9,300 a unit a year plus operational costs of $4,350. The total annual operating costs would be about $13,650 -- half of which would be covered by the $7,000 subsidy and half by collected rent.
"This allows good housing to be provided to First Nations for low-income renters," Lawson said. "Some of the on-reserve housing being built under this program is as good or better than that built in good neighbourhoods off reserve."
The one catch is that very few of the social housing units are being built.
"I see it as the only program currently available that can provide high quality on-reserve housing for many First Nation members," Lawson said. "In many communities, the average income cannot support a house loan. Without more social housing, the on-reserve housing situation will continue to be in crisis."
INAC says it provided grants for the construction of 772 homes on B.C. reserves in the past two years of which 206 were social housing units -- about half a house a year for each of the 198 bands in B.C.
The bands also continue to suffer from flaws in previous versions of the social housing program. For instance, prior to 1997, band members paid rent according to their income. This created huge disparities on reserves where some people were paying 10 times as much as their neighbours. As a result, people stopped paying rent, bands had to dip into other revenue to cover loans, arrears piled up, and CMHC cut them off for further housing. Nearly 75 per cent of the bands surveyed for the Palmer Report said that their community had a problem with arrears. "Many described the problem as serious," the report said. "One community said that their arrears exceeded $250,000."
In 1997, CMHC changed the rules and most bands started charging flat rents based on the type of house. Though an improvement, the change created a new disparity because bands now had people under the old program paying higher rents for older homes, and other people paying lower flat rents for new homes, Lawson said.
2 PROJECTS WITH MINISTERIAL GUARANTEES: A band or band member applies for and receives a ministerial guarantee, obtains a bank loan and builds a home. Band members have been granted use of the land by the band or have a certificate of possession, which means they have been allotted a section of the reserve by the band and INAC. The member must also show an ability to repay the loan, and that he or she has savings or an INAC grant. If the band member defaults, the band is stuck with the bill.
3 PROJECTS WITHOUT MINISTERIAL GUARANTEES: A band sets up a housing trust in association with CMHC, or obtains the backing of a new $300-million First Nations Market Housing Fund. The band or band member then obtains a loan without having to get a ministerial guarantee and builds a house. The bank can get access to the trust or the First Nations Market Housing Fund if the band member fails to repay the loan and the band doesn't live up to its guarantee to step in and cover the payments. The band has to meet certain CMHC requirements, and the homeowner has to meet credit standards.
4 A BAND BUILDS WITH ITS OWN MONEY: A First Nation uses its own money and an INAC grant to build homes without requiring a bank loan. The band rents the house out to band members or, in some cases, turns ownership over to a band member. "Very few bands have the resources to build homes with their own revenue, so this type of financing is somewhat rare in B.C.," the Palmer Report said.
5 A BAND MEMBER BUILDS WITH OWN MONEY: A band member uses his own money or obtains a private loan without the need of a ministerial guarantee. The band may assist by helping the band member obtain an INAC grant.
ACCOUNTABILITY
Each First Nation can select or develop its own housing plans, but it has to meet building codes in order to receive federal money, INAC says.
Each band is also responsible for obtaining the necessary housing inspections to ensure that new houses comply with all health, environmental, fire and building code standards.
INAC provides money to help cover the cost of inspections, which must be sent to the ministry before the band is eligible for further subsidies.
Lawson said the B.C. building code should be the "minimum standard" applied by bands, particularly when they can choose the design. "The social housing projects I now work on are for clients who are committed to building mould-proof houses," he said.
THE KEY: GOVERNANCE
Lawson, who has worked with more than 30 First Nations on housing issues over 18 years, believes having a strong, effective housing committee remains crucial to a successful housing program on reserves.
"Without good governance, the best-built houses won't live out their lifespan; First Nations will be swamped with housing debt and arrears; the few housing resources available will be the source of acrimony and the on-reserve housing crisis will be perpetuated," he said.
"It is not the only answer. There needs to be more resources, but without good governance, all the resources possible won't provide good housing."
Sources: Glenn Lawson, Lawson Tessier consultants; Aboriginal Housing in British Columbia: A Needs and Capacity Assessment by Palmer and Associates, March 2007; Report of the Auditor General of Canada, April 2003; Canada Mortgage and Housing Corporation and Indian and Northern Affairs Canada websites.
