Millions gone astray?
Small homes cost Navajo agency at least $300K each, raising new questions on how federal funds are spent
After failing to spend nearly a half-billion dollars in federal housing funds over a decade, a Navajo Nation agency has been pouring money into a project to produce small, modular dwellings at a cost of nearly $300,000 each — and possibly much more, according to tribal documents. ¶ The contract with a company known as LAM/Rockford Construction LLC is one example of business practices at the Navajo Housing Authority, which faces reform demands from tribal President Russell Begaye andmembers of Congress. ¶ The Housing Authority has been under scrutiny since the publication late last year of an Arizona Republic series about the agency squandering money on failed projects while building a funding backlog that once hit $477 million.
In the aftermath, the Tribal Council adopted a Begaye-backed measure to replace the Housing Authority board, the tribe asked top authority executives to step down, and an investigation by U.S. Sen. John McCain concluded the NHA “remains a broken public housing agency that is grossly misusing taxpayer funds.”
As a member of the Senate Committee on Indian Affairs, McCain proposed congressional cutbacks in Navajo housing funds and the creation of a separate agency to handle new-home development for the tribe.
LAM/Rockford’s contract originated in 2014, when the NHA was under intense pressure to build homes and spend down its huge surplus of federal housing funds. The agency sought bids for a project involving the purchase, delivery and installation of modular dwellings to numerous tribal communities.
Phase 1 of the project called for a “needs assessment.” LAM/Rockford bid $992,897 to do the work, and its bid was recommended by an NHA evaluation team over Greenberg Construction, the only other competitor. Records indicate the Phase 1 contract was not put to a vote of the NHA board.
In the second phase, LAM/Rockford submitted a proposal to acquire and deliver 260 modular homes to 14 reservation sites for $30.8 million. A contract was approved immediately by NHA commissioners.
In documents provided by the Housing Authority, there is no indication that the contract was compet-
itively bid.
The $30.8 million sum was only for Phase 2. In May 2015, LAM/Rockford submitted a Phase 3 proposal to actually install the homes — for an additional $44.1 million. That contract was approved within days, according to NHA records. Again, the agency provided no evidence of competitive bids.
LAM/Rockford’s contracts represent the largest home-development deal on the sprawling reservation in at least 10 years. Although work was underway while The Republic investigated tribal housing last year, NHA leaders did not mention it once during 18 months of communications.
After the contracts were approved, NHA records show the project scope was slashed from 260 homes in 14 locations to 200 units in 11 communities. Later, the NHA announced there would be only 170 modular dwellings installed — one-third fewer than originally contracted.
In response to written inquiries, NHA officials said 170 homes “have been installed with a few still pending final inspection . ... There are currently 90 homes not yet installed.”
LAM/Rockford officials declined to be interviewed and did not respond to questions submitted via email. Instead, in a written statement, the company said 170 homes are completed and 90 more will be built.
“We look forward to completing this important project with NHA in support of their mission to bring sustainable and cost-efficient homes to their nation,” the statement concluded.
Forty-nine of the homes now stand in the Navajo community of Ramah, New Mexico, scattered within a pre-existing development. Most are occupied.
The houses are small, prefabricated structures ranging from two-bedroom units of 1,000 square feet to slightly larger three-bedroom dwellings. They were built by a subcontractor in Albuquerque and trucked to the reservation.
Because NHA homes are built on tribal trust lands, there is no real-estate expense — just materials, labor and infrastructure.
If only 170 dwellings are completed, as the NHA announced last year, the price per house will be $447,000, based on $76 million in contracts.
NHA Director Aneva “A.J.” Yazzie did not respond when asked whether LAM/Rockford will receive a reduced payment if the project is downsized.
The Phase 3 contract specifies a “final completion date” of July 20, 2016, with penalties of $200 daily for each unfinished home. It is unknown whether penalties have been imposed.
Arizona and New Mexico records show LAM/ Rockford is a Michigan corporation formed by two entities:
» Rockford Construction Co., based in Grand Rapids, a nationwide contractor operating in 44 states. According to the corporate website, Rockford has completed projects worth $4 billion. Its founder and chief executive is Mike VanGessel.
» The LAM Corp., which touts itself as “100 percent Navajo owned and operated.” It is headed by architect Loren A. Miller, a tribal member. It is based at the same address as LAM/Rockford. In 2016, the company was named New Mexico’s Minority Construction Firm of the Year.
Documents submitted to the NHA show the joint venture was formed via a $10,000 investment, with Miller putting up 51 percent. The records also say Rockford is providing “100 percent of the financial resources” to perform projects, and is the repository for LAM/ Rockford records.
During the 1970s, the Navajo Housing Authority was headed by Pat Chee Miller, whose 2005 obituary notices list Loren A. Miller as his son.
The elder Miller was forced to resign from the NHA in 1977 following a federal indictment for conspiracy and fraud. He pleaded guilty to accepting kickbacks in return for depositing HUD funds with a firm that invested in a vacant Las Vegas casino.
Pat Miller later became president of PC&M Construction Co., listed among the largest Indian contractors on the Navajo Nation. According to U.S. Senate records, the business was secretly owned by a non-Indian associate in Albuquerque, using Miller as a front to secure Native American contracting advantages. In the late 1980s, under federal immunity, Miller said he made bribery payments to then-Navajo Chairman Peter MacDonald.
In 2004, Miller was indicted in another scheme. This time, according to federal court records, he was accused of collecting $735,000 in U.S. funds from the Navajo Nation by falsely certifying the completion of buildings that did not exist. Miller suffered severe injuries in a 2005 auto accident and died before that case went to trial.
LAM/Rockford was formed in 2008. Its offices are at a Gallup, New Mexico, address previously listed for PC&M Construction.
NHA records show the company applied for contracting benefits as an “Indian Preferred” enterprise but it was turned down in 2011 for failure to meet criteria requiring Native American control. In 2013, for reasons not divulged by the NHA, that decision was reversed and a two-year certification was granted.
NHA contract bidders are graded on a 100-point scale. Indian companies get a 15-point advantage in scoring. NHA officials contend LAM/Rockford would have won the modular-home project even without bonus points.
In August 2016, the NHA threw a party to celebrate the opening of new houses in Ramah. Loren Miller stressed in an agency news release that the modular dwellings are high-quality. “These homes aren’t the standard home trailers you see out there,” he noted. “These houses are not going anywhere.”
Wesley Begay Jr., the NHA’s development manager, said in a January news release the project’s guiding principles were safety, quality and time. Begay resigned from the Housing Authority a month later. He could not be reached for comment.