[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
H.R. 4100, THE LOUISIANA
RECOVERY CORPORATION ACT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
NOVEMBER 17, 2005
__________
Printed for the use of the Committee on Financial Services
Serial No. 109-64
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26-756 WASHINGTON : 2006
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HOUSE COMMITTEE ON FINANCIAL SERVICES
MICHAEL G. OXLEY, Ohio, Chairman
JAMES A. LEACH, Iowa BARNEY FRANK, Massachusetts
RICHARD H. BAKER, Louisiana PAUL E. KANJORSKI, Pennsylvania
DEBORAH PRYCE, Ohio MAXINE WATERS, California
SPENCER BACHUS, Alabama CAROLYN B. MALONEY, New York
MICHAEL N. CASTLE, Delaware LUIS V. GUTIERREZ, Illinois
PETER T. KING, New York NYDIA M. VELAZQUEZ, New York
EDWARD R. ROYCE, California MELVIN L. WATT, North Carolina
FRANK D. LUCAS, Oklahoma GARY L. ACKERMAN, New York
ROBERT W. NEY, Ohio DARLENE HOOLEY, Oregon
SUE W. KELLY, New York, Vice Chair JULIA CARSON, Indiana
RON PAUL, Texas BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio GREGORY W. MEEKS, New York
JIM RYUN, Kansas BARBARA LEE, California
STEVEN C. LaTOURETTE, Ohio DENNIS MOORE, Kansas
DONALD A. MANZULLO, Illinois MICHAEL E. CAPUANO, Massachusetts
WALTER B. JONES, Jr., North HAROLD E. FORD, Jr., Tennessee
Carolina RUBEN HINOJOSA, Texas
JUDY BIGGERT, Illinois JOSEPH CROWLEY, New York
CHRISTOPHER SHAYS, Connecticut WM. LACY CLAY, Missouri
VITO FOSSELLA, New York STEVE ISRAEL, New York
GARY G. MILLER, California CAROLYN McCARTHY, New York
PATRICK J. TIBERI, Ohio JOE BACA, California
MARK R. KENNEDY, Minnesota JIM MATHESON, Utah
TOM FEENEY, Florida STEPHEN F. LYNCH, Massachusetts
JEB HENSARLING, Texas BRAD MILLER, North Carolina
SCOTT GARRETT, New Jersey DAVID SCOTT, Georgia
GINNY BROWN-WAITE, Florida ARTUR DAVIS, Alabama
J. GRESHAM BARRETT, South Carolina AL GREEN, Texas
KATHERINE HARRIS, Florida EMANUEL CLEAVER, Missouri
RICK RENZI, Arizona MELISSA L. BEAN, Illinois
JIM GERLACH, Pennsylvania DEBBIE WASSERMAN SCHULTZ, Florida
STEVAN PEARCE, New Mexico GWEN MOORE, Wisconsin,
RANDY NEUGEBAUER, Texas
TOM PRICE, Georgia BERNARD SANDERS, Vermont
MICHAEL G. FITZPATRICK,
Pennsylvania
GEOFF DAVIS, Kentucky
PATRICK T. McHENRY, North Carolina
Robert U. Foster, III, Staff Director
C O N T E N T S
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Page
Hearing held on:
November 17, 2005............................................ 1
Appendix:
November 17, 2005............................................ 49
WITNESSES
Thursday, November 17, 2005
Batt, Hon. John A. Batt, New Orleans City Council, New Orleans,
LA............................................................. 30
Isaacson, Walter, Co-chair, Louisiana Recovery Authority......... 25
LaFonta, Hon. Juan A., Louisiana State House of Representatives.. 30
Nagin, Hon. C. Ray, Mayor, City of New Orleans, LA............... 12
Schedler, Hon. John T., Louisiana State Senate................... 28
APPENDIX
Prepared statements:
Oxley, Hon. Michael G........................................ 50
Batt, Hon. John A. Batt...................................... 52
Isaacson, Walter............................................. 64
Nagin, Hon. C. Ray........................................... 67
Additional Material Submitted for the Record
Frank, Hon. Barney:
"FEMA Broke it's Promise on Housing," New York Times,
November 17, 2005.......................................... 71
Letter to FEMA, October 7, 2005.............................. 74
Watt, Hon. Melvin L.:
AFL-CIO, news release, November 10, 2005..................... 76
Ammendment to H.R. 4320, National Flood Insurance Program
Commitment to Policy Holders and Reform Act of 2005........ 77
Children's Defense Fund, letter, November 9, 2005............ 80
H.R. 4197, Hurricane Katrina Recovery, Reclamation,
Restoration, Reconstruction and Reunion Act of 2005........ 81
Leadership Conference on Civil Rights, news release, November
10, 2005................................................... 296
Local Ininitiaves Support Corporation, news release, November
10, 2005................................................... 297
National Association for the Advancement of Colored People,
prepared statement, November 10, 2005...................... 299
National Urban League, news release, November 4, 2005........ 301
H.R. 4100, THE LOUISIANA
RECOVERY CORPORATION ACT
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Thursday, November 17, 2005
U.S. House of Representatives,
Committee on Financial Services,
Washington, D.C.
The committee met, pursuant to notice, at 10:14 a.m., Hon.
Michael Oxley [chairman of the committee] presiding.
Present: Representatives Oxley, Baker, Biggert, Shays,
Feeney, Hensarling, Neugebauer, Price, Frank, Waters, Maloney,
Watt, Carson, Meeks, Lee, Clay, Baca, Matheson, Scott, Davis,
Green, and Cleaver.
The Chairman. The Committee will come to order. Today we
consider H.R. 4100, The Louisiana Recovery Corporation Act,
authored by the Capital Markets Subcommittee's Chairman Baker
to assist in the rebuilding efforts of the Louisiana areas
devastated by Hurricanes Katrina and Rita.
First, I would like to take a moment and assess the active
role this committee and its members have undertaken in the
hurricane relief efforts.
Upon Congress's return after the August recess, and just
days after Hurricane Katrina ravaged the Gulf Coast region, the
Committee held a briefing to gauge the response of financial
services companies and industry regulators to the hurricane's
effects and the needs of the impacted community.
The following week, the Committee held a briefing on the
response of the insurance industry to Hurricane Katrina. This
past week, the Capital Markets Subcommittee hosted a briefing
on the insurance industry response to Hurricanes Katrina, Rita,
and Wilma. Under the leadership of Chairman Ney, the Housing
and Community Opportunity Subcommittee held three hearings and
briefings on the National Flood Insurance Program, and the
critical housing needs of the hurricane-ravaged areas.
In addition, the Housing Subcommittee has shepherded needed
relief legislation to the House floor. The first week after the
August recess, the House unanimously approved H.R. 3669, The
National Flood Insurance Program Enhanced Borrowing Authority
Act, introduced by Subcommittee Chairman Ney, Subcommittee
Chairman Baker, and Congresswoman Brown-Waite, to temporarily
increase the borrowing authority of the National Flood
Insurance Program to pay Hurricane Katrina-related claims.
And yesterday, the House passed similar legislation, H.R.
4133, The National Flood Insurance Program Further Enhanced
Borrowing Authority Act, introduced by Congressman Fitzpatrick
and passed in this committee in late October, to enhance
borrowing authority for victims of all three hurricanes which
have devastated the Gulf Coast region.
In addition, yesterday, the committee passed a much needed
bill to reform and strengthen the National Flood Insurance
Program, H.R. 4320, The National Flood Insurance Program
Commitment to Policy Holders and Reform Act, introduced by
Ranking Member Frank and myself.
In early October, the House passed three bills providing
direct housing relief to survivors of Hurricanes Katrina and
Rita: H.R. 3894, The Hurricane Katrina Emergency Housing Act,
introduced by Congressman Alexander; H.R. 3895, The Rural
Housing Hurricane Relief Act; and H.R. 3896, The Hurricane
Katrina Emergency Relief CDBG Flexibility Act, both introduced
by Capital Markets Subcommittee Chairman Baker.
On October 26, 2005, the House overwhelmingly approved GSE
reform legislation, H.R. 1461, The Federal Housing Finance
Reform Act, which included a housing fund provision granting
priority to affordable housing proposals in hurricane-affected
areas.
In mid-September, the Financial Institutions and Consumer
Credit Subcommittee held a hearing focusing on legislative
relief to aid hurricane victims' access to financial services.
The testimony and discussion generated at this hearing provided
the impetus for the consideration of three more financial
services relief bills.
On October 27, the House passed unanimously H.R. 3945, The
Hurricane Katrina Financial Services Relief Act, introduced by
Subcommittee Chairman Baker, to provide relief to financial
institutions affected by Hurricane Katrina. That same day, the
committee passed by voice vote a similar bill covering
Hurricanes Rita and Wilma-affected institutions, H.R. 4146,
Hurricanes Rita and Wilma Financial Services Relief Act, also
introduced by Subcommittee Chairman Baker.
The Committee also passed by voice vote H.R. 3909, The
Hurricane Check Cashing Relief Act, introduced by Congresswoman
Brown-Waite, to reduce financial difficulties for hurricane
victims devoid of personal identification and financial records
and with limited access to financial services.
These are the efforts this committee has undertaken over
the past few months. Our work, however, does not stop here. And
I promise that this committee will continue to help lead
recovery and rebuilding efforts.
In closing, I would like to commend my fellow committee
members for their diligence, compassion, and bipartisan spirit
in crafting relief for the individuals and communities who have
suffered the effects of these devastating hurricanes.
I look forward to hearing from the witnesses, their views
on Mr. Baker's relief proposal, H.R. 4100, The Louisiana
Recovery Corporation Act. And I now yield for an opening
statement to the gentleman from Massachusetts.
[The prepared statement of Hon. Michael G. Oxley can be
found on page 50 in the appendix.]
Mr. Frank. Thank you, Mr. Chairman. This is a subject,
obviously, of great importance. And the Congressional Black
Caucus has had a very special interest in this and has
developed comprehensive legislation on the subject, a piece of
which was offered as an amendment yesterday, and after a very
vigorous debate was defeated, but on a close vote, and we hope
that it stays alive.
And therefore, in the interest of the best, fullest
discussion, I am going to yield the remainder of my time to our
committee member who is a housing expert and also the chair of
the Congressional Black Caucus, and major author of the bill,
the gentleman from North Carolina.
Mr. Watt. Thank you, Mr. Frank. I thank Mr. Frank for
yielding to me to--for the purpose of making this opening
statement.
I want to welcome the witnesses, especially my good friend,
Senator LaFonta, from the State legislature. Mr. LaFonta
participated with us at the Congressional Black Caucus Annual
Legislative Conference and provided input into the bill that
the Congressional Black Caucus has produced, and welcome him,
in particular. And I have seen the mayor on television; I have
not met him in person, but we certainly want to welcome him.
Let me just say that I assure Mr. Baker and the witnesses
that our interest here is to try to find solutions that will be
helpful to the Gulf region. And it is for that purpose that we
are here. We are not necessarily at odds with all or parts of
Mr. Baker's legislation, although I think you will find that we
think that's a longer-term piece of legislation, and I hope you
won't be surprised if we focus more on some of the more
immediate responses to this catastrophe today.
That does not mean that we are not interested in the
longer-term discussion, but we certainly will want to know what
your positions are short of that because we take Mr. Baker's
legislation to be a last resort legislation. You set up this
corporation to take people's property, or to assume control
over property, but we assume that's a last resort. The first
resort is to get people back into this area in ownership of
properties that they previously owned and residing in that
area.
You should know that the Congressional Black Caucus
consists of 43 members, and 12 of those members happen to be
members of this financial services committee. So our desire is
to have a constructive role in the process of shaping
legislation that will be helpful to you and not be put in the
position that we will have to play a destructive role in that
process.
But we are--we have a set of beliefs about what needs to be
done. Three of our members are from the Gulf area:
Representative Jefferson, from New Orleans; Representative
Artur Davis, who is a member of this committee, from Alabama;
and Representative Thompson, from Mississippi. So we get direct
input from our members also about what is needed.
And so, with that having been said, I want to assure you
that we are here for a constructive purpose, and we are here to
hear your honest views, not any views that may be coerced by
the fact that a number of the dollars that participate in this
reconstruction process may be coming from the Federal
Government.
So we hope you will be honest and open with us in your
opinions and not let this setting deter you from expressing
your honest opinions about both what is on the table and other
questions that may be posed to you. Thank you. With that, I
yield back, Mr. Chairman.
The Chairman. The gentleman yields back. The Chair now
recognizes the gentleman from Louisiana, the architect of this
proposal, and thanks him for his leadership on so many of these
issues.
Mr. Baker. Mr. Chairman, I thank you and Mr. Frank for your
courtesies extended in this matter. It is certainly to be
recognized by all of us within the State of Louisiana, that
this Congress--this committee, in particular--has been
significantly responsive to the needs and creative in providing
those different methods of assistance to our State.
And it cannot be said enough how appreciative all of our
constituents are for the courtesies extended and the offers of
assistance that continue to be made on our behalf.
I wish to explain to members that I had intended to be a
part of the witness panel this morning and speak to the
committee as to the elements of H.R. 4100 from that
perspective. I was asked by the chairman to be available to
perhaps take the chair at a future point during this hearing
this morning.
And for that reason, I speak today as a member of the
committee, but want to take a brief liberty to talk about what
H.R. 4100 does in order to establish it for the record and
offer to the members of the witness panel, with which I would
have been participating, to have questions with which they may
not have comfort, relative to the construction of 4100 be
referred to me, even if I am in the chair.
Mr. Frank. Mr. Chairman, could I just say at this point we
would be glad to waive any 5-minute rule. I think it would be
useful to have this laid out. So the gentleman shouldn't feel
constrained by time.
I think it is in everybody's interest to just lay that out,
as extensively--
Mr. Baker. I am most appreciative for the gentleman's
courtesy. This does require a little bit more than a 5-minute
explanation, and I will proceed as quickly as possible to first
start with the purposes of H.R. 4100.
It is to develop what we all collectively believe to be a
responsible plan for the recovery of communities. This is not
just about the restoration of a single individual's home. To do
so returns an individual, perhaps, into a desolated community
without a grocery store, without a post office, without police.
So this has to be community restoration. In some cases, the
entire restoration of social order. There are no fire trucks;
there are no schools; there are no groceries. There are
literally are, block after block, of desolated homes.
There isn't, to my knowledge, a plan that has yet been
identified to deal with that reality. There are a number of
suggested plans going forward, but most are deficient when it
comes to a recommended methodology for payment of the
obligations associated with the recovery.
We also understand, as Louisianans, and are most sensitive
to the perceptions others may hold about our State from outside
those who reside in Louisiana and that we have obligation to
the taxpayers of this country to demonstrate a plan which, to
the best of our ability, is responsible to and accountable for
the expenditures made and, if possible, to restore the loans
made to us during our time of critical need.
I also wish to make clear that H.R. 4100, as distributed to
the members this morning, was introduced now a month ago. It is
a document in the works. Some witnesses this morning will
explain their particular perspective on how it may continue to
be modified.
We have distributed for members' benefit the modifications
agreed to not contained in the document now at members' desks,
which I shall speak to momentarily, because there had been
valid suggestions made and agreements reached to modify the
bill.
And there will be, at some point, either a manager's
amendment--if the bill were to be marked up in full committee--
that would reflect those changes, or modifications to a bill,
if it were to be included in another measure considered on the
House floor.
Today we have with us a city councilman, a State
representative, a State senator, the mayor of the great City of
Orleans, a representative of the Governor's recovery authority,
all of whom are here to speak to the advisability, from their
perspective, of moving forward with something like H.R. 4100.
So what does it provide? With the Treasury Department's
assistance, long-term full faith and guaranteed public debt
would be issued, which would be made available to the
corporation. The corporation would make utilization of those
resources, not for expropriation.
I wish to make clear this will not require any individual
to forego ownership of their property if they do not choose to
voluntarily enter into negotiations with the recovery
corporation. If you don't want to sell, you don't have to. That
is an essential element that has changed, from the perspective
of some, from the original proposal.
What will be offered? To owners who are now sitting with
property that is impaired, who have a mortgage obligation,
perhaps a job, perhaps not, maybe living in a FEMA trailer,
maybe out of State, they have no expectation of how they can
recover.
The corporation will approach those individuals with an
offer, principally relating to the equity they hold in their
property. The mayor has made excellent recommendations as to
valuation methodologies which might be employed to assure
equitable treatment of homeowners.
In addition, should the homeowner agree to a settlement
figure, we will then step in, as the corporation, into the
borrower's shoes, and negotiate resolution with the financial
institution.
Financial institutions also find themselves in a unique and
distressed circumstance. They now have a mortgage obligation
for which payments are not being made. They have collateral
which is impaired. In order to make the collateral marketable,
they must invest money to clean it up, meaning they are going
to have to put money into a mortgage obligation in order to
recover a small percentage of the debt which they are owed--an
untenable financial condition.
The result is the corporation will reduce--take a reduction
in the bank's financial condition, but offer them a way to also
escape from the untenable financial circumstance by making
partial settlement on the mortgage obligation.
As a condition of that settlement, however, it will be
required of the lender to release the borrower from their
obligations, so that the borrower, with cash in hand, and now a
clean credit report with respect to that mortgage obligation,
may come back to the community and reinvest, if they so choose,
in the redeveloped community.
Another opportunity. The homeowner may elect a first right
of refusal. If they choose not to leave the community and wish
to return, but not sure they believe us, that the redevelopment
is going to meet their expectations, they can take their
settlement figure, come back in 2, 3 years, and agree to
repurchase the lot, which we bought from them, at a pre-
development price. They get a deal.
That enables them to make another choice: ``I can leave for
a while and come back and take a look and see if it's the real
deal, and if it is, I can reinvest.''
A third option. They can be a true partner in the
redevelopment. Take no money. They make alternative
arrangements during the interim for the recovery. During the
recovery period, we try to assure them that a lot of
approximate size and prior value in approximately the same
location will be made available to them.
Their only obligation is to reimburse us for the pro-rata
cost of the clean-up work--taking down structures, cleaning up
environmental problems--a few thousand dollars. They get their
original site back, as best we can develop it, in the condition
that it was prior to the storm for them to rebuild the home of
their choosing.
The last option. Do nothing. Keep your property as it is.
We do not provide assistance; we do not coerce; we do not ask;
it is the decision of the homeowner to choose which option
suits their family's requirements best and meets the needs of
their future.
Why will this work? Today we are an impaired community. We
are desolate communities. The councilman will have photographs
to present to the committee in a moment to show the before and
afters in many instances. Very telling visual evidence of our
problem. We can't go in and build a single home. We can't go in
and build a block of homes. We need to go in and reconstruct
communities.
This requires something of the order of the corporation to
be able to step in and help. Someone suggested this is a long-
term plan. Let me explain the short-term consequences.
Today we are closing in on the 90-day forbearance window
granted homeowners on the payment of their mortgage
obligations. That is going to run out. Banks will have no
regulatory choice. Regulators will require them to act to
protect the solvency of those financial institutions. What does
that mean? It means foreclosure notices can begin to go out as
early as January. That will be a disaster for over 100,000
homeowners.
If we were to pass H.R. 4100, which provides a mechanism
for future reimbursement of financial institutions for their
mortgage obligation, I am told by regulators that a real
recovery plan adopted by this House, moving forward through due
process, will enable them to extend forbearance terms up to one
year.
That would mean, to homeowners in Louisiana who are now
uncertain as to their future, if we are to pass 4100, which
provides a take-out for the mortgage companies and financial
institutions, that the regulators will say, ``Your 90 days now
is extended to a full year.'' This is significant and immediate
and absolutely urgent assistance needed for the people of
Louisiana.
By the way, this is not the only remedy proposed. Although
not the subject of this hearing, nor within the jurisdiction of
this committee, there is a broad expansion of the Community
Development Block Grant program, which Mayor Nagin can speak
to, I think, perhaps better than anyone in his capacity as
mayor, and how CDBG has worked within his community, and what
it would mean to have a Katrina/Rita-specific CDBG
authorization with significant appropriated dollars associated
with that effort.
The Louisiana Recovery Corporation is not the cure for
everything. It is a tool. CDBG is not the cure for everything.
It is a tool. But the two together are a powerful, influential
effect on our ability--at the local level, not the Federal
level--to reconstruct communities in a way which they are
deserving of getting assistance for.
The LRC will not require the planning be done at the
Federal level. The mayor, in his commission, the Governor in
her commission, local homeowners organizations will decide
where and if the corporation's assistance is required. The
corporation will not show up in communities and say, ``We're
here to help you.'' The corporation will come, based on the
action of local community leaders requesting the corporation's
involvement, because the recovery is beyond the scope of
resources of the local community or the State.
The corporation will be invited in, and they will be
invited in to implement the plan developed by local community
leaders. They will make application through the recovery
authority to the Treasury--excuse me, to the corporation, to
the Treasury, who will issue the long-term public debt,
enabling year over year reconstruction effort to proceed.
And we should not mislead. This is not a resolution that
will be easily achieved in 30 days, or 90 days, or 6 months.
This is perhaps a decade-long effort. It will require the
continued patience of this Congress, observing the fact that we
are going to do this in a clear, transparent way. And at the
end of this process, when the corporation has cleared the deck
and reclaimed substantial acres of property, the property will
be sold into commerce.
There is the most important point for those of my friends
concerned about taxpayer liabilities. That will enable us to
have a repayment of the debt issuances by the Treasury
Department from the sales of property reclaimed by the
corporation.
I hope that the committee understands that this is a
recommendation not evolved in one office, nor by any single
individual, but by all stakeholders over the period of the last
month. H.R. 4100, as on your desk, is not the H.R. 4100 we are
talking about today. Please find the addendum that has been
distributed to all members that indicates the already agreed to
modifications to H.R. 4100, which I believe each of the
witnesses will speak to here this morning.
Mr. Chairman, I have gone well over my allotted time. I
wish to thank Mr. Frank for his courtesies extended, and do
hope that the committee members will find this approach to be
helpful in our resolution efforts.
The Chairman. I thank the gentleman. The gentleman from
Massachusetts?
Mr. Frank. Thank you, Mr. Chairman. First, let me say that,
at the request of the gentleman from North Carolina, I would
ask unanimous consent to include into the record the text of
the CBC bill, and an explanation--I would yield to the
gentleman, if that is--
Mr. Watt. I would just--I thank the gentleman for allowing
me to make the request, a unanimous consent request, to insert
into the record a copy of H.R. 4197, and the bill summary in
lieu of taking equal time to explain the bill that has been
represented as there not being an alternative out there.
Mr. Frank. And I am sure we will be discussing that
further.
I want to talk not just so much about the bill--though
there are--and it's a new subject, and a difficult one, and
obviously, many of us are going to defer, to some extent, to
the people from the affected area. I have already spoke to our
colleague--obviously, Mr. Jefferson--I called Senator Landrieu,
and will be particularly interested in the input.
And one piece of it does deal with something that has
concerned many of us, which was the prospect of smaller banks,
which have a very large percentage of their economic activity
in the affected area, failing because loans that were prudent
when made have been literally washed away.
And that is not only unfortunate to the banks, but one of
the things that many of us have been concerned about is the
trend towards bigger and bigger banks and bank consolidation.
Many of us believe that smaller banks, minority banks, and
other banks, small credit unions, play a very important role.
And having them wiped out would be a problem. There are aspects
of this bill, obviously, that deal with that.
But there is another aspect that particularly troubles me--
it's the reason I'm on this committee and why I got here 25
years ago, and that's housing. And I am terribly disheartened
by the absolute inadequacy of this Administration's response in
housing, both short-term and long-term.
On October 7th, I wrote to FEMA. And one of the problems
here is that HUD has sort of been kept out of this, and FEMA
has been running the housing operation without, it seems to me,
a lot of cooperation with HUD. I wrote to FEMA on October 7th,
and I will ask that that letter be put in the record, saying,
``Look, you gave people 3-month housing. What's going to happen
at the end of 3 months? Let's let them know now.'' I got no
answer.
On Tuesday, 2 weeks before the expiration of the 3 months,
FEMA announced that 50,000 people who live in hotels outside of
Louisiana and Mississippi will have to move. People whose lives
were disorganized, who may not have great economic resources,
are now given 2 weeks to move, and to move into some place
that's going to rent to them for 3 months.
I don't know whether the people who run this are people who
are used to kind of time share resorts. The notion that you can
easily find a 3-month rental at these levels in the cities,
apartment owners are not going to give their best stuff out for
3 months.
To give 50,000 people whose lives have been disorganized
and who probably don't have the resources--because, otherwise,
they would not be in the hotels; they would be in alternative
housing they could have found--to give them 2 weeks to find a
3-month rental is just nuts or just shows a kind of great
indifference to the needs of people.
Beyond that, they announced that they're going to continue
this 3-month restriction, and they're going to keep cities and
towns and States from helping. There is a very good article in
today's New York Times, page 820, by Ralph Blumenthal and Eric
Lipton. Mr. Lipton has been following this closely. Headline,
``FEMA Broke its Promise on Housing, Houston Mayor Says,'' and
we have here the gentleman from Houston, Mr. Green, who has
been very concerned about this. I would ask unanimous consent
to put this in the record.
The Chairman. Without objection.
Mr. Frank. Mayor Bill White of Houston accused FEMA of
breaking its promise to Hurricane Katrina evacuees by imposing
strict limits on a housing relocation program, as it stops
thousands of hotel subsidies.
So there is chaos on the near term. Telling these people
that--now they're on their own--if a State or a city wants to
help by being an intermediary and finding the apartments, you
know what? A landlord might be more willing to rent to a city
or a State than to some individual who has no ties to the
community for 3 months.
FEMA has said, ``No, that can't happen.'' Why? Why do we
debar States and cities who want to help, outside the hurricane
area, from being intermediaries?
And then we have the problem of the long-term housing, and
that is an area where I think the CBC bill has a major piece
that is missing. I would appreciate Mr. Baker--and we have had
conversations, and he has, in his legislation now, talked about
proposed expanding the community development block grant and
home funds for public services. That's important.
But we need more than that. We need to do something about
housing. To date, the only Administration program on housing is
the urban homesteading program. Well, this is not 1843. And
giving people a vacant lot and an axe ain't going to work in
New Orleans. In fact, you probably--maybe you don't want them
carrying axes around.
You could, in the 19th century, go chop down trees and
build a house in open space. You cannot do that in a big city.
The President, in fact, acknowledges that. Because under the
urban homesteading program, you get to be eligible for one of
those in a lottery. Well, when you do a lottery, you are, of
course, making clear what a very small percentage of people are
going to win. You also get the right to build the house, but no
money to build it.
I should also add that one of the areas that they were
going to use to provide the housing that would be available
were FHA properties. In the reconciliation measure, the once
and future--maybe, maybe not--reconciliation measure, we were
forced to vote to rescind the funding for that program, that
puts those houses into shape to be lived in.
So there was this chaos in the near term with housing, and
there was a complete absence of any recognition that
significant subsidy funds are going to be needed if moderate
and lower-income people are going to be able to live there.
Now we did--and I appreciate the gentleman from Louisiana,
the chairman's help--we did, in our GSE bill, get a source of
money that would be available, hundreds of millions of dollars
would be available for affordable housing. We have differences
over some of the restrictions, but there is an agreement to do
that.
Unfortunately, that's not going anywhere in the Senate; the
Administration is opposed to it. So I would hope, at the very
least, they would recognize that we have offered them a non-
budget-impacting way to send hundreds of millions of dollars
for affordable housing to the affected areas. And so far, all
we've gotten from the Administration is, ``We're against it.''
So as we go forward in this, I intend to continue to draw
attention to this. And I just close, the mayor of Houston says
he can't believe that FEMA's restrictions on his ability to
help people, many of whom live in Houston--as the gentleman,
Mr. Green, has reminded us, because he has worked so hard with
them--he can't believe they're going to stand. It is not too
late for FEMA to get sensible.
Mr. Baker. [presiding] I thank the gentleman. Mr.
Hensarling?
[No response.]
Mr. Baker. Mr. Neugebauer?
Mr. Neugebauer. Thank you, Mr. Chairman. I don't have a lot
of remarks, but I would just say a couple of things from
experience in the past.
In 1970, a tornado hit Lubbock, Texas, and hit an area some
of which were low income. And we took that lemon and made
lemonade out of that. We did that with the private sector and
CDBG. Now that area, for example, doesn't even qualify for
community development block grant money because the income
levels are too high.
Also going on in our community today is one of the largest
redevelopment projects in the country, basically a one-square
mile area which was an area that had become laden with crime
and substandard housing. And private sector driven, that area
now is turning into a great area. It's changed the dynamics of
that area.
And so, I think one of the things that I like about the
plan being presented here is that it is a plan that allows the
private sector to have a heavy participation in that. And I
think that any successful plan for any area that has
experienced this kind of devastation, this kind of change--and
basically, you know, that area will be forever changed.
And so, I think it's incumbent upon all of us to look for
ways that we can bring all of the community together. But
certainly I think that if you want to have a successful one,
you are going to have to have one that is private sector, maybe
even led with the Government facilitating.
I have served on the city council, now a Member of
Congress, but I am a land developer and a home builder. And I
know if you want participation from the private sector, you
have to allow for a--to facilitate that, and you have to
facilitate it with infrastructure, and you have to facilitate
it in a way that allows for a market-drive recovery and a
market-driven reuse of that area.
Many people are going to put pressure on you to go back and
try to put it back the way it was. But the thing about change
is that change is not doing it the way it was. And maybe--
hopefully--it will be for the better.
And I would hope also--and I heard a little bit of some
comments made today--with the purpose that we're here today,
and we can either talk about the lemons, or we can talk about
the lemonade. And I hope our discussion today will be about the
lemonade. Thank you, and I will yield back the balance of my
time.
Mr. Baker. I thank the gentleman. Mr. Watt?
Mr. Watt. Thank you, Mr. Chairman. I won't take the full 5
minutes, but I hope we're here to talk about lemonade, too. And
Mr. Chairman, I never did hear--I think you and the chairman
were switching seats when I made a previous unanimous consent
request, and that was never granted. I asked unanimous consent
to submit into the record H.R. 4197 and a bill summary.
Mr. Baker. Certainly, without objection.
Mr. Watt. Okay, I just wanted to make sure that we had
gotten a ruling on that unanimous consent request, as well as
the written endorsements of H.R. 4197 by the NAACP, the
National Urban League, the United Negro College Fund, the Local
Initiative Support Corporation, The United Way of America,
Operation Hope, Rainbow/PUSH, The Black Leadership Forum, and
The Children's Defense Fund. I would ask unanimous consent.
Mr. Baker. Without objection.
Mr. Watt. All right. Just wanted to just quickly make sure
that the representation that has been made that there has not
been a comprehensive bill introduced in response to the Katrina
disaster is just not the case. And if we are going to talk
about making lemonade, we need to talk about making lemonade
around ideas that a wide variety of people have coalesced
behind. It can't be only about setting up a corporation whose
primary purpose it will be to take land from people and be the
master over that land.
So if we're going to have a lemonade conversation, let's
make sure that we're talking about putting all the lemons and
the sugar and the water into the lemonade. This will not be a
discussion only by the lemon owners. With that, I yield back to
the chairman.
Mr. Baker. I thank the gentleman. I am advised that the
mayor has another obligation on the Hill. I do not wish to
forestall anyone's opening statement, but wish to make members
know that if they would like to have the availability of his
testimony, and perhaps an opportunity to question, that we
could move forward to the mayor's testimony. But I will not
insist; I am merely making an inquiry.
Would there be objection if we would proceed to the mayor's
testimony at this time?
[No response.]
Mr. Baker. If there is not, Mr. Mayor, I don't know that
you need introduction at this point. Everyone certainly has
come to know you through various means. I have come to great
appreciation for your leadership in these difficult hours and
particularly want to express my appreciation for the courtesies
extended, as we have really tried to work our way through a
resolution process, and we welcome you here this morning and
look forward to your comments, sir.
Mr. Frank. We just didn't recognize you with the tie.
STATEMENT OF HON. C. RAY NAGIN, MAYOR, CITY OF NEW ORLEANS,
LOUISIANA
Mr. Nagin. Thank you, Mr. Chairman, and to members of the
committee. It's, you know, a pleasure to be here for these
committee hearings. I want to particularly thank Congressman
Richard Baker for what he is doing and the leadership he is
providing.
To all Members of Congress, and especially our Louisiana
delegation, the City of New Orleans owes you a great debt of
gratitude to continue to look for solutions to help us as we
come out of this incredible tragedy that has befallen our
wonderful city.
You know, my message is to come up and support this bill,
but also to say that New Orleans needs assistance, and we need
assistance now more than ever before. A lot of our citizens are
still spread out among 44 different States, and we really do
not--we are running out of time, as it relates to individuals
trying to make decisions on whether to move back, how to move
back, whether they feel comfortable enough about the levee
systems, whether they feel comfortable that they have the
resources necessary to move back, and what this Congress and
what the State government and what the local government is
doing to facilitate and accelerate them coming back.
You know, I don't need to bore you with a lot of the
details of Katrina. It was worse than anyone could ever
imagine. It's the largest natural disaster in the history of
this country. And I am encouraged by everyone saying that New
Orleans is so important and that we do not see--as the
President said, ``There is no way to imagine America without
New Orleans, and this great city will rise again.''
But the only way this great city will rise again is if we
get help and if we get immediate help. So I have been up here
on Capitol Hill at least once a week, talking to everyone,
trying to get their ideas. I have been trying not to do what
other people do, and that's to shoot down ideas before I fully
understand them.
So I had the wonderful opportunity of sitting with Mr.
Baker and discussing his bill because I did not understand it
fully. And after coming away from that discussion and studying
the bill even further, I thought that--and I still think this--
that we have an opportunity to use this as an instrument to
affect people's lives, people that really need help.
And I'm kind of off script right now, but I kind of feel
the need to do this. What most people don't understand about
New Orleans right now is that we are moving in a very positive
direction as it relates to recovery. But we still have a
plethora of challenges in front of us. I have opened up enough
zip codes in the city that, based upon pre-Katrina census
numbers, we can bring back 255,000 people. And it's very
diverse, you know; it's--the demographics are very similar to
what you had pre-Katrina.
But there are some significant challenges in housing. And
as I look at what FEMA's doing, as I look at what the Corps is
doing, and the slowness of the overall responses, the thing
that bothers me the most and why I'm up here advocating this
bill is because we have lots of home owners in New Orleans that
are trying to figure out how to come back and rebuild their
homes. And the Tauzin legislation basically deals with
businesses.
This piece of legislation that Congressman Baker has put
forth deals with people and their homes. We have been able to
figure out lots of solutions based upon individuals that have
flood insurance or that can take advantage of SBA 2.67 percent
loan money. The thing that we have not been able to do--and
it's frustrating lots of residents--is to come up with a
comprehensive program to allow those individuals that cannot,
or will not, or do not have the resources to rebuild.
And let me give you some very specific examples. My entire
family lives in New Orleans, for the most part. I have aunts
and uncles that lived in their homes, that did not have flood
insurance, that their homes were paid for, and they lived from
day to day because they're on fixed incomes in a retirement
mode. There is tremendous amount of senior citizens in our city
right now that cannot afford to pay for somebody to go in and
gut their homes so that they can move forward in the
rehabilitation of their homes.
As I appreciate this bill, this bill will set up an
authority. It will set up a process to provide financial
resources. So for someone who fits in this category that I'm
most concerned about that does not have the resources, it will
allow them options. It will allow them options to maybe get
some financial resources to repair their homes. It will allow
them options that, if they want to take a check and they want
to move to a senior assisted living facility temporarily until
their neighborhood is rebuilt--and they still have rights of
first refusal, once the neighborhood is rebuilt, to move back--
this bill allows them to do that.
And here is the big thing that I am really hoping that this
bill will help us to do. As people are moving back to make the
decision to rebuild in New Orleans, they're doing it in onesie
twosies. So this is a neighborhood in New Orleans--this is a
great example--this congressman may decide to rebuild their
homes, but all these empty chairs represent people that may or
may not be able to rebuild their home. So I could be stuck with
a neighborhood that has four people living in it.
Over here, these folk on this side, on the left-hand side,
have figured out a way, creatively, to rebuild their homes. So
they may be well populated, and they may be able to create an
environment where there is a neighborhood. But over here to the
right, I do not have a neighborhood. And I am hopeful that this
bill will allow us to create neighborhoods again in the city
and particularly provide the resources for the people who need
it the most.
The congressman talked about CDBG money. I have worked with
HUD over the years; I have seen the work that this particular
group of funding does. It's our most flexible dollars as it
relates to redevelopment. We tend to use CDBG money for soft
second assistance, for first-time home buyers. We can use it
for down-payment assistance. We can use it for infrastructure
development throughout the city.
We have also come up with some innovative programs to help
people that are on Section 8 certificates, to allow them to use
those Section 8 certificate vouchers and those monthly
payments, grouped with CDBG dollars, to allow them to become
first-time home buyers for the first time in their life.
And as we think about the redevelopment of New Orleans, a
city, for the most part, that was a city of haves and have
nots, if we can create the right instrument to create home
ownership, or to maintain home ownership in some of the areas
that need it the most, then you will see a city rise from the
ashes--or I should say from the waters--you will see a city
rise from the waters. And this Congress and this Federal
Government will not need to support us for 20 or 30 years in
the future.
But with CDBG dollars and these types of instruments and
the other instrument that the gentleman from North Carolina
outlined for us will allow for the Federal Government, State,
and local government to create the initial stimulus for the
private sector to come in and support this community so that we
bring neighborhoods back up, you know, as we need to do that.
New Orleans is going to come back. I have no doubt about
that. It's just a matter of how we come back, if we come back
comprehensively or we do it in a scattered manner where we do
not develop neighborhoods comprehensively. That concludes my
testimony, Mr. Chairman.
[The prepared statement of Hon. C. Ray Nagin can be found
on page 67 in the appendix.]
Mr. Baker. Thank you, Mr. Mayor. I have shared time with
you and don't feel the necessity to ask questions in this
forum. I would like to--it's a little out of order; normally we
go through each witness, and then we open up for questions.
Given the mayor's schedule, if we can perhaps provide for 10 or
15 minutes worth of questions and then proceed?
One other little note of business. I would like to
acknowledge the return of a distinguished former Louisianan,
Member of the United States Senate, J. Bennett Johnston, good
friend for many years. We served together on the Hill. Good to
have you here, sir. Welcome.
Mr. Frank?
Mr. Frank. Thank you, Mr. Chairman. Let me just deal with
one issue, which I think you have resolved in the later version
of the bill.
But when the House debated the bill dealing with eminent
domain, there was unanimous acceptance of an amendment offered
by the gentleman from Texas, Ms. Jackson-Lee, which said it's
the sense of Congress that, ``Any and all precautions shall be
taken by the Government to avoid the unfair or unreasonable
taking of property away from survivors of Hurricane Katrina,
who alone would bequeath and assign such property for economic
development purposes.''
I take it now, with the modifications to that bill, that
has been, in effect, accomplished?
Mr. Baker. Correct, sir. There will be an overt statement
at the outset of legislation saying that the corporation shall
not have the power of eminent domain. The only dispute
resolution mechanism remaining in the bill would be if an offer
were made to purchase a home at $300,000, the owner felt it was
worth $400,000, there is litigation as to value only.
And should an owner not wish to litigate, they could
withdraw from the negotiation and withdraw their offer with no
prejudice. So there is no obligatory, or any opportunity, for
the corporation to take someone's property who chooses not to
release it.
Mr. Frank. All right. Now, let me ask a couple of
questions, one of which was raised in some conversations I had
with some people dealing with the nature of the appointment. We
are talking about all Presidential appointees. Does that cause
any of the panelists any concern?
Mr. Nagin. Well, you know, it initially caused me, you
know, some concern. I think the direction that the bill is
currently headed, where there will be seven members: four will
be pure Presidential appointments and three will be through the
Governor.
I would respectfully ask that this committee consider the
fact that a significant number of the commission members should
be Louisianans and should be people who are from the affected
areas.
Now I also think that that should be sprinkled with
national experts to kind of help us to look at things outside
the box. But I think that this commission, at the end of the
day, needs to be properly represented, especially from the
people who are--
Mr. Frank. I appreciate it. I guess it was five to two.
It's now four to three, is that--
Mr. Baker. That's correct, sir.
Mr. Frank. That's correct? Okay. Thank you. I did agree--
the three, meaning that they would have to come from a list. Is
it all from the Governor or does the mayor get--
Mr. Nagin. It's currently from the Governor.
Mr. Frank. From the Governor.
Mr. Nagin. I think three--
Mr. Frank. Okay. And the other four would be--actually, you
have stated an ideal that is, unfortunately, not always
reached. That is pure Presidential appointees, and we know that
is they don't always turn out to be pure.
But I know that is the standard to which we strive.
The area of my expertise--and I know the gentleman from
North Carolina will have more questions about this--but that
is, on the housing situation I am troubled. And this FEMA
request--and I know this is not, by definition, in your
jurisdiction; these are people who have had to move. But these
are many of them, your former--and we hope future--
constituents.
Mr. Nagin. Yes.
Mr. Frank. This having to get out of the hotel in 2 weeks
and the restriction that they, themselves, have to find--
without intermediation from any local government--a 3-month
rental. I wonder if you think this is an adequate level of
response for them.
Mr. Nagin. Well, at the risk of getting involved in some
heavy partisan politics up here in Washington, you know, I will
tell you I think that particular move is very concerning to me,
as mayor of the City of New Orleans.
You know, what I have witnessed FEMA, over the months that
I have dealt with this tragedy, is to be a very--almost
haphazard, very reactive process that they have, whether it be
hotel rooms, whether it be shelters, whether it be cruise ships
that are sitting, docked in the City of New Orleans.
At some point in time there seems to be someone somewhere
that looks at a budget number and tells FEMA that they're
spending too much money. And then, within a 2-week time period,
they're making major decisions that stress families and
individuals out that have been stressed for way too long.
So with the mandate to move 150,000 people out of hotels in
pretty short order is going to create lots of angst and anxiety
and more stress, and I think that's going to put more pressure
on temporary housing, which leads me to the other area.
FEMA is driving people out of hotels, but simultaneously
we're not getting the flow that we need on the temporary
trailers. So, now that these people are being dumped into the
private market, if you will, and trying to find apartments--
Mr. Frank. But FEMA--
Mr. Nagin.--if they can't find that, they can't get the
temporary trailers, so they become homeless. And I think
that's--
Mr. Frank. Well, thank you. And the only thing I would say
is that you needn't worry, I think, about it becoming partisan
because I know I have spoken, for instance, to the gentleman
from Ohio, Mr. Ney, who is the Chair of the Housing
Subcommittee, and he shares some of these concerns.
So I think this becomes--let me just ask you--my time is
up, and I will just ask you--you know, you will be responding
later, and we will be interested--one of the pieces of the CBC
bill that's very important to many of us is what it tries to do
for low and moderate-income housing, for public housing, and
for other forms of housing.
And I would be interested--not now--because that's
something that's not addressed in the other bill that we need
to do additional things. I would be interested in your sense of
what kind of Federal help we ought to be doing to make sure
that we have got moderate- and lower-income people able to
continue to live in the city.
Mr. Nagin. The only way that we can manage, you know, a
mixed income environment as New Orleans is, is with Federal
help. Right now, market conditions are driving rents and
housing prices significantly. And unless we have, you know,
some Federal help to make sure that there is the proper mix of
low to moderate income, the dynamics in the community will
change substantially, as they are changing up here in
Washington and in other urban centers around America.
Mr. Baker. The gentleman yields back. Mr. Neugebauer, did
you have a question?
Mr. Neugebauer. Thank you, Mr. Chairman. Mr. Mayor, tell me
a little bit about, as you go back--and I think that was a
great analogy--let's talk about these neighborhoods right now,
the ones that Mr. Feeney and I live in and we don't have any
neighbors.
From a land planning standpoint and a future planning
standpoint, there has been a lot of debate about whether some
of these areas should go back as residential or should maybe
become open space or mitigation areas for some of the other
redevelopment. Can you kind of talk to me about where you are
in the planning process?
Mr. Nagin. Well, there are two distinct issues with that
particular discussion. You know, what we are seeing over here
with, you know, only a limited number of people moving back
into a neighborhood and the creation of blight around them,
that's a big issue for us.
The second issue is this whole debate about whether we
should rebuild certain areas of the city, based upon their
elevations as it relates to the flood plain. From my
perspective, we should rebuild all of New Orleans.
Now we're not going to do that immediately. And in the
areas that are most prone to flooding, we should look at
techniques and different styles like they have in Galveston,
and other cities, where, if you rebuild in those areas, the
first floors are more parking or more storage and the second
and third floors are the living spaces.
In addition to that, I was talking to this lady from San
Francisco, and she was talking to me about the fact that we are
designing communities to basically fight the water, and we
should learn to live with the water and live more in harmony
with it, from the standpoint of maybe we allow a certain amount
of flooding, and we design neighborhoods to accommodate that.
And as the water subsides, we hose the streets down and then we
go back to our normal mode of operation.
Those ideas and concepts are being incorporated in a plan
that our commission is putting together. We are working with
ULI, the Urban Land Institute.
And might I add that the Governor also has a commission
that's in place. They're focused on State-wide issues. The
commission I put together is focused on New Orleans issues. But
we have cross-pollinated each other's commissions, and we are
working well together to come up with one vision for New
Orleans and Louisiana.
Mr. Neugebauer. One of the things that--and as I hear you
talking about, you know, redesigning the housing and having the
first floor--one of the things we need to make sure, though,
that that is market driven. Because that kind of housing may or
may not have a marketable appeal to the folks coming back in.
And I--a great example, when I was on the city council,
there was a story of a neighborhood group and the city planners
and city council, and we were all talking about what kind of
facility we were going to build over the neighborhood.
And then, at the end, we decided, "Well, let's go over into
the neighborhood and ask them about what they think about that
idea." And what they told us, they didn't want that, that they
wanted something different, that that had more meaning to our--
to their particular neighborhood.
Mr. Nagin. Yes.
Mr. Neugebauer. So I think we have to be careful in this
process of saying, ``We've got a new and improved way for you
to live in this area,'' but make sure there is going to be
market acceptance.
And I think what I was trying to say to you a while ago is
if it's private-sector driven, in the sense that--the private
sector, before they go out there and build a lot of housing
stock in this redeveloped area, is going to make sure that they
think there is market acceptance. But you don't want to go
spend all of those dollars to set your infrastructure up to
build that kind of housing in advance if you're not sure that
the market acceptance of that is going to be going on.
And so, what are--how is the--when I hear you talking about
these task forces, how much private sector folks are sitting in
this process to be giving you that kind of feedback?
Mr. Nagin. We have a significant number of private sector
individuals sitting on every meeting that deals with the
specifics of urban design in New Orleans.
The reason why I brought up that example is because what we
found in the floods--we have about 70,000 homes that were
severely damaged in the flood. Most of those homes are single-
story slab-type homes. And from this experience with Katrina,
we know that we cannot build a significant number of those
types of homes in New Orleans going forward.
And we also have learned that some of the areas that didn't
flood, those homes were built on--in an elevated fashion
similar to what we described. But we do have the private
sector; we have the HUD executives, and we have this public/
private dialogue going on right now. And hopefully, we will
come up with the right solution.
Mr. Baker. The gentleman's time is expired.
Mr. Neugebauer. Thank you.
Mr. Nagin. Thank you.
Mr. Baker. Ms. Waters, and I--as I recognize you, I had a
prior announcement. The mayor has an obligation that will
require him to leave about 11:20. I just wanted to let you know
that before you began your questions, in light of the mayor's
request to leave early.
Ms. Waters. Thank you very much. I would like to thank all
of our presenters here today, the State representatives, the
city council, and you, Mr. Mayor. And I would like to say to
you that as we have watched you for all of these days following
Katrina, our hearts have just gone out to you and the
tremendous challenge that you were confronted with.
And so, I am pleased to see you here today, and I am
pleased to see you in high spirits, continuing the struggle,
and advocating for that which you think is right and best for
your city.
I want to ask something that is not directly related to the
bill so that we can try and clear the air. Mr. Mayor, there was
a meeting in Dallas that you attended.
Mr. Nagin. Yes.
Ms. Waters. And it was described in the Wall Street Journal
as a meeting of the shadow government of New Orleans, of the
rich and powerful. And supposedly, one of the main items of
that meeting was to talk about the rebuilding of New Orleans
and how to make sure that there are not as many poor people
back in New Orleans as you had before. Is there any truth to
that?
Mr. Nagin. Well, you know, as best I can in this setting,
let me just tell you this. New Orleans is a place that has
evolved over many, many years. It's a chocolate city: 67
percent African American voters in the city. But the realities
of the economics of the City of New Orleans is that most
African Americans do not participate in a meaningful way in the
economics of that.
And I'm being very frank with you, since--if you ask me a
question, I must tell you. I'm going to try my best to give you
the straight answer because I believe in truth. And I'm
protected by truth all the time.
So there is an element in the city that would like to see
less of what we used to have. And some of it is racial, but I
think the more of it is class oriented because what was
draining the city prior to Katrina, was a heavy weight of poor
people that the city did not have the resources to adequately
deal with.
So a lot of people in the City of New Orleans basically
survive from day to day in a kind of a depth of poverty that
shouldn't happen in this country. So that meeting in Dallas was
a meeting of business leaders that wanted to talk about how we
move New Orleans forward.
Now, unfortunately, one of the members of--in that meeting
did an interview that left the impression that the group wanted
to talk about how to get rid of poor black people.
When I went to that meeting, I made it very clear to the
group that I was happy to meet with them; I was happy to talk
to them about New Orleans. But if they wanted to talk about the
New Orleans of 1812 and how we get back to 1812, I had no
interest in that. And I was interested in talking about the New
Orleans of 2012, that was more akin to a model like Chicago or
Atlanta or some of the great urban cities that have more equity
and have more fair opportunity for all people.
Ms. Waters. I appreciate your honesty and being quite up
front with that. Secondly, I'm worried about--as you know, I
was in the city.
Mr. Nagin. Yes.
Ms. Waters. The day before Mr. Baker was there, I believe.
Mr. Nagin. Yes.
Ms. Waters. I went to your staging ground, and we helped to
transport some people over from the airport to Alexandria.
Mr. Nagin. Yes.
Ms. Waters. And then I visited New Iberia and on and on and
on. So I feel very strongly that we should all in this country
be involved in helping you.
I am worried about the contractors there now, and I am
worried about the immigrant workers who are coming, people who
are not getting paid. I am worried about people who want to go
to work, come back into New Orleans in some way. Maybe they
have to live in another city, but the jobs, I mean, this is how
we empower people, with giving them jobs with decent wages.
I understand the President has reversed himself on Davis-
Bacon, but the contractors, are they recruiting undocumented
workers to replace the workers in New Orleans, and are they
treating them badly and not paying them and getting away with
this?
Mr. Nagin. What did you eat for breakfast this morning?
Ms. Waters. I eat it every morning. Every morning.
Mr. Nagin. You are asking some pretty tough questions, and
I appreciate them.
Let me try and describe the environment in New Orleans
right after the storm. As you know, FEMA and the Corps of
Engineers have established relationships with contractors. And
they immediately issued four huge contracts. I think they were
$4 million a piece. Those companies went about their business
during the emergency of immediately trying to rescue, de-water
the city, and clean up debris.
There was contractors that were put in place, which
fundamentally left out New Orleans and Louisiana vendors, with
the exception of one, being Shaw Industries, which is based in
Baton Rouge.
As time went on, we started to get these complaints from
local vendors and local contractors, that they needed to
participate. We started to get them involved, but at that time,
a minimum flow had already taken over and there were some--I
don't know if they were illegal workers coming in, but they
were workers that weren't Louisiana or New Orleans residents.
And I have seen some tapes of some kind of sweat shop
environments where they are taking these workers after hours
and just putting them in environments that are really
unsanitary and unworkable.
I hadn't heard that the President reversed himself on
Davis-Bacon, but I think that's a great thing if he did that.
But to answer your fundamental question, there is some
momentum happening for local vendors, but it's not enough. Then
there is lots of work in New Orleans for people to come and
work. As a matter of fact, Burger King is offering $6,000
signing bonuses, enough to almost entice Reverend Jesse Jackson
to take a job when he was down there not too long ago.
So it's getting better, but we still have a long way to go.
Mr. Baker. The gentlelady's time has expired.
Ms. Waters. Thank you very much.
Mr. Baker. Mr. Mayor, I will leave it to your discretion.
There are several members who have requested the opportunity to
ask questions.
Mr. Nagin. Whatever you prefer.
Mr. Baker. I know there are several members on this side
who would like to ask questions.
Mr. Nagin. Well, we will do one on both sides if that
pleases the Chair.
Mr. Shays. Thank you, Mr. Mayor. Mr. Mayor, this is not
intended to be antagonistic, but maybe to give you an
opportunity to respond.
Mr. Nagin. Sure.
Mr. Shays. I was in New Orleans a week after the horrible
Katrina incident, and I realize it was a storm of biblical
proportions, and so everyone was tested to the limit.
But I was sitting next to a police officer who was there
along with National Guard and others, and I started to ask the
police officer some questions. And he was very antagonistic to
me and said, ``I'm not allowed to answer any of your
questions.'' I said, ``I'm a Member of Congress. I'm here just
to learn the truth. You don't even want to tell me?'' And he
looked at me and snickered and didn't answer any questions.
Right following, I had an employee--I had someone from the
New York Fire Department who said all of his volunteers are
down there helping and only 20 percent of the firemen were
showing up for work.
I contrast that that same day being in Mississippi where
the firemen and policemen showed up for work beforehand, and
all of them showed up afterwards.
And I want to ask you this. How can you give me a sense of
faith, both in the competence of the people who were trying to
rebuild New Orleans and in their honesty? And tell me how I
should sort that out because I have just a very bad feeling.
Mr. Nagin. I think I understand your question. And I'm not
sure who you talked to. But in any organization, you're going
to have people that tell you the truth and people that don't
tell you the truth. And New Orleans, obviously, is not immune
to that.
For the most part, I can tell you that most of our first
responders are very honorable people, hard working; they were
heroes during the--most of the event that happened. But they
were also victims. And almost over 80 percent of our
firefighters, police, and the emergency medical personnel lost
their homes.
So I am not sure who you were talking to; I don't know what
state of mind they were in. We did not have any gag orders in
effect, you know, at any particular point in time. We were
being overwhelmed with press inquiries.
Mr. Shays. It was just such a contrast. And I will get to
my question. But in Mississippi, all the firemen in one parish
lost, all the policemen in one parish lost their homes. But
they all showed up for work the next day--and about two-thirds
of the firemen--and they all showed up for work. It was just
such a contrast, and it just makes me feel like there must be a
culture that you have to deal with that is going to make your
job all that more difficult.
Let me ask you, with CDBG and Mr. Baker, my chairman's,
legislation, if you combine them both together, doesn't that
give you kind of the tools that you would need to clear out a
whole section and rebuild?
Mr. Nagin. I think so. I mean, with this type of tool, with
some modification, with adequate CDBG funds, I think we can do
the job necessary to rebuild whole communities, versus doing
just spot rebuilding in certain sections of the city.
Mr. Shays. And would your preference be to rebuild whole
communities?
Mr. Nagin. Absolutely. Whole neighborhoods.
Mr. Shays. Whole neighborhoods.
Mr. Nagin. We have 70-something distinct neighborhoods in
the City of New Orleans.
Mr. Shays. Well, I will yield to my colleagues on the other
side, and just say the devastation that I saw was just
unbelievable, monumental, and I realize the task is Herculean.
Mr. Baker. The gentleman yields.
Mr. Shays. Thank you.
Mr. Baker. I thank the gentleman. I recognize Mr. Watt, and
if he chooses to yield--
Mr. Watt. Thank you, Mr. Chairman. Thank you for being
here, Mr. Mayor. And I want to applaud, in particular, one
statement that you made in your opening comments and that is
your willingness to not reject things until you understand them
and understand the comprehensive nature of them. And that's
exactly what we have been trying to do between yesterday and
today.
We have seen an evolution in Mr. Baker's proposal--
apparently, I haven't seen the language--but the summary
suggests a movement in a direction that is certainly desirable.
And we have encouraged our members not to reject out of hand--
as I said in my opening statement--any proposal until we
understand it fully.
There is one provision in the revised statement that I do
want to pull up, though, and that's in part two of what we were
handed this morning. The new bill would have a clear statement
that no property owner or homeowner may be compelled by the
corporation to accept a settlement offer, which ultimately is a
statement, an affirmation, that individual property owners
should have the first rights to their property. And I assume
you endorse that?
Mr. Nagin. Yes.
Mr. Watt. Now you referred in your comments to a number of
people who, in your--some of whom were in your family who
didn't have flood insurance.
And so my question is were all of those people in an area
that was designated--were some of those people in an area that
was not designated as a flood insurance-required area?
Mr. Nagin. You're getting into a really complicated and
interesting area.
Mr. Watt. Well, I--
Mr. Nagin. Let me just give you a quick--
Mr. Watt. Can you just answer my question because I --and
then I'm going to go to the next one.
Mr. Nagin. Some were and some weren't.
Mr. Watt. Some of the people were in areas that were not
flood-designated areas?
Mr. Nagin. That's correct.
Mr. Watt. Okay. And for those people, Mr. Mayor, would it
be of some advantage to them, in deciding whether they were
going to sell their property to this corporation or not sell it
to the corporation, to really improve their position as
individual property owners if they could retroactively buy into
the flood insurance program?
Mr. Nagin. That would help.
Mr. Watt. That would help? Okay. And so the bill--the
amendment that we offered yesterday that failed in this
committee 34 to 32, you believe would be helpful if it covered
some of the--those people who were outside the flood area,
didn't have any expectation to have flood insurance because
they weren't in a flood area. Isn't that right?
Mr. Nagin. I'm not quite clear on what was proposed
yesterday.
Mr. Watt. Okay. Well, that's fine. Let me just go forward
and ask you about a couple of other things. You are familiar
with Hope VI?
Mr. Nagin. Yes, sir.
Mr. Watt. New Orleans used the Hope VI program before,
hasn't it?
Mr. Nagin. Yes, sir.
Mr. Watt. Would it be an advantage, either in connection
with this, Mr. Baker's legislation, or independent of it, to
have more funding put into Hope VI? That would help you
reformulate these communities, would it not?
Mr. Nagin. I appreciated the Hope VI program, and I think
it would be helpful to move New Orleans forward also.
Mr. Watt. And CDBG, Mr. Baker has put in his--that's in the
Congressional Black Caucus bill too, you have already
indicated, that would be very helpful to you.
Mr. Nagin. Yes, sir.
Mr. Watt. And more aggressive fair housing enforcement.
That would be helpful to you?
Mr. Nagin. Yes.
Mr. Watt. All these things are in the CBC bill, I want you
to know, that some people have said there is not a
comprehensive plan out there to deal with this.
Now the other thing you talked about was the local employee
and local contracting requirements. Nothing in this legislation
that we're having this hearing today that really addresses
that, one way or another. But there is in the CBC bill, which I
want to make sure you get a copy of before you leave here.
Mr. Nagin. I would love to.
Mr. Watt. I know you all have been busy, but every single
person on this panel, I want to make sure, subsequent to today,
after you have had a chance to review H.R. 4197, after you have
had a chance to review it, I want to get your comments about it
because I think it's important for you to see what has been
proposed, and have your comments. You are the closest people to
it.
But one of the things in that is a local employment--
contracting requirement, and another thing is a local employee
requirement. You endorse that, without seeing the specifics of
it, in general terms?
Mr. Nagin. In that concept, absolutely, 120 percent.
Mr. Baker. If the gentleman can begin to wrap up, sir.
Mr. Watt. All right. I will yield back. I just wanted to
make sure, before the mayor leaves, I hand him a copy--
Mr. Nagin. But Congressman, let me just make sure that you
understand my position on all the bills that are moving.
We have worked with Congressman Jefferson and with the
bills that he has been pushing forward, and I think I hear it
passed last night. This bill was an instrument that we kind of
came across and started to study and tried to get behind to
support. If you have another bill that you would like for us to
study, we will get behind that one also.
Mr. Watt. I will give it to you.
Mr. Nagin. Because I don't see any one bill as being big
enough to solve the challenge of New Orleans. This is
unprecedented, where an entire city was almost destroyed, and a
city as important as New Orleans. So we would love to work with
you on the bill that you are crafting.
Mr. Watt. Mr. Mayor, I am also going to give you a copy of
the amendment that we introduced yesterday. I would love to
have your input on whether--
Mr. Nagin. Thank you, sir.
Mr. Watt.--it would have value to you.
Mr. Baker. Mr. Mayor, it's up to you. We can go to another
person.
Mr. Nagin. I think I have to go. I need to be excused.
Mr. Baker. Well, if we may, there are several members that
would probably--
Mr. Nagin. All right. One more question, and then we can
go.
Mr. Scott. Thank you, Mr. Mayor. I will be very brief on
this because I think it's very important for us to get the
record straight on your concern.
I have a concern about the formation of the seven-member
board. And I want to make sure that we got your comments
correct on that. Because it strikes me as a glaring omission
not to have at least the mayor of the City of New Orleans, the
epicenter of the whole event, where easily 80 percent of the
damage and 80 percent of the correction needs to take place,
for that mayor not to have at least 1 voice, 1 opportunity to
have input on this seven-member panel.
It's fine to have the President make some appointments.
When you look at the responsibilities of this board, it will
acquire the property; it will make the necessary infrastructure
repairs; it will, if given the opportunity, allow those who
don't have the money to receive some form of compensation for
their equity; it will have first right of refusal.
Would not you want to make a plea before this committee
today, that--and we are in the process of a hearing here--and
from the hearing we will take recommendations and make some
improvements to the bill. Would not you want to have a seat at
this table, at least to have an opportunity--and if we could
put an amendment to this bill that would give you, as the mayor
of New Orleans, at least one of these appointments?
Mr. Nagin. I would love to have a seat. You know, I am
working with the--this bill to try and get it modified. And the
position that if the bill moves in this current form, I would
be in a position of working through the Governor.
But I think--if you're asking me what would be a perfect
world, a perfect world would be for the most effected parishes,
which are Orleans, St. Bernard, and Plaquemines, to recommend
to the President or to the Governor to have representatives on
this commission directly. That would be a perfect world.
Mr. Scott. All right--
Mr. Baker. And if the gentleman will suspend--I am sorry, I
have extended courtesies to the gentleman to ask his question
out of order, ahead of some other members, and the mayor has
indicated a need to leave.
What I would ask, without attempting to be at all
disrespectful, is have members formulate their questions in
writing. I will assure you we will get you timely answers back,
but to enable the mayor to make his appointment without
further--
Mr. Nagin. Thank you, Mr. Chairman. I really appreciate
listening to the members, really appreciate your frankness and
your attention to this. New Orleans will come back with your
help. Thank you.
Mr. Baker. Thank you, Mr. Mayor, for your courtesy of your
time and participation.
At this time, we would like to return to our regular order.
Our first--I am sorry. I have just been advised--I did not--I
was not made aware. There is a vote now pending on the floor
with about 5 minutes remaining. I have to ask the panel's
indulgence. We are going to go vote. We will recess for 15
minutes and come back and reconvene.
[Recess.]
Mr. Baker. Reconvene the hearing. I apologize. I did not
know, at the time of recess, there were three votes in a row,
not simply one. That delayed us a bit. And there will be
members coming back. I rushed from the conclusion of the vote
to get here quickly.
So without delaying you further--I know that some have
concerns about flights--I would first like to introduce Mr.
Walter Isaacson. For some, they may know him for his business
relationship to publishing efforts, a distinguished
businessman.
And he has taken on the responsibility as co-chair of the
Louisiana Recovery Authority. This is an authority created by
executive order of the Governor of Louisiana to assist in the
overall planning and management of the reconstruction effort.
Welcome, Mr. Isaacson. We certainly look forward to your
comments and insight.
STATEMENT OF WALTER ISAACSON, CO-CHAIR, LOUISIANA RECOVERY
AUTHORITY
Mr. Isaacson. Thank you, Congressman Baker. And thank you,
personally, for showing the leadership. At a period like this,
you find out which great leaders emerge. And I want to say, on
behalf of people in Louisiana--and for that matter, on those of
us who are ex-patriots and recovering journalists and
everything else, it's good to see somebody like yourself emerge
as a great leader in this.
I have a prepared testimony--and if you don't mind, I would
like to have it submitted so I don't have to read the whole
thing to you.
Mr. Baker. Certainly. And all witnesses, a formal statement
will be made a part of the official record. Thank you, sir.
Mr. Shays. Could I just ask the gentleman to yield? Were
you required to say that in order to be invited to this panel?
Mr. Isaacson. Well, I--
Mr. Baker. He's the first journalist that has ever said
anything like that.
Mr. Shays. I know; I am shocked.
Mr. Isaacson. We journalists know that. But also, I will
take the opportunity also to say how much we appreciate
Congress.
Like you said, Congress has really shown a lot of
forbearance and help to the State of Louisiana. And to the
distinguished Congressman from Connecticut, who made a comment
that I think we should all take to heart, that there were times
when we didn't show great leadership, whether it was in the
stress of the moment, and a lot of us messed up, and that sort
of thing, and I also think that we have to make it clear that
we plan to rebuild ourselves.
We were all talking while you were away about how far we've
gotten ripping out the basement, and ripping out the drywall
board, and coming back, and making sure everybody was coming
back. My family neighborhood is in Broadmoor, in uptown New
Orleans, and I know we have to do this with our own hands, to a
large extent.
We also have to, in terms of what Congressman Shays said,
promise a few things, one of which is we're going to get our
priorities straight. We're not all going to be talking with
different voices, all shouting and all asking for everything.
And the priorities have been put very clearly now by the
Louisiana Recovery Authority, working very closely with the
mayor.
And I will say that when the mayor's commission was formed
and then we formed the Louisiana Recovery Authority of the
Governor, the first question I got as vice-chair was, ``How are
you going to work with the mayor's commission?'' And we said,
``We're going to surprise you. We're going to astonish you by
how well we work together and get over that hump of people not
pointing fingers, people pointing fingers at each other and
stuff,'' and I think we have astonished people, as we cross-
pollinated our two groups and worked together.
We also know that we have to be frugal and sensible. We're
not going to rebuild everything, and we're not going to ask
Congress to rebuild everything. And I hope too--and this is
finally the point that Congressman Shays has made--our
authority is there to make sure things are scrupulously honest.
I don't want to go back into the history of Louisiana, but we
all know there have been occasional times that it's good to be
a journalist in Louisiana because you've got a lot to cover.
But we have a new authority here. We have one of the big
three accounting firms down to look at every penny. Everything
is going to be frugal, zero tolerance for corruption, and very
honest and wise.
And I will now summarize briefly, if I may, the testimony.
As part of the recovery authority appointed by Governor Blanco
to address the needs, I wanted to say that all of us appreciate
the legislation that Congressman Baker has put forward. We have
all studied it, and the more we study it, the more comfortable
we are with it.
I also want to add to my prepared testimony a message I got
last night from the Governor herself, who said she wanted me to
stress in my testimony that she personally has now looked over
this and is very strongly in favor of this piece of
legislation. I think I told your staff that last night, but I
wanted that put in the record.
Mr. Baker. Thank you very much. That's most appreciated,
sir.
Mr. Isaacson. Louisiana needs a smart and bold process. I
think one of the things we have seen with the problems with
FEMA--and also, if I may say so, the similar problems with the
SBA--is that there hasn't been a lot of creativity and smarts
put to how do we deal with an emergency situation.
I think that this bill that Congressman Baker has put
forward does give us a smart and bold process to channel the
resources for the rebuilding of our State. I have consulted
with a lot of people on the LRA board, and the executive
director, Andy Koplin, and now the Governor, and we believe
that this concept is the best one to serve as an important
enabler for getting our homes and our communities back.
I think it deserves prompt consideration, and I know you're
doing a great job pushing it through. But this is pretty
desperate. Everybody is sitting there, day by day, trying to
figure out, ``How do we get our homes back?'' We're doing it
most with our own hands, but we need to know that the
neighborhoods can come back as well.
There are many statistics. You know I'm not going to go
over them all. But according to the Red Cross, Katrina
destroyed approximately 275,000 housing units. That's something
that is hard to comprehend, and it is why we had some trouble
responding prudently right away. That's 10 times as many, for
example, as was destroyed by Andrew.
Level of devastation also has created a banking and a
financial disaster in the making if we don't do something. Like
many Americans--whether it's my family in Broadmoor or any of
the families that have come before you and that you know and
that you meet when you come back down--a lot of your personal
wealth is in your home. And that's linked to the riches of the
communities that we all prize. And all of that has been washed
away.
So we need some partnership, especially with SBA in being
so slow in helping us, some partnership to help the communities
come back. It's also affected and hit hard our local banks and
financial institutions, with the mortgages they have extended.
Many of them minority owned, serving the poor citizens of the
State, and everything else, they face huge losses as a result
of this, and they are essential to our economic life.
So what you are doing is really going to help in so many
areas. We need a vehicle for helping to redevelop our
neighborhoods. We need to provide the liquidity through a
standard process, a process that the people in Washington--I
mean, whether it be the Congressmen here or the Washington
Post--that you can trust, that you can say, ``Okay, this is a
very reliable authority; this is not just money being sent down
there, and we don't know how it's going to happen.''
You, Congressman Baker, have set up a very good system,
where it's going to be a very comprehensive, trustworthy
process, so that the money is not squandered.
The LRA, as you know, was provided to provide leadership
and set the priorities of the rebuilding. This will be a
perfect complement to the LRA. There is absolutely no conflict,
of course, with the LRA or, if I may speak, for Mayor Nagin,
with the city commission, or anything else. We're broadly
represented in the State. I know that you have talked to people
on the LRA even last night. I know that your staff has been
working with us very well.
And I want to say for the record--which is also not in my
statement--that Congressman Baker and the staff have diligently
worked with all of the leaders in the State of Louisiana and
the leaders of the LRA, the Louisiana Recovery Authority, to
assure that this recovery corporation and this bill will follow
the important principles that we need, which is that
partnership through the State and localities, partnership
through the LRA, State and local involvement for development,
consistency with State and local redevelopment plans that we
are all doing, individual choice by homeowner, market-based
solutions, absolute scrupulous transparency and honest, and
cost efficiency, all of which we owe the people of the United
States if we're going to ask for any money. Boy, this bill does
that, and it's very good.
As you can see, it's a long way to go before we can restore
the people of south Louisiana to the wonderful lives we
cherish. It's a pretty long marathon. But on behalf of the LRA,
I want to thank--and all the citizens of Louisiana--I want to
thank Congressman Baker and all the people of Congress for
helping support us in these efforts. Thank you very much.
[The prepared statement of Walter Isaacson can be found on
page 64 in the appendix.]
Mr. Baker. Thank you very much, sir, for your fine
statement. And express my appreciation to the Governor for her
kind words.
Our next witness is the State senator from what is called
the north shore of Lake Pontchartrain, the area that was
significantly impacted, not commonly thought of in the minds of
most people watching the evening news. State Senator Schedler,
also in your prior capacity as a businessman involved in the
banking industry as well, I think brings unique perspective to
the problems we face. Please proceed, sir.
STATEMENT OF HON. JOHN T. SCHEDLER, LOUISIANA STATE SENATE
Mr. Schedler. Thank you, Mr. Chairman. And I certainly want
to echo Mayor Nagin and Mr. Isaacson's comments about your
leadership in this and the bill that you brought forth, at
least for a methodology out there that can possibly assist in
the rebuilding of the greater New Orleans area, and the region.
As you indicated, my past background, I was president of a
bank, and I still sit on a national bank board of a regional
nature. And certainly we are very concerned about some of the
possibilities that could be forthcoming when the forbearance is
uplifted.
You brought out the fact--or Mayor Nagin brought out the
fact--that one of the concerns that we have, and we share, is
the very scenario that he created of this side of the House,
one or two individuals buying--repairing their homes when the
rest of the area remains blighted for some time, for various
circumstances. And the other sector, because of availability,
rebuilds and somewhat comes back pre-Katrina or Rita.
We're concerned about that, and we likewise are concerned
about the levee systems and the vulnerability that remains. But
what we do see in this particular bill is hope that this is one
method that could be used by communities to bring back some of
those areas that maybe will be down in that type of situation
for some time.
Further, I think it's also fair. I think it's fair, most
importantly, to the U.S. taxpayer because it's not a hand-out.
It's not Louisiana coming up here and saying, ``Give me, give
me, give me.'' And I think that what you have seen to date has
been that.
What I like about this most, it's fair to that individual
in Idaho, in Maine, in Connecticut, and the West Coast because
it gives an opportunity for some reasonable, prudent pay-back
to the American taxpayer if you follow this all the way through
the process. So I think that is certainly something that should
give it some credibility, you know, in the market place.
I am also very encouraged by the transparency that is being
created here. I know there is some debate on how the
composite--how we compose that committee. In speaking to the
author of the bill, he certainly has shown some willingness to
be flexible on that, and I think we can work out something
along those lines that would be comfortable for everyone, that
would be a balance of true Louisianians from affected areas,
and yet some credibility from the side of national perspective,
and some talents that they bring to the table.
You know, we have somewhat shot ourselves in the foot. We
recognize that. There is one thing I have always--this is off
script a little bit--I have always marveled at how Louisianans
and Louisiana politics play out, and it's very misunderstood.
I think there is problems in every State in this country. I
read the Wall Street Journal, and I certainly see problems all
over the country. Louisiana certainly has their share, and we
certainly contribute to that. But it is a very hardworking
people, and we want to be as fair as we can to everybody in
this process. And you know, let's please don't be--that be the
reason of why you don't give assistance to Louisiana.
Mr. Watt's alternative bill I certainly want to look at. I
share Mayor Nagin's comment about the possibilities that may
exist with dual instruments out there that may give us some
relief. I don't know if there is the ``silver bill,'' but we
will take anything and everything we can get to assist us in
Louisiana and the general Gulf Coast.
You know, the comment was about, you know, lemons and
lemonade. I don't know if we have sugar or lemons, but I know
we got the water. That's one thing I can assure you, we've got
that one ingredient taken care of.
And that's what has caused the most diversity. It is a sea
of uncertainty out there right now, to all Louisianans in the
greater region, of to come back, not to come back. Is my
insurance going to pay? Is it not? Did I have flood insurance?
And I think this plan would at least put some certainty on
the table, that at least there is some methodology, if you want
to participate to bring back some of these neighborhoods, like
the mayor envisioned, that could be done in a more futuristic
type basis, with the basement levels--and to me, this plan is
the only plan that would allow that to unfold in a very orderly
fashion, unlike anything else I have seen.
Louisiana has been highly criticized for not having a plan.
And I certainly applaud, again, Congressman Baker for at least
bringing forth a plan. And it's a plan that I certainly
embrace. I am the caucus chair on the Republican side in the
State Senate. And I'm not saying it's endorsed yet by the
Republicans; I'm going to bring this back to them. But
certainly it's endorsed by me, its chairman, individually.
And we are building a consensus, as you can see from this
table. And I think we can further improve on that, as we move
through the process. I was encouraged, again, as Mr. Isaacson
last night, when we received word that the Governor now
embraces it wholeheartedly.
And with the mayor, I think we are building a very strong
consensus across all political positions, and I would urge you
to work through the process and, hopefully, deliver this to us
sooner than later. Thank you very much for the opportunity.
Mr. Baker. Thank you, senator. I certainly appreciate your
comments and your time.
Our next witness is the Honorable Juan LaFonta, who is also
a member of the Louisiana State House of Representatives and
professionally an attorney in the Orleans area. Welcome, sir.
STATEMENT OF HON. JUAN A. LAFONTA, LOUISIANA STATE HOUSE OF
REPRESENTATIVES
Mr. LaFonta. Thank you, Mr. Chairman and members of the
committee. First of all, before I get into some of my
testimony, I would like to say how we got here.
Initially, I shared a lot of the sentiments of your
Congressional Black Caucus here about concerns with the eminent
domain provisions in the bill, which have been removed. A lot
of the other issues we have been working out, and this is very
much a living document.
The way I look at it, from a community perspective, is this
is just the beginning. This is how we address the long-term
large scale problem that New Orleans may face in repopulating
and redeveloping the city.
And I would love to look at your document, and I will even
volunteer to come up here and testify on your behalf for the
short-term goals because I do think we have some issues as to
pushing folks out of hotel rooms, not giving them proper
housing, and not giving them alternatives. But I do think this
is the beginning of a larger plan.
The way I was able to accept the plan was to read it. It's
really a reactionary document, so if people need assistance,
they can go to it. It's not forcing anything on anybody.
The other thing that really pushed me in the direction of
support is if you look at this table, you have people from all
walks of life. Myself, I'm a very community activist type
person. The rest of this people on this panel represent all
different interests all over the State. We've come to this
point where we're all supporting this bill because we
understand the concept and we understand the need for this type
of document.
I would also like to say I look forward to seeing the
development of this thing be more community involved. And I
have spoken with Congressman Baker, and we are looking to
redirect and redevelop some of the seats on it so it can give
the mayor, if he needs to get a seat, or some positions so we
can have more effect on it from a local level. Thank you.
Mr. Baker. Thank you very much, sir. We appreciate your
willingness to appear here, too.
And our last witness is a city councilman from the
Lakeshore area of the city, the Honorable John Batt, who is--
brings another perspective, think, to the resolution necessity.
Please proceed, sir.
STATEMENT OF HON. JOHN A. BATT, NEW ORLEANS CITY COUNCIL, NEW
ORLEANS, LOUISIANA
Mr. Batt. Thank you, Mr. Chairman. I wanted to ask, though,
have the members of the committee received the package--
Mr. Baker. If we haven't distributed those, we certainly
will do it at this time. And while he is getting ready there,
those are some photographs personally taken by the councilman
that reflect the pre and post-Katrina condition.
I think one set of photographs is even in your own
backyard?
Mr. Batt. My own backyard, with my daughters Bailey--
Mr. Baker. We will make sure members see it.
Mr. Batt. Thank you. Thank you, Congressmen, for having me
today to discuss this extremely difficult situation we face in
the City of New Orleans and explain why I think the Louisiana
Recovery Corporation is essential to bringing back our great
city.
Now I know all of you watched Hurricane Katrina hit the
City of New Orleans and saw the pictures of the man-made levees
breaching because of faulty construction, flooding 80 percent
of our city, leaving 350,000 people homeless.
It has been said that the New Orleans greeting of, ``Where
are you at,'' has been replaced with, ``How's your house?''
Who are the hurricane homeless? Many live in my council
district, in neighborhoods tourists rarely venture to, in
neighborhoods like Carrolltown, St. John, Hollygrove, Midcity,
Palmier, and Lakeview.
They are police officers and physicians, lawyers and
teachers, firemen and engineers, businessmen and union members,
and they are the hardworking middle and upper-class and glue of
our city.
They represent over one-third of the tax base of the City
of New Orleans. They are the people who bring you Mardi Gras
and Jazz Fest. On any given weekend, you can see over 3,000
kids playing soccer with the Carrollton and Lakeview soccer
associations, watch throngs of teenagers heading to the St.
Dominic's CYO events, and see empty nesters tending to their
yards for the Lakeview Garden of the Month contest.
Whether newcomers or seventh generation New Orleanians,
they love their city and long to return. After a lifetime of
hard work, they never dreamed they would be a hurricane
homeless. And they want nothing more than to get their piece of
the American dream back.
Now you are probably still sitting there wondering, ``Who
are these hurricane homeless people? What do they look like?
How do they dress? Are they anything like me? Will I ever meet
one?''
Well, you already have. I'm hurricane homeless. Hurricane
Katrina pushed 10 feet of water into my Lakewood South
neighborhood. Water sat in my house for 2 weeks. As you can see
from these photos, it turned my lush green backyard into a
barren brown wasteland. It destroyed the contents of my home,
which was covered in mold after two-and-a-half weeks of water
and rendered my entire neighborhood unlivable at the present
time. My story is not unique. It's the norm.
Pam and Kevin Lair lost their home when the 17th Street
Canal breached in their backyard. They also lost the nine-
employee neighborhood mortgage company they had worked for 5
years to build.
Ilene and Mario Simoncioni, a disabled couple who owned
rental properties, lost all of their property and their income.
Vicki and Steven Sobel, parents of preschoolers, lost their
home while Steven was in the hospital receiving his first round
of chemotherapy.
All we want is to be able to rebuild our homes and our
neighborhoods. But that is a difficult proposition because each
homeowner is faced with a different situation. Some have flood
insurance; some don't; some have a little. Some have a business
or a job to return to; some do not.
As you hear the stories, as I do every day, it is clear
that a vehicle is needed to relieve these homeowners of the
immediate burden of their loss and assure those who want to
rebuild that they will be able to without fear or uncertainty
over what their neighbors will do.
Congressman, your bill is the only sensible solution I have
heard of that will let people who can rebuild with confidence
while allowing those who cannot be compensated for their loss
and have their mortgage paid off. It will prevent a wave of
bankruptcy filings from under-insured, unemployed homeowners
and give those individuals the first right of refusal to
repurchase in their old neighborhood once they are on their
feet again.
The Baker bill is not eminent domain. Rather, it gives
homeowners four great options: they can sell outright to LRC;
they can sell to the LRC with a special option to repurchase;
they can partner with the LRC to clean up their property; or
they can do nothing at all. It's completely voluntary.
With these four options, I feel confident that people will
be able to make the decision that is best for them in a timely
manner. It will encourage historic preservation in one of
America's most historic cities, because those properties will
not become blighted. Instead, they will be saved.
Banks will be relieved of the burden of foreclosing on
thousands of properties by using U.S. Treasury bonds that will
be paid back by private investors. It is a fiscally responsible
vehicle to provide relief to the victims of Hurricanes Katrina
and Rita.
As a city council member, I am constantly faced with zoning
decisions. And the decisions I will be faced with in the
aftermath of these hurricanes concern me greatly. I need to
know the status and outlook for each of our beloved
neighborhoods. By quickly determining the direction that
homeowners are taking in each of the New Orleans neighborhoods,
the Baker bill will allow for master planning an effective
community redevelopment.
Without the Baker bill, we risk becoming a Wild West of
opportunistic house-flippers and fly-by-night developers who
will create an incoherent hodge-podge of a city.
New Orleans neighborhoods have always been what city
planners across the United States are striving to achieve:
traditional neighborhood developments, children that can walk
to school, and to the corner, to the store to get a popsicle,
families to church on Sundays, or to local restaurants at
night. Neighbors meet over coffee on their front porches. We
want our neighborhoods to be rebuilt in this manner, but better
than ever.
On behalf of all Louisianians, I urge you to look into your
hearts and answer this question. When a major city in the
country has been destroyed, shouldn't we seize the opportunity
to rebuild it better than ever? I urge you to pass the Baker
bill, The Louisiana Recovery Act, and give our citizens a
second chance at the American dream they so desperately deserve
and need. Thank you.
[The prepared statement of Hon. John A. Batt, Jr. can be
found on page 52 in the appendix.]
Mr. Baker. Thank you, councilman, and I want to express,
again, appreciation to each of you. You, on short notice, were
willing to get on a plane and make difficult transportation
arrangements. For those not familiar, flights in and out of New
Orleans are still not the most convenient in the world. Some of
our witnesses will actually be departing and flying into
Gulfport to get home today, trying to drive home to get back to
family this evening. And for that, I am most appreciative.
Mr. Isaacson, I wanted to comment further on the Governor's
endorsement. From your perspective as the vice-chair of the
authority, have you been made aware of any group within the
State to date that--although there may be many people still not
aware of H.R. 4100--is there any organized opposition to the
proposal in the modified form that we are now discussing?
Mr. Isaacson. No, no major opposition. And it's partly a
testament to the fact that you have listened to a whole lot of
people, whether it be at the Governor, the mayor's level, and
others, and some of his staff, so it's been modified in a way
that everybody feels comfortable with it.
I think that both the eminent domain provisions are
absolutely clear, and nobody fears them any more, whatsoever.
The question of who, beyond the commission--you know, we can
all argue that, one way or the other, but there is actually
pretty good unanimity, that whether it's four to three--I think
the way you're now having it is good.
I would personally probably get in trouble a bit because
last night I was saying to the mayor, ``It's not the worst
thing in the world to have Felix Rohatyn or Colin Powell or
Alan Greenspan or, you know, having some distinguished
appointees who aren't from the State.
But all of those type of things you have been willing to
work out. I am sure we can work out amicably.
Mr. Baker. Terrific. Going forward, as to the structure
itself as a business structure, it doesn't preclude any other
additional assistance being made available to the authority. At
one contemplated further modification--as I understand may have
been suggested--is that the authority itself become the
recipient of funding that might be made available by the
Federal Government for reconstruction purposes.
Mr. Isaacson. CDBG-type funding?
Mr. Baker. Correct.
Mr. Isaacson. Yes.
Mr. Baker. And that if there are other avenues that
potentially might be made available--Mr. Watt's proposal or
others--that those resources could also be simultaneously
directed to the authority to facilitate even a broader or, in
some perspectives, a more prompt rebuilding.
I think it important to get on the record that even if the
Congress were to act the first week of December--which is my
hope, to get this bill and the CDBG portion into a House-passed
Katrina relief package the first week of December--assuming
miracles happen, and it got out of the Senate, and the
President signed it, to begin the process of standing the
corporation up, and to begin the research on titled property,
to actually tender offers, issue the debt, have the resources
to deploy, we're well into next year. Hurricane season starts
June 1.
We have an unbelievable task ahead of us, even if all of
this works without controversy. So just from us back to the
Louisiana representatives, I want to make sure everybody
understands even if this were to go as well as could possibly
be expected, there is going to be a delay in the delivery. And
I don't know that there is a good remedy for that problem.
Mr. Isaacson. Yes. And I do think that the Congressman from
Massachusetts and the Congressman from North Carolina both
addressed the fact that there is certain very immediate needs
and that the Small Business Administration has not
distinguished itself, just as FEMA hadn't, with good, well-
intentioned people in both places. They just haven't been very
creative or aggressive in understanding the emergency
situation.
So I do think that this bill does not solve everything, and
we want to make that clear. I think that Don Powell is also
very clear about that, and they're all very upset about some of
the FEMA process and the SBA process that has gone on. So I
thank you for putting that into the record.
Mr. Baker. Thank you. And I would like to ask both--my
members of the legislature, with regard to concerns of
speculative opportunists being engaged in the community, I have
grave concerns that people who are very afraid right now about
their future may grasp at any straw that's extended.
Is there any role that we might play, or help you play, in
educating the community? Because, as the mayor indicated, we
have dislocated individuals in 44 States. These folks can be
very bright and find these individuals who are in Oregon and
make an offer via mail, and that person may well accept it
without having knowledge that there is a recovery plan in
place.
What--do you have a view about how we can address that
issue and what can be done? Or how can we help you, as the
local folks respond to that concern?
Mr. Schedler. Well, it certainly is a concern. And I--you
know, each day that goes by, that possibility becomes more
forefront.
You know, one of the issues is just mail delivery to even
contact some of these people. We're going through that debate
right now in the legislature, with even voting issues of
upcoming elections, of how to contact those individuals that
have been displaced. And FEMA has somewhat taken the position
that they're not going to give us the list because of privacy
issues.
So--but to answer your question more directly, yes, I do
think that's a big concern. And to answer what you can do, I
think it's more just a public service announcement. I think we
need to use--you know, in our area, WWL seems to be the airway
everyone is listening to right now. That has the broadest reach
across a lot of the affected areas of where folks are.
So certainly that, newspapers, and any other mechanism we
can come up with. But that is a major concern and, you know, I
didn't point out--I mean, my mother was 8 feet of water, my
sister was 10 feet of water in these affected areas. And we are
going through those exact battles, like Councilman Batt
indicated, for my mother and family.
So this affected many, many, many people from all levels of
society. And the one thing I didn't do--Mr. Chairman, if you
would beg my indulgence--is that I was very pleased to hear
that Ms. Waters has been there, and Mr. Shays, and I would
certainly urge other Members of Congress to come down to the
affected area. You cannot believe it unless you walk the ground
and see it yourself.
Because we will find a way to put you up if we got to put
you up in our own houses, but the more Members of Congress from
the House and Senate that can see the devastation--I don't
remember the Senator's name, but just this past week I think
Senator Vitter had a Senator in the area, and his comments
were, ``You have to see it to believe it.''
And it's like nothing you have ever seen. If you can just
imagine a major city of this country in total darkness, it's
just--Senator Chaffey--in total darkness, with no people
around, no green, everything dead, and just no life. And we're
talking almost approaching 90 days after the storm passed.
And for those--I had the pleasure of taking a Blackhawk
trip this past week and get on the ground; we could certainly
make arrangements for you to do that also if you wanted to take
advantage of that.
But the devastation is beyond comprehension. I don't know
how some of these people will ever come back. And that's why
I'm so encouraged by your bill, that it gives some tool in the
tool box to maybe get some of these folks back quicker than we
thought.
Mr. Baker. Representative?
Mr. LaFonta. Yes, and my sentiments are pretty much the
same as Senator Schedler. I do think we need to do a PSA, and
one of the things we're having a problem with in the City of
New Orleans now is online buying.
A lot of folks are buying properties without even seeing
them, and they're buying them up in bulk. And they're finding
ways--like you said--they're finding ways to contact folks. We
don't want people like that to buy up in bulk areas and
redevelop for purposes that are not consistent with the
community needs and with the community culture. So I definitely
would urge you all to do a public service announcement.
Another thing that I was wanting to talk about was the
addresses. And I know this isn't the direction of this panel,
but--and the Louisiana Legislative Black Caucus is presently
preparing a lawsuit against FEMA for the addresses and for the
knowledge and whereabouts for our constituents, because we
don't think, one, that they were--you know, not all of them
were voluntarily moved.
And a lot of folks that they picked up from New Orleans
from the flooded areas were not told where they were going. And
a lot of people are dislocated and can't locate members--even
to this day--can't locate members of their family. So we feel,
you know, it's part of our call to represent our constituents,
folks that got displaced due to the storm. So we're actually
preparing a suit against FEMA.
So if there is anything that Congress can do to urge FEMA
to help us get those addresses so we can get contact to people,
so we can notify them of our programs, we would surely
appreciate it.
Mr. Baker. All right. Thank you, sir. My time has long
expired. Mr. Watt?
Mr. Watt. Thank you, Mr. Chairman. Let me first address a
couple of things that Senator Schedler said.
First of all, I have been there twice now, and I agree with
you. This can't be appreciated without seeing it in person. And
I am sure it's not getting any better, really.
Mr. Schedler. No.
Mr. Watt. Second, I want to correct the impression--and it
may have been unintentional--that H.R. 4197 is an alternative
bill to this bill. I really don't view it in that way. H.R.
4197 needs to be evaluated. This bill needs to be evaluated.
And I think there are things that can complement each other.
So it's not H.R. 4197 or this bill. They are--these things
need to exist in tandem. And I want to go forward and explain
why, because one of the initial concerns we had about Mr.
Baker's bill was that it was not clear what authority this
corporation was going to have.
The transition that has been made from yesterday to today,
or through whatever process it was made--may be over a longer
period of time--makes it clear that no property owner or home
owner will be compelled to accept a settlement offer.
We had a lot of people out there who were given false
options. Yes, FEMA was offering them this--the alternative was
nothing. And as between this structure and this free-wheeling
people out there buying up property site unseen, developers
being, you know, irresponsible--I don't think I have any doubt
about which one of those I would prefer.
But that's not really what the model is, because I mean,
that's one--that's the downside model. We're looking at the
upside model. Our country is based on private property rights,
individual property rights. All of us would agree--and it's
interesting to hear Republicans agree--that a Socialist model
that moves kind of like this and makes property decisions for a
whole neighborhood is more efficient and might give you better
planning. I am not saying that in a derogatory sense, but in a
sense, this bill sets up a Socialist model for restoration.
What we want to make sure is that the individuals, before
they decide whether they are going to buy into this model or
don't buy into it, have the best options available to them.
And they have a range of other services that are around so
that this really, as I believe is clear, should be the last
option that a homeowner or a property owner buys into.
And so, our bill is focused more on the things that would
be before this bill. As far as I know--I guess nobody on this
panel would tell me there is any organized opposition to H.R.
4197. Anybody know of any organized opposition? We've got
plenty of support groups that have endorsed it. I hope you
gentlemen will look at it and decide whether you like some of
the provisions or not.
We are trying to move these things in tandem, but it seems
to me if we move this bill first and leave people with no
option other than to sell their property or transfer ownership
of their property to people who have the means to organize and
rebuild communities, as opposed to allowing individual people
what our whole Nation has been based on, and make that a
meaningful option, we will have missed the boat.
And so, be clear on what we are trying to do, and I am
trying to make Mr. Baker clear on it, too--I mean, we have
had--this is not an adversarial process. But to give people
this option before you give them some other viable assistance
and options is not going to solve their problem. It's going
to--yes, they will go and they will sell their property. They
will put it in this thing, and they will take advantage of it.
But for the life of me, I can't see why--and I don't know which
one of you unknowingly mentioned flood insurance--why it
wouldn't be a better option to allow people to retroactively
buy into the flood--from their own individual perspective.
Mr. Schedler. Let me take a stab at that. First off, Mr.
Watt, I didn't--and I never, ever took it as an adversarial
deal; I always looked at it as an option. And I don't know
every detail of H.R. 4197, but I certainly will look at this on
the way back to Louisiana.
But one of the debates going on about flood insurance--and
I am familiar with the clawback, or payback, of the 10-year--we
have that--we are in session right now on a special session
that is in the Governor's call as an item, and I don't know who
introduced the bill, but we are debating that bill in the
legislature as we speak. We close out 6:00 p.m. next Tuesday.
But one of the problems--at least in some neighborhoods--is
that even if we are able to get individuals flood insurance
under that plan, is that in many cases it doesn't go to where
we need it to go because of the limitations. You know--
Mr. Watt. That's the high-income areas.
Mr. Schedler. Well, that's--
Mr. Watt. That's $250,000. That's right.
Mr. Schedler. I understand.
Mr. Watt. And I know it is not a cure-all, but $250,000--
Mr. Schedler. Is a lot of money.
Mr. Watt. To anybody is a lot of money.
Mr. Schedler. I understand. But just an example, someone
made the comment about the Homestead Act with an axe and a lot.
I mean, in all honesty, many of these people would be--
including my own mother--would be better off with, right now, a
vacant lot and an axe because at least she doesn't--she is not
confronted with the cost of demolition and putting it down to
the vacant lot.
But I hear what you're saying, and I'm not trying to
disagree with you, but I mean, I'm just pointing that out. And
it does in some cases, but the building costs have gone through
the ceiling. I mean, I will give you an example. In our area, I
need to replace my own roof. The three-tab shingle roof--
Mr. Watt. Now, Senator, you're not saying to me that
somebody who has $250,000 is not better positioned to make a
good decision about whether the deal with this corporation that
this bill would set up than somebody who doesn't have $250,000.
Mr. Schedler. Absolutely not.
Mr. Watt. Isn't that right?
Mr. Schedler. Yes, sir. I am not at all arguing that point.
I mean, I will tell you, I have some concern, from an actuarial
standpoint, of what that does to the Federal flood program, but
that's not for me to decide. I mean, I do have some questions
on that issue, but absolutely, I agree with you on that
comment.
Mr. LaFonta. And just to reiterate some of the comments, I
am here because this is an option for my community, bottom
line. Be it last resort, second-to-last resort, whatever, it's
an option for my community.
And the problem that we have had right now, in the
legislature and trying to get things across to the national
audience, is we need more options for our people at home. And I
do not think any panel member here is adverse to 4196 or 4196,
and I think once we read it, we probably could support that.
And I don't look at it as an alternative to what we're doing; I
just look at it as another option.
And Congressman Watt, you know I voiced to you several
weeks ago my concern about folks pontificating, about
pontificating, about pontificating, and not putting that into
action, and not doing something that's going to embrace and
help people now and for the long term. And what I think
Congressman Baker's bill does is it addresses our long-term
problem of redevelopment in our communities.
I mean, does it address the immediate problem of the people
who are getting pushed out of hotels and given 2 weeks to
either find another hotel or be in a homeless situation? No, it
doesn't. And I hope that the bill that you're doing does
address those needs.
Mr. Watt. Well, it creates about 300,000 new Section 8
vouchers for this area, which would help solve that.
But, Mr. Chairman, I am over time, too, but I do want to
take the liberty of just saying to this gentleman that the
comments that he made at our Congressional Black Caucus weekend
were so profound, and he is absolutely right. It led to the
challenge that we made to the members of the Congressional
Black Caucus, that we can't afford to just voice a lot of
rhetoric--pontificate, as you say--on this issue. There has to
be a concrete set of proposals out there.
It was your comments that really led, as directly as
anything I can think of, to the creation of the Congressional
Black Caucus's bill. Because nobody was stepping forward with a
viable, comprehensive alternative that really looked at the
whole range of issues that were out there.
And so, I appreciate--I want to express publicly my thanks
to this gentleman for his--
Mr. LaFonta. Well, I am glad you took it as constructive
criticism.
Mr. Watt. Absolutely.
Mr. LaFonta. I have done the same thing with the State of
Louisiana, and I haven't had as great a response. So I am glad,
you know, that you definitely took the ball and ran with it.
Mr. Baker. The gentleman's time has expired. But Mr.
Isaacson, did you care to comment?
Mr. Isaacson. No, I have taken very seriously the
Congressman from North Carolina's bill and was reading it. And
I just want to say to you, first of all, I appreciate it, and
we appreciate it, and we will look at it, et cetera.
And obviously, there are things in the bill that if we
could have them both or have them all, it would just be
wonderful. We have always asked for more than we could possibly
get.
Obviously, if we got $250,000 retroactively for homeowners,
this would just be a great solution. I will look at everything
else you have, which is, you know, the home program for $1
billion, et cetera. This is all good.
That said, when I was talking a couple of weeks ago to the
Small Business Committee in the Senate and they were exercising
the good oversight, they had three different competing
measures, and everybody said, ``Well, I'm not going to go for
this one while this one is there because you've got to have
them both,'' and we never got anything. And it was a disaster,
and businesses are dying.
I know you're not suggesting that. I am just saying that
sometimes the perfect is the enemy of the good, and sometimes--
if this bill is going to pass, let's not do anything to slow it
up, even if this would be a nice complement to it, because I
get astonished when I come up here, where people do have maybe
better ideas, but they slow down ideas that are something we
really need. So just don't slow us up. Thank you.
Mr. Baker. The gentleman's time has expired. Mr. Shays?
Mr. Shays. Thank you. I would like to weigh in on this as
well and just say what I like and what I do not like.
What I didn't like was to see a huge breakdown of
government officials that I thought needed to step up to the
plate on the local, State, and Federal level. I was embarrassed
for my country, particularly Mr. Brown and his failure to
recognize that his technicalities about what he legally could
do meant that literally hundreds of people probably died.
That's my view.
I was appalled to see a mayor that, frankly, just said what
would he do differently, and he said he would yell louder. I
think he's doing something differently now, and he's not
yelling louder. And I like that.
And I was appalled by a Governor, frankly, that didn't
realize that she had to make some tough decisions and not keep
delaying them.
Having said that, I can put that all aside; I can put it
all in the back and say, ``Where do we go from here?'' And what
I like is that all of you are recognizing that we can be very
helpful; we can accomplish more together and that if you all
can be clear what you want, and what you need, and how you get
it, you make it more likely.
What is, for me, a hollow, hollow effort to help people is
to suggest that people could buy into insurance for 10 years
when they didn't buy into it 10 years ago and then have
insurance. To me, it's like waiting until you got into an
automobile accident to then buy insurance or waiting until
you're sick and then buying insurance. It just is absurd to me.
I can't get beyond the absurdity of it.
But what I am struggling with is to understand what we deal
with, in terms of such a large group being blown apart by a
biblical storm. To be in Mississippi and to realize that 10
miles in they had 20 feet of water when never had any water, 20
feet of it. And I saw it.
And I will affirm what all of you have said. To go there is
to recognize that you have to cut everyone a lot of slack.
Because the challenges that confront you are unbelievable.
Unbelievable. I don't even know what you do with all the
debris. I don't know where you put all the debris. Where are
you going to put it all? I don't know. I can't imagine how long
it's going to take you to just clean up, to get sites ready.
And that's why I like what my chairman has put forward.
I was thinking, as I was flying over by the--in the
helicopter in New Orleans, I thought, ``Well, if I owned a
house there and I had the resources to fix it up, if I fixed it
up, next to me is just a swamp of houses that are totally
destroyed.'' So you all are on the right track, I think, with
the chairman, my chairman, with suggesting that you have got to
guarantee that you can fix up the--that your neighbors will
basically--or somebody else--will fix up whatever is next door
to you. However you achieve it, it seems a logical thing to
suggest.
What I would love to know is how are we protecting people?
It reminds me, during the Revolutionary War, soldiers were paid
in paper dollars. And the paper dollars tended to have no
value. Alexander Hamilton said, ``They're going to have value
because to not have value means that there is no real basis to
have commerce in our country.'' And so, ultimately, we gave
value to those dollars. But before then, people sold them off a
penny on a dollar or less.
What can we do and what are you doing to make sure that
people don't panic and sell their property for less than it's
worth, even if it's worth something on the dollar?
Mr. Baker. Whoever chooses to respond, please.
Mr. Isaacson. Why don't you start, and I have something I
wanted to add--
Mr. Batt. There are a couple of things, or a few items,
that need to be addressed first and foremost. And first and
foremost is the levee system. The people need a commitment that
they're going to be built properly and they will be
structurally sound.
The 17th Street Canal, which flooded most of District A,
was construction flaws and design flaws. Everybody is aware of
that now. Those levees were not topped. It wasn't from storm
surge. They were built badly. It was human error. As a result,
70,000 to 80,000 people in my district are displaced and--
Mr. Shays. How many homes in your district does that
represent? About 70,000 homes?
Mr. Batt. Thereabouts, yes. Maybe about 50,000. Homes
ranging in value--
Mr. Shays. 50,000 homes?
Mr. Batt. No, no, no, excuse me. About 25,000 homes.
Mr. Shays. Right, right.
Mr. Batt. But homes ranging in value from--anywhere from
$75,000 to $100,000 all the way to $3 million.
Mr. Shays. Right.
Mr. Batt. My district runs the gamut in--
Mr. Shays. So one thing is to guarantee that levees can
be--
Mr. Batt. No one is coming back if those levees are not put
back in shape.
Mr. Shays. You're talking about the coming back part. How
about just helping me understand how you--and what you're
talking about is important. But just first off, how you stop
the hemorrhaging of people panicking and saying, ``My house
isn't worth anything. Someone is going to give me $10,000,''
and so they just unload it. Is there any thought on how we're
dealing with that issue?
Mr. Baker. And I hate to interrupt, but that will have to
be the gentleman's last question. I have been informed we will
expect votes some time around 1:20 or so, and I want to make
sure all members present get a chance to ask questions, so this
will be the gentleman's--
Mr. Shays. Well, then, let me just throw on the table and
maybe you all--
Mr. Baker. Yes, sure, just please respond to the
gentleman's question.
Mr. Shays. Just--there is two things. One is how people
don't panic, and the other issue that I would love to have
addressed is is there an anticipation on the part of all of
you--maybe that's the question I really want you to answer--
that people will be held harmless, or do you anticipate and
expect, given resources, that people are going to have to
absorb some of the loss themselves?
They didn't have insurance; they're not going to have some
magical thing happen where people step in and fill in the gap.
Mr. Isaacson. Let me speak to that. First of all, no, we're
not going to be held harmless. We're going to have to--no,
we're not going to be held harmless. We're going to have to
work really hard and all of us have lost a lot of our family
savings. And we just need some partnership here, which is what
this bill gives us. It doesn't try to say you can buy into
insurance and get everything back when you didn't have it, et
cetera.
And if you were down there this past week, like I was, and
we were all looking at our neighborhoods saying, ``Don't panic,
don't sell out, we're going to be back,'' everyone is working
real hard and just borrowing dollars all over the place trying
to make sure they can get the houses back.
So this is a joint effort. We are going to show you how
hard we can work, but this bill preserves it.
Mr. Shays. Right.
Mr. Isaacson. On your second part, the don't panic thing,
first of all, this bill is the best thing to help us not panic.
If we know this is coming down the pike, it's going to help.
Mr. Shays. Fair enough.
Mr. Isaacson. Secondly--and this is what Jay Batt said,
which I was going to say, but I will reiterate, which is we set
our priorities after we first threw everything on the table--
and probably lost some of our credibility--and said, ``Okay,
let's set our priorities.''
Priority one is a good levee system. That's going to keep
people from panicking, as well. As long as we know those levees
are going to be built back, that--we got to say it over and
over again, we need your help there. Because we can be--you
know, we can all put our elbow grease and our own personal
dollars--
Mr. Shays. Good point. And I--
Mr. Isaacson. We can't fix the levees. That's a Federal--
Mr. Shays. Basically, you're saying Mr. Batt was really
answering my question.
Mr. Isaacson. He's exactly right. And then, thirdly, small
business loans. You need to get the businesses back. Now you
talked about FEMA being an embarrassment, and Michael Brown,
and I admit that up and down the State, from the lowest level
to the top, we all didn't react--we were honest; we were good,
but there was some lack of decisive leadership. You saw that in
some places, as well.
That's happening right now in the SBA. You're talking about
the founders. The founders gave you oversight authority. You're
seeing a slow motion FEMA disaster happening now, where people
are panicking because nobody can get the 90-day emergency
bridge loans they need. That's the third thing we need to keep
people from panicking.
And finally, we're not going to panic, because, believe it
or not, New Orleans has an amazing magnetic attraction. People
like me, people like my family, everybody you have met--it's
not like any other city--people are going to want to come back
and make it work.
Mr. Shays. Let me just say--
Mr. Baker. The gentleman's time has expired.
Mr. Shays.--my constituents want to help you all. And with
that kind of attitude that all of you have, you're going to get
a lot of help.
Mr. Isaacson. Thank you so much.
Mr. LaFonta. Can I just say one--
Mr. Baker. The gentleman's time has expired. I need to go
to Ms. Carson, if I may.
Ms. Carson. I will be extremely brief. I was trying to
discern whether or not underground, in Louisiana, there is
sufficient know-how and manpower to rebuild the city. Reminds
me of Charles Dickens's ``A Tale of Two Cities.'' Do you have
people there, living there, available there, who can begin the
reconstruction process of a city?
And then, secondly--and I don't want to cause any trouble,
because that's my middle name--FEMA. Should FEMA be allowed to
run its course? I realize any entity, agency, has its mistakes
to make. But when I read where they were telling those people
they had to get out of the hotels, they apparently don't know
what their mission is, in my opinion.
Because I'm in the abstract now, and I admit that. Are you
at liberty or are you apprehensive about criticizing FEMA in
terms of how it's responded and what it plans to do now? If
not, I will understand it, and won't regard that as being
disrespectful.
Mr. LaFonta. Well, and I want to kind of pull in what I
wanted to tell Congressman Shays. My perspective is from
somebody who was not indecisive. I come from a group of
decisive black leaders who when the flood hit, we got buses and
trucks and everything we could get our hands on to get people
in and out of the city and deploy folks.
And my position is also that I'm not really politically
afraid of any group or whatever. I didn't get here because I
made a lot of friends. I ran against the whole organized
machine to get in.
So my thing to you is I do think that the FEMA situation
needs to be revisited. I mean, if that's a political statement.
I think it's terrible when we were coming in and out of New
Orleans to get people out, that they had trucks that weren't
deployed, they had buses that weren't deployed. Now we got
people who were put in hotels that they're about to kick out. I
mean, you're giving us a bunch of solutions to do what?
I mean, what immediate actions--if you're an emergency
management association, if you're dealing with a large scale
problem and you have immediate problems, why aren't we
addressing those problems?
Just to give you a personal story, I have had friends who
have taken 2 to 3 months to receive a $2,500 check or a $2,000
check. Or I have had people who had several--because in New
Orleans, a lot of family people live together, but they're like
a lot of adults that live in the one household. But then when
the flood came, those adults kind of broke up and went to other
States, so some folks went 2 months without getting any Federal
assistance to help tide over.
My district ranges from the French Quarter to Dillard
University. I've got five historic districts. But in all of it,
I have a lot of minority population. I have got 70 percent of
my district is minority folks that are struggling.
And I'm not going to get in any political wherewithal up
here, but I do think that FEMA needs to be revisited. Because
if it's set up to help folks like me and my family and my
community, then we've got a big hole in it that needs to be
patched.
Mr. Baker. And if the gentlelady would yield on that point,
just to add a bipartisan view, the entire Louisiana delegation
has deep concerns about the FEMA operation. We all have our own
stories. We share the sentiments of the gentlemen at the
witness table, who are being very gentlemanly in their
comments. It was a disaster.
Ms. Carson. It still remains a disaster, it appears.
Mr. Baker. I am very interested in seeing some of those
unspent, uncommitted funds be diverted into helping the
corporation and the CDBG effort get funded quickly. We need to
wind FEMA down, get them out of town, and have alternative
resources deployed as quickly--
Ms. Carson. You need legislation to do that, Mr. Chairman?
Mr. Baker. Well, I am hopeful that, working with Mr. Watt
and others, that we can come to some resolution. But, yes, we
do. We need to get something done pretty quickly, too.
Ms. Carson. I yield back, in deference to my other--
Mr. Baker. I thank the gentlelady.
Ms. Carson. Thank you.
Mr. Baker. Mr. Green?
Mr. Green. Thank you, Mr. Baker. And I thank the chairman
and the ranking member for holding these hearings. I was born
in New Orleans, Charity Hospital, have a great affinity for the
city and the people.
I did return, and I was with Senator Ed Murray. We toured
the entirety of what I believe to be the most devastated area,
including the Lower Ninth Ward. I think that, without question,
New Orleans will come back. The question is, who will come back
to New Orleans? And how do we do the right thing such that
people who have an affinity, who were there when Katrina hit,
such that they have an opportunity to come back and experience
again the New Orleans that I know, and I love?
A lot has happened prior to your arrival. A lot has been
said. Some of the things that were said I wish people would
retract about various pieces of legislation because I think
that we have two good pieces of legislation. And we ought to
try to get the best from both. We really ought to try to do
that. I don't think that's impossible.
But when people use some of the language, some of the
diction has been less than superb. Some of the diction does not
appeal to people who love Louisiana and New Orleans and who
want to see it come back.
So I am asking, first, that we tone down the rhetoric, to
the extent that we can. And I know that I am to be terse, and
laconic, pithy, and concise, but I do have to make a couple of
more comments, if I may.
We did the right thing after 9/11. We spent billions, but
we did the right thing. I don't have a problem saying that. We
did the right thing when we bailed out the savings and loan
associations. It's time to do the right thing with Louisiana,
Mississippi, and Alabama. And doing the right thing requires
that we do more than give property owners certain rights and
privileges.
Many of the people who were born and reared in New Orleans
never owned property. They never had a fee simple to anything
other than a legacy of poverty that many of them inherited. If
we want to do the right thing, we have to find the methodology,
the means, and the will to give those people an opportunity to
come home, too. It was home to them before the hurricane. There
is no reason why it can't be home to them afterwards.
So as I peruse this legislation, I am looking to see how
can we tweak it, if you will, such that we can give persons who
were born and reared, but never owned property an opportunity
to come home to New Orleans. I thank you for the time, Mr.
Baker.
Mr. Baker. I thank the gentleman.
Mr. Green. I yield back.
Mr. Baker. I thank the gentleman. Mr. Cleaver?
Mr. Cleaver. Thank you, Mr. Chairman. Let me, first of all,
just express some dismay and some embarrassment. Had this
hearing been held 2 months ago, all of these seats would have
been filled, all of those seats would have been filled, TV
cameras would have been hanging over the rooftops. And it shows
that Congress, and perhaps even our country, is suffering from
Attention Deficit Disorder. We just can't maintain our
attention on anything for an appropriate amount of time to
solve the problem.
This is unbelievable. Unbelievable. I think everybody is
connected with New Orleans. My son, a student at Dillard
University and proud to say he was the starting point guard for
Dillard and the captain of the basketball team, he made it out,
home. I feel very strongly about New Orleans, which is why I
had some problems with some of the statements made earlier,
which I won't get into.
But I am a former mayor. I think my city was about the same
size as New Orleans. Almost a half-million people. And so, when
you start talking about an authority, it gets my attention.
When you start talking about community development, block
grants, it gets my attention.
I mean, with an authority, not only the appointment process
bothers me, but does the authority have bonding capacity?
Mr. Baker. If the gentleman would yield?
Mr. Cleaver. Yes.
Mr. Baker. You talking about H.R. 4100; is that your
inquiry, sir, the bill under consideration today? Does that
have bonding authority?
Mr. Cleaver. Yes.
Mr. Baker. The corporation itself does not. Technically,
what it does is sell shares of stock to the U.S. Treasury. The
U.S. Treasury, to pay for those shares of stock, issues long-
term public debt, guaranteed by the full faith and credit. And
the reason is to get us out of the appropriations cycle here
and to allow the Treasury Department to get debt issued year
over year for the long-term resolution. So, the short answer is
yes, but that's how we do it.
Mr. Cleaver. Okay. I was concerned about trying to rely on
the full faith and credit of New Orleans.
Mr. Baker. No, sir. It's been acknowledged that both the
city and the State are already having some credit impairment,
and their ability to sell debt into the markets would be at a
very high rate right now. So that's why it's U.S. treasuries.
Mr. Cleaver. Okay. So if we are able to get some kind of
sizeable community development block grant, it would go to the
authority?
Mr. Baker. It's my position at this time. I have suggested
and I think the chairman of the authority has indicated he
would like to see that.
The community development block grant piece is not
technically a part of the bill. I delivered a copy of it to Mr.
Frank today, and I have asked for his consideration to make it
part of H.R. 4100. If we did, then I would propose to have it
sent to and be received by the authority for their use.
Mr. Cleaver. Yes, because with CDBG dollars, there are
certain requirements.
Mr. Baker. Yes. And in lieu of going to the Governor, as is
the usual practice, with the Governor's understanding I am
told, it would go to the recovery authority in this case for
this purpose.
Mr. Cleaver. Well, no. The community development block
grants from HUD will go directly--I mean, they go directly to
the cities. They don't go to the Governor unless they are
second class cities. The smaller cities make applications on a
competitive basis with the State.
But New Orleans and Baton Rouge, the money comes directly
into them.
Mr. Baker. In this case, because we're talking about a
significant rural component beyond Orleans--and this, really,
the CDBG program that is contemplated, is even beyond
Louisiana. It's the whole Gulf Coast.
So in the Louisiana case, all funds would go to the
recovery authority. In other States, the regular order would
apply. So only in Louisiana would we follow this procedure to
coordinate the recovery authority's ability to redevelop.
That's the reason in Louisiana.
Mr. Cleaver. Good.
Mr. Baker. So whether it's a small community or a big
community, it would go--at least under current discussion; and
this is all open to the gentleman at the witness table to
advise us--but as contemplated at the moment, it would go to
the recovery authority, to have a consolidated recovery plan.
Mr. Cleaver. Okay. So we will have to suspend some of the
CDBG requirements.
Mr. Baker. Yes, that's correct.
Mr. Cleaver. One of them is, you know, the--we would
probably have to suspend--which creates trouble, which means
that there is an annual--as you know, Councilman--you have to
have annual hearings on the community development block grant.
And in some cases, those hearings are held in various parts of
the community and--which I'm assuming won't take place, which
goes back to the whole issue of the appointment of the
authority.
I don't want to take a lot of time. I have a lot to say and
a lot of questions to ask. I am extremely concerned--I mean, we
voted on--we had a bill before us yesterday, and it was voted
on yesterday, that the problem is we have entered a situation
where we have a concert and then we try to tune up the
instruments. And I'm not a good musician, but I mean, basics
would be tune up the instruments and then have the concert,
which--we did it just the opposite here.
The Member of Congress representing New Orleans has not
signed off on this legislation. As a former mayor, in our city
we practiced what was called legislative courtesy.
In other words, if we were entertaining something for a
particular council district and that council district
representative was not on board, the chance of that being
approved were almost non-existent, even if some of us felt
strongly about it. We were not going to push something in
someone else's district that they did not want, or move things
around, or appropriate dollars. It's a process that is
practiced probably in most cities--I would imagine New Orleans
has the same kind of operation.
And Congressman William Jefferson, I spoke with him maybe
an hour-and-a-half ago, said that he had not signed off on this
legislation. And I am just one person, but it's going to be
extremely difficult, or monumentally difficult, for me to
support this without him supporting it. And I would try to
discourage others from voting for it unless, of course,
Congressman Watt advised me otherwise.
Because, I mean, I think that the interest in what goes on
is high. And I don't think that we should put legislation in
place without, you know, having dug deeply into all of its
components.
And I do believe that the Watt amendment had some
components that are not in H.R. 4100.
If I could ask you a question--this sounds off the track,
but do any of you have any idea what the African American
population is of San Francisco?
[No response.]
Mr. Cleaver. I checked just before I left. I was right.
It's three percent. Three percent. That used to be
significantly higher. But poor folk can't live in San Francisco
and so the population for African Americans, being the lowest
of the income groups in San Francisco, it is gone.
And one of my fears about New Orleans is that I don't see
anything in any of the legislation or anything that I have
heard or read to this point that moves against the possibility
of gentrification. I mean, there ought to be a gentrification
barrier. There ought to be something in place that would halt
gentrification.
And if the rumors are true, which is that people are coming
and buying huge tracts of land, I fear that one of these days I
will be able to refer back to this day and say that I cautioned
the leaders about the possibility of gentrification occurring
in New Orleans. And it troubles me deeply.
Mr. Baker. Would the gentleman yield, just on one point?
Mr. Cleaver. Yes, sir.
Mr. Baker. I appreciate your courtesy. I just want to point
out that the affected area for the implementation of H.R. 4100
is, in fact, broader than Congressman Jefferson's district. It
does include Congressman Melancon's district, and he has signed
on.
And I am in discussions with Mr. Jefferson, have been. He
has indicated--he has enumerated about five issues which he has
brought to our attention, and we are trying to work resolution
on that matter, with sensitivity to your point.
I only ask, in return, that if the Louisiana community
comes together, we continue to observe that rule. Thank you.
Mr. Cleaver. Let me just conclude. We have a bill that I
happen to feel strongly about, which is the CBC Watt amendment
and then, of course, H.R. 4100, which has some significantly
good and proper components.
And I found that there are two sides to every question, as
long as I am not personally concerned with it. And so, to me,
even though there may be two pieces of legislation, I am
concerned with the issue and with the legislation. And so, I
appreciate the opportunity, Mr. Chairman, for the work that you
have done. I don't discount that, and I don't, you know, throw
arrows at it. But for me, Congressman Jefferson has to say, you
know, ``This is something good.''
I just think that it would be--I would not want him to come
into Kansas City, Missouri--or anybody--and vote to do
something that I am not supportive of.
Mr. Baker. And I certainly share the gentleman's sentiment,
and that's exactly my appeal, that if we, as Louisianans, can
come together with something that is publicly defensible and
meets reasonable standards, then we would hope the Congress
would look on it as an acceptable path.
And I think members from the Orleans area have some
decisions to make, and it will be clearly difficult, I'm sure.
But we are going to all look to them to do what's necessary in
this case. And I appreciate the gentleman's comment.
Is there any further comment by any member at this time?
[No response.]
Mr. Baker. If not, I know that votes are imminent, and we
have detained our guests beyond the agreed-upon hour. Let me
express to each of you our deep appreciation for making the
effort to come forward, express your views, and we would
welcome any comment you choose to make about any pending matter
before the Congress relative to the resolution of the Katrina
difficulties.
Mr. Watt. Mr. Chairman?
Mr. Baker. Yes, Mr. Watt?
Mr. Watt. I just want to reiterate an earlier question
because I did specifically ask each of the witnesses to review
the other bill, which number I keep forgetting--4197--and to
let us have their written comments about it. That would be very
helpful.
Mr. Baker. Yes, that clearly is on the record, and there,
I'm sure, will be other questions from members who,
unfortunately, had to leave the hearing before being
recognized.
But again, our deep appreciation for your courtesy and your
comments here today. Our meeting stands adjourned.
[Whereupon, at 1:31 p.m., the committee was adjourned.]
A P P E N D I X
November 17, 2005
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