A program that gives federal tax credits to investors who build homes on the White Earth Indian Reservation will make a small but important dent in the chronic housing shortage there.

Thirty families on the reservation are living in new homes this spring thanks to the program, through which the tribe hires contractors to build two- and three-bedroom homes with money from private investors. The investors will receive a 10-year tax break for investing in low-income housing.

About 9,200 of the White Earth tribe’s 20,000 enrolled members live on the reservation, where housing is a mix of single-family homes and apartments. The tribal housing authority, which manages about 310 units, has a waiting list of about 200 families for housing.

Many families on the northern Minnesota reservation live in very challenging conditions, Executive Director Jen McDougall said.

"A lot of our families are households within households," she said. "For instance I have a family right now, a family of 14 living in a two-bedroom house. They probably have three families within that home."

Living conditions change dramatically for some families who are moving in to the new homes, which cost about $200,000 each to build.

After 15 years, the tribe will own the homes and decide whether to transfer ownership to individuals or continue to rent them. McDougall says the tax credit program is critical to solving the tribes housing shortage.

"Without it we wouldn’t be able to put new homes on the reservation. We of course don’t have enough dollars to stretch to give homeowners that opportunity," she said. "So the tax credit is the way to do it right now."

The tribe boosted its chances of winning $7 million in tax credits by putting aside a $1.3 million federal stimulus grant in its latest application.

When developers apply to the state of Minnesota for tax credits, state officials use a complex scoring system to rate the applications. Tribes often build streets and sewers to raise their scores.

Northern Minnesota tribes are adept at using the tax credit to improve housing, said James Horvick, a vice president for Raymond James Investments who connects investors with tribal officials. He said big banks are the primary investors.

"This is just my opinion, but it’s probably the case tribes have leveraged the program over the past 10 years as effectively as possible," he said. "People are probably applying for five or six dollars of tax credit for every dollar that’s available."

The program has produced results on the reservation, where lifelong resident Wendy Roy, 50, now lives in a new small home with red siding and a shiny metal roof.

Roy’s three-bedroom house is designed to be energy efficient, with big south-facing windows that generate passive solar heat in the winter.  It’s also wired for solar panels that will be installed on the roof as money is available.

Inside, the rooms are small, but the wood-lined cathedral ceilings add light and space. The house has a lot of woodwork and easy to care for hardwood floors.

Roy, who lives with two grandsons, moved in two months ago after living in a cramped apartment. She receives disability payments through Social Security and pays rent based on her $1,000 a month income. She also receives credits for caring for grandchildren.

"My payments went from $565 a month plus having to pay utilities, to $156 a month," she said. "That’s just unbelievable — and such a gift.  It’s going to be so much less stressful for me, so much more enjoyable."

Even though Roy is a renter, she had to take a homeownership class, and learn basic home repairs. In 15 years, after the tax credit expires, she hopes to own the house.

She said it’s exciting to have a place she can think of as her own.

"I took some of the left over siding and built a box to match the house, for the garbage," she said. "I have plans to put in a sandbox for the boys and a little playground equipment for them to play."

Although tax credits are often used to build low-income apartment buildings, tapping them to build single-family homes is a unique use of the program.

White Earth officials are already preparing to pursue another tax-credit project to rehabilitate 25 to 30 existing homes on the reservation.

Minnesota tribes have used the program to build hundreds of housing units in the past decade.