Thank you, and thanks to the Department of Interior and my own colleagues at the Center for Indian Country Development, or CICD, for organizing this event. I’m glad to be with you today, on the historic land of the Shakopee Mdewakanton Sioux Community, for this convening on Indian Country land data. Land is the essence of Indian Country, and accurate and accessible land records are essential for Indian Country’s prosperity.
I applaud your goal today—identifying improvements in how land records are collected, processed, and disseminated to better support residential and commercial development on reservations. What you are talking about are fundamental structural reforms, reforms that not only promote efficient and productive use of Indian Country’s vital land resources, but also affirm tribal sovereignty and self-determination.
I’ve been thinking more and more about how to bring about these kinds of structural reforms, those that address critical issues like poverty, job opportunities, and affordable housing by boosting efficiency, productivity, and supply. So let me explain how your concerns are broadly parallel to my own concerns about the need for fundamental structural reforms to land and housing markets, and why I am pleased to join forces with you. Before I do, let me note that the views I express today are my own and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.
My story is rooted in the nature of the Federal Reserve System. The Fed is the nation’s central bank. Our fundamental responsibility is monetary policy in pursuit of two objectives—maximum employment and stable prices, the so-called dual mandate that Congress has established for the Fed. The Fed also has been given significant authority as supervisor of financial institutions and as a provider of payments services. All of these responsibilities are common to many central banks around the world.
But the Fed stands out among central banks because of its decentralized structure. When Congress created the Fed in 1913, it did something unique: It distributed us across 12 regional, independent Federal Reserve Banks, rather than concentrating power in Washington, D.C. Congress did this to ensure that the many locally varying conditions across the United States are considered in economic policymaking. That’s why we have a Federal Reserve Bank in Minneapolis—to understand and represent the economic conditions in our region, the Ninth Federal Reserve District. And that’s why I spend a lot of my time meeting with community leaders across the Ninth District.
On one of those trips I met with a business executive who had just moved to Duluth, Minnesota. He said he’d found it very expensive to buy a home there. I was surprised to learn that he had come not from a small town but from Houston, Texas. How could it be that he found homeownership more expensive in Duluth than in one of America’s largest metropolitan areas?
But this was not an isolated example. Local leaders consistently tell me that affordable housing is one of the biggest challenges facing their communities. I hear it all the time and everywhere I go. I have heard it in Indian Country too, in recent visits with community leaders from South Dakota’s Native communities and from the Hannahville Indian Community, a small but thriving Native community in Michigan. That tells me that something in our housing system is structurally broken. Otherwise housing supply would respond to demand, and affordable housing would be only a temporary issue in certain fast-growing communities.
The only explanation that makes sense to me is that too many barriers impede the supply of land and buildings. However well intentioned, these barriers are driving up the cost of real estate and housing for everyone, although low- and moderate- income families feel the pain of high housing costs the most.
These supply barriers can take many forms. In many places the burdens directly raise construction costs—and I’m part of that problem myself because I live in a suburb, Orono, Minnesota, that requires large minimum lot sizes. In Indian Country these burdens often take the form of administrative processes that affect the availability of housing finance, particularly due to the trust status of the land. I know you will be discussing these issues today. Other common restrictions include limits on multifamily or manufactured housing. Some of these regulations sound good, but by pushing costs up, they also help put us in a housing affordability hole.
When you’re in a hole, you should stop digging deeper. One way to start is to educate local leaders, including tribal leaders, on how decisions that may seem like good ideas in isolation collectively drive up the minimum cost of housing for families of modest means. In Indian Country, housing is intricately tied to the federal government and its regulation of tribal lands. I understand that part of the discussion today will be around the need to address fundamental problems with the quality of land data and the speed and reliability with which land records are processed.
In recent years we have allowed these barriers to mount while seeking ways around the problems they cause, often via additional appropriations for subsidized housing. The complaints about affordable housing that I hear in Indian Country and wherever I go tell me that the strategy of subsidized housing has fallen short of resolving the housing problem—and I can assure you it will continue to fall short. No matter how justified we may think those subsidies are, the number of families struggling with housing cost and availability issues far exceeds the subsidies we can afford.
So we need to complement the existing subsidy programs by boosting housing supply and bringing down the cost of housing. I have asked the Research staff at the Minneapolis Fed to help me identify where we can achieve the biggest net gains through reducing barriers to the supply of developable land and new homes. We’re just beginning to scratch the surface on this issue.
Given my views, I’m pleased that you are already engaged in a similar search for supply-boosting structural reforms in the Indian Country. The National Native Homeownership Coalition, the CICD, and staff at the Department of the Interior have organized an impressive array of information about how Indian Country housing and mortgage supply, and hence homeownership, have been held back by bottlenecks in loan processing. These include, I understand, fundamental limitations in trust land records and myriad bureaucratic practices for processing Indian Country land, lease, and loan transactions.
Your collective goal of making it faster and easier to transact loans on trust land will benefit not only the housing market in Indian Country, but also its business sector. So the work you are doing here—to improve the accuracy of land records and the ease and speed of processing loans on trust land—exemplifies the type of fundamental structural reform we need to boost efficiency, while solving basic social problems.
So think deeply and boldly about how to protect what’s essential about trust land while also ensuring that it can be used efficiently to the full benefit of tribal communities. We at the Minneapolis Fed are committed to working with you to make progress on these important issues. Thank you.