DENVER (CN) — A tribal housing authority in Northern California asked the 10th Circuit to return $146,000 the Department of Housing and Urban Development reclaimed after it accused the tribe of being overpaid.
The Modoc Lassen Indian Housing Authority is the tribal housing entity for the Grindstone Indian Rancheria of Wintun-Wailaki Indians. Roughly 100 of the tribe’s 170 members live on the 120-acre reservation about 5 miles north of Elk Creek, in Glenn County, in North Central California.
The Department of Housing and Urban Development administers yearly Indian Housing Block Grants for low-income Native American families, to help tribes meet their needs under the Native American Housing Assistance and Self-Determination Act of 1996.
From 1999 to 2002, HUD removed 13 homes from the Rancheria’s funding, overpaying Modoc Lassen by $146,000, according to HUD’s calculations. When HUD discovered the error, Modoc Lassen told HUD they did not convey the properties because the tenants were not allowed to buy the homes until they had made full payments. HUD told Modoc that nonpayment was no justification for the nonconveyance of the properties, and continued to ask for the $146,000 to be repaid.
HUD notified the tribe in 2004 that it had recaptured the funds by reducing the grants. Modoc Lassen took the case to federal court in 2008.
In June 2014, Senior U.S. District Judge Richard Matsch ruled that HUD had violated the Native American Housing Assistance and Self-Determination Act by recapturing the money as quietly it did.
“HUD did not provide an administrative hearing to Modoc Lassen before it recaptured the funds,” Matsch wrote. HUD appealed.
Because HUD allocates its funding, when a tribe misrepresents the number of eligible housing units it owns, other tribes suffer, the agency said. So HUD deserved to recapture the funds so that other tribes wouldn’t pay the price.
At the 10th Circuit hearing Wednesday morning, Modoc Lassen attorneys said that under the Native American Housing Assistance and Self-Determination Act, funds allocated to the tribes, even in error, were theirs to keep so long as the money was used for its original purpose.
Craig Kaufman represented the tribe to U.S. Circuit Judges Robert Bacharach, Nancy Moritz and Scott Matheson.
“The tribes are still entitled to keep the money as long as it’s spent on affordable housing,” Kaufman said. “There has never been an allegation that any tribe, in good faith, believed that what they were doing wasn’t right.”
Bacharach asked Kaufman why the disputed funds did not constitute money damages.
“Judge Matsch said, ‘HUD, you need to return exactly what you took from the tribe,’” Kaufman replied. “He reset the parties to a status quo. We’re not asking for substitute relief.”
Judge Moritz interjected: “So there’s nothing prevent [the tribes] from exploiting the figures?”
“That would be a willful manipulation of data,” Kaufman said. “That is certainly not the pattern that is here.”
Modoc Lassen also seeks attorney’s fees.