[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
                    FAIR HOUSING ISSUES IN THE GULF
                       COAST IN THE AFTERMATH OF
                      HURRICANES KATRINA AND RITA
=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 28, 2006

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 109-74



                    U.S. GOVERNMENT PRINTING OFFICE
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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
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             MELVIN L. WATT, North Carolina
ROBERT W. NEY, Ohio                  GARY L. ACKERMAN, New York
SUE W. KELLY, New York, Vice Chair   DARLENE HOOLEY, Oregon
RON PAUL, Texas                      JULIA CARSON, Indiana
PAUL E. GILLMOR, Ohio                BRAD SHERMAN, California
JIM RYUN, Kansas                     GREGORY W. MEEKS, New York
STEVEN C. LaTOURETTE, Ohio           BARBARA LEE, California
DONALD A. MANZULLO, Illinois         DENNIS MOORE, Kansas
WALTER B. JONES, Jr., North          MICHAEL E. CAPUANO, Massachusetts
    Carolina                         HAROLD E. FORD, Jr., Tennessee
JUDY BIGGERT, Illinois               RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut       JOSEPH CROWLEY, New York
VITO FOSSELLA, New York              WM. LACY CLAY, Missouri
GARY G. MILLER, California           STEVE ISRAEL, New York
PATRICK J. TIBERI, Ohio              CAROLYN McCARTHY, New York
MARK R. KENNEDY, Minnesota           JOE BACA, California
TOM FEENEY, Florida                  JIM MATHESON, Utah
JEB HENSARLING, Texas                STEPHEN F. LYNCH, Massachusetts
SCOTT GARRETT, New Jersey            BRAD MILLER, North Carolina
GINNY BROWN-WAITE, Florida           DAVID SCOTT, Georgia
J. GRESHAM BARRETT, South Carolina   ARTUR DAVIS, Alabama
KATHERINE HARRIS, Florida            AL GREEN, Texas
RICK RENZI, Arizona                  EMANUEL CLEAVER, Missouri
JIM GERLACH, Pennsylvania            MELISSA L. BEAN, Illinois
STEVAN PEARCE, New Mexico            DEBBIE WASSERMAN SCHULTZ, Florida
RANDY NEUGEBAUER, Texas              GWEN MOORE, Wisconsin,
TOM PRICE, Georgia                    
MICHAEL G. FITZPATRICK,              BERNARD SANDERS, Vermont
    Pennsylvania
GEOFF DAVIS, Kentucky
PATRICK T. McHENRY, North Carolina
CAMPBELL, JOHN, California

                 Robert U. Foster, III, Staff Director
           Subcommittee on Housing and Community Opportunity

                     ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice     MAXINE WATERS, California
    Chairman                         NYDIA M. VELAZQUEZ, New York
RICHARD H. BAKER, Louisiana          JULIA CARSON, Indiana
WALTER B. JONES, Jr., North          BARBARA LEE, California
    Carolina                         MICHAEL E. CAPUANO, Massachusetts
CHRISTOPHER SHAYS, Connecticut       BERNARD SANDERS, Vermont
PATRICK J. TIBERI, Ohio              STEPHEN F. LYNCH, Massachusetts
GINNY BROWN-WAITE, Florida           BRAD MILLER, North Carolina
KATHERINE HARRIS, Florida            DAVID SCOTT, Georgia
RICK RENZI, Arizona                  ARTUR DAVIS, Alabama
STEVAN, PEARCE, New Mexico           EMANUEL CLEAVER, Missouri
RANDY NEUGEBAUER, Texas              AL GREEN, Texas
MICHAEL G. FITZPATRICK,              BARNEY FRANK, Massachusetts
    Pennsylvania
GEOFF DAVIS, Kentucky
CAMPBELL, JOHN, California
MICHAEL G. OXLEY, Ohio


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    February 28, 2006............................................     1
Appendix:
    February 28, 2006............................................    45

                               WITNESSES
                       Tuesday, February 28, 2006

Johnson, Derrick, President, Mississippi State Conference, NAACP, 
  Jackson, MS....................................................    19
Kendrick, Honorable Kim, Assistant Secretary for Fair Housing and 
  Equal Opportunity, U.S. Department of Housing and Urban 
  Development....................................................     6
Murguia, Janet, President and CEO, National Council of La Raza...    22
Perry, James, Executive Director, Greater New Orleans Fair 
  Housing Action Center, Baton Rouge, LA.........................    24
Rich, Joseph D., Project Director of the Housing and Community 
  Development Project, Lawyers' Committee for Civil Rights Under 
  Law............................................................    26
Smith, Shanna L., President and CEO, National Fair Housing 
  Alliance.......................................................    28

                                APPENDIX

Prepared statements:
    Oxley, Hon. Michael G........................................    46
    Ney, Hon. Robert.............................................    47
    Johnson, Derrick.............................................    48
    Kendrick, Hon. Kim...........................................    54
    Murguia, Janet...............................................    59
    Perry, James.................................................    66
    Rich, Joseph D...............................................   101
    Smith, Shanna L..............................................   113

              Additional Material Submitted for the Record

    Statement of the National Fair Housing Alliance..............   123


                       FAIR HOUSING ISSUES IN THE
                      GULF COAST IN THE AFTERMATH
                     OF HURRICANES KATRINA AND RITA
                              ----------                              


                       Tuesday, February 28, 2006

             U.S. House of Representatives,
                        Subcommittee on Housing and
                             Community Opportunity,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 11:00 a.m., in 
room 2128, Rayburn House Office Building, Hon. Robert W. Ney 
[chairman of the subcommittee] presiding.
    Present: Representatives Ney, Pearce, Campbell, Waters, 
Lee, Green, and Frank.
    Chairman Ney. The Housing Subcommittee meets this morning 
to discuss recent fair housing issues in the Gulf Coast related 
to Hurricanes Katrina and Rita. The events surrounding the late 
August and early September hurricanes in Louisiana, 
Mississippi, and Texas have certainly captured the attention of 
the American people, including this committee. Our subcommittee 
was the first committee of the House to go to New Orleans. We 
went in January, and then after that the Katrina Subcommittee 
went.
    I just got a notice that the Speaker of the House, Mr. 
Hastert, and the Minority Leader, Nancy Pelosi, are both going 
down on March 2nd; I believe it is for 2 days. We had written 
them a letter--I know Chairman Oxley also did--encouraging both 
of them to get together and go down to the Gulf; and they are 
going to do that, as I understand it, for 2 days this week, 
which I think is good.
    The Housing Subcommittee and Financial Services Committee 
have been at the forefront of the hurricane relief effort with 
numerous hearings and multiple briefings with approximately 80 
witnesses participating. Again, in mid-January, this Housing 
Subcommittee held the first post-hurricane congressional 
hearings in Louisiana and Mississippi, reviewing the housing 
issues that the Federal Government will need to consider in the 
next few years.
    I also note that when we had those hearings the members' 
participation was unbelievable--I think 5 hours in 1 day, 6 
hours the next day--and they gave full time and attention. I am 
very proud of the members of this committee for doing that 
because it is an extremely important issue to the many people 
whose lives have been horrifically disrupted down in the Gulf.
    In addition, this committee has shepherded needed relief 
legislation to the House Floor in the recent months following 
the disaster that will affect not only families in the 
immediate hurricane-ravaged areas but those families forced to 
suffer the aftermath due to flooding. As the thousands of 
hurricane evacuees in the Gulf Coast begin the process of 
looking for permanent housing, the Federal Government must do 
everything in its power to protect the rights of households to 
obtain the housing of their choice.
    The January 13th and 14th field experiences in the Gulf 
underscored some experiences and practices that could violate 
the Fair Housing Act. I look forward to working with HUD and 
other relevant enforcement agencies to ensure that these 
families have equal access to the housing opportunities that 
they need to rebuild their lives.
    It is my hope that today's hearing will give the members of 
this subcommittee a unique perspective on fair housing issues 
and on what steps HUD and individual groups can take to ensure 
that the relocation of these evacuees is fair and also legal.
    Fair housing and enforcement work best when people know 
their rights. To the extent that this committee can highlight 
patterns and practices that impede fairness and equal access to 
housing, government, private, and nonprivate sectors will be 
encouraged to adequately inform, monitor, and correct 
violations and to enforce the current law.
    Again, I want to thank our ranking member, Maxine Waters of 
California, for her participation down in the Gulf, also, Mr. 
Frank, our ranking member for the committee and Chairman Oxley. 
I also would like to welcome a new member, too, today, Mr. 
Campbell of California to the committee.
    With that, I will refer to the gentlelady from California.
    Ms. Lee. Thank you very much, Mr. Chairman.
    Mr. Chairman, let me thank you and our ranking member for 
organizing this very important hearing on fair housing and also 
for your leadership and Congresswoman Waters' leadership in 
leading the first congressional field hearing in the Gulf Coast 
after the hurricanes. That was such an important 2 days, Mr. 
Chairman. I think we learned quite a bit, and I believe this 
hearing is an important step in the correct direction.
    During the field hearings in New Orleans and Gulfport, we 
were really all quite outraged to hear stories of blatant 
discrimination in housing in the aftermath of Hurricane 
Katrina. So I am pleased again that, under your leadership, we 
are seeking to investigate these Fair Housing Act violations as 
many of us, including myself, have requested.
    Housing, quite frankly, should be a basic human right. Any 
kind of discrimination that denies or hinders someone's ability 
to access that right is just plain wrong, and it should be 
prosecuted under the law.
    While we are here primarily to discuss discrimination in 
the provision of housing, we cannot ignore the ongoing 
discrimination in the financing of housing or the provision of 
brokerage services that also falls under the fair housing 
statute. We also cannot ignore the need for more funding to 
investigate cases of discrimination and to enforce the Fair 
Housing Act.
    Let's be for real. Over 300,000 homes were damaged or 
destroyed by Hurricane Katrina and over a million people were 
displaced. We have a huge housing shortfall right now in the 
Gulf Coast. We have numerous reports and we heard this during 
the hearing of price gouging and illegal evictions taking 
place.
    We need more money not only to house people but to ensure 
that they are not discriminated against, and I believe in the 
Baker bill and also in our Congressional Black Caucus bill we 
adopted an amendment which I wrote, and that would be to 
increase the number of housing discrimination advocates and 
complaint officers and to hire people who are from the region 
to really work with HUD's regional offices to enforce fair 
housing laws.
    That amendment, unfortunately, is stuck now. Increase in 
funding for fair housing compliance has not been moved forward. 
So I hope that we can figure out how, in a bipartisan way, to 
move some of these fair housing laws forward.
    On top of all of that, we have a GAO report from last 
October that documents many glaring problems with HUD's 
response and investigation of fair housing complaints.
    Despite these problems, the Administration has proposed a 
fair housing budget of just $45 million for fiscal year 2007. 
That is $1 million less than last year--$1 million less. That 
is just totally inadequate; and it shows once again, quite 
frankly, that this Administration is really out of touch.
    So, Mr. Chairman, I hope we can work together to strengthen 
the fair housing program, to encourage HUD to adopt the GAO 
recommendations, to provide a substantial increase in funding 
for testing and the enforcement of the Fair Housing Act, and to 
employ folks who have been traumatized and displaced by 
Hurricane Katrina to be our fair housing applicants and 
compliance officers so that they, too, can not only benefit 
from the employment opportunities that resulted from this 
disaster, but also make sure that housing discrimination does 
not exist in the Gulf region.
    So thank you again for holding this hearing, and I look 
forward to the testimony of our witnesses.
    Chairman Ney. Thank you.
    Mr. Frank.
    Mr. Frank. Thank you, Mr. Chairman, and I very much 
appreciate your holding this hearing.
    People were horrified by what they saw during the height of 
the Katrina disaster. I don't think I can remember such a sense 
of outrage and frustration on the part of many Americans to see 
their fellow citizens marooned in such terrible circumstances, 
in the middle of the United States. People didn't think that 
with our technology, you could have people in a major American 
city worse off than the survivors of a boat crash on Gilligan's 
Island, equally out of reach of any help. But there was at 
least the hope that this would be temporary and that, as time 
went on, we would alleviate the situation. Sadly, that has not 
been the case nearly as much as it should be.
    We have a situation where those victims of Katrina, in very 
large numbers, have been revictimized by the policies and the 
absence of policies of this government. And I want to repeat 
what I said. That was, I understand, provocative and it was 
meant to be, because we need to call attention to this. I am, 
in fact, troubled that there are so few of us here today 
hearing this situation.
    To date, the policy of the United States Government with 
regard to New Orleans appears to me to be a policy of ethnic 
cleansing by inaction.
    Now I am not talking about genocide. I am not talking about 
people being killed. I am talking about a population being 
displaced and replaced by a population of a different 
ethnicity, and that is what we face in New Orleans if we 
continue the current course. If we fail to put a good deal more 
than we have into reconstructing housing for the people of New 
Orleans, similar to what there was before in its economic 
structure--yes, we want it to be physically improved. We want 
it to be more resistant to floods. We want it not to be in 
areas that are particularly vulnerable. But it is certainly 
within our capacity as a country to make sure that New Orleans 
does not become--let's be very clear--a richer, whiter city as 
a result of a natural disaster. But I am afraid we are on the 
way to that.
    Part of that goes beyond the scope of this hearing, because 
we are talking about providing the revenues that are necessary 
to replace housing, public housing and other forms of rental 
housing as well as home ownership.
    But a large number of the people who will be hopefully put 
back into place in New Orleans will be people of color who will 
face various forms of discrimination. Now one form of 
discrimination is simply not having the housing available in 
the appropriate income stature, but there are also dangers that 
people will be denied the housing.
    We know that when it comes to the rental of housing or 
mortgages or all of these things that there is a racial 
element. We have diminished it, I believe; and I am proud of 
our collective efforts. But it is still there. So it is very 
important that we be able to deal with this; and I share the 
distress of my colleague from California that the President has 
proposed a 2 percent cut in the budget for fair housing, $44 
million for housing for the United States, less than $1 million 
per State.
    How can anyone who understands where we are in terms of 
race relations in the United States today think that that is 
remotely close to--it is not close to inadequate. Adequate is 
way off on another planet. It falls enormously short of 
inadequate. It is scandalous. Less than $1 million per State, 
when there is, in fact, an increased need in New Orleans.
    Again, I think we have made progress, but there is still 
discrimination. And the people who doubt this--and I will close 
with this, Mr. Chairman, because I will pursue this later--we 
have the evidence on the Internet. We have documented 
widespread--and I will introduce this into the record; some of 
it has come from some of the witnesses--widespread 
advertisements on the Internet from people seeking to house 
people who have been displaced from New Orleans, explicitly 
racist, except what they say, as I read them, is, ``I am not a 
racist, but whites only''.
    Well, I want to see what a racist says. If a nonracist says 
``whites only'', I guess a nonracist--I want to see what that 
becomes--or racist. But we have explicit evidence that racism, 
unfortunately--I think it is diminished in this country--still 
prevails. So we have a great deal to do both with regards to 
New Orleans specifically and the country in general, and I 
appreciate you calling this hearing.
    Chairman Ney. Thank you.
    The distinguished gentleman from Texas, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    I would also like to thank the ranking member, Maxine 
Waters, who has done a stellar job in helping us, along with 
you, with much of the issues, many of the issues that we are 
confronting.
    I would like to thank my ranking member on Financial 
Services, Ranking Member Frank, for being as attentive as he 
has been and being here with us today, as well as all of the 
other members who are in attendance today. I am grateful that 
they are here.
    Mr. Chairman, I, too, marvel at some of the things that 
have happened. I have had the good fortune, or misfortune, I am 
not sure which, to say that I was born in Louisiana, in New 
Orleans; and Charity Hospital was my place of birth. And I am 
certainly wanting to see the hospitals and the rest of the 
infrastructure in New Orleans reestablished. I would like to 
see the schools and the institutions of higher education 
receive the proper attention that they should receive.
    But this hearing today is about housing.
    And I want to thank you, Mr. Chairman, for the field 
hearings that we had in Louisiana and in Mississippi. I think 
those were most appropriate, and they give us some meaningful 
insight into some of the greater concerns that are being dealt 
with.
    One of the concerns, of course, deals with trailers. Here 
we are in the richest country in the world. We constructed the 
Golden Gate Bridge; we constructed Hoover Dam; we have put 
people on the Moon; but we can't put a trailer on a lot. That 
is quite disturbing.
    Thousands of trailers are literally wasting away in a field 
while people are in need of housing. That really is appalling.
    We also are concerned about the levees, because levees not 
only impact housing but also business. And to rebuild the 
levees to a level less than a Category 5, I think would create 
concerns in the minds of businesspeople who want to relocate to 
Louisiana and bring major opportunities, jobs, to Louisiana. 
And to be quite candid, I would not want another hurricane to 
come through and devastate that area with levees that have been 
reconstructed to less than Category 5. I would not want to see 
that happen on my watch. I think I have a duty to do all that I 
can on my watch to make sure that we establish the best levee 
system that our technology can provide us with.
    We spend enormous amounts of money in other places outside 
of the borders of the United States. And I am not demeaning 
those efforts. I do contend, however, that we can spend what it 
takes to secure the City of New Orleans and to restore the Gulf 
Coast area.
    I think we did the right thing when we helped the 9/11 
victims. That was the right thing to do. I think we did the 
right thing when we bailed out the S&L's. I think it is time 
for us to do the right thing by the people of New Orleans and 
the Gulf Coast. They deserve what we have done for others.
    And I thank you very much for the time, Mr. Chairman.
    Chairman Ney. I want to thank the gentleman.
    I want to start with Panel I, Kim Kendrick. Kim has served 
as the Assistant Secretary for Fair Housing and Equal 
Opportunity at HUD for the past year-and-a-half. Before joining 
the Bush Administration, Ms. Kendrick was the General Counsel 
for Covenant House Washington, an international non-profit 
organization committed to helping at-risk youth. From 1998 to 
2002, she served as regional administrator for the District of 
Columbia Housing Authority.
    I think this is your first time to testify as Assistant 
Secretary today. Welcome, and we will begin with you. Thank 
you.

 STATEMENT OF THE HONORABLE KIM KENDRICK, ASSISTANT SECRETARY 
  FOR FAIR HOUSING AND EQUAL OPPORTUNITY, U.S. DEPARTMENT OF 
                 HOUSING AND URBAN DEVELOPMENT

    Ms. Kendrick. Thank you. Good morning.
    Chairman Ney, Ranking Member Waters, and members of this 
committee, I appreciate this opportunity to share with you how 
HUD has been helping to secure the fair housing rights of 
displaced Gulf Coast residents as they seek new housing.
    My name is Kim Kendrick, and for the last 4 months and 2 
weeks, I have served as Assistant Secretary for Fair Housing 
and Equal Opportunity at the U.S. Department of Housing and 
Urban Development. I oversee the Federal Government office with 
the primary responsibility for enforcing fair housing laws of 
the United States--most notably the Fair Housing Act, which 
prohibits discrimination in housing and housing-related 
transactions on the basis of race, color, national origin, 
religion, sex, disability, or against families with children.
    Two days before Hurricane Katrina reached landfall, HUD 
Secretary Alphonso Jackson assembled a team who would be ready 
to respond to housing needs that he anticipated would arise in 
the aftermath of the hurricane. That team, called the HUD 
Recovery and Response Team, drew on employees from all HUD 
program offices, including HUD's Office of Fair Housing and 
Equal Opportunity, or as we call it, HUD FHEO.
    While HUD typically is not a first responder in the event 
of national emergencies or natural disasters, Secretary 
Jackson's response to Katrina was immediate. HUD staff was on 
the ground in Louisiana within days to assist with the housing 
relocation effort.
    Like other HUD offices, FHEO immediately dispatched staff 
to Baton Rouge to work with the Federal Emergency Management 
Agency in the disaster recovery centers. FHEO has maintained a 
staff presence of three to five persons in Baton Rouge since 
September.
    FHEO has also increased its presence in Mississippi. And 
FHEO's Houston office has been actively involved in education, 
outreach, and enforcement activities in and around Houston, 
Texas, where the greatest number of hurricane evacuees have 
relocated.
    The role of FHEO post-Hurricanes Katrina and Rita, is to 
make sure that people know their rights, to actively enforce 
the law when we learn about violations, and to work with the 
housing industry to prevent such discrimination in the first 
place.
    From the start, most of the complaints that HUD received 
from the Gulf Coast region alleged discrimination against 
African Americans as they sought new housing. In general, the 
staff onsite in Louisiana, Mississippi, and Texas have been 
able to address reports of discrimination immediately and 
directly.
    Staff provides onsite assistance on disability 
accessibility issues or advises landlords that they cannot 
discriminate against families with children. By providing the 
on-the-spot education to landlords and mobile home park owners, 
FHEO staff has been able to prevent some discrimination from 
occurring.
    HUD recognizes, however, that many individuals seeking 
housing, and many landlords providing it, might not know their 
rights and responsibilities under the Fair Housing Act. So in 
the first month after the hurricane, HUD took out 
advertisements in local papers in the Gulf Coast advising 
people of their fair housing rights and Fair Housing Act's 
prohibitions against discrimination and how to report such 
discrimination.
    HUD staff also distributed fair housing posters and flyers 
at the disaster recovery centers and shelters and among other 
organizations throughout the Gulf Coast. HUD staff and other 
fair housing partners in the Gulf Coast also appeared on radio 
and television programs to provide information on fair housing.
    Also, on October 25th, in my third week as Assistant 
Secretary, I sent out an open letter to the housing industry 
advising them that it is against the law to discriminate in 
housing-related transactions on any basis that is prohibited 
under the Fair Housing Act.
    To date, HUD has received thousands of telephone calls, and 
it has received 100 actual complaints of discrimination from 
displaced Gulf Coast residents. HUD has been investigating 
those complaints and obtaining relief for individuals where 
parties could arrive at some mutually satisfactory resolution.
    HUD is currently investigating a number of complaints, 
including one filed by the greater New Orleans Fair Housing 
Action Center, which alleges discriminatory advertising on 
Katrina-related Web sites.
    HUD has found that while the Internet is a valuable 
resource, helping hurricane evacuees finding housing, obtaining 
supplies, and locating loved ones, it can also cause harm. The 
Fair Housing Act makes it unlawful to publish discriminatory 
statements in connection with the sale or rental of housing. 
HUD takes all allegations of discriminatory advertising 
seriously, particularly when the language inflicts harm on 
people who have already gone through so much.
    While a number of Web sites have begun to purge their sites 
of these discriminatory ads and have posted public information 
notices about the obligation of all advertisers to comply with 
the Fair Housing Act, we are continuing to investigate 
complaints against certain Web site providers.
    Also, HUD continues to educate the general public about its 
fair housing rights. Last month, on January 19th, I joined HUD 
Secretary Alphonso Jackson and Congressman Green in Houston as 
we announced the launch of a nationwide public service 
announcement campaign to inform displaced hurricane survivors 
of their fair housing rights. Working with the Ad Council, HUD 
produced compelling television, radio, and newspaper ads that 
informed the public that the storm isn't over for those 
hurricane evacuees who are facing discrimination as they search 
for new housing.
    In the months immediately following the hurricanes, the 
first priority for many evacuees was having a roof over their 
heads and food to eat. We expect that when people see our 
public service announcements and reflect on the obstacles they 
experience in their housing search, we will likely see a rise 
in those complaints. Moreover, we expect we will see additional 
complaints as people leave the FEMA hotel reimbursement program 
and begin their housing search.
    However, rest assured that HUD is not waiting for people to 
file complaints before taking action against discrimination. 
Where no one has stepped up, stepped forward to file a 
complaint, we have used our statutory authority to initiate 
investigations based on reports of discrimination that we have 
received. Specifically, HUD is investigating Louisiana parishes 
that have either refused to site FEMA trailers or have imposed 
significant restrictions on the placement of such trailers. 
Legitimate reasons may exist for some of these parishes' 
policies, but some allege that the parishes' objections are 
motivated by the fear that African Americans will move into 
these communities. HUD is looking into these allegations.
    A significant part of our Gulf Coast efforts has been to 
advise FEMA on disability accessibility issues as it creates 
mobile home communities to temporarily house the people 
displaced by the hurricanes. HUD provided FEMA with a design 
for accessible mobile homes and provided guidelines to FEMA on 
how on make mobile home parks more accessible. HUD has also 
detailed a staff person to FEMA's long-term recovery efforts to 
advise on disability rights issues, promote the hiring and 
training of low-income persons on certain HUD-assisted projects 
and to advise on fair housing issues in general.
    We have also directed more of our accessibility education 
efforts to the Gulf Coast, to make sure that developers, as 
they rebuild, make sure properties are accessible to persons 
with disabilities.
    I thank the committee for the opportunity to testify on 
HUD's post-hurricane fair housing efforts. I ask that my 
written statement be made part of the record. I am now 
available to answer questions.
    Chairman Ney. Without objection, it is made part of the 
record. Thank you for your testimony here today.
    [The prepared statement of Ms. Kendrick can be found on 
page 54 of the appendix.]
    Chairman Ney. I want to ask you, the termination of FEMA's 
hotel reimbursement program, now we don't know when this will 
be because the dates changed. It was going to be somewhere 
right after our hearing. And we went down and had our hearing, 
and it was changed. There is a judge involved. So I am not 
sure. But that is FEMA's call that they were making on that.
    Well, let's assume that does happen, that there is a 
situation where, for whatever reason, the hotel rooms are 
stopped. Are you prepared for what I think would be a huge 
influx of complaints and how would FHEO handle that 
discrimination and where would people go?
    Ms. Kendrick. Thank you.
    Yes, we are prepared to handle it. As you might know, 70 
percent of the complaints that come into HUD are handled by our 
fair housing partners in our State and local agencies. The 
remainder are handled by HUD. So we expect that we have the 
staff available across the Nation through our network with our 
fair housing staff, the private organizations, and the public 
partners. We have the staff ready and available to help.
    Chairman Ney. On that issue of the hotels, when we went 
down to the Gulf, it wasn't an issue in Mississippi. We asked, 
does anybody want to talk about--really, it wasn't an issue. 
But it was a large issue in New Orleans. And, like I said, I 
hope it doesn't happen. It is just shut off. And we expressed 
that and I think the Federal Government has to get with the 
State and has to get with the city, frankly, because I think 
there are some problems inherent with the three different 
entities of how this thing is going.
    But I am saying if it does come about and we don't know how 
the judge will rule, what will happen, I just would say you 
probably will have a huge influx. If you have the staff 
prepared, I think it would be important.
    I want to ask you, because I saw some things in New Orleans 
that were presented to us as a result of using things like 
craigslist, and I saw blatant examples of discrimination on 
there that we don't want families of color to be here or we 
don't want Catholics or we don't want Protestants or whatever, 
you name it. There were a lot of statements made on that list, 
where people could live or not. Have you seen the--with the 
advent of online classifieds like craigslist, have you seen 
more, the same, or less discrimination complaints?
    Ms. Kendrick. We have seen--we had some Internet complaints 
before the hurricanes hit, and we have been investigating those 
complaints. We have seen--we have received probably 15 
complaints now involving the Internet. So that is more than we 
had in 2004. So 2005, 2006 we are seeing more complaints being 
filed, yes, sir.
    Chairman Ney. How do you act? Do you act on the Internet 
complaints any different or is there a different procedure from 
how you would act on nonelectronic-involved complaints?
    Ms. Kendrick. No, we are handling the complaints the same 
way. The thing that we have done that is different, because 
this is brand new for us, what we have done is we put together 
a task force within FHEO to deal with these complaints so we 
can have consistency across the country on how these complains 
are handled and how they are resolved.
    Chairman Ney. Last question I have is, maybe you could 
explain just in simple terms how complaints of housing 
discrimination are filed in the sense, of will a simple 
complaint without the individual actually filing it trigger an 
investigation? Does the individual have to file the complaint 
or can the mere suggestion allow the Department to look into 
things?
    Ms. Kendrick. An individual calling on our hotline can file 
a complaint that way. That individual can file a complaint.
    But, also, the Secretary has the authority to file 
Secretary-initiated complaints without a complainant once we 
hear that there is something--that some activities have 
occurred that might be in violation of the Fair Housing Act. We 
have used that Secretary-initiated complaint several times 
since Katrina has hit. We are investigating parishes in 
Louisiana. We are investigating the housing authority in 
Louisiana because we have heard of complaints. So we didn't 
have complainants, so we took our initiative and started 
investigating those cases.
    Chairman Ney. The gentlelady from California.
    Ms. Lee. Thank you, Mr. Chairman.
    Thank you very much for your testimony.
    Let me mention a couple of things. We have heard from a 
variety of organizations that--I don't know if it is by 
accident or design--but that, of course, African Americans are 
being grouped in certain locations and individuals with 
disabilities are also being grouped in certain locations. And I 
want to find out about FEMA and your coordination with FEMA and 
has FEMA had any training from HUD on how to effectively 
provide fair housing? I want to make sure that FEMA is working 
with you to ensure that evacuees are integrated into their 
communities instead of being segregated from them.
    So that is the first question I have with regard to FEMA 
and what you are doing to help them become more sensitive to 
our fair housing laws.
    Secondly, I just want to know what your staffing looks 
like. Do you hire Katrina survivors, and what do you think you 
need in terms of staffing?
    Finally, I just want to ask you about the National Fair 
Housing Alliance, which will be on the second panel. They, of 
course, conducted an initial investigation into racial 
discrimination in the rental market in the Gulf Coast; and they 
found that 66 percent of tests checking unit availability, 
rental rates, discounts, etc., that white callers--and I don't 
know how they determine who white callers are or African 
American callers--but there was a lot of discrimination. And I 
think that is just an astounding number. That is just one 
number.
    So I went to know what HUD is doing to help organizations 
like the National Fair Housing Alliance to conduct these fair 
housing tests and have you conducted any on your own?
    Ms. Kendrick. Thank you.
    I am going to address FEMA first. We have worked with FEMA 
since we got to the Gulf Coast right after the hurricanes, 
about 2 weeks after the hurricanes. We went down to Baton 
Rouge. We had HUD employees and specifically we had fair 
housing employees on the ground in Baton Rouge meeting daily 
with FEMA. Because of our daily meetings with FEMA, we did 
understand that they needed some training in areas of 
accessibility and disability issues and rights under the Fair 
Housing Act. They actually encouraged us to help them with our 
efforts.
    So we were able to talk to them about mobile homes and 
manufactured homes, how to make those mobile homes and 
manufactured homes accessible for persons with disabilities. 
They were accepting of that information. We were also able to 
work with them on their mobile home parks to make sure that 
they were accessible for persons with disabilities.
    One of the issues we did have in the beginning was making 
sure that they did not group certain people together because of 
disabilities. We helped them create mobile home parks that were 
accessible so that people could be integrated into the 
communities.
    So FEMA has been very receptive to our intervention into 
their area.
    Ms. Lee. So you believe that FEMA is sensitive to 
nondiscrimination and to our fair housing laws as they relate 
to the disabled community, and to African Americans and people 
of color? They get it?
    Ms. Kendrick. I think that they get it. Yes, ma'am.
    Ms. Lee. What about the training now in terms of the tests 
and funding the National Fair Housing Alliance, you know, which 
is a very important organization that is really helping you do 
a lot of what you all should be doing; and also let me know how 
many people you have out there.
    Ms. Kendrick. We work very closely with the National Fair 
Housing Alliance and their individual members. When we first 
heard about the hurricane, we found some extra money and we 
were able to get some extra dollars to some of the fair housing 
groups in the Gulf Coast area. So we had some extra fiscal year 
2005 money. It wasn't a lot of money. But we were able to get 
$500,000 down into the Gulf region to help with the 
organizations who were dealing with enforcement, dealing with 
testing issues. And we are investigating--NFHA did file some 
complaints with us, and we are investigating those complaints.
    On the staffing level, we have--our staffing level is about 
620 persons right now; and I can assure you that every one of 
us, every day, is involved with issues relating to Katrina.
    Ms. Lee. Wait a minute. Six hundred and twenty in the Gulf 
region? How many do you have in New Orleans and Gulfport?
    Ms. Kendrick. In New Orleans--we have persons in New 
Orleans. We have people in our New Orleans office. We have them 
in Baton Rouge. We have people in Houston. We have them in 
Dallas. We have people in Atlanta, in Mississippi and, frankly, 
across the country, because these complaints are coming in 
across the country. So it is not just those people who are in 
the Gulf region. We have spread out the work across the 
country.
    Ms. Lee. About how many people? What does that mean in 
terms of numbers?
    Ms. Kendrick. I probably could say on a daily basis we have 
30 people dedicated just to Katrina efforts.
    Ms. Lee. Do you need any more?
    Ms. Kendrick. As the President's fiscal year 20O7 budget 
states, I think our staffing levels are accurate.
    Ms. Lee. So you don't need any more.
    Ms. Kendrick. I think our staffing levels are accurate.
    Ms. Lee. Accurate or adequate.
    Ms. Kendrick. Adequate, yes, they are.
    Ms. Lee. Adequate.
    Finally, do you have any Katrina survivors who are working 
with you on the investigation and complaints and doing really a 
lot of this work, which again, as I mentioned earlier, the 
amendment to both of our bills, the CBC bill and the Baker 
bill, required?
    Ms. Kendrick. From the HUD perspective, we don't have 
Katrina survivors working with us specifically. But when we 
were in Baton Rouge, we worked with FEMA and some of their 
contractors to explain to them the section--our section 3 
program to encourage them to hire persons who were displaced by 
the hurricanes.
    We also were able to--the moneys that we provided to the 
fair housing groups, we were hoping that they would use some of 
that money to hire testers to go out and some of the evacuees 
would be testers. So wherever we can encourage people to hire 
persons who have been displaced we have done so.
    Ms. Lee. I don't think 30 people are really enough. You may 
think it is adequate, but given what we learned during our 
hearings, for the life of me, 30 people would just be able to 
scratch the surface on the whole notion of fair housing and 
making sure that people are not discriminated against.
    Ms. Kendrick. I don't want you to think just these 30 
people are dedicated, but everybody on our staff works on fair 
housing issues every day. Because, as I said, the complaints 
aren't just coming in in Louisiana.
    Ms. Lee. But you said nationwide it is 30.
    Ms. Kendrick. Nationwide every day those are the people in 
the Gulf region. Nationwide across the country we have our 600 
employees who are all dedicated to working on this effort.
    Chairman Ney. I thank the gentlelady.
    The gentleman from California, again, welcome to the 
committee on your first day.
    Mr. Campbell. Secretary Kendrick, if I am looking at your 
statement correctly, you have received 100 complaints about 
discrimination to date?
    Ms. Kendrick. Yes.
    Mr. Campbell. Given that hundreds of thousands of people 
were displaced in these disasters and given the allegations of 
widespread discrimination, 100 out of hundreds of thousands 
doesn't seem to jibe with the comments that have been made that 
this discrimination was very widespread. How do you reconcile 
those allegations with the fact that you have only received 100 
complaints?
    Ms. Kendrick. It is very obvious. I have spoken to a number 
of evacuees; and, frankly, they were interested in more 
immediate needs. They have the immediate need of temporary 
shelter, housing, finding their loved ones. But what we suspect 
is that once people get settled and they are moved out of the 
FEMA-sponsored hotels that we are probably going to get more 
complaints.
    Mr. Campbell. So you don't think this is indicative of the 
breadth of the issue at this point?
    Ms. Kendrick. I don't, and I am being very frank about 
that.
    Mr. Campbell. Thank you.
    Okay, that is all, Mr. Chairman.
    Chairman Ney. Thank you.
    The gentleman from Massachusetts, Mr. Frank.
    Mr. Frank. Thank you, Madam Secretary. I understand this is 
new to you, the question of the Internet; and it has been new 
to all of us.
    I think we have a serious dilemma here, and I appreciate 
the fact that you set up a task force. And I don't mean to have 
you try to anticipate the results, but if it turns out that 
provisions of other laws, the Communications Decency Act 
apparently most likely, immunize the Internet from the fair 
housing law, would you as a matter of policy be in favor of 
changing that, that is, given your commitment to enforcing fair 
housing laws?
    What if, as a result of our inquiry, we found that Congress 
inadvertently in my judgment but perhaps effectively anyway has 
said that the Internet is immune from the fair housing laws, is 
that a situation you would be satisfied with or should we try 
to change that?
    Ms. Kendrick. I certainly would not be satisfied with that. 
I frankly think that the Communications Decency Act does not 
immunize any of these Internet providers. I think that the Fair 
Housing Act is sufficient to enforce the fair housing laws in 
this Nation against these Internet providers who are 
discriminating.
    Mr. Frank. I am not by nature really contrary, so it is 
nice to be able to fully agree with an Administration witness 
on that point, and I very much appreciate your saying that. I 
would just say then, if--and I agree with you, and certainly 
that was not the intent. But if it should be held by the courts 
that it is the effect of what we did, then I hope we will be 
able to call on you for appropriate help in drafting 
legislation that would change that.
    I notice some of the people from craigslist said, well, we 
are not a newspaper and we shouldn't be treated exactly like a 
newspaper. I accept that. There may be some differences in how 
we apply the enforcement. But I want to definitely make sure it 
is enforced. So I thank you for that.
    Now as to fair housing in general, I am just asking--
because I appreciate your answer to the gentleman from 
California; he asked a reasonable question--in your view as the 
chief Federal official in this, by how much has housing 
discrimination in the United States decreased from last year to 
this year? How much less housing discrimination do we now have 
than we had a year ago?
    Ms. Kendrick. I can answer it this way, because I am not 
sure I can answer it the way you want. But the way I can answer 
it is that by the number of complaints that we have received, 
the number of complaints we have received from October 1st to 
date is about equal to the number we received at the same time 
last year.
    Mr. Frank. Then why are we cutting the budget?
    Ms. Kendrick. I am glad you asked that question.
    Mr. Frank. I am glad you are glad.
    Ms. Kendrick. Our budget, while you think it looks like a 
$1 million cut, it is a combination of cuts and increases in 
the fair housing budget.
    One of the things that--as Congresswoman Lee has stated, 
GAO audits has asked us to take a look at some of our issues; 
and one of the things we have done in fair housing is to create 
a Fair Housing Training Academy. By creating a training 
academy, we are able to consolidate some of our training budget 
and reduce some of our training budget so we can consolidate it 
all at the Fair Housing Training Academy. So we are able to 
reduce some of the budget because of that.
    Also, last year, we had a policy conference. Every year 
that is an odd year--or an even year--we have a policy 
conference. So we put money in the budget for the policy 
conference. This is--
    Mr. Frank. This is an even year.
    Ms. Kendrick. 2007 is the odd year. So we don't need money 
for the policy conference. So that is why it looks like the 
budget shifted.
    Mr. Frank. So you are telling us if we were to vote for the 
budget as submitted, what amount would be available for 
enforcement? More? Same? Less?
    Ms. Kendrick. It would be the same, sir.
    Mr. Frank. Same for enforcement. The cut--it still doesn't 
seem to be enough, and in particular we--I guess the other 
issue is contingency. And I am glad you mentioned you were able 
to find some money to help out in the Katrina situation, and 
you mentioned $500,000, is not obviously a lot of money in the 
context of something like that. Is there in your budget any 
kind of contingency funding should similar situations arise?
    Ms. Kendrick. No, there is not.
    Mr. Frank. I would think that is something we should look 
at, building on that experience. It could be a contingency that 
would not be spent if it didn't have to be spent, but give the 
fact that if you did find the need to go to, you had to go to 
that, the assistance of people last time, we ought to learn 
from that and build that in.
    While I appreciate your answers; and I look forward to 
getting the result.
    Let me just ask one question. I assume that at some point 
you would be willing to do an enforcement action against people 
who are blatantly racist on the Internet. Because, obviously, 
that would be the prerequisite for finding out what the courts 
considered to be the case. So you are telling us if you find a 
case which does violate the law, leaving aside the potential 
immunization, you would then bring an enforcement action that 
would then allow us to get this into court?
    Ms. Kendrick. Yes, sir. I have consulted with our General 
Counsel. Our General Counsel has assured me that we have the 
authority under the national Fair Housing Act to enforce 
against Internet providers who discriminate and against those 
persons who advertise on the Internet in a discriminatory 
manner. We have the authority to enforce under the national 
Fair Housing Act, and we will do so if we find discrimination.
    Mr. Frank. It shouldn't be too hard to find discrimination, 
and then we will see if we have to take any further action. 
Thank you.
    Chairman Ney. The gentleman from Texas, Mr. Green.
    Mr. Green. Mr. Chairman, I see that we have been joined by 
our ranking member, and I would gladly yield to her. Neophytes 
do learn protocol, Mr. Chairman.
    Thank you again, Mr. Chairman.
    I do want to, if I may, acknowledge the presence of an 
NAACP representative. The director of the Washington Bureau, 
Mr. Hillary Shelton, is here. And I know we have a NAACP 
representative who will be on the next panel. But I am honored 
that he has chosen to be here. As you know, the NAACP is our 
oldest civil rights organization, and we are hopeful that it 
will be acknowledged as such by the Congress at some point in 
the near future.
    If I may, I would like to thank you also, Ms. Kendrick, for 
not only being here today but for coming to Houston and 
announcing that you were going to be a part of this fight, if 
you will, to eliminate discrimination in housing.
    Secretary Jackson was there, and he made some very strong 
comments about his position on discrimination and the 
elimination of discrimination.
    I remember one question which took us beyond what we 
traditionally think of discrimination and it had to do with 
discrimination against just a Katrina victim, a person who may 
not be of African ancestry, a person who may not be bound by 
some disability, and how would just a person who is a Katrina 
victim be helped?
    And, apparently, it is not easy to help white people who 
are discriminated against, but we know that it happens. If you 
are white and if you are a Katrina survivor and you apply for 
housing and someone rejects you simply because you are a 
Katrina survivor and you happen to be white, it creates a 
concern. Have you had an opportunity to review that situation 
of just a victim who is not of an ethnic group, not religious 
discrimination, not based on some disability, not based on 
gender, but based upon the fact that someone just doesn't want 
a Katrina survivor living on their property?
    Ms. Kendrick. Under the Fair Housing Act, as you know, we 
have a group of protected classes. If you don't fall within the 
class, you are not protected by the Fair Housing Act.
    Notwithstanding, at FHEO, we take a look at all issues and 
try to work--investigate those issues and try to work with 
those persons. For example, just because you are a Caucasian 
doesn't mean you are not protected. We had a case in Georgia 
where the family notified us that their employer was not 
accepting Katrina evacuees, and we were able to take that as a 
complaint.
    So we try to work with everybody who comes forward because 
we know everybody needs help. Whether we take it as a fair 
housing complaint or just deal with it because we are HUD, we 
try to deal with it, sir.
    Mr. Green. What percentage of the people served and helped 
would you say are not of African ancestry because of some 
disability that is recognized, but they are not African 
Americans?
    The point I am trying to make is that a lot of these 
dollars will benefit people who are not of African origin. 
Sometimes we tend to think of fighting discrimination as a 
black and white issue and the black person being the sole 
beneficiary of the moneys that are allocated. But my suspicion 
is that we have a good number of persons who are not of African 
ancestry who benefit from these dollars, and maybe you have 
some anecdotal or empirical data to support my thesis.
    Ms. Kendrick. It is about 50 percent of the complaints we 
receive, about 50 percent are not African American.
    Mr. Green. Moving along to something else that happened 
last year, we were able to--with the help of Ranking Member 
Barney Frank, Ranking Member Maxine Waters, Congresswoman 
Barbara Lee, Congrssman Hastings of Florida, and Congressman 
Grijalva, we were able to add $7.7 million to fight 
discrimination in housing; and we received bipartisan support 
for that. And people want to--there is a core group of folks 
who seem to want to make sure that we are in a position to 
fight discrimination in housing. And I mentioned that because I 
think that same group of folks will want to do what they can 
this year to make sure that we have adequately funded this 
effort to fight discrimination in housing.
    If an effort is made to assist you, could you use a few 
more dollars in that budget if you had them? Not that you would 
solicit, but if you had them, would you find a meaningful way 
to use a few more dollars?
    Ms. Kendrick. If they magically appeared in our budget, we 
would use them.
    Mr. Green. Thank you. Sometimes we have the magic touch 
here in Congress.
    Let me just mention one more thing as I close. You are not 
the supervisors of HUD--pardon me of FEMA, is that correct?
    Ms. Kendrick. That is correct.
    Mr. Green. You don't supervise FEMA.
    Ms. Kendrick. No.
    Mr. Green. And I don't want you to grade FEMA. But, 
apparently, there are some things that FEMA should be doing, 
that they haven't done well, but I think that you sometimes get 
the blame.
    These trailers, for example, I think that is a FEMA 
responsibility, isn't it? Are you involved in helping to get 
those trailers located on lots in Louisiana and Mississippi?
    Ms. Kendrick. What we are doing is we are assisting FEMA in 
their efforts to get the mobile homes, manufactured housing 
placed in parishes in Louisiana.
    Mr. Green. And tell us what role you play in that, if you 
would, please.
    Ms. Kendrick. What we are doing is FEMA brought to our 
attention that they had some--maybe 50 parishes out of--only 8 
parishes out of 64 that were willing to have trailers situated 
in their communities as a group trailer facility, and they 
brought that to our attention. So what we are doing is we are 
investigating those parishes to make sure that any time they 
make a decision not to situate group trailers in their 
parishes, that the decision is not based on any type of 
discriminatory manner.
    Mr. Green. Finally, in your comments, you indicated there 
are people who literally don't want African Americans in their 
communities; and they are concerned that if you bring in the 
trailers that will bring in the African Americans. I want to 
compliment you on acknowledging that.
    One of the first things that we have to do, if we want to 
eliminate discrimination, is to admit that it exists; and I am 
pleased that you are publicly admitting and saying this.
    My suspicion is that you know well what discrimination is, 
and sometimes a visual inspection of a person can tell you a 
lot about a person. And as I visually inspect you, my suspicion 
is that you dealt with discrimination in your lifetime. But it 
is good for your agency to say that, that it exists and that 
you are fighting it and that there are people out there who 
don't want certain people to move into their neighborhoods. 
Because there are others who literally try to disavow the 
existence of any discrimination at all. Do you keep statistical 
information on these acts of discrimination and how they are 
resolved?
    Ms. Kendrick. Yes. The complaints that come into HUD--we 
keep a record of all the complaints that come in and how they 
are resolved.
    Mr. Green. You mentioned 100 complaints. For every 100 that 
you get, do you have a guesstimate as to how many are not filed 
and not reported?
    Ms. Kendrick. I don't have a guess on that, but certainly 
you can assume that there are some people who just don't want 
to file complaints.
    We have situations even in the Katrina incidents where we 
have tracked down people based on news accounts and wanted to 
help them; and they have said, no, I don't want to file a 
complaint. I just want to move on and find housing.
    We know it is out there. We know some people who are 
discriminated against don't want to file a complaint, but we 
still try to help those persons.
    Mr. Green. Well, thank you very much for your testimony; 
and I yield back the balance of my time. Thank you, Mr. 
Chairman.
    Chairman Ney. I thank the gentleman from Texas.
    We have been joined by our ranking member, the gentlelady 
from California. And, again, as at the beginning the hearing, 
we thank the gentlelady for her time and attention and 
perseverance on the first official committee hearing which we 
had in the Gulf of the Housing Subcommittee.
    Ms. Waters. Thank you very much, Mr. Chairman, and I thank 
you for holding the first official hearing in the Gulf region 
on the issues that confronted us relative to Katrina, the 
housing issues, of course, in particular. Not only did you go 
to New Orleans but to Gulfport, and we toured all the way down 
through Bay Saint Louis.
    But it was because of that hearing that we were able to 
really focus attention on what was happening with the trailers 
and what the problems were that the citizens were encountering 
in an attempt to get those trailers. So your follow-up today is 
absolutely commendable. Not only did you hold the first 
hearing, you are following up, and you have been very generous 
with all of the members of our panel in allowing us to pursue 
the issues in a way that I have never seen done before.
    I know that when we were in Mississippi you allotted me 
extraordinary time on the panel to pursue the trailer issue, 
and I want you to know that I really do appreciate that.
    To Ms. Kendrick who is here today--and let me apologize for 
being late. We were held up in an election over at the CBC 
meeting that had to take place this morning.
    To Ms. Kendrick who is here, I have been updated quickly 
about your testimony and the questions that has been raised of 
you. I think that this committee, the members here, have 
covered most of what we have been concerned about with what is 
going on in the Gulf region and in New Orleans, from my point 
of view in particular, and the discriminatory tactics that are 
being employed on the Internet and with the owners of rental 
property; and you have responded to that.
    As I understand it, not only are you--do you agree that 
there is a problem, you also have initiated that you have no 
problems in following up with the enforcement powers that you 
have in order to deal with this basically discrimination and, 
in some cases, racism and discrimination.
    So let me just say I have one little bit of an inquiry, and 
I don't even know if it is applicable to the supplemental CDBG 
funds that we authorized from this committee. Most of us 
believed, and I thought we had done that in such a way that 
those funds would be used for housing for low- and moderate-
income persons, for the most part. The supplemental, yes. 
However, I guess there are some questions about who controls 
the supplemental and how is it being used, those funds that we 
authorized.
    Are you aware of the CDBG funds, the Community Development 
Block Grant funds, and how they are being used and whether or 
not there is some attempt to use them for something other than 
what we authorized?
    Ms. Kendrick. I am aware that a $11.5 billion supplemental 
appropriation was provided for the Community Development Block 
Grant program. I also know that there was a notice published in 
the Federal Register that explains how those funds should be 
used, and I know that the Secretary wants to encourage that 
those funds be used for housing opportunities in the Gulf 
Coast.
    Ms. Waters. Are you aware that there are any attempts to 
use them for anything other than housing, for example? Are 
people using them to support other programs in addition to 
housing, because I am not aware, it has just been brought to my 
attention. Of course we are going to take a look at it, but I 
thought perhaps you might know something about some attempts to 
direct the funds in other social programs, etc.
    Ms. Kendrick. As you know, the way the program is set up, 
the Gulf region--those States in the Gulf region--will be 
submitting plans to HUD for review. We can't approve the plans, 
but the way the language in the appropriation was set up, we 
are supposed to take a look at the plans and help guide them in 
that direction. It is going to be the local, the States, that 
will be responsible for developing the plans and how they want 
to best use the money for their communities, but HUD does have 
a role in reviewing those plans.
    Ms. Waters. I think we did have some questions about 
whether or not the Governors of those States would be in 
control of those moneys or whether or not it would operate in 
the traditional manner, going into the cities, where the 
cities, basically through their city councils, have plans and 
ways by which they disseminate those funds. Are you aware of 
that discussion?
    Ms. Kendrick. I am aware, just reading the statute, reading 
the notice, the Federal Register notice, that the Governors 
have to submit plans for their States.
    Ms. Waters. If I may, Mr. Chairman, that is a little bit 
different than normal.
    Chairman Ney. The question is in regard to the--
    Ms. Waters. The CDBG funds. With our supplemental 
authorization did we also write something in that would allow 
the Governors to be able to direct these moneys in ways 
different than we normally do when those moneys go into the 
cities?
    Chairman Ney. I don't believe we did but I don't want any 
mistakes, so we will have to get a direct answer. I think the 
Governors have some discretion in it of what they can do, but 
we do need to get an answer. I am not completely positive.
    Ms. Waters. Thank you very much. I have no further 
questions. Thank you.
    Chairman Ney. With that, I want to thank you for your time 
today.
    Ms. Kendrick. Thank you.
    Chairman Ney. We will go on to the second panel. I want to 
welcome Panel II.
    First we have Mr. Derrick Johnson, the president of the 
NAACP Mississippi State Conference, who was also in Gulfport 
with us. So it is a pleasure to see you again. The NAACP is the 
Nation's oldest and largest civil rights organization. It has a 
half million members throughout the United States and the 
world, and advocates for, and monitors for, civil rights and 
equal opportunity.
    The next witness is Janet Murguia, the president of the 
National Council of La Raza, a nonpartisan, nonprofit 
organization headquartered in Washington, D.C., the largest 
national Hispanic civil rights and advocacy organization in the 
country. Welcome.
    Also, Mr. James Perry, the executive director of the 
Greater New Orleans Fair Housing Action Center, who was with us 
in New Orleans during the hearing. The Center works to 
eradicate housing discrimination in the greater New Orleans 
area. Currently the Center is focused on the issue of predatory 
lending.
    Joseph Rich is the project director of the Housing and 
Community Development Project for Lawyers Committee for Civil 
Rights Under Law. The committee's major objective is to use the 
skills and resources of the legal profession to obtain equal 
opportunity for minorities by addressing factors that 
contribute to racial justice and economic opportunity.
    And also Shanna Smith, the president and CEO of the 
National Fair Housing Alliance, which is the only national 
organization dedicated solely to ending discrimination in 
housing since 1990. She has led the agency as it works to 
ensure equal housing opportunity for all people.
    Chairman Ney. We will begin with Mr. Johnson.

  STATEMENT OF DERRICK JOHNSON, PRESIDENT, MISSISSIPPI STATE 
                 CONFERENCE, NAACP, JACKSON, MS

    Mr. Johnson. Thank you Chairman Ney, Ranking Member Waters, 
Congressman Green, and other members of the committee. I would 
like to thank you for inviting me to speak here today. I was 
really hoping to go last but looks like I am going first.
    Chairman Ney. We can change that order. I have no problem.
    Mr. Johnson. I am fine, since I have started now. Founded 
in 1909, the NAACP is the Nation's largest civil rights 
organization. The Mississippi State Conference has been active 
in providing civil rights advocacy for over 60 years and has a 
mission to ensure political, educational, social, and economic 
equality rights of all persons, and to eliminate racial hatred 
and racial discrimination.
    On January 9th, after Katrina, Mississippi NAACP held a 
State Legislative Gap Analysis Convening, gathering 
stakeholders to discuss State or housing policy, pre-Katrina, 
and to identify potential policy gaps in preparation for the 
2006 legislative session. Participants included local and 
national housing experts, legislative and community 
stakeholders. As a result of this convening, we identified 
several policy gaps that would lead to ongoing housing 
discrimination for African Americans and low-income 
individuals.
    The Governor's Commission Report, of which I served as Vice 
Chair, included preliminary data on housing damaged by the 
storm and noted that although all people were struck by the 
storm, low-income households were more likely to lose their 
homes due to a greater likelihood of living in older 
properties.
    The storm has further eliminated affordable housing on the 
coast and a wave of evictions and rent gouging threatens to 
exacerbate the displacement of low- and moderate-income 
families from their coastal communities. We have already seen 
eviction cases clogging the courts and TV news stories covering 
tenants in low-income developments threatened with evictions to 
make way for higher rents.
    Additionally, low- and moderate-income homeowners in some 
communities face fights with their insurers to receive coverage 
or receive settlement adequate to make needed repairs. While 
those problems face low- and moderate-income owners and 
renters, they are of particular concern to African American 
communities, particularly historic coastal communities like 
Turkey Creek, North Gulfport, and Forest Heights communities in 
Gulfport and East Biloxi that were already dealing with decades 
of exclusion and disinvestments from the storm.
    If the housing problems faced by these groups are not 
addressed, we fear that the storm and the Government's response 
may permanently displace a large number of African Americans 
and lower-income people. We feel that those able to stay and 
return would no longer recognize their communities, as 
gentrification pushes people of color out.
    In regard to fair housing, Mississippi does not have a Fair 
Housing Act, resulting in housing discrimination going 
unchecked in many instances. Housing discrimination can be 
subtle and all too often goes unreported, since the victims may 
not even know they are being discriminated against. They are 
simply told a house or property has already been rented or 
offered different rent than other applicants.
    Importantly, the lack of State and local fair housing 
agencies means that victims of discrimination are also not 
aware that there are options to enforce the law, or lack the 
resources to do testing or otherwise investigate claims of 
discrimination. A State law creating these enforcement and 
testing agencies funded by either State or Federal monies could 
make a tremendous difference in making prospective buyers and 
renters aware of their rights and owners aware of the law. 
However, State legislators in this legislative session decided 
not to approve a bill which would have created a Fair Housing 
Act for Mississippi.
    In regard to CDBG funds, as you are aware, Congress 
appropriated over $5 billion in funds for Mississippi. Because 
of the discretion given to States, particularly the Governor, 
there is no guarantee that any of these funds will be used in 
ways to benefit low- or moderate-income homeowners or to do 
anything to create or rehabilitate rental housing affordable to 
the poorest and most vulnerable families displaced by the 
hurricane. Nor does the proposed plan by the Governor make any 
provisions for individuals with disabilities. This will be the 
greatest tragedy and example of discrimination of all, 
especially since the Governor's Commission Report identified 
both of these issues as significant needs since Katrina. The 
most vulnerable residents will be excluded.
    Under the Governor's proposed plan, he is proposing to 
provide grants up to $150,000 to individuals who are owner-
occupied homeowners. They must be outside of the flood zone and 
the homeowner must have had insurance before Katrina, but no 
flood insurance.
    The Governor's plan fails to provide support for senior 
citizens who may own their home but are on a fixed income, 
i.e., Social Security, and could not afford insurance; senior 
citizens who live in affordable housing complexes; home renters 
or residents who live in affordable or subsidized housing that 
was destroyed.
    The CDBG funds do not, however, need to be used in the 
manner the Governor is proposing. Though the Federal 
appropriation must be administered by an entity chosen by the 
Governor for each State, nothing in the Federal law requires 
that the funds be spent on any particular program. We strongly 
believe that the funds should prioritize those most in need and 
that the Secretary of HUD should not waive the 50 percent 
requirement that funds support low- or moderate-income 
individuals. Not only is that requirement already reduced from 
the 70 percent normally required by CDBG funds, it ignores the 
disproportionate funds and resources such as the SBA loan 
program that benefits middle- or lower-income households but 
have redacted lower-income homeowners at staggering rates.
    Homeowner counseling should be required to prevent 
predatory practices. Under the Governor's plan there is a great 
concern that low-income homeowners will be disadvantaged 
without mandatory homeowner counseling. For those who are 
eligible for the homeowner grant, the process would occur in 
the following manner. A private entity that the State will 
contract with will determine eligibility of recipients of CDBG 
funds under the direction of the Mississippi Development 
Authority. Those who are deemed eligible will receive a check 
up to $150,000 dollars.
    Chairman Ney. I am sorry; the time has expired, but if you 
would like to summarize, and, without objection, put all the 
testimony as part of the record.
    Mr. Johnson. Okay. Let me go directly to the 
recommendations. Under potential issues that are listed on the 
page, three recommendations we would like to see come out of 
this process: a strong, funded counseling component that 
informs check recipients of their rights and consumer 
protections and identifies eligible users. If checks are 
provided through homeowners, they will be dual-signed over to 
the homeowner and the bank. Banks will have an obligation to 
try to get their mortgage paid off and homeowners will be left 
holding a piece of slab that they will have no funds to repair.
    Two other issues we identified: Money must be set aside to 
assure that the rights of people with disabilities are not 
violated through inadequate program design, and affordable 
housing is replaced on a one-to-one basis. That is a provision 
that was taken out of the supplemental CDBG package.
    The final recommendation for the committee is that the 
Secretary of HUD should not waive the 50 percent requirement 
that funds support low-or moderate-income individuals and 
should require that the State plans for using the CDBG funds 
demonstrate how that will address the needs of all groups 
affected by the hurricane.
    Thank you, and I would like to enter my written testimony 
into the record.
    Chairman Ney. Without objection. Thank you, Mr. Johnson.
    [The prepared statement of Mr. Johnson can be found on page 
48 of the appendix.]
    Chairman Ney. The next witness.

STATEMENT OF JANET MURGUIA, PRESIDENT AND CEO, NATIONAL COUNCIL 
                           OF LA RAZA

    Ms. Murguia. Hello. My name is Janet Murguia and I am the 
president of the National Council of La Raza. I want to thank 
the committee for inviting us to speak on this very important 
topic. It is an issue we have followed very closely, and in 
fact later today NCLR is releasing its own report on Hurricane 
Katrina and where the failures occurred when it came to, 
particularly, the Latino community. And we also make 
recommendations about lessons learned. So I appreciate the 
chance to be here today.
    I also want to extend a special thanks to Chairman Ney, 
Ranking Member Waters, Congresswoman Velazquez, and Congressman 
Tiberi for their hard work on housing counseling and other 
housing issues important to Latinos. I see Congressman Green. I 
know you were the host of a town hall for many of us in the 
Latino community and other communities of color, most recently 
through the tri-caucus. Thanks for your work in Houston.
    As an advocate for Latino families, I understand the 
pivotal role of fair housing and a family's pursuit of life 
opportunities. And I know from my own personal experience, 
growing up in a large Hispanic family, in a small house, how 
important that opportunity of home ownership can be. There were 
nine of us, so we were crowded and the house was old, but it 
was ours. Growing up in a home, no matter how poor the 
neighborhood, gave us a sense of community and a sense of 
pride.
    Equal access to housing is critical to the stability of 
neighborhoods everywhere and is essential to the strength of 
communities anywhere. It is especially critical to the 
rebuilding efforts of the Gulf Coast region. And I have had a 
chance to visit there at least once or twice since the 
hurricane.
    I want to begin by telling you about Nilo Cervantes. He is 
a legal permanent resident of Mississippi. He had been a 
hardworking employee of Tyson Food Company but lost his job in 
the wake of Katrina. Like other storm victims, he turned to the 
American Red Cross when he lost his home. Unfortunately, help 
was not what he found. Instead, he and nearly 40 other people 
were told the shelter was not available to out-of-state workers 
or non-U.S. citizens. They were evicted the next day.
    Whether they didn't bother to ask or didn't believe his 
story is not clear; what is clear is that he and others were 
targeted because they are Latino. His story is indicative of 
the antiimmigrant backlash that has sprung up across the 
country. As a result, many Latinos are unfairly stereotyped as 
being immigrants or illegally present, or both.
    This has led to increased discrimination, especially in the 
area of housing. Housing discrimination against Latinos is not 
new. Research sponsored by HUD in 2000 showed that 
discrimination against Latino renters had actually increased 
since 1989 and new data is telling us that discrimination rates 
are on the rise in the current climate.
    This committee has already heard many alarming reports of 
discrimination against Gulf Coast residents. I echo these 
concerns and the concerns of my fellow presenters. Such 
discriminatory acts will erode decades of work in fair housing.
    I would like to share three areas of particular concern and 
then discuss the implications that they have for the rest of 
the country.
    First, many Latino workers are still unable to find decent 
housing. Promised housing by their FEMA-contracted employers, 
these workers are forced to live in tents on the outskirts of 
construction sites.
    Second, many homeowners are facing possible foreclosure. We 
believe that these families are extremely vulnerable to 
predatory lenders.
    And, third, the Internet threatens to become a new tool for 
discrimination.
    As you have already heard from the Greater New Orleans Fair 
Housing Action Center, Web ads clearly stated that Latinos and 
families with children were not welcome. I am unhappy to report 
that such discrimination is not limited to the Gulf Coast. For 
example, just last week The Washington Post reported that two 
local cities are using zoning codes to profile Latino families. 
Despite repeated inspections of their home, few, if any, 
infractions were found. They are trying to block Latino 
families from their neighborhoods. Making matters worse, the 
current enforcement system is ill-equipped to handle these 
issues. Too few have access to the information they need and 
too few Latino organizations are involved in fair housing 
enforcement.
    Recourse for a discriminatory act is unlikely. Even if 
legal action is taken, the process is slow and painful for the 
family.
    It is clear that Congress must act on these issues, and in 
the spirit of bipartisanship I would like to make the following 
recommendations: first, target a portion of reconstruction 
funds toward fair housing; second, engage communities in the 
battle against housing discrimination; third, hold Web site 
hosts accountable for discriminatory ads; and, finally, fully 
fund an adequate fair housing outreach and enforcement system.
    This testimony obviously is focused on Latinos but I 
believe it applies to all communities of color and all those in 
need. I invite you to please read our written statement for 
further information. We stand ready to work together with this 
committee and we thank you for this opportunity. I am happy to 
answer questions at the appropriate time.
    Chairman Ney. Thank you.
    [The prepared statement of Ms. Murguia can be found on page 
59 of the appendix.]

   STATEMENT OF JAMES PERRY, EXECUTIVE DIRECTOR, GREATER NEW 
      ORLEANS FAIR HOUSING ACTION CENTER, BATON ROUGE, LA.


    Mr. Perry. Thank you Chairman Ney, Ranking Member Waters, 
and members of the committee. I welcome the opportunity to 
speak to you on Mardi Gras today. It is so important to me that 
I let go of the festivities and made it out to Washington D.C., 
for the hearing today. Very tough thing to do.
    Our organization is an 11-year old private, nonprofit civil 
rights organization established to eradicate housing 
discrimination in the New Orleans Metro area. I had the great 
opportunity to speak to this subcommittee in New Orleans on 
January 13th. And so today I am going to not go through a lot 
of the detail that I went through that day, but instead really 
focus significantly on the Internet advertising cases that we 
have had to take in since the hurricanes.
    At the last hearing I gave you a brief overview, but I am 
going to go into some more detail here today. In early 
December, we received information from an evacuee concerned 
about several advertisements that she had noticed on 
Katrinahousing.org. In a matter of minutes she faxed a printout 
of the ads to me. When I conferred with our staff attorney, she 
thought that the ads must be a hoax. We read the ads together 
and we saw the following:
    ``I would love to house a single mom with one child; not 
racists, but white only.'' ``Not to sound racist but because we 
want to make things more understandable for our younger 
children, we would like to house white children.'' ``Provider 
will provide room and board for $400, prefers two white 
females.'' ``White Catholic family, children welcome.'' Last 
but not least, ``room available to single white mother with 
child or younger to middle-aged white couple.''
    We immediately sought to determine the authenticity of the 
advertisements. We logged onto Katrinahousing.org and searched 
for housing in the State of Louisiana and instantly five 
discriminatory advertisements popped up. It didn't take us any 
time to find them.
    What that communicated was perhaps this isn't some anomaly 
but, rather, a normal happening on the Web site. I spent the 
rest of the day searching Web sites related to the evacuation 
process and found five different Web sites and found about 28 
pages of ads just in that first day that were discriminatory. 
The advertisements were on Katrinahousing.org, Katrinahome.com, 
DHR online, and reliefwelcomewagon.com.
    I was really disappointed to find one of the Web sites, DHR 
online, is a FEMA-sponsored Web site. When an evacuee registers 
for housing through the FEMA process and finds out whether or 
not they are going to be qualified, the FEMA Web site directs 
them to DHR online to look for housing opportunities on DHR 
online. The two are interrelated.
    So as a result, on December 23rd, we partnered with the 
Lawyers' Committee for Civil Rights and the Relman Law Firm to 
file a complaint against each of these Web sites, so we have 
gone forward with that complaint process.
    To date, none of the cases have been settled. Some of the 
sites have removed the discriminatory advertisements or put 
forth some mechanism to prevent discriminatory advertisements 
from being placed, but we are still working through that 
process. It has been a long, arduous process. We really thought 
when we brought this to their attention they would spring into 
action to remove the advertisements and things would happen 
quickly, but unfortunately it has been a very slow process.
    One of the big issues is that they have attempted to defend 
their actions by using the Communications Decency Act. They 
have said that the Communications Decency Act immunizes them. 
Obviously we disagree, as does Assistant Secretary Kim 
Kendrick. It doesn't give them immunity. But there is at least 
one court that has sided with them that perhaps there may be 
some immunity. That is a big issue and the case may be, as 
Representative Frank said earlier, that inadvertently Congress 
may have given Web site providers the idea that perhaps they 
don't have to comply with the Fair Housing Act when they 
publish discriminatory advertisements. We think it is a wrong 
and bad reading of the Communications Decency Act.
    With that said, what I would implore from members of this 
committee, and Members of Congress in general, is an amendment 
to the Communications Decency Act that very clearly settles the 
issue. The amendment can clearly and very plainly state that 
nothing in the CDA limits the Fair Housing Act or limits the 
effect of the Fair Housing Act. I really think that a very 
simple one- or two-line amendment would remedy the problem.
    If the New York Times or the Washington Post ran any of 
these advertisements that I read to you today, there would be 
no question of liability. And they would instantly remove the 
Web sites because there is so much case law that establishes 
that they are liable in these situations. But because of the 
Communications Decency Act, some of these Web sites think that 
they can go forward here; that they don't have to remove these 
advertisements; that they have no obligation. They think that 
it is okay for them to have an advertisement that says that it 
is illegal or that says that they won't allow a person to rent 
a home because of the color of their skin or national origin, 
etc. So we implore your action on this issue.
    In recent years there have been a large number of cases 
that have come up on Internet advertising situations. Only 
weeks ago there was a Web site, a lawsuit filed against 
craigslist. In 2003, the Justice Department negotiated a 
settlement against a Web site called sublet.com. And then the 
San Fernando Valley and Fair Housing Council of San Diego are 
currently litigating against roommates.com. As the Assistant 
Secretary mentioned earlier, there are about 15 cases that HUD 
is currently considering dealing with these Internet 
advertising cases.
    According to the housing advertising guide, most families 
now who are looking for housing turn first to the Internet when 
looking for a home before looking to any print advertising. I 
submit to you that this is the way people are going to look for 
housing in the future. This is it. And so it is appropriate for 
Congress to act now to make sure that there are proper 
safeguards so people are not discriminated against. It will 
erode some of the great strides in the fair housing arena.
    I have a significant number of additional comments, but 
because I have been able to make many of them before the 
committee before, including the recommendations, I will 
conclude my comments there and submit my written comments for 
the record.
    Chairman Ney. Without objection. Thank you.
    [The prepared statement of Mr. Perry can be found on page 
66 of the appendix.]
    Chairman Ney. Mr. Rich.

 STATEMENT OF JOSEPH D. RICH, PROJECT DIRECTOR OF THE HOUSING 
AND COMMUNITY DEVELOPMENT PROJECT, LAWYERS' COMMITTEE FOR CIVIL 
                        RIGHTS UNDER LAW

    Mr. Rich. Thank you Chairman Ney and Ranking Minority 
Member Waters. My name is Joe Rich and I want to thank you on 
behalf of the Lawyers' Committee for inviting us to this 
hearing today, and particularly Barbara Arnwine, our executive 
director, asked me to thank you as well.
    In our written testimony that has been submitted, we set 
out two major fair housing issues that I would try to 
summarize. I want to introduce our testimony into the record 
and I will try to summarize what is in it.
    First, I want to make one point that I think is very 
important that came up early and has been coming up at all 
hearings: how important it is for Members of Congress to go to 
the coast and see what is actually going on. I am pleased to 
hear that Speaker Hasteret and Minority Leader Pelosi are going 
down, and I don't know how many are going with them, but I urge 
that.
    First, let me just touch on the Internet advertising issue 
that James has summarized so well. First, I want to say how 
much of a pleasure it has been for us to work with the Greater 
New Orleans Fair Housing Action Center.
    I wanted to make a couple of points about the Internet 
issue. It is a growing issue. As James pointed out, the amount 
of advertising for housing is growing, the amount of 
advertising in the press is declining, and if the defense that 
is routinely brought up by Internet providers through the 
Communications Decency Act is found by the courts to be valid--
which we don't think it is--we think that the act was designed 
to protect against obscenity, defamatory statements, not Fair 
Housing Act discrimination statements. Nonetheless, there is 
some uncertainty on this. And if this were permitted, you would 
have the absurd situation of ads that were in a newspaper being 
illegal and ads on the Internet not being discriminatory ads.
    I second the suggestion that James made about what could be 
a fairly simple fix of this by Congress to clarify this point, 
something that Congress did not intend to do and should make 
clear now to avoid the ongoing litigation.
    The second area I wanted to touch on was the importance of 
another part of the Fair Housing Act, section 808, which puts a 
duty to affirmatively further fair housing on the agencies that 
use Federal funding as well as the agencies that receive the 
Federal funds. This actually imposes an obligation to promote 
fair housing, to promote racial integration, and to ensure that 
more minorities are not excluded. Particularly in this 
situation, this is an extremely important part of the Fair 
Housing Act. It touches on so many of the things that are 
problems.
    Derrick Johnson mentioned the CDBG problem. I would add one 
thing; in Mississippi you have a situation where the money now 
is proposed to be used only for homeowners who are insured. 
This leaves out low-income homeowners who cannot afford 
insurance, and that is a real gap for low-income people and it 
is where you need to see section 808 needs to be applied.
    I think the States are looking at these issues now, and 
hopefully, they will address them. If not, HUD must be very, 
very vigilant in doing that when they review the plans. And 
that also goes to the issue of the 50 percent of the money that 
is set aside for low- and moderate-income.
    Secondly, what is really missing from these plans is money 
for rehabbing, rebuilding apartments for low-income and 
moderate-income people. Indeed, all of these plans have very 
little money for renters. Without that, the low-income people 
are disproportionately affected. And there is a real need now 
to do something about rebuilding subsidized housing.
    I will just give you one example and then I will stop. When 
we were down in Mississippi back in October, a group of people 
came to us who lived in a subsidized housing project and they 
told us--this was a Thursday--they told us on a Monday that 
they were going to be evicted. We went over to look at the 
property. The property was in horrendous condition not only 
from the hurricane but pre-hurricane. We were able to go to the 
landlord and stop the evictions.
    Since October, there has still been no effort made to rehab 
this building; and the people, while they are able to stay 
there, they are living in these continued horrendous 
situations.
    It is important that there be money set aside to rehab and 
rebuild this type of housing. It is another fair housing issue, 
and it is something that I think HUD should consider when they 
are reviewing the plans.
    Thank you.
    Chairman Ney. Thank you.
    [The prepared statement of Mr. Rich can be found on page 
101 of the appendix.]
    Chairman Ney. Ms. Smith.

STATEMENT OF SHANNA L. SMITH, PRESIDENT AND CEO, NATIONAL FAIR 
                        HOUSING ALLIANCE

    Ms. Smith. Thank you, Chairman Ney. My name is Shanna Smith 
and I am with the National Fair Housing Alliance. You have my 
testimony for the record, so I would like to instead address 
some of the things that were raised with the Assistant 
Secretary in some of the other questions that came up.
    First of all, the testing that the National Fair Housing 
Alliance engaged in immediately in September was provoked 
because we know many people who experience discrimination 
simply don't report it. There are more than 2 million estimated 
instances of race and national origin discrimination occurring 
annually in the United States. HUD handles less than 3,000 
complaints, the State and local government agencies handle 
around 6,000, and the private groups handle around 16- to 
17,000. We are not even touching the tip of the iceberg with 
the amount of discrimination that is going on. Representative 
Campbell asked how much is really happening with more than 1 
million people displaced from New Orleans. I don't think any of 
us know that answer because without testing we won't understand 
the nature and extent of the discrimination.
    We know that African Americans and people with a disability 
file more complaints. We do know that Latinos and Asian 
Americans, many of whom were displaced throughout the Gulf 
Coast, rarely file complaints. So we must conduct testing by 
sending out white testers with Latino, African American, and 
Asian American testers and people with disabilities to see how 
the housing market is actually treating them.
    What we found in our initial testing in 65 paired tests was 
that 43 out of the 65 tests showed that African Americans were 
being given untruthful information about availability, about 
the amount of rent that was going to be charged, the security 
deposit, and they all identified themselves as Katrina 
evacuees.
    We did telephone testing, which is using linguistic 
profiling. I know Congresswoman Lee said she wondered how that 
works. All of us make judgments based on a person's phone voice 
when we are talking to them. We might not guess right. If you 
are from the North and I am from Ohio, northern Ohio, so my 
accent is a little different than people from southern Ohio 
and--I know we are from Ohio but we have this Midwest accent.
    When you are talking to someone, we guess about them by 
their voice. It doesn't mean we are a bigot when we do that, 
our brain just filters information as it comes in to us. What 
we do with that information is what gets these landlords in 
trouble.
    So many of them decided that the person they were talking 
to was African American or Latino and chose not to give them 
truthful information about an apartment.
    We went through the Internet; as you heard in the previous 
testimony that so much is being done on the Internet. We also 
tested large apartment complexes. We didn't do the mom-pop kind 
of situation. We went to large complexes where we know they 
know the law and we found high rates of discrimination.
    We then chose some of the tests where it wasn't clearcut 
from the telephone test. We took five of those and we flew 
African American and white testers out to the apartment 
complexes in these States and we had them make an in-person 
visit. In three out of five of those investigations, it showed 
discrimination.
    So we found that it is very subtle or very direct on the 
phone and some of the subtlety when you show up in person gets 
to be quite serious.
    We are in the middle of conducting more testing in three 
more States. In two of the three States we found another high 
rate of discrimination. The people again were identifying 
themselves as relocatees with employment, not low- and 
moderate-income; families with children and looking for housing 
for which they were qualified.
    In sum, I would like to say that if Assistant Secretary 
Kendrick, whom I believe is a breath of fresh air, doesn't want 
additional money; if you put additional money into the Fair 
Housing Initiatives Program I guarantee you that the private 
fair housing movement can use that money, use it on the ground 
right now to assist people who are victims of housing 
discrimination. Thank you.
    Chairman Ney. Thank you very much.
    [The prepared statement of Ms. Smith can be found on page 
113 of the appendix.]
    Chairman Ney. On that issue I heard a statement made, I saw 
it on television last week, where a couple of people had 
publicly said down in New Orleans that people--they didn't want 
people back into public housing unless they had a job. Are you 
aware of this?
    Ms. Smith. Yes, I saw that.
    Chairman Ney. Do you consider that to fit under the current 
law or not?
    Ms. Smith. Well, subsidized housing is not just for people 
who are employed. People with disabilities will not be 
employed. And some of the families, as they are coming back, 
will need housing. I think part of the purpose when public 
housing was created in the 1930's was to help people who were 
not employed, who were employed, to have affordable housing. If 
I have a decent, safe, sanitary place to live, it is more 
likely that I will have an opportunity to be employed.
    I saw that statement, and we have talked about writing to 
that member of the city council in New Orleans because what he 
was saying was promoting another kind of segregation against 
people with disabilities as well.
    Chairman Ney. Somebody also--I watched that program and 
somebody also from the housing authority, I believe--I don't 
want to misstate here--made the same comment, or somebody 
involved. It was a lady who came on. I didn't write down the 
names, but I saw it.
    Mr. Perry. I believe it was a Ms. Moon from the housing 
authority who is the HUD receiver in charge of the housing 
authority. It had significant trouble in recent years so it had 
gone into HUD receivership.
    One thing I would add to Shanna's comments, it was a 
council member named Oliver Thomas who made the point about 
employment, that it kind of provides this litmus test for who 
can and who cannot return to New Orleans public housing. About 
95 percent of residents of public housing in New Orleans are 
African American. And so when there are efforts to limit who 
can return or how many people can return, it substantially has 
an effect on African American residents of public housing. And 
that is probably one of the significant ways the Fair Housing 
Act is invoked, in that regardless of what its intent is, it 
has a disparate affect on African American residents of public 
housing there.
    Mr. Rich. I would just add the housing authority in New 
Orleans, still most of the public housing is not open. And 
there is a great uncertainty about what is going to happen to 
the public housing. There is a need for HUD, that is the 
receiver on this, to make clear what the plans are and get that 
housing open for the residents who have been displaced 6 months 
now.
    Chairman Ney. Just from the observation of what I saw on 
the show, it wasn't a potential discriminatory statement of 
race, it was a questionable statement about potential 
discrimination on economics of people, of whether you are 
working or you aren't. This is what people then called into our 
office and said. This is some of the observations.
    And also you have got local, which might have the intent 
you have to be employed to come back into public housing, but 
you also have Federal law of where this stands, and can local 
law be passed on these issues. I just think it does not get 
into disagreeing or agreeing with the statements; I just think 
you are seeing the tip of the iceberg, especially in New 
Orleans, about decisions being made or what people want to do. 
I just think you are seeing the tip of the iceberg. As places 
are rebuilt and people come back in, you are going to see a lot 
more debate, controversy, and also a look at whether this is 
discrimination or not.
    I just think you are seeing, in my opinion, the very 
beginning of huge debates that will happen.
    I wanted to follow up, I think, Mr. Perry, on your comment 
about maybe having to amend the statute, and it would deal with 
maybe the Federal Communications Commission. But I was talking 
to my ranking member from California; we might be able to do 
some type of amendment and it might have jurisdiction of 
Judiciary at the end of the day to deal with it because I would 
assume fair housing would automatically apply to the Internet. 
It is still fair housing laws. Any further comment on that?
    Mr. Perry. Well, I would assume as well that it would 
automatically apply. I will take a second and read to you the 
specific language from the Fair Housing Act. It says: ``It 
shall be unlawful to make, print, or publish or cause to be 
made, printed, or published any notice, statement, or 
advertisement with respect to sale or rental of a dwelling that 
indicates any preference, limitation, or discrimination based 
on the protected classes.''
    So there is no doubt that this is the publishing of 
discriminatory advertising. So in our minds it is very clear 
that the Fair Housing Act applies to Web site providers. And so 
it not really, I guess, an issue of whether or not the act 
applies but it is just that some of these Web sites have tried 
to say well, even though it would apply, this Communications 
Decency Act gives us some immunity or may give us some 
immunity.
    The Communications Decency Act particularly applies to 
defamation and to obscene statements. And so the problem that 
they are making is that they are saying that discriminatory 
statements are equal to obscene or defamatory statements. But 
there is a very important difference between the two. They are 
very simply not the same. To say that I won't rent to you 
because you are African American or you are white, is 
discrimination as opposed to making an obscene statement about 
someone. I will refrain from giving an example of an obscene 
statement.
    I don't think that it is a great argument but, 
unfortunately, it is an argument that has been used. And we 
want to make sure the Fair Housing Act has the staying power 
that it deserves.
    Ms. Smith. Mr. Chairman, it would be interesting if the 
Justice Department would weigh in with HUD on this particular 
issue just because our Assistant Secretary supports it doesn't 
mean that if it goes through the HUD administrative process and 
ends up in Federal court, we will need the assistance of the 
U.S. Department of Justice.
    Chairman Ney. I am sorry. Has Justice weighed in on this 
previously?
    Ms. Smith. No.
    Mr. Perry. But they have brought at least one case that was 
settled in 2003 against a group called sublet.com. So even 
though they haven't given official guidance, they have brought 
cases.
    Chairman Ney. You think Congress should contact Justice to 
ask them to weigh in?
    Ms. Smith. I think it is important.
    Ms. Murguia. In my longer testimony I cite a case in New 
Jersey where city officials targeted Latinos and used selective 
enforcement of building codes to push Latinos out of their 
city-used Internet chat groups to identify Latino addresses. 
While that case was settled with DOJ because a city official 
was caught soliciting addresses online, it shows related ways 
that the Internet can be used to discriminate, whether it is an 
ad or people are using it to solicit information that would 
result in discrimination.
    I think there are a lot of issues where I think it is not 
clear exactly whether that falls directly under the statute, 
but we ought to get Justice to weigh in and give us their 
opinion.
    Chairman Ney. That is a good point.
    The gentlelady from California.
    Ms. Waters. Well, first of all let me thank the panel for 
being here and let me thank those who were involved in our 
hearing for following up and forcing us to even really focus a 
lot deeper on these issues that you are bringing to us. And one 
of the good things that we have on this committee is a chairman 
whom I work with very closely; and already, as we are sitting 
here listening to you, we are describing to each other how we 
think we can do a number of things relative to enforcement, new 
legislation, and, as you are alluding to now, getting the 
Justice Department involved in some of these issues.
    I did have a few questions that I wanted to ask and I have 
got to think a little bit deeper about some of the testimony 
that has gone on here today. You heard me when I attempted to 
engage in some discussion with the representative from HUD 
about CDBG, and I am worried that low- and moderate-income 
people are not going to be taken care of properly unless we pay 
more attention to what we authorized and what is being done or 
what is intended with these CDBG funds.
    Would you restate for me--because I just had a little side 
conversation with Mr. Clinton--please restate for me what you 
said about what you understood about what was happening in 
Mississippi with CDBG plans.
    Mr. Rich. The CDBG supplemental language said that 50 
percent of the CDBG should go to the benefit of low- and 
moderate-income people. There was a provision that this could 
be waived by HUD for compelling reasons not defined. Since 
then, the Governor of Mississippi has gone forward and proposed 
a plan that isn't finalized which, first, leaves out any 
renters. The plan for CDBG is focused primarily, if not wholly, 
on homeowners who were in flood areas that were not Federal 
floodplains; which is a great need, there is no doubt about 
that.
    But what is left out, and which is quite disturbing, is 
that it only covers those homeowners who are insured, have 
insurance.
    Ms. Waters. This is what I wanted you to repeat.
    Mr. Rich. I think Derrick Johnson can follow up on this. 
But if you are not insured and even though your house was 
flooded, my understanding of the Governor's proposal at this 
point is that you are not eligible for the grants under the 
CDBG plan. This is obviously a big impact on low-income people. 
And I know that Derrick--and he should really answer now--has 
been working on that issue in Mississippi. So let me turn it to 
him.
    Ms. Waters. Please.
    Mr. Johnson. The Governor's plan is in effect a retroactive 
flood insurance plan. It would provide insurance coverage using 
CDBG funds up to $150,000 for individuals who lived outside of 
the floodplain, had regular insurance but didn't have flood 
insurance. If you did not have regular insurance, you would not 
be covered. If you did not own your home, you could not be 
covered. If you did not occupy the home you owned, you could 
not be covered.
    So in effect, it would eliminate individuals who were on 
fixed incomes, who owned their home but couldn't afford 
insurance. We are finding that the category of individuals more 
often are senior citizens who have owned their home for a 
number of years but are on Social Security. We had a gentleman, 
84 years old; he owned his home for over 40 years and received 
just over $600 a month in Social Security benefits. He hasn't 
had insurance in over 20 years. He cannot afford it. He is not 
covered.
    You have individuals who are home renters. Because the 
supplemental appropriation took out the requirement for one-to-
one replacement on home rental units, there is no requirement 
to replace affordable rental units, so that whole population is 
taken out.
    Under the proposed plan by the Governor, you must build to 
the international building code standards but that would 
inflate the price, so even the homeowners who owned, say, a 
$60,000 house, they could only get the fair market value of the 
house pre-Katrina. They get $60,000, but to build to the new 
codes it may cost $80,000. That is an additional hardship for 
low-income homeowners.
    Another hardship for individuals is in the disability 
communities that would have to build to the new building 
standard, but they also have to have their homes fit for 
whatever type of ramping equipment. There is no provision in 
the funds to provide anything for them.
    Out of the $5 billion that has been granted that 
Mississippi will receive, $4 billion will be used for this 
program to cover 35,000 households.
    Ms. Waters. Yes.
    Mr. Perry. We had the opportunity, Joseph Rich and myself 
were able to meet--we were able to meet with Secretary Jackson 
a few weeks ago and we raised that very issue. We talked about 
the Governor's plan in Mississippi and we said, we are 
concerned that perhaps it may not meet the requirement that it 
assist 50 percent of people who are low to moderate income, at 
least 50 percent of the funding.
    What he indicated was that he intends to give wide 
discretion to Governors and to their plans. He also indicated 
that he felt the Governor's plan was right on point and right 
on target. He felt it was an excellent plan, the plan in 
Mississippi.
    A point that I specifically raised with him was that I 
thought the plan didn't do enough for renters, particularly for 
low-income renters. And he said well, you know, my issue is 
that--is that I don't want to help landlords. I am not in the 
business of subsidizing landlords.
    So I proposed a few ways that I thought that he could 
assist renters and perhaps not end up subsidizing landlords. He 
said that he would consider them, but I guess my overall 
feeling from the meeting was that the way the plan is right now 
is the way that it is going to go forward. And I think, as a 
matter of fact, Joe raised the issue of what happens when they 
come up against this requirement; and what came out is that HUD 
has the ability to waive the requirement with compelling 
reason, and that because they tend to give folks wide 
discretion they may, in fact, waive the 50 percent requirement 
if they have to, particularly since they think the Governor's 
plan is a good plan.
    Ms. Waters. Did we write into the authorization that the 
Governor could waive that 50 percent requirement?
    Mr. Johnson. In the authorization--
    Ms. Waters. I would like our people to hear this.
    Mr. Johnson. The authorization gave the Secretary of HUD 
to, upon request from the Governors of the State, to waive the 
requirement.
    Ms. Waters. The 50 percent requirement.
    Mr. Johnson. Prior to the 50 percent requirement there was 
a 70 percent requirement. So the supplemental reduced it from 
70 percent low and moderate to 50 percent, and then gave the 
Secretary of HUD the discretion, upon request, to reduce it 
even further.
    Ms. Waters. Wow.
    Mr. Rich. The final decision is with HUD though.
    Ms. Waters. Has a request been made by the Governor in his 
plan?
    Mr. Johnson. The Governor has not submitted his plan. HUD 
just published in the Register the appropriations for each 
State last week. We are waiting for the Governor to first 
submit the waiver; from there, to actually submit his plan. He 
is coming under some pressures in the State, including the bill 
that we had filed that would allow the State legislators to 
have input in any CDBG funds. So it looks like he is becoming 
more flexible, but we are dealing with a Governor who typically 
appears to be flexible on one end, and end up doing exactly 
what he wants to do. We believe he is going to request a 
waiver, and if it is requested, it will be granted.
    Mr. Rich. I would just add one point to this. The standard 
for the waiver is compelling needs. It seems to me that should 
be a very high standard, because if this 50 percent is waived, 
low-income minority people are not going to be helped; and that 
raises this whole Fair Housing Act issue of affirmatively 
furthering fair housing in spending Federal funds.
    Ms. Waters. Well, let me just say that that certainly was 
not my intent when I supported the CDBG authorization and so 
not only am I going to activate other members who certainly did 
not intend for that to be waived in any shape, form, or 
fashion, but I think that we also ought to look at some 
opportunities by which we fix that in law and basically amend 
the authorization in some way. So we will be taking a real, 
real fast-and-quick look at what we can do with that quickly 
because this is moving so fast.
    Let me suggest to those of you who worked so hard at all of 
this that you have raised some questions about several things 
that I think a coalition of advocates should consider. One is 
if FEMA has been recommending sites on the Internet that are 
having discriminatory messages on it, we should think about a 
lawsuit against FEMA. We should think about--
    Mr. Rich. One of the complaints that was filed with HUD 
through the Greater New Orleans group was a Web site that FEMA 
was associated with, and the notice did go to FEMA. FEMA has 
claimed that they are taking steps to protect against that type 
of advertising, but they also are claiming they are immune from 
this kind of lawsuit.
    Ms. Waters. That is okay. They can claim that they are 
immune, and they may be, I don't know. But I think that the 
advocates can certainly look at it and see.
    The other thing is, even on the Governor's plans--and I am 
going to work as quickly and as hard as I possibly can to deal 
with that--it seems to me if it looks as if Mr. Jackson, who 
will be coming before us pretty soon, I hope, is going to allow 
these waivers, that we need to think about filing injunctions 
against the implementation of those plans to frustrate their 
ability to move forward in the way they want, while we are 
working up here to try and fix it.
    So I would just like for you to think about some additional 
ways by which we can be working to make sure that they don't 
easily disregard low- to moderate-income renters in moving 
forward with those plans. We may not have the ability to stop 
Mr. Jackson from offering waivers. We don't know that he is 
going to do it. But based on the conversation you are sharing 
with me, it sounds as if he is poised to do that, and it may be 
that there is some explicit language in the authorization, I 
don't know, that says that he can do that. But I think it would 
be worthwhile to talk about filing injunctions if they move 
very quickly to do things while we are trying to get this done.
    Mr. Johnson. We believe under the Fair Housing Act it is de 
facto discrimination because it would adversely affect African 
Americans and Latinos at a disproportionate rate to other 
Mississippians.
    The other part of this is that even if the plan goes 
through, you have the banking industry that will probably take 
advantage of low-income homeowners because the checks will be 
made out both to the homeowner and the bank. And we are also 
trying to get a consumer counseling process so homeowners 
understand their rights, once that check is written, that they 
don't have to turn over all the proceeds to the bank to cover 
the mortgage; they can use the money to rebuild their home and 
maintain the mortgage relationship they have with the bank. So 
that is another outcome that we are concerned with, with the 
high land speculation that is taking place on the Mississippi 
Gulf Coast right now.
    Ms. Waters. So we will be in touch with you to help us 
refine the language that we may use to try and see if we can't 
move something through here that would correct that. I don't 
know that we can, but I am certainly willing to try. And thank 
you very much
    Chairman Ney. Thank you. The gentleman from Texas.
    Mr. Green. Thank you again, Mr. Chairman, and Madam Ranking 
Member. I would like to also thank each member of this panel. 
You truly have enlightened us greatly today. And I compliment 
you because you represent an underserved constituency. Here in 
Congress it seems that the well-off, the well-to-do, the well-
heeled, they do well in terms of receiving representation. It 
is the least, the last, and the lost that we find are 
underrepresented. And I thank you for what you do to help those 
who but for you might not receive help at all because of the 
information that you bring to us.
    Let me go back to the comment that was made by Mr. Johnson, 
I believe, about the fixed income homeowners who do not have 
insurance, not benefiting from the $4 billion. Is that a 
correct statement, Mr. Johnson?
    Mr. Johnson. That is a correct statement. Under the 
Governor's plan, he only expects provision for the CDBG funds 
for home ownership. And those plans were based on the belief 
that the mission was going to receive $4 billion in CDBG funds. 
Now that we know we are going to receive $5 billion in CDBG 
funds, I understand there is an ongoing discussion about some 
of the utility companies being able to use those funds to 
recoup losses. And that would be a way to benefit low- and 
moderate-income individuals because they would not have to 
increase rates.
    So as of today, I have yet to hear of any proposals by the 
Governor to provide any support for low-, or moderate-income 
individuals, specifically individuals who are homeowners 
without insurance.
    Mr. Green. Just to comment, I remember, if my memory serves 
me correctly, that with 9/11, when we did the right thing and 
gave families millions of dollars, I just don't recall us 
having this type of means test that would ultimately lead to 
only those who have been receiving. I am hopeful that our 
ranking member and the chairman will help us to find a means by 
which this can be addressed.
    I support them and will do what I can to assist you in this 
effort as well.
    I want to talk a bit about the testing, because my belief 
is that we don't do enough testing. Testing appears to be the 
only empirical data that we can use to validate that 
discrimination exists. And it seems to me that we have just 
enough for us to continue saying there is something wrong but 
not enough so that we can say without question, reservation, 
hesitation, or equivocation that we need to go to a next level 
with this whole testing process.
    Tell me first, how difficult is it to get the grants to do 
the testing?
    Ms. Smith. Well, they are competitive grants through the 
Fair Housing Initiatives Program. Currently, it is the first 
time that HUD's Office of Fair Housing is allowing some of the 
fair housing groups to get a 3-year grant rather than having to 
apply every year and wonder if you have the money.
    The grants are not necessarily used to just do the 
independent testing that we do. It is really used in response 
to complaints that come into your office.
    So you have these fair housing groups that maybe have 
three, possibly four staff people, who are responding to 
rental, sales, lending, insurance, racial and sexual harassment 
complaints in their community, and then still trying to get a 
handle on what is the nature and extent in your area?
    In places like the D.C. area, the fair housing group has 
been around a long time. So linguistic testing doesn't show 
much. You actually have to go and apply for an apartment 
because they have learned not to turn you down over the phone 
or to actually often lie to you about availability. It has to 
go through the application process. That is more complex 
testing. That is just in the rental area.
    If you deal with home sales, many real estate agents who do 
the right thing do show people a lot of neighborhoods to look 
at. Those who don't follow the law will simply just steer you 
to homes in the neighborhood where your race predominates. And 
most of us, if we are out in the housing market, trust our real 
estate agent to show us properties that are within our price 
range.
    In the lending arena, it is much more difficult. To do 
testing, you actually have to have a person's true identity and 
fill out an application. But on the lending application, it 
says, if you provide any false information that that is a 
felony. So we have actually only done one full lending 
application ever in the country and that was in Lima, Ohio, and 
we had real people do that.
    With homeowner's insurance we have been testing them, and 
we have made some changes with those companies so that people 
can get the best coverage. But now with homeowner's insurance 
credit scoring is an issue. So there is a way to reject people. 
So some of that my colleague was talking about in Mississippi, 
if you are a senior and you don't have a good credit score, you 
may simply be turned down for homeowner's insurance, not that 
they didn't want to buy it but they weren't even eligible 
because of their credit score.
    Mr. Green. Quickly permit me to ask this. When you have a 
clear-cut case of discrimination as a result of your testing, 
what is the next step? What happens after that?
    Ms. Smith. Most fair housing groups will file a complaint 
starting with their State or local agency or HUD. If that 
process is moving swiftly, they will continue in that process. 
If it is not, then many of us just file directly in the Federal 
District Court.
    We often use the HUD administrative process first because 
when you have clear-cut strong testing, if you can get the 
parties to the table and they see and you share some of your 
evidence with them, good lawyers on the other side will say 
they caught you, you need to settle.
    Most cases that go to trial are those where either the 
testing is strong but the defense says I think I can beat this, 
or it is a disparate impact situation where we are showing that 
people with disabilities or people with color are harmed more 
than whites are in that particular situation.
    Mr. Green. With respect to the testing and lending, do you 
have some language that we might borrow that might advise us 
and help us to hopefully eliminate this loophole that seems to 
exist?
    Ms. Smith. Yes. We actually brought this up in the early 
1990's when we were doing a lot of lending testing, and it 
would simply be because the tester is not trying to defraud the 
lender. We are just trying to see what terms and conditions a 
loan will be made on. And if there were language there saying 
something about testers are excluded from this felony part 
because we are not trying to defraud the bank of money, that 
would open up the floodgates for us to do a lot of lending 
testing throughout the United States.
    Mr. Green. I would welcome the opportunity to review the 
language and if you could pass it on to our office I would 
appreciate it.
    Mr. Perry.
    Mr. Perry. Representative Green, you know, this is 
something that Shanna made me realize a few years back with the 
funding program. You know, there is funding for what is 
commonly referred to as FHIP, Fair Housing Initiative Program, 
which funds agencies like mine. And then there is the FHAP 
program, Fair Housing Assistance Program, which assists State 
and local agencies that enforce fair housing law.
    The reason why I want to give you the difference between 
the two is that the State organizations do not do testing, 
while the programs that get Fair Housing Initiative Program 
funding do the testing. And so the very evidence that is 
necessary in order to enforce the fair housing law only comes 
forth through the work of the private nonprofits who get the 
Fair Housing Initiative Program funding.
    My point is that when HUD funding levels come to you and 
you are looking at the HUD fair housing programs, it is 
important to make sure that the FHIP program gets significant 
funding, and perhaps even more funding than the fair housing, 
than the FHAP program. And the reason is that if you are going 
to have any success in any of the other programs, it is all 
dependent upon whether or not there is enough money for the 
FHIP nonprofits to do adequate testing and to actually run 
their programs.
    One last thing that I would say about that is that these 
are private nonprofits, often very small. My organization only 
has--well, before the storm we had four staff members. Right 
now we have two because we lost folks as a result of the storm.
    Any point in time that an organization isn't funded through 
this HUD program, through this Fair Housing Initiative Program, 
it could cause the very end of that program. As a matter of 
fact, there is a coworker of mine in Texas right now who has 
had some difficulties with funding through the program, and it 
has caused great problems for him to keep the organization 
operable.
    And so one issue is that there has to be consistent 
funding. And is has put forth a new effort to make sure that 
groups can get 3-year funding. But we want to make sure that is 
a consistent thing that groups are able to ensure that they are 
always going to be there to fight housing discrimination and to 
do the testing that is required in order for HUD or for the 
other State and local agencies to enforce fair housing law.
    Ms. Smith. If I might add, they are only getting about 
$250,000 a year. So imagine that for the City of New York or 
the City of Houston. You have to pay rent, you have to pay 
salary, you have to pay benefits, you have to pay for your 
testing program. It is so miniscule. This is why we are not 
making a dent in housing segregation and discrimination in 
America because we haven't had the financial commitment from 
the Federal Government to fund true education and enforcement 
nationally.
    Mr. Green. In that last appropriations package I think we 
had some $45-, $46 million in fair housing. What portion of 
that went to the Fair Housing Initiative Program as opposed to 
the Fair Housing Assistance Program, if you know?
    Ms. Smith. About $20 million. And about $11- or $12 million 
of that went to just enforcement. But you have to understand 
under the education that money opens up to anybody, a 
university can get it, a community group can get it. People 
with literally no fair housing enforcement experience get 
education money.
    So in the past when the program was created in 1988, 
Congress and the White House said, we are going to give these 
fair housing groups both education and enforcement money so 
that they can educate the community about the problem, they can 
enforce it, and then they can reduce the amount of 
discrimination.
    Now, the money has been just spread out so thin that an 
enforcement agency--these fair housing groups apply for the 
enforcement money. They may ask their city for some education 
money. But it is just not being utilized in the most efficient 
way that it could be.
    And if we went back to the way the program was set up as a 
pilot program--actually it was President Reagan who pushed the 
program through, and Congress who supported it. If we went back 
to the way it was originally established, I think you would be 
able to see measurable results in desegregation and fair 
housing enforcement in the United States.
    Mr. Green. I have one more question and the chairman has 
been more than generous with his time. But I do want to ask 
about the impact that these--that knowledge of testing has on 
discrimination.
    Have you found that there is some deterrence if it is 
widely known, if it is pervasive, that people are testing and 
that you can be caught?
    Ms. Smith. Yes. In the cities where there are always 
ongoing testing programs, like here in the D.C. area, you see 
the rate of discrimination lower. In D.C., they are finding 
maybe about a 40 percent rate of discrimination when they do 
their audits, which means they just send testers out. In other 
parts of the country, that rate of discrimination is usually 75 
percent.
    So when you have a strong education and enforcement 
component in a community, you see a reduction in blatant 
discrimination. Now, it means that we have to pierce further 
into the system to find out if it is continuing in the 
application process, but we have seen reductions.
    Mr. Green. How--can you tell me how we can say to people 
that eliminating this kind of discrimination saves money? Can 
you make that connection for me?
    Ms. Smith. Oh, yes, yes. If you look at what segregation 
does to a city and what it does to city services, education, 
and employment opportunities, you can see how much we have 
lost.
    It is like when we were talking about the public housing. 
Yes, you should have working people in public housing. You 
should have racial and economic integration in a community. We 
look at the education system, and if you see the white flight 
from the 1940's, 1950's, and 1960's, you can look at the core 
cities, and then you saw middle class black flight from 
communities as well, because real estate agents were not 
marketing those communities and they were preying upon people's 
fear of integration to push property values down, which then 
reduces the tax base, which reduces the money for education, 
which reduces money for city services, and anybody who can 
afford to tends to move.
    If we had enforcement, if we had the lenders who were 
redlining back then, and the insurance companies who were 
redlining, if we could curtail that activity we would see 
people moving back into cities, not in a gentrifying way but 
more in a way where you have racial and economic integration 
and people wanting to live with each other because it is a good 
thing to do, not fear of crime, not fear of poor educational 
systems that are available.
    We have wasted so much money. And if you look at the check 
cashing companies that opened up, if the lenders were in that 
community, there are billions of dollars in the low- and 
moderate-income communities that are being exploited by title 
companies, the car title things that they have in Florida and 
the check cashing companies. There is such a change we could 
make in this country if we would put money into fair housing. 
You wouldn't have to be so concerned about voter education, 
voting rights, or school desegregation because you would have 
integrated communities, and people would be electing you or 
going to that school or liking you based on your character, not 
your race.
    Mr. Green. Thank you very much. I appreciate your comments.
    And thank you, Mr. Chairman.
    Chairman Ney. Thank you. The gentlelady from California, 
Ms. Lee.
    Ms. Lee. Thank you, Mr. Chairman. Thank you all again for 
being here. I am sorry I didn't hear your testimony, but I have 
had a chance to look over it and I want to thank you very much 
again for being very clear and succinct and giving us specific 
recommendations on what we need to do.
    I wanted to ask you a couple of things with regard to the 
Assistant Secretary's response just in terms of how you see 
what is taking place in the region.
    We heard from Mr. Campbell, whose question with regard to 
approximately 100 complaints had just about been filed given 
the numbers of individuals who have been displaced, how do 
you--how do we reconcile just 100 complaints at this point 
given your testimony and what we learned when we were in the 
region?
    Mr. Perry. Well, I think there are a few things. The first 
is really about the way that people perceive discrimination in 
that sometimes a person can be discriminated against and have 
no idea that they have been a victim of discrimination.
    In 2003, I opened a fair housing center on the Gulf Coast 
of Mississippi, and when we first opened we did an 
investigation of housing discrimination there. And we sent a 
tester to--an African American tester to an apartment complex 
on the Gulf Coast. And he was told that the rent was going to 
be $600 a month. And the person there was extremely nice to 
him, and so he thought there was a great opportunity. He came 
back and gave me personally his report, and I frankly, and he 
also thought there was no discrimination at that complex.
    We sent our white tester about 20 minutes later, went to 
the same apartment complex and our white tester was told that 
the rent was $400 a month, significantly less than the African 
American tester had been told. And once again the landlord was 
very, very nice and very, very accommodating.
    And so, what is interesting there is that about 5 days 
later the tester came back to me and said, hey, you know I am 
actually looking for housing myself and I really liked that 
apartment on the Gulf Coast, and I want to know since we are 
done with testing can I go back and rent that very apartment. 
And we usually don't tell our testers the result of the 
process. We don't tell them whether or not they have been a 
victim of discrimination. But I had to tell him. I had to tell 
him that, hey, this woman offered you this apartment at $600 a 
month and it is the exact same apartment that 20 minutes later 
she offered to the white tester that you met a few days ago who 
is no different from you but for the fact he is white and it is 
going to be $200 more for you than it was for this person. Very 
blatant, very straightforward discrimination.
    My point is that he would not have known if he were not a 
tester, and it really goes to and speaks to the importance of 
the testing program, the importance of the work that we do. If 
we can't test these cases, a lot of times we don't know if 
there has been discrimination. Usually it is really a feeling 
or a hunch that a person has.
    I will give you one more example like that, and it is not 
particular to the Gulf Coast but I think it really makes a 
point. A friend of ours whose husband was looking for housing 
and she was looking for housing, they were getting a divorce 
and they had a son who was bilingual. And this is here in D.C. 
The husband was Hispanic. The mother was white. And she calls 
an apartment complex here in D.C., and finds out that there is 
an apartment available for rent, several apartments as a matter 
of fact. And so, she says, well, these apartments are too big 
for me and more than I want to pay but it would be great for my 
husband. She refers them to her husband. He calls. He has a 
Latino accent. And right away they say nothing is available.
    And so he calls his wife, about to be ex-wife, and said why 
do you put me through all this stuff, I know we are getting 
divorced but you know you don't have to waste my time and have 
me looking at thee apartments. And she says, no, I just called 
and they said this apartment was absolutely available.
    So she calls back again and she finds out well, wait, they 
tell her again that the units are available. So she suspects 
obviously that discrimination has happened. She contacts the 
National Fair Housing Alliance. Within a few days they are at 
the table with a leading civil rights attorney and they are 
settling the case. And it is only because they both called and 
they were able to compare what happened that they were able to 
determine that there was housing discrimination.
    And so that is an important anecdote that comes up, is that 
it is only when you are able to compare what happens, are you 
able to determine that it is housing discrimination.
    So I think a lot of times people in the Gulf Coast and 
elsewhere go out and look for housing, and they have that 
feeling that something funny is going on, but the only way to 
prove it is with support from agencies like ours. And so I 
think that that is what happens and that speaks a lot of times 
to that 100 complaint number, is that people frankly don't know 
many times they have been victims of discrimination.
    Ms. Lee. And then that begs the question in terms of just 
the trauma and the confusion and all of the stuff that comes 
with being displaced and being lied to and being jerked around. 
You add that to not knowing, and then HUD, I mean, with 30 
people in the region, I just can't imagine how people are being 
informed and being educated and being taught about their rights 
at this point.
    And I would hope--and you heard again what the Assistant 
Secretary said, 30 people in the region. She thought that the 
budget was adequate and that this was enough. I can't imagine 
that given the population of people that have gone through this 
that 100 complaints reflects, that 30 people are going to be 
able to service and look out for the rights of those people who 
have been displaced.
    How do you see that 30, the staff there, and their role in 
their job?
    Mr. Perry. I have been privileged to meet with the 
Assistant Secretary a few times since she has taken office, and 
I would submit a few things, that, you know, she inherited an 
office that was perhaps very different than the vision that she 
has for the office and she has only been in her position for 4 
months at this point. And so I don't offer that as a defense or 
as an explanation, but I think that that contributes to the 
response.
    But I have been able to talk to her, for instance, about 
stationing folks on the Gulf Coast, and one concern I had was 
that they are only coming for about 2 weeks at a time. But 
since then, for instance, she listened to my concern and there 
are some folks who are staying for as many as 60 days on the 
Gulf Coast to work on issues. And I have been able to work very 
closely with them.
    I think that what is key to going forward on the Gulf Coast 
is not really the placement of HUD staff frankly. I think that 
what is key is supporting the groups that are already there, 
the fair housing and civil rights advocacy groups that are 
already there. And the issue is this. When a HUD staff person 
comes in from out of state and they have to learn the entire 
terrain of the Gulf Coast in a matter of only, in a very short 
period of time, it is very difficult for them to learn 
everything they need to learn and then aggressively investigate 
housing discrimination issues, and so it may be better served 
to give more support to the local agencies.
    Now that said, HUD has given some support or allocated some 
support in the way of, I think, a program called the PIF 
program, and so we have been allocated some of that funding. We 
haven't received the funding yet. We are still awaiting it. But 
there are some other efforts there. But I would agree that 
there needs to be more.
    And to the extent that there can be more funding, you know, 
one basic issue that I talked about with the Assistant 
Secretary is that one of the limitations is the amount of 
funding that is available. You know, I think she commented, and 
I hope I don't misquote her, that for some of the other HUD 
programs, there was emergency money in order to send people 
down to the coast to do work. But when it came to the Fair 
Housing Initiatives Program or the Fair Housing Education 
Outreach Program, there wasn't this extra money. It had to come 
specifically out of the existing budget. And so there wasn't 
additional money in order to put a great number of staff down 
there. So I think there has to be more funding for that.
    Ms. Murguia. If I can just add, your question is extremely 
on point especially when you think about the number of staff 
they have down there, but also the diversity of the population. 
Of course we need to make sure the African American population 
needs are met. But as you heard in the various testimony there 
are Latino communities and Asian American communities who have 
been there for several years, and some who are now coming to 
the region, and there is a wide mix of needs because of that.
    And we have determined, and I have shown, where you know 
language and cultural competency is really important in those 
staff, that they be prepared to deal with the diversity of the 
community and those needs. And quite frankly we don't have any 
knowledge to know that those folks are really qualified to work 
with that diversity of the community. And we do know that 
perhaps those in the Latino community, as you have heard it 
said before, are often intimidated or otherwise discouraged to 
file anyway. And so when you add language and social competency 
issues from those who are down there, it creates another layer.
    And again many Latinos and other members of communities of 
color are also unaware of their rights or unaware that they 
have been discriminated against. So you wonder if the staffing 
down there is not only adequate but is really qualified to 
serve the diversity of the communities that are down there.
    Ms. Smith. We also have to look at the fact that there is 
only one fair housing center in the State of Louisiana. There 
is only one in Mississippi. There is only one in Tennessee. 
There is nothing in South Carolina. There is one in North 
Carolina, one in Virginia, zero in Arkansas.
    It goes like that across the United States--Ohio, 
California, Wisconsin, and the Chicago area have most of the 
fair housing centers in the United States. There is nothing in 
Dallas. And how many evacuees are in Dallas? There is no 
private fair housing center in Dallas. The Houston office has 
two-and-a-half people, and most of the evacuees ended up in 
Houston.
    So unless we can get additional fair housing money for 
those groups, we are not going to make any progress. You know, 
if HUD takes the $11- or $13 million that is set aside for the 
whole country for enforcement and retargets some of that just 
for the Gulf Coast, what have you done to the 64,000 evacuees 
in the fair housing people in Georgia? You can't take this 
little pool of money and stretch it any thinner. We need more 
money for enforcement.
    Mr. Johnson. Part of the problem in Mississippi--is the 
only place I can speak for--we don't have a Fair Housing Act. 
Many people don't understand what their rights are. The HUD 
Fair Housing Office has been vacant for a few months now, I 
think about 9 months. The HUD fair housing individuals who come 
down, they rotate every 2, 3 weeks in. They make the key 
contact calls to say, are there any problems? And then they 
leave.
    So you cannot sustain any type of ongoing education 
program, you cannot really do any real testing, and you don't 
have any real thrust to get at the problem. And you compound 
that with Katrina, you have a big problem.
    Ms. Lee. Thank you and thank you for your response. Mr. 
Chairman, I hope as we look at this budget moving forward, 
given the fact that the President's budget is a million less 
than last year, we need to figure out a strategy in light of 
Katrina and Rita to bump this up, not only restore these cuts 
but we need to have a specific increase for fair housing 
investigation, complaints, and process in terms of compliance 
with our nondiscrimination laws.
    Thank you very much. Thank you, Mr. Chairman.
    Chairman Ney. I want to thank all the members for the 
hearing today and the panelists for your important 
presentations.
    I note that some members may have additional questions for 
this panel which they may want to submit in writing. Without 
objection, the hearing record will remain open for 30 days for 
members to submit written questions, and the witnesses to place 
their responses in the record.
    Again, thank you for your time on a very important issue. 
We will follow back up with a potential look at some of the 
amendments.
    Yes, Mr. Perry.
    Mr. Perry. I forget to ask to submit into the record a copy 
of some of the advertising that we found on Internet Web sites 
and I submitted that at the previous hearing, but I just want 
to get it into the record at this hearing as well.
    Chairman Ney. Without objection. I think we also have 
copies. Without objection.
    Thank you very much for the hearing.
    [Whereupon, at 1:30 p.m., the subcommittee was adjourned.]


                            A P P E N D I X



                           February 28, 2006


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