NHA sues Flagstaff housing nonprofit

By Cindy Yurth
Tséyi' Bureau

CHINLE, Dec. 8, 2011

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A dozen new homes in the Western Agency are languishing in various stages of completion while the Navajo Housing Authority and Indigenous Community Enterprises battle in court over who should be allowed to finish them.

The NHA and the nonprofit contractor are accusing each other of breaking the contract between them.

The NHA filed suit Nov. 17, claiming it voided its contract with ICE this summer after ICE was unable to account for $100,000 in requisitioned funds.

According to NHA's complaint, ICE sold some of the equipment and supplies used in the project and refused to turn the rest over to the NHA as specified in the contract.

ICE filed an answer and counterclaims Monday, alleging NHA broke the contract by withholding the balance of its grant and failing to pay claims of at least $2.5 million.

The nonprofit's response also cites Navajo fundamental law, claiming NHA did not use the concepts of k'e and hozhoongo to settle the dispute but resorted to the courts and calling in the Federal Bureau of Investigation.

"Basically, ICE had a cash flow problem, and instead of working it out with them, NHA called them thieves and called in the FBI," said ICE attorney James W. Zion.

The FBI has not issued a report of its investigation, according to Zion.

The dispute stems from a September 2007 contract NHA made with Flagstaff-based ICE to build scattered-site housing in the western chapters using funds from the Native American Housing and Self-Determination Act.

The grant was to be secured with leasehold interest, property purchased for the project, and any income ICE derived from the projects.

"During the early portion of calendar year 2011, the Grants Management and Compliance departments of NHA uncovered discrepancies in the defendant's requisitioning of grant funds," the complaint reads.

NHA informed ICE on July 18 of this year that it was terminating the contract and asked for all the documents, files, equipment and property involved in the project so NHA could take it over and finish it.

ICE at first agreed to comply, but then didn't follow through, NHA alleges. The corporation sold some of its assets to its subcontractors and board members.

"They got cash-strapped and had to make payroll," Zion explained.

Zion admitted that his client had, in some cases, contracted for services before it obtained funding from NHA, thinking that it could pay the subs when the money came through.


ICE "assumed obligations to third parties" for which NHA should be liable, the counterclaim reads. But instead of giving ICE money to pay its subs, "the plaintiff and its agents and employees accused the defendants of the commission of a crime or crimes in an attempt to coerce the defendants and extort their silence and submission to the decision of the plaintiff," states ICE's counterclaim.

Meanwhile, the homes are about 80 percent complete and people are waiting for them, including, according to Zion, a Navajo Code Talker.

Zion said the NHA's strict interpretation of NAHASDA process precludes ICE or any small housing nonprofit from doing business with NHA on the Navajo Nation.

"No small nonprofit is going to have the cash up front to build these houses," he said.

Neither of the attorneys for NHA, Patterson Joe and Joe Aguirre, returned a phone call Tuesday.

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