[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
FEDERAL HOUSING RESPONSE
TO HURRICANE KATRINA
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 06, 2007
__________
Printed for the use of the Committee on Financial Services
Serial No. 110-1
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HOUSE COMMITTEE ON FINANCIAL SERVICES
BARNEY FRANK, Massachusetts, Chairman
PAUL E. KANJORSKI, Pennsylvania SPENCER BACHUS, Alabama
MAXINE WATERS, California RICHARD H. BAKER, Louisiana
CAROLYN B. MALONEY, New York DEBORAH PRYCE, Ohio
LUIS V. GUTIERREZ, Illinois MICHAEL N. CASTLE, Delaware
NYDIA M. VELAZQUEZ, New York PETER T. KING, New York
MELVIN L. WATT, North Carolina EDWARD R. ROYCE, California
GARY L. ACKERMAN, New York FRANK D. LUCAS, Oklahoma
JULIA CARSON, Indiana RON PAUL, Texas
BRAD SHERMAN, California PAUL E. GILLMOR, Ohio
GREGORY W. MEEKS, New York STEVEN C. LaTOURETTE, Ohio
DENNIS MOORE, Kansas DONALD A. MANZULLO, Illinois
MICHAEL E. CAPUANO, Massachusetts WALTER B. JONES, Jr., North
RUBEN HINOJOSA, Texas Carolina
WM. LACY CLAY, Missouri JUDY BIGGERT, Illinois
CAROLYN McCARTHY, New York CHRISTOPHER SHAYS, Connecticut
JOE BACA, California GARY G. MILLER, California
STEPHEN F. LYNCH, Massachusetts SHELLEY MOORE CAPITO, West
BRAD MILLER, North Carolina Virginia
DAVID SCOTT, Georgia TOM FEENEY, Florida
AL GREEN, Texas JEB HENSARLING, Texas
EMANUEL CLEAVER, Missouri SCOTT GARRETT, New Jersey
MELISSA L. BEAN, Illinois GINNY BROWN-WAITE, Florida
GWEN MOORE, Wisconsin J. GRESHAM BARRETT, South Carolina
LINCOLN DAVIS, Tennessee RICK RENZI, Arizona
ALBIO SIRES, New Jersey JIM GERLACH, Pennsylvania
PAUL W. HODES, New Hampshire STEVAN PEARCE, New Mexico
KEITH ELLISON, Minnesota RANDY NEUGEBAUER, Texas
RON KLEIN, Florida TOM PRICE, Georgia
TIM MAHONEY, Florida GEOFF DAVIS, Kentucky
CHARLES WILSON, Ohio PATRICK T. McHENRY, North Carolina
ED PERLMUTTER, Colorado JOHN CAMPBELL, California
CHRISTOPHER S. MURPHY, Connecticut ADAM PUTNAM, Florida
JOE DONNELLY, Indiana MARSHA BLACKBURN, Tennessee
ROBERT WEXLER, Florida MICHELE BACHMANN, Minnesota
JIM MARSHALL, Georgia PETER J. ROSKAM, Illinois
DAN BOREN, Oklahoma
Jeanne M. Roslanowick, Staff Director and Chief Counsel
C O N T E N T S
----------
Page
Hearing held on:
February 6, 2007............................................. 1
Appendix:
February 6, 2007............................................. 139
WITNESSES
Tuesday, February 6, 2007
Andrews, Julie, spokesperson for Residents United and a public
housing resident............................................... 119
Bernardi, Hon. Roy A., Deputy Secretary, U.S. Department of
Housing and Urban Development.................................. 43
Boustany, Hon. Charles W., Jr., a Representative in Congress from
the State of Louisiana......................................... 15
Bright, Edgar III, President, Standard Mortgage Corporation, on
behalf of Mortgage Bankers Association......................... 94
Browne-Dianis, Judith A., co-Director, Advancement Project....... 123
Crowley, Sheila, President, National Low Income Housing Coalition 86
Garratt, David, Acting Director of Recovery, Federal Emergency
Management Agency.............................................. 45
Jefferson, Hon. William J., a Representative in Congress from the
State of Louisiana............................................. 13
Johnson, Derrick, President, Mississippi State Conference NAACP.. 115
Kegel, Martha J., Executive Director, UNITY of Greater New
Orleans........................................................ 125
Kelly, James R., Chief Executive Officer, Catholic Charities
Archdiocese of New Orleans..................................... 117
Koo, Doris W., President and CEO, Enterprise Community Partners.. 113
Leger, Walter, Chairman, Housing and Redevelopment Task Force,
Louisiana Recovery Authority................................... 48
Mehreteab, Ghebre Selassie, co-Chairman and CEO, NHP Foundation.. 90
Melancon, Hon. Charlie, a Representative in Congress from the
State of Louisiana............................................. 17
Perry, James H., Executive Director, Greater New Orleans Fair
Housing Action Center.......................................... 91
Richardson, James A., John Rhea Professor of Economics, E.J.
Ourso College of Business, Louisiana State University.......... 95
Swoope, Gray, Executive Director, Mississippi Development
Authority...................................................... 50
Tate, Kirk H., Chief Executive Officer, Orion Real Estate
Services, on behalf of National Multi Housing Council.......... 88
Taylor, Hon. Gene, a Representative in Congress from the State of
Mississippi.................................................... 10
Turner, Margery Austin, Metropolitan Housing and Communities, The
Urban Institute................................................ 121
APPENDIX
Prepared statements:
Baca, Hon. Joe............................................... 140
Blackburn, Hon. Marsha....................................... 141
Brown-Waite, Hon. Ginny...................................... 142
Carson, Hon. Julia........................................... 143
Garrett, Hon. Scott.......................................... 145
Sires, Hon. Albio............................................ 147
Taylor, Hon. Gene............................................ 148
Waters, Hon. Maxine.......................................... 153
Andrews, Julie M............................................. 160
Bernardi, Hon. Roy A......................................... 162
Bright, Edgar III............................................ 167
Browne-Dianis, Judith A...................................... 180
Crowley, Sheila.............................................. 267
Garratt, David............................................... 299
Johnson, Derrick............................................. 306
Kegel, Martha J.............................................. 312
Kelly, James R............................................... 316
Koo, Doris W................................................. 320
Leger, Walter................................................ 327
Mehreteab, Ghebre Selassie................................... 352
Perry, James H............................................... 358
Richardson, James A.......................................... 363
Swoope, Gray................................................. 374
Tate, Kirk H................................................. 379
Turner, Margery Austin....................................... 385
Additional Material Submitted for the Record
Frank, Hon. Barney:
Letter to the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, the
Office of the Comptroller of the Currency, the Office of
Thrift Supervision, and the National Credit Union
Administration, dated January 17, 2007..................... 399
Response letter from the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation,
the Office of the Comptroller of the Currency, the Office
of Thrift Supervision, and the National Credit Union
Administration, dated February 5, 2007..................... 401
Statement of Habitat for Humanity............................ 404
Statement of American Association of Homes and Services for
the Aging (aahsa).......................................... 407
Statement of National Association of Housing and
Redevelopment Officials (NAHRO)............................ 413
Statement of the National Association of Realtors............ 423
Statement of The Housing Policy Council of The Financial
Services Roundtable........................................ 426
Statement of Volunteers of America Greater New Orleans....... 434
Statement of The National Association of Home Builders....... 443
Green, Hon. Al:
Letter to David R. Paulison, Director, Federal Emergency
Management Agency, dated December 7, 2006.................. 450
Response letter from David R. Paulison, Director, Federal
Emergency Management Agency, dated January 12, 2007........ 454
Report of the National Low Income Housing Coalition.......... 456
Melancon, Hon. Charlie:
Charts pertaining to the Federal Government's commitments to
Louisiana.................................................. 526
Waters, Hon. Maxine:
Newspaper articles from the Washington Post and the Wall
Street Journal............................................. 528
Responses to supplemental questions submitted to FEMA............ 535
FEDERAL HOUSING RESPONSE TO HURRICANE KATRINA
----------
Tuesday, February 6, 2007
U.S. House of Representatives,
Committee on Financial Services,
Washington, D.C.
The committee met, pursuant to notice, at 10 a.m., in room
2128, Rayburn House Office Building, Hon. Barney Frank
[chairman of the committee] presiding.
Present: Representatives Frank, Waters, Maloney, Velazquez,
Watt, Ackerman, Sherman, Meeks, Capuano, Clay, McCarthy, Baca,
Lynch, Scott, Green, Cleaver, Moore of Wisconsin, Davis of
Tennessee, Sires, Ellison, Klein, Wilson, Perlmutter, Donnelly;
Bachus, Baker, Castle, Gillmor, Jones, Biggert, Miller of
California, Capito, Feeney, Hensarling, Garrett, Pearce,
Neugebauer, Blackburn, Bachmann, and Roskam.
Also present: Representatives Taylor, Jefferson, Boustany,
and Melancon.
The Chairman. This hearing of the Committee on Financial
Services will come to order. I want to begin with an apology to
members of the public. It was not the decision of this
committee to expand the committee. You may note that there is a
row of seats facing the audience that ideally should be part of
the audience, but the committee has grown in size, and that has
taken up some of the room that would be for the public. We
apologize for this. We do have another room where people can
listen. We promise not to be too interesting, so those who only
listen will not be too deprived, and I welcome the witnesses.
This is a very important hearing. There are few areas in
the judgment of many of us on this committee where Federal
policy has failed to meet its responsibilities more clearly
than in helping respond to the terrible tragedy that hit people
in Louisiana and Mississippi with Hurricane Katrina. There was,
of course, a lot of controversy about the response of the
Government, particularly the Administration here in Washington,
and other governments at the time. It is one thing for people
not to be able to respond in a terrible emergency in a period
of a few days. It is, in my judgment, inexcusable that this
much later--a year-and-a-half after those events--so little has
been done. No one can use the justification of an emergency or
of unpreparedness. What we have is a conscious decision not to
remedy terrible conditions in which people should not have to
live.
The purpose of this hearing is not simply to document that
failure, although documenting failure is an important part of
any effort to move forward. People say that we should ignore
the past and just look to the future, forgetting that dealing
intelligently with the future requires an understanding of what
went wrong in the past. Our intention--and I speak here for
myself and the Chair of the Subcommittee on Housing, the
gentlewoman from California who has been very much concerned
with this since the day of the terrible hurricane--is to
listen, to elicit information, and within a fairly short period
of time, certainly by March, come forward with legislation
which we believe will begin to address problems that have for
so long been unaddressed. This committee has particular
jurisdiction over housing. There is shared jurisdiction.
Insurance is shared with the Committee on Homeland Security,
and flood protection is shared with other committees.
But our jurisdiction is completely in the area of housing,
and we have a terrible problem in that a large number of
housing units were destroyed. The information we received was
that in Louisiana, 204,000 homes were destroyed or suffered
severe damage; in Mississippi, 61,000. Of those, 82,000 homes
in Louisiana and 20,000 in Mississippi were renter-occupied,
and we have two related problems: The ability of homeowners to
rebuild and get back into their homes; and a shocking neglect
of the need for rental housing. The absence of that rental
housing is not simply a social problem, but it is an economic
problem, as well. An article in the New York Times about a
month ago reported the decision by the Oreck Company to shut
down a factory that they had reopened in Mississippi after the
hurricane to great praise, and one of the reasons they gave,
and there are always a lot of reasons and people can be for or
against a decision, but one of the reasons was that they had a
hard time getting workers because there was no place for these
workers to live. The economy of New Orleans, a service economy
with hotels and restaurants, requires housing where people who
work in those occupations can live. They will be renters to a
great extent. We have seen a complete failure on the part of
the Administration here in Washington to respond to that
crisis, and indeed, there have been efforts by the
Administration to oppose things that we have put forward that
would provide some of the resources.
Now, let me just say, obviously a lot of governments are
involved. Our primary responsibility as a committee of the
Congress of the United States is to look at our
responsibilities as part of the Government of the United
States. People will be commenting and there will be testimony
from State officials from Mississippi and Louisiana. And that
is part of the mix, but the remedies we control, the measures
we will propose will deal with the Federal Government's
response because it is the Federal Government for which we bear
responsibility, and in my judgment it is the Federal Government
which has failed completely to meet its responsibilities and,
indeed, to live up to the promises that were made by the
President and high officials of this Administration in the days
immediately after Hurricane Katrina. We have given out some
paper that makes that clear--that contrasts the President's
promises with the failures.
And finally, let me say, people will say, why are you now
getting to this? In the period after the hurricane--
I apologize for my condition, but unlike the condition of
the people in Louisiana, it will take care of itself. A cold
goes away. A lack of housing for people does not take care of
itself, and it perpetuates until action is taken.
The gentlewoman from California, when she was the ranking
member of the Subcommittee on Housing, and I was the ranking
member of the Full Committee, we spent as much time in this
past 15 or 16 months in trying to sort out the problems in
Louisiana as anything else. She has been there. She plans to
bring this subcommittee there later this month. We tried very
hard to sort this out, and we were frustrated in our ability to
do so. But now as members of the majority, it is our intention
to insist on answers, including from the people who live there
and the people who have been trying to deal with it, as to how
we can improve the situation, what we, the Federal Government,
can do to begin to meet a need that should have been met 15 and
16 months ago, to help people rebuild their homes and come back
to their homes, and we then plan to have a legislative package.
We have consulted with other committees, the Committee on
Ways and Means, which has jurisdiction over the tax credits and
others, and we will have a package. I believe that it is
appropriate for those of us in the Federal Government to
apologize to the people of the Gulf area, of Louisiana and
Mississippi, to apologize for having done so little to
alleviate the pain that was inflicted upon them through no
fault of their own. I can't undo the past 15 months, the past
16 months, but we can commit ourselves to doing everything that
is within the power of this committee to start to do what we
should have done a while ago.
I now recognize the ranking member of the committee.
Mr. Bachus. Let me start by thanking Chairman Frank for
scheduling this hearing and for his leadership of the
committee. This committee has a long history of working
together effectively in a bipartisan way, and I appreciate the
positive working relationship that we have established and look
forward to building on that relationship. Let me welcome my
former Congressional colleagues. You will be introduced in a
very short time. I would also like to welcome the folks from
the affected States, as well as Deputy Secretary Bernardi. We
are all aware of the tremendous cost wrought by Hurricane
Katrina.
Most Americans recall the stark images that were broadcast
by the news media during that last week of August 2005, images
of suffering, devastation of neighborhoods, communities, dreams
and fortunes swept away in a very short time, and
unfortunately, yes, human lives swept away. A great American
city, New Orleans, reduced to near primitive conditions. Along
the Mississippi coast, century old homes that had withstood
storm after storm were no longer there; they were lost forever.
As frightening as all that was for those of us who viewed
Katrina's wrath from a distance, via television or news
reports, only those who experienced it firsthand can truly
appreciate the devastation and anguish left in Katrina's wake.
I remember Gene Taylor saying that if you are a Member of
Congress and you haven't been there, you need to go there
because it is worse than it is portrayed on TV. Those of us who
went there--and most Members of Congress did--found that to be
the case. And it was in December of that year that Congress
first appropriated money for hurricane relief only a few months
later. Then in February, you will recall that President Bush,
after consulting with the Governors, put forth his budget
recommendations. I know for Louisiana it was $4.2 billion, and
at that time all the news reports said they thought that would
be sufficient. So I know there have been failures, but I know
that at least in February there was an agreement in this body
shortly after the hurricane as to what amounts of money were
needed and were appropriated.
While many never lived to tell their stories and
experiences of Katrina, some did, and I understand that some of
the people testifying today actually went through the hurricane
from start to finish. After the storm finished, here are some
of the things that we found. One is that it devastated an area
of 90,000 square miles. Now people, what is 90,000 square
miles? Well, it is the size of Great Britain. It is an area
bigger than Utah, closer to the size of Oregon, so imagine how
widespread that is. That is historic. 770,000 Americans were
left homeless, 1,464 deaths in Louisiana alone. Almost
700,000--645,000, to be exact, people in Louisiana displaced
without a home. About 67,000 in Mississippi. A smaller number
in Alabama, my home State.
From a personal standpoint, I am particularly interested in
hearing the stories of those who continue to wrestle with the
storm's difficult and frustrating aftermath, to learn how
effective the billions of dollars in Federal aid have been in
supporting the relief, recovery, and rebuilding efforts.
Further, and I think this is most important, I hope that
from this hearing and others we will reach a consensus on some
of the critical questions facing this Congress relative to this
Nation's disaster response preparedness, such as determining
which Federal agency should lead the national response, in
developing a strategy for dealing with uninsured losses. I know
that particularly in Louisiana, people who thought they were
fully covered found out that it was flood insurance or that it
was wind insurance and it didn't cover flooding. Once we
determine an appropriate agency, it is of utmost importance to
determine its role and its primacy. Does the State lead or does
a Federal agency lead? Who supports? Who has final authority?
Katrina not only left physical devastation in its wake, it left
behind a reservoir of anger, strong emotions, and painful
experiences. Our challenge is to channel those experiences and
those emotions into an appropriate response.
You have heard the chairman talk about his anger. We must
not let our anger and the anger of our witnesses today, a
rightful anguish, inspire us only to more legislative anger.
The people addressing us today as well as thousands of affected
Americans depend on us, Republicans and Democrats alike, not to
get angry but to get it right. So do those families who in the
future may themselves experience a Katrina-like tragedy. In the
past few years, we have viewed the Middle East and events there
and we have all, I think, questioned and hoped that people
there would set aside age-long hostilities and grievances and
come together and build a new society, one founded on
cooperation and brotherhood, not on revenge.
We face a similar challenge in this country. The natural
inclination is for us to continue to criticize and denigrate
the Katrina relief efforts, but what is needed is altogether
different, and that is an honest commitment to come together
and avoid the mistakes of the past. In summary, Mr. Chairman,
it is imperative that we not waste our energy in concentrating
on past mistakes, but rather focus on ways to avoid them in the
future. Thank you.
The Chairman. The next speaker will be the Chair of the
Housing Subcommittee, who has devoted more time and energy to
trying to deal with this problem, I believe, than any Member
not from the affected area and, now that we are in a position
to do something, will be taking the lead in our efforts, in
fact, to provide that long-needed relief, the gentlewoman from
California.
Ms. Waters. Thank you very much, Mr. Chairman. I want to
thank you for holding this hearing, and I must admit that I was
skeptical about holding yet another hearing. We have held
countless hearings in various committees of Congress, and there
have been so many visits both from the Senate side and the
House side. Members of various committees have gone to the Gulf
region, including, of course, New Orleans and all of the other
cities, only to find ourselves here today understanding that
with all the money that we have appropriated, and it looks as
if it is $19.3 billion to FEMA, $16.7 in Community Development
Block Grant funds alone and other moneys, that we still have
displaced persons who do not know what the future holds for
them. They are living outside of their home States, they are--
some of them--their rents are being paid by HUD and they are
paying market rate rents for these temporary quarters, some of
which are not really habitable, worse than some of the public
housing that people are being told they can't return to, and
some of those folks who are being taken care of by FEMA do not
know from day to day whether or not FEMA will continue to
provide the rental assistance for them, despite the fact that
they have no permanent housing.
What is very interesting about the situation is that, on
one of my five visits to New Orleans, I discovered there were
many businesses that could not operate properly because they
didn't have the personnel. And as a matter of fact, some of the
big companies that got demolition contracts were bringing in
people from all over the country, paying rental rates at hotels
for them to stay to get involved to be doing some of the work
while, in fact, the residents who were living in Dallas and
Houston and all of these other places wanted to come home,
wanted jobs, but there was no housing for them. I have visited
these public housing projects, and I am amazed at the number of
public housing projects that have minimal damage that could
have been repaired. HUD again is paying market rate for many of
the public housing tenants to live in other States, and these
tenants all thought that they would be able to come back home
after these units were repaired. Because some of the housing
only suffered minimal damage, 2 to 3 feet of water at the base
of the project, many people thought they would be able to come
back home. They have since been told, ``Oh, no, we are going to
tear them all down, and we will provide an opportunity for you
to be eligible for a unit in 5 to 6 years.'' The residents are
very upset, not only can they not wait 5 to 6 years to expect
to come back to affordable housing, but they don't trust HUD.
And most of the whole six projects, they have lost two-thirds
of the low-income housing in these mixed developments where
there is an attempt to have market rate plus homeownerships and
some public housing units. They have lost again two-thirds of
these public housing units, and many of these people believe
that not only does HUD not want them back in public housing
units but even some of the city fathers and officials want to
get rid of poor people, and this is a convenient way by which
to do it.
So the public housing residents have gotten with pro bono
lawyers, and they have filed a lawsuit, and the judge has been
telling HUD and the residents to work it out. HUD has insisted
that it must demolish many more units than the residents
believe need to be demolished. As a matter of fact, what is
interesting about HUD is that some of the units that they now
include in demolition have been approved since 1997, and they
did not demolish them and replace them. The other thing that we
are discovering about the housing authority in New Orleans, for
example, is that it has not been maintained, that little money
has been put into maintaining these properties. In addition,
since HUD made the decision that it was going to demolish the
units, they have done nothing to secure them.
I walked through a number of these developments just a week
ago last Sunday. I spent a day looking and walking through, and
what I saw was this--some are in great disrepair. Much of what
happened is as a direct result of Katrina, but because the
doors have been left open, the vandalism has been great: copper
piping has been stripped out and the roofs in some of them are
in disrepair. The rain has come in because there has been no
attempt to secure and maintain these developments. And so we
have public housing that is standing there, and even that
public housing that could have been unboarded and used to let
people return was not repaired to enable people to come back.
Now, let me just say a word about the homeowners; they are
in just as bad a shape. This Road Home Program in Louisiana is
a joke. We have given all of our CDBG money, over $16 billion I
believe in CDBG money, to Louisiana and then come up with a
state-directed program out of the Governor's office, supposedly
to help provide subsidies to homeowners, up to $150,000, and we
find that somewhere between 228 and 400 homeowners have been
assisted and not all with the full $150,000, out of 100,000
applicants. And we find that there is a program that is not
designed to really help people but rather to keep people from
getting the money because they think somehow they may be
involved in fraud.
Mr. Chairman and members, this subcommittee and this
committee must undo this mess and undo it quickly, and I think
we can. The CDBG money is Federal money, and the States don't
get an opportunity to take our money and do whatever they want
to do with it. In Mississippi, Mr. Taylor, they have done a
little better with over 10,000 units, homeowners who have been
assisted, but still I don't think it is good enough, and then
you will tell us a little bit more about that. We intend to
hold our hearings. We are going to go to New Orleans. We are
going to work with the tenants as well as HUD and we are going
to get some units opened back up. You are going to hear a lot
about phased development and how we can do this.
I welcome the opportunity to engage everybody today but the
bottom line, Mr. Chairman, is we have to move it. We have to do
something, and we have to guarantee that not only public
housing residents but homeowners are going to be treated fairly
and our money is going to be spent properly.
I yield back the balance of my time.
The Chairman. Pursuant to the agreement, I am now going to
recognize members of the minority and instead of 5 minutes, I
will make it 7 minutes to accommodate the extra, and pursuant
to the instruction from the ranking member, I will first
recognize the gentlewoman from Illinois for 4 minutes and then
the gentleman from New Mexico for 3 minutes, if that is
acceptable. The gentlewoman from Illinois is recognized.
And I should at this point make it clear that all members
are entitled to submit written statements for the record
without any objection. The gentlewoman from Illinois.
Mrs. Biggert. Thank you, Mr. Chairman, and thank you for
chairing this hearing. By all accounts, certainly Hurricane
Katrina was the most destructive and costly natural disaster in
U.S. history. It led to the evacuation of a major city and the
surrounding areas and it destroyed housing and infrastructure
on an unprecedented scale. During the 109th Congress, the
Financial Services Committee was at the forefront, I think, of
the hurricane relief efforts with three hearings and four
briefings, with approximately 80 witnesses participating. In
the months that followed this disaster, the committee
shepherded needed relief legislation to the Floor, helping not
only families in the immediate hurricane-ravaged areas, but
those who suffered in the aftermath due to flooding. But the
task of recovery and rebuilding in the Gulf Coast region
continues to be monumental. We are 18 months removed from
Hurricane Katrina, yet the challenges seem unending. To many of
those affected, the recovery has been, to say the least, slow
and unending. Rebuilding has been hindered by the severity of
the damage, the need to limit future flood damage and the need
to coordinate the recovery among many levels of government.
There are still too many people who are without permanent
housing, jobs, and infrastructure. How best to go about the
reconstruction of the region and the problems facing the
mortgage and financial services industry are all issues that
must be addressed.
One thing that is certain is that disasters will continue
to happen. We need only to look at the devastating storms in
Florida this past week as a reminder. We in Congress need to
learn from our mistakes in the Gulf Coast. We must ask the
difficult questions about how the $110 billion has been spent
in the localities, could it have been spent more efficiently
and cost-effectively? What accountability should there be? What
Federal organization should be in charge of the Federal
Government response? And what should be done about uninsured
losses? These are difficult questions, but we must figure out
how to get it right.
As the new ranking minority member on the Financial
Services Subcommittee on Housing, I certainly have a deep
interest in this. Clearly the availability of affordable
housing is critical to the overall recovery after such a
devastating storm. If there is no housing, there are no
businesses. If there are no businesses, there are no jobs, and
without jobs and businesses, residents will fail to return and
provide the economic base that will spur the economy for the
New Orleans metropolitan region.
I hope that today's hearing will shed light on the issues
that Congress should consider in order to better plan for
future disasters and how to improve the capability of all
levels of government to respond to disasters effectively. And
with that, I yield back.
The Chairman. I thank the gentlewoman. At this point the
gentlewoman from California would ask unanimous consent to be
able to insert some material into the record, some newspaper
articles. Is there objection? The Chair hears none. The
gentlewoman may proceed to insert those materials. And the
gentleman from New Mexico is now recognized.
Mr. Pearce. Chairman Frank, I appreciate this hearing. Like
all Americans, I was deeply shocked and saddened by the events
surrounding Hurricanes Katrina and Rita. Hurricane Katrina's
impact was of historic and devastating magnitude. Thousands of
active duty troops and National Guard forces all deployed to
assist and search in recovery efforts and to provide logistical
and medical supports to supported areas. The President ordered
the Department of Homeland Security through the Federal
Emergency Management Agency to organize efforts between the
Federal, State, and local authorities. And we all watched while
it had less than spectacular results.
Last year Congress held hearings and introduced several
pieces of legislation in light of the Federal Government's
response to the disaster. These included efforts to make the
Department of Housing and Urban Development the primary Federal
agency responsible for coordinating housing assistance in
connection with major disasters resulting in long-term housing
needs. We learned a great deal from those efforts and their
position not to rehash old criticism but to constructively
utilize lessons that we have learned.
As of this year, Congress has passed a series of
supplemental emergency spending bills totaling $81.6 billion.
These relief packages came at a cost greater than any our
country has ever seen in the face of natural disasters. It is
important to know that Congress exercised oversight in these
dollars to ensure that they are wisely spent and truly reach
those most in need. We must also understand why portions of
this funding has yet to be spent and what impediments exist
that may encumber the efficient use of these funds.
On a personal note, I watched as Hurricane Rita circulated
3 days over the Cancun area of Mexico. Shortly after that
disaster, a friend of mine visited in order to see what the
condition of the coast was for travel purposes. I will tell you
that without billions of dollars spent, the people began to
clean up the mess, they began to understand that their
livelihood was dependent on tourism, and there was a concerted
effort to cure the problem.
Yes, I agree that we have underfunded and have not directed
funds properly, but the tremendous cost is being borne by
people in New Mexico who have had parts of their community
burned by forest fires and no national effort to help them. In
my own town last year, a prairie fire pushed by 50- and 60-
mile-an-hour winds raced across 70 miles, burning right up to
the edge of town, burning several businesses, and burning
houses. The wind changed or the entire town may have burned
down, and yet we are being charged in order to pay for people
who lost possessions in a different natural disaster. We face
tornadoes, we face other natural disasters, and never is the
Federal Government standing by to help these people in New
Mexico who have modest incomes averaging in the $20,000 range.
So as we rush to spend the Federal dollars and to browbeat
ourselves for not spending enough, remember the tremendous cost
is being borne by people who are being charged flood insurance
and yet they live in a portion of New Mexico that will never
see a flood, not in 500 years, not in 1,000 years, but they are
being charged higher rates in order to rebuild houses along the
Gulf Coast and sometimes those houses are not just primary
domiciles, sometimes those homes have been rebuilt multiple
times, and we need to ask serious questions about why we are
doing what we are doing.
I agree with the chairman of the subcommittee who found
great unsettlement at the minimal damaged apartments that were
simply closed off and allowed to be stripped out. I, like most
Americans, would share the outrage that such practices were
allowed to happen in the aftermath of the hurricane. We will be
happy to participate in the oversight, and we will be happy to
hold the government accountable because that is what the
Americans expect us to do.
Thank you again, Mr. Chairman, for holding this hearing,
and I yield back.
The Chairman. Let me now explain--this is a little unusual
with this hearing. It is a very important subject and we want
to make sure that a wide range of people are heard. The
gentlewoman from California will be heading the Subcommittee on
Housing for this committee to New Orleans for a field hearing
in February. We will be focusing today, and then, on specific
ideas about what we can do to make Federal resources available
and make them available in a way that leads to their being used
efficiently.
We are now going to hear from four Members from the
affected areas, and I would ask unanimous consent at this point
that the four Members from the affected area subsequent to
their testimony be able to join us in participating in the
hearing if they wish to do so. Is there objection? The Chair
hears none. They will get a chance to question at the end of
the regular membership if they wish to do so.
Next, we will hear from a panel of government witnesses,
after which we will take a break. That is an unusual thing, but
I don't want people to be rushed. I don't want people to be
sitting around and the audience to dwindle. So, when we finish
the government panel, we will break; it will probably be around
1:00. We will break for about an hour, and we will come back at
2:00. This will be a late day for some. We will have two panels
of witnesses, and I hope as many Members as possible will stay.
These are important matters for us to air. I don't think a day
out of our lives, given what has been taken out of the lives of
so many in the Gulf area, is too much to ask. The gentlewoman
from California.
Ms. Waters. Yes. I would like to submit several articles,
two from The Washington Post and one from the Wall Street
Journal. These are articles that have been written about the
``Road Home: Where is the Money?'' I would like to submit these
for the record and to pass them out to our members.
The Chairman. Is there any objection? Hearing none, the
permission is granted. I will now introduce our colleagues. We
have the gentleman from Mississippi, Mr. Taylor, who represents
the area in Mississippi that took the brunt of the hurricane.
The gentleman from New Orleans, Mr. Jefferson, who represents
New Orleans and on the Democratic side, the gentleman from
Louisiana, Mr. Melancon, who represents the area adjacent to
New Orleans, also very heavily hit by the flood. The gentleman
from Alabama.
Mr. Bachus. I want to yield to the gentleman from
Louisiana, who is heading up the Water Resources Committee with
the Corps of Engineers, who has taken that position, the
gentleman from Louisiana, who has really led our efforts on
Katrina.
Mr. Baker. I thank the ranking member for yielding. I just
wanted to introduce Dr. Boustany to the panel. Most of you know
him as the Seventh District of Louisiana Republican. He came
here by way of a career as a thoracic surgeon, so I believe he
has elevated the Louisiana Congressional delegation's abilities
rather significantly, for which we take all the credit.
The Chairman. We will now begin the testimony with the
gentleman from Mississippi.
STATEMENT OF THE HON. GENE TAYLOR, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MISSISSIPPI
Mr. Taylor. Thank you, Chairman Frank, for calling this
hearing. I want to thank you and all of my colleagues for the
help you have provided to me, and more importantly to the
people of south Mississippi, since Hurricane Katrina.
The flood insurance buy-in bill that you and Chairman Watt
drafted to help homeowners who had homeowner's insurance but
not flood insurance eventually led to the Mississippi and
Louisiana homeowner assistance programs that were funded
through the CDBG. Although the House Republican leadership in
the Bush Administration blocked that bill, Senator Cochran was
able to gain approval for the homeowners assistance use of CDBG
funds. The Mississippi program is very similar to our bill
except that it took a year for HUD and the State to create and
implement this new program. Our bill would have provided relief
more quickly to allow homeowners to file flood insurance claims
up to the amount of their homeowner's policy that would be
funded with disaster appropriations. We are very grateful for
the CDBG funds, but HUD and State created a slow bureaucratic
procedure where the situation called for expedited action.
Homeowners had to wait for insurance while the State tried to
verify every detail with insurance companies, lenders, FEMA,
SBA, and other agencies. Those companies and agencies did not
have the extra personnel or motivation to quickly verify each
claim. Homeowners should have been able to provide copies of
the documents, sign affidavits, and then get their checks with
the clear understanding that any fraud would be prosecuted to
the full extent of the law.
While the State was treating every disaster victim with
suspicion, the Mississippi Development Authority, the State's
economic development agency, saw no problem in giving the
contract to the State Senate Finance Committee Chairman and two
other State legislators. I am sorry to report that the State
Ethics Commission said it was okay for a State agency to award
a contract to a legislature who has influence over that agency
so long as only Federal funds and not State funds were
involved. I hope your committee will pass language to prevent
this in the future.
In addition to the housing assistance grants, Mississippi
is using CDBG funds to build water and sewer infrastructure, to
rebuild public housing units, to rebuild utility
infrastructure, and to temporarily subsidize homeowner's
insurance in the State wind pool. While I agree that these are
important needs on our coast, I want to ensure that homeowners
receive all of the assistance that they should from the grant
program. For that reason, I ask the committee to require a full
accountability of the grant program. There should be a list of
who was paid and how much they were paid. These are Federal tax
dollars, so we need to know that they were spent fairly and
appropriately.
Seventeen months after Katrina, south Mississippi's
recovery is still delayed by the refusal of several insurance
agencies to pay fair wind claims. I wrote to Chairman Frank
asking the Financial Services Committee to conduct
investigative hearings about the denial of thousands of Katrina
wind claims, wherever insurers could blame flooding. I am very
grateful that Chairman Watt, the chairman of the Oversight and
Investigation Subcommittee, has scheduled a hearing for
February 28th. I intend to present a case at that time for a
full investigation of the actions of insurance companies and
the engineering firms, adjusting firms, and the contractors
that they used to deny claims.
For thousands of destroyed properties in Mississippi,
insurers assigned all damages to flooding covered by the
National Flood Insurance Program and none to their wind storm
policies. The Mississippi Gulf Coast suffered several hours of
very destructive hurricane winds before the inundation by a
storm surge. Insurers paid billions of dollars of wind claims
inland where they could not possibly blame flooding in the 79
counties north of the coast. Insurers paid more than 250,000
claims totaling $3.5 billion. Claims were paid in every county
as far as 300 miles inland. Insurance claims data from three
coast counties show that the National Flood Insurance Program
in the Mississippi wind pool paid much more than did private
insurers. NFIP estimates it will pay approximately 18,000 flood
claims in three Mississippi Gulf Coast counties for a total of
$2.6 billion. That is an average of about $142,000 per claim
where the average policy was $148,000. HUD will pay an
additional $3 billion to CDBG funds to assist homeowners who
did not have flood insurance. I am convinced that the insurance
adjusters billed the flood program for some damage that should
have been covered by private wind insurance.
Last year Chairman Frank and Mr. Oxley helped make sure
that I could offer an amendment to the flood insurance reform
bill to have the Inspector General of Homeland Security
investigate these claims. This amendment passed by a voice
vote. Although the Senate did not pass the flood insurance
bill, Senator Lott was able to pass that provision to the
Homeland Security Appropriations Act. The Inspector General is
required to report his findings by April 1st.
Insurance companies have a conflict of interest when we
allow them to decide whether to assign damages to the Federal
Flood Insurance Program or to themselves. The Flood Insurance
Program does not provide sufficient oversight to protect our
Nation's taxpayers. The contract between NFIP and the insurance
company requires an adjuster to represent the flood program as
well as the insurance company. The Federal regulations require
the adjuster to make a proper adjustment and to apply the same
standards to a flood claim as to a wind claim.
That certainly did not happen in Mississippi. There is
documented evidence of cases in which insurance companies or
their contractors pressured engineers to revise their reports
or ordered a second report if the first report concluded that
the damage was caused by wind. Once they learned that they
could not control all of the engineers, State Farm simply
stopped ordering engineering reports. Instead the company
issued a wind water claims processing protocol from its
headquarters in Illinois, instructing their adjusters to pay
nothing on a wind claim if any damage could be caused by
flooding. State Farm used Haag Engineering and adjusters from
E.A. Renfroe to justify denials of wind claims. Both companies
have a history of questionable actions, including a 2006
decision against State Farm's denial of 1999 tornado claims in
Oklahoma. The Oklahoma jury found that State Farm--
The Chairman. The gentleman will have a chance to go into
the insurance issue in great detail in the February 28th
hearing, and we do have a fairly packed day. So I would ask him
to come to a close.
Mr. Taylor. One page, Mr. Chairman. The Oklahoma jury found
that State Farm acted with malice and relentlessly disregarded
the duty to act fairly and in good faith by employing Haag
Engineering and Renfroe. In the February 28th hearing, I will
ask Mr. Watt's subcommittee to investigate State Farm, Haag,
Renfroe, and any other partners that conspired against
consumers and taxpayers.
Later this week, I intend to introduce a bill to create a
multi-peril insurance option to the National Flood Insurance
Program. That bill will create a new program to provide wind
and flood coverage in one policy in order to be fiscally
responsible and honor our commitment to pay-as-you-go
budgeting. The premiums would be based on actual risk with no
subsidy. If this bill is enacted, property owners will be able
to buy insurance and know that the damage will be covered. They
will not have to hire lawyers, engineers, and adjusters to try
to prove what damage was caused by wind and what damage was
caused by water. If insurance companies get away with placing
the burden of proof on homeowners to prove that the damage was
caused by wind, I am afraid a lot of people would not evacuate
the next time a major hurricane approaches the Gulf Coast. I
have had friends tell me that they plan to stay behind next
time with a video camera so that they can document the damages.
There is an urgent need for a wind and water insurance policy
for the 53 percent of all Americans who live in coastal
communities.
In recent months insurance companies have canceled wind
policies--
The Chairman. The gentleman has to conclude.
Mr. Taylor. Mr. Chairman, thank you very much.
The Chairman. I appreciate it. I understand that there is
some unfairness in the word-per-minute standard, but we do have
to stick to some overall time limit.
Mr. Taylor. I appreciate that, Mr. Chairman.
[The prepared statement of Representative Taylor can be
found on page 148 of the appendix.]
The Chairman. The gentleman from Louisiana, Mr. Jefferson.
STATEMENT OF THE HON. WILLIAM J. JEFFERSON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Jefferson. I am grateful to you, Mr. Chairman, and to
the members of this committee, particularly subcommittee Chairs
Waters and Watt, for the attention they are already paying to
our recovery. This hearing is just another example of the
commitment of this committee to rebuild the great City of New
Orleans and the towns and cities surrounding it.
I want to make two important points that I think should be
made from the start. First, the Federal responsibility of our
recovery in New Orleans is different from that of any recent
disaster. The drowning of New Orleans was not caused by
Hurricane Katrina itself. Were it so, it would rightly be
described as a disaster caused solely by an act of God. Rather,
according to the Interagency Reforms Evaluation Task Force,
IEPT report issued by the U.S. Army Corps of Engineers, the
Corps admits that its negligence in the design, construction,
and maintenance of our levees was the cause of the destruction
of the homes, businesses, and lives of hundreds of thousands of
our people. Thus, ours is principally, by the Corp's own
admission, a manmade disaster or a Federal Government agency-
made disaster.
Second, this Federal Government agency-made disaster had
been made worse by the failure of the Federal response from
Congress and the President to use real numbers that match up to
the scope of the devastation of our area and that would
actually pay the true cost of recovering. This is not to say,
of course, that we are not deeply appreciative of the $110
billion that has been made. That has been enormously helpful.
In our area, $26 billion of this has been used for the recovery
of buildings and homes, schools and libraries, and so on out of
$110 billion, and the rest has been spent on other things. But
the point is that the help that has been given has not matched
up to the help that is needed to, in real terms, fully rebuild
and to recover. And these numbers have largely been just put
together as a matter of what is possible as opposed to what was
actually necessary to get the job done.
Against this backdrop there are four things in the short
term that I would like to ask this committee to work with us
on, which are tactical and long-term larger problems. The first
is affordable housing. Before the storms, around 60 percent of
New Orleans' population rented housing. According to a survey
of 680 randomly selected evacuees in Houston's shelters,
conducted by the Kaiser Family Foundation, 64 percent of
evacuees forced into shelters were renters and 93 percent were
African American. The affordable housing units lost in Katrina
represented about 30 percent of destroyed or severely damaged
rental housing. As of December 2006, more than 4,000 families
that reside in public housing had not returned because their
developments remained closed. Some of them have made their way
back to the city, only to find that their units were boarded
up, padlocked, and surrounded by fencing, despite demands by
residents who hold leases that these units be reopened.
Additionally, 32 percent of renters paid less than $500 a
month for rent before the storm. Post-Katrina, the average rent
has risen more than 70 percent. In 2005, prior to Katrina,
there were 5,100 families residing in public housing units.
Currently, fewer than 1,000 families have been able to return.
And in June 2006, HUD announced plans to demolish 5,000
salvageable units. This represents a discriminatory and an
illogical policy of destroying homes during a housing crisis.
Moreover, many of these units proposed for demolition can be
repaired and modernized at a fraction of the proposed cost.
Demolition of these homes would cost approximately $450 million
more than simply repairing the units, and most repairs are
stemming from slight water damage and vandalism.
The second is the effect of the Flood Insurance Program. As
Mr. Taylor has alluded to, many of the homes in our area
weren't protected by flood insurance because the FEMA map said
that they didn't have to be, that the levees would take care of
it all, and they would require--in many places like in the
lower Ninth Ward we have heard so much about, 66 percent of the
homeowners living there owned their own homes, and they had
owned them for many years, they had been passed down from
generation to generation, had no mortgage on them for the most
part, and therefore had no flood insurance requirement. The
flood comes, they are relying on FEMA estimates of risk, and
their homes are lost, so they are penalized unfairly. We talked
earlier about how to remedy this.
Mr. Taylor proposed some time ago and I think this
committee ought to still look at this whole issue of permitting
people to retroactively get involved in the Flood Insurance
Program. The Road Home Program you heard Ms. Waters describe
this morning and others describe--we have gotten $10 billion of
the CDBG money to provide home rebuilding in our area. The
State has chosen to administer this program through what is
called the Louisiana Recovery Authority, the LRA, with the help
of an administrative contractor called ICF. To date, as she has
stated, over 100,000 applications for assistance have been
made. Only about 300 people have actually received Road Home
grants. And while the creation of bureaucracy by the State and
the Administration's program in order to ensure against
improper payment is laudable and necessary, guidance from this
committee with respect to the use of banks to disperse these
funds, deadlines for the disbursal of these funds and
permissible use of funds for administrative costs and grants to
business would be very helpful.
And finally, I would just like to mention the HUD disaster
assistance and voucher and rental assistance program. These
programs were designed for shorter term recovery periods than
is the reality for Katrina victims. The maximum assistance
amount allowable per family of $26,200 should be revisited with
a view toward lifting it to meet present needs, and the
deadlines that are being arbitrarily set for the cutoff of
rental assistance is further stabilizing the already disrupted
lives of Katrina survivors. This is a particular problem for
the elderly, for the disabled, and for families with children.
I would like to thank this committee for this opportunity,
and I look forward to having us work on these four discrete
issues as we work on the larger issues which I think have to do
with whether or not we actually have met our Federal
responsibility overall because I believe this number that we
have talked about, this $110 billion, was a whole lot of money,
was simply picked out of the air, and was not based on any real
assessment of what the needs are for a full recovery. So I
thank the chairman for this opportunity to present to the
committee.
The Chairman. The gentleman from Louisiana, Mr. Boustany.
STATEMENT OF THE HON. CHARLES W. BOUSTANY, JR., A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA
Mr. Boustany. Thank you, Mr. Chairman. I appreciate the
opportunity to testify before the committee, and I thank the
members of the committee as well. And I ask unanimous consent
that my full written statement be--
The Chairman. Without objection.
Dr. Boustany. Mr. Chairman, the official title for this
hearing, ``Federal Housing Response to Hurricane Katrina,''
suggests that there was only one storm that hit the Gulf Coast
in 2005. In fact, my southwest Louisiana district was directly
hit by Hurricane Rita on September 24, 2005, a second storm.
The total damage from this storm is estimated at approximately
$10 billion, making Rita the third most costly natural disaster
in U.S. history. It is also called the forgotten storm in my
neck of the woods. The southwest Louisiana parishes of
Vermilion, Cameron, and Calcasieu are critical components of
our Nation's energy security, including oil refineries,
pipelines, and petrochemical plants. Vermilion Parish is home
to the Henry Hub, the pricing point for natural gas futures
contracts, and the West Hackberry Strategic Petroleum Reserve
in Cameron holds about one-third of the U.S. strategic reserve.
Furthermore, this area will remain vital in the future as 25
percent of all natural gas consumed in the United States will
eventually come through just one parish in my district, Cameron
Parish, in the next few years. In Calcasieu Parish, 75 percent
of the roofs in the parish were damaged or destroyed. About 13
percent of the nearly 20,000 properties in Vermilion Parish
sustained major or severe damage, with the remainder incurring
roof damage, flooding, or both from the storm surge. Cameron
Parish was hit the hardest; 3,241 homes sustained damage, 90
percent of the homes in Cameron Parish; 2,000 of those homes
were completely destroyed and need to be rebuilt. Based upon
percentage, the damage in Cameron Parish exceeds the damage in
Hurricane Katrina-hit areas in Louisiana, and is about equal to
the damage seen in the district of my colleague from
Mississippi.
I have said from the very beginning of the recovery and
rebuilding process that the Federal Government cannot
micromanage this process, but it must provide support for local
decisionmakers to create the environment for vital partners,
small business owners, homeowners and others to rebuild, to
return, and to become success stories. The Congress has done a
good job of providing money, but the second part of our
function is oversight, and that is why I am pleased to hear
that we are having this hearing. We need to see why the money
that has been appropriated is not getting into the hands of
those who actually need the money.
There are three issues that the Federal Government can have
an impact on, and these will be housing for workers, insurance
for homeowners and businesses, and looking at the Go Zone
legislation. The unemployment rate has been around 3 percent
since the spring of 2006, coming down from a high of around 16
percent in my district. Wages have increased by as much as 25
percent. The demand for labor remains high and the shortage has
been one of the chief factors cited by local leaders as
prolonging the rebuilding effort.
I urge my colleagues to consider the impact of the housing
shortage on additional workers needed to do the rebuilding, and
we need to look at policies that will help bring this about.
Homeowners and small business owners are having difficulty
obtaining insurance or retaining policies after Rita. Homeowner
premiums have increased 100 percent if they can find the policy
to purchase and similarly insurance for business owners has
increased by as much as 75 percent in 1 year.
I think the Federal Government can aid homeowners,
families, and small businesses by looking at ways to enhance
the ability of insurance companies to obtain reinsurance, which
is a significant problem, and to allow insurance companies to
set aside tax deferred reserves to pay for future large
catastrophes like this.
In December 2006, Congress approved legislation to extend
certain Go Zone provisions to the most heavily impacted areas.
I want to thank my colleagues for their support of this
legislation and hope that they will continue to support such
measures to aid in the economic recovery and rebuilding of the
region.
I want to leave the committee with one last thought. After
Hurricane Rita I was driving, shortly after the flood waters
had receded, and I was driving through Vermilion Parish and
came across a home and there was a gentleman out there cleaning
debris. The yard was a mud flat with all kinds of debris, it
smelled awful, and I walked out to talk to this fellow to find
out what had happened, if this was his home. The fact of the
matter was that it was his wife's home and she had returned to
work and he was just trying to start the recovery process with
his sleeves rolled up, on his own.
I saw where floodwaters had come in 6- to 7 feet high, blew
out windows in this home, blew out doors, and when we walked
into the home there was 8 inches of mud and debris everywhere,
furniture, large pieces of furniture were thrown about, and you
could really appreciate the full effect, the full magnitude of
what happened.
But, you know, when I walked into the living room,
everything was destroyed in that room except for one picture of
the family on the mantlepiece right above. It was splattered
with mud but it was still there. And that symbolized to me what
the strong-willed people of southwest Louisiana are all about.
They are not waiting for the Federal Government, they are not
waiting for the State government. They are rolling up their
sleeves and actually trying to get the work done and the least
we can do at the Federal level, and State level is to provide
some assistance.
Again, I thank you for allowing me to testify here and look
forward to any questions that might arise. Thank you.
The Chairman. The gentleman from Louisiana, Mr. Melancon.
STATEMENT OF THE HON. CHARLIE MELANCON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Melancon. Thank you, Mr. Chairman. I want to thank the
Congress first of all for the appropriated moneys that they
have sent to the Gulf Coast region. While it is a good effort,
there is still a lot to be done. Mr. Chairman, I would like to
thank you for holding these hearings. This is one element of a
recovery, the housing element, and there are many other
elements that have to be addressed that have not been
addressed.
I would like to thank the Speaker for allowing the
committees to begin the process of looking into the problems
that we have and looking for ways to resolve those problems. I
would like to echo also the comments made by my colleague, Mr.
Boustany, and the fact that this is not just Katrina, this is
Katrina and Rita, two of the most devastating storms to hit the
coast of the United States, causing the most damage. And a lot
of the people who are outside of New Orleans, and we feel for
New Orleans, and we want to help New Orleans, and we will help
New Orleans in spite of it not being our district, but we need
for people to understand that it is the entire Gulf Coast, from
the Mississippi line at Alabama to the Texas line at Sabine
River and actually somewhat into Texas and somewhat into
Alabama.
It has been 18 months since Hurricane Katrina made
landfall, and almost 17 months since Hurricane Rita, and it
feels good to know that my colleagues remain committed and
supportive of seeing the Gulf Coast rebuilt. As you are all
well aware, Katrina made history as one of the most devastating
storms our Nation has ever witnessed. Rita followed with just
as much devastation.
The destruction wrought by the storms was unprecedented.
Hundreds and thousands of homeowners and renters were left
without a place to live, and sadly so many of the people are
still in the same position today. I have often heard figures
citing a Federal response totaling $118 billion for rebuilding
of the Gulf Coast but the problem the Gulf Coast residents are
facing is that they aren't seeing this money on the ground back
at home.
This problem persists because of a litany of issues that
continues to expand. Among some of the most pressing Federal
policy needs is reform of the Stafford Act, which cannot
currently deal with a Katrina-sized catastrophe. Insurance
policy reform. Private insurance companies have given up on
coastal Louisiana and other places where it appears that they
can't make an easy buck. An underfunded and behind schedule
comprehensive hurricane protection system. This is critical to
defending ourselves from the next big storm. SBA disaster loan
reform saw small businesses can revive an economy that
desperately needs the extra staying power. Further extension of
the Go Zone tax credits that include all areas severely damaged
by the storm. And of course an inadequate housing policy, the
purpose of this hearing today.
The current system is failing us. Public housing remains
shattered and low income rental housing is next to impossible
to find, or, for the lucky ones who can find it, they are
finding it next to impossible to afford. The longer it takes to
provide this housing, the longer our recovery will take and the
more widespread the damage to our economy will be.
I commend you, Chairman Frank and Ms. Waters, for turning
over the first stone in this recovery process. We have a long
journey ahead of us but from what you will all learn from these
witnesses today, and from what will continue to reveal itself
under close scrutiny across-the-board in the recovery process,
I am confident that this Congress will allow the Gulf Coast to
rebuild, in the words of President, bigger and better than ever
before.
I will keep this succinct as you have more important
witnesses to hear from, but again I appreciate the opportunity
to be here and I appreciate this Congress taking the necessary
steps to help get my constituents and other residents of
Louisiana back in their homes. Thank you.
The Chairman. The chairman now recognizes the gentleman
from Texas, Mr. Green, who has a major interest in this because
his district has been, and continues to be, a quite gracious
host to many of those who have been displaced. Let me say to
the gentleman, Mr. Boustany, I accept your point, and it is
true that we did mistitle this hearing, but as you can tell
from your presence here, we got the casting right, which is
important. We did implicitly acknowledge that and we will make
sure that in the future we correct the title.
The gentleman from Texas had a unanimous consent request.
Mr. Green. Yes, sir, I would like to submit two letters
sent to the Director of FEMA concerning the termination of
Section 408 housing assistance, and with unanimous consent, I
would like for them to be entered into the hearing record.
The Chairman. Is there any objection? The Chair hears none.
The Chair will ask unanimous consent to enter into the
record a letter just received February 5th from the Chair of
the Federal Reserve, the Chair of the Federal Deposit Insurance
Corporation, the Chair of the National Credit Union
Administration, and the Director of the Office of Thrift
Supervision. Several of us, the gentlewoman from California,
the gentleman from North Carolina, the gentlemen, Mr. Jefferson
and Mr. Melancon, from Louisiana, the gentleman from Mr.
Mississippi, Mr. Taylor, and the gentlewoman from New York,
Mrs. Maloney, wrote to these regulators asking them to reaffirm
their encouragement to financial institutions to show
forbearance for the people who are trying to pay off mortgages.
What we have, I am very pleased to see, is a letter from all of
the regulators reminding banks that they are encouraged in a
responsible way to show forbearance and essentially make it
clear that no financial institution needs to fear being
penalized because they show unusual flexibility as long as they
say there is an ultimate target towards loan repayment. They
acknowledge your effective loan workout and recovery may
involve protracted resolution.
We appreciate the regulators making that clear, and I ask
unanimous consent that this correspondence be put in the
record. With that we will begin the questioning. I would ask
the members to try to keep the questioning of our colleagues
brief. Let me just ask, to begin, and some of you have done
this and I don't ask you to do it now, but we plan to
legislate, and this committee's jurisdiction is in housing, it
is also in insurance, and we will be dealing with the insurance
matters in separate issues, but we would welcome from you
specific proposals as to what we can do, partly to make more
resources available, and partly to free up resources. We have
been told, for instance, that we need to extend the time when
tax credits can be used.
The gentlewoman from California, who has been on top of
this, raises questions about some of the matching requirements.
Are they too onerous for governments that are financially
burdened? We would welcome your recommendations as to that. We
have, we believe, money that will be coming as part of the bill
dealing with Fannie Mae and Freddie Mac in the first year that
will be money available for affordable housing. How we
distribute that, that issue will be before us.
I am going to cut off my time right now, but I do invite my
colleagues to continue, as they have been, to share with us. We
have, of course, the gentleman from Louisiana, Mr. Baker, who
has played a major role and we want to work with him.
The gentleman, Mr. Jefferson.
Mr. Jefferson. Mr. Chairman, if I might, the first thing
that I think this committee ought to pay real attention to is
the issue of public housing. It is so obvious that this is a
wrong-headed policy. It is keeping people out of town for no
good reason, and these are people who had their leases paid up,
who actually had leases, legal agreements to rent and to occupy
space, and the Mayor announced that the water was on, the
lights were on, and they came back to town and couldn't get in
the houses.
I think to the extent this committee can do it, you really
ought to direct HUD to revisit this whole area and to not
engage in demolition that will keep people out of town.
Everyone is for improving the housing developments down the
line, and I think we can do that. But we ought not as almost a
penalty for folks trying to make it back home, to not let them
back in until we get everything just right.
The second thing is you mentioned that the Gulf Opportunity
Zone legislation needs to be extended for the low income
housing tax credit and the GSA reform program that you talked
about so much that we want to see done as quickly as possible
to provide, I think you said, $4- or $5 million in assistance
for rental units and for the homeowners.
And the last thing is the HUD disaster voucher and rental
assistance programs. As I mentioned, some people, some families
are approaching the $26,200 cap because it was designed for
much shorter periods of disaster recovery than we are
experiencing now and the reality is that it is taking a long
time because it has been such a devastating proposition for
people. That needs to be lifted, there needs to be some guides
as to under what circumstances it should be done, but it needs
to be done.
And the other thing is that on the rental assistance
program, what happens there is that you keep getting these
deadlines for people who move out, they have nowhere to go, and
what is the point of that. There ought to be a more humane way
to deal with this whole set of issues than they are being dealt
with now.
Finally, on the flood insurance issue, we have people
penalized back home because they had no flood insurance, but it
was because FEMA said they didn't need to have it; it was okay.
And they are being penalized. As the folks back home who make
up the Road Home Program, they are saying to people, ``You
didn't have flood insurance, you get penalized for not having
had it'', when of course this doesn't make any sense because
FEMA said that they didn't need it.
So those specific three or four areas, I think, we can do a
lot of good in a hurry if the committee will take those up in
the next few months and get something passed in that regard.
The Chairman. Just two points. One, the gentlewoman from
California and I have talked, and we intend to try to
legislate, we have spoken to Mr. Thompson from Mississippi, the
chairman of the Homeland Security Committee. The relationship
between HUD and FEMA is hopelessly tangled up and we need to
straighten that out.
Mr. Jefferson. The last thing I forgot to mention was the
Community Disaster Loan Program, the forgiveness issue. We did
for the first time in this Congress require our local
governments to pay back these community disaster loans. We have
never done that before in the history of this Congress. We did
it, I don't know why we did it, but it was done.
The Chairman. We can undo some of that, and that is one of
the specifics we will be examining. We plan to sort out the
responsibilities between FEMA and HUD, along with the Homeland
Security Subcommittee. My own initial view is that FEMA ought
to be the emergency provider, but at some point very soon after
that HUD ought to be involved because we do agree that there
have been some problems there.
Mr. Baker.
Mr. Baker. I thank the chairman for this time. Mr.
Jefferson, I am going to be pretty brief because I want to get
to my other two Louisiana colleagues, and I don't mean to
intentionally ignore my Mississippi friend, but this is so
unusual to get the delegation at a meeting like this and to
talk through where we are. Am I correct in assuming Road Home
for you in your district is not working well?
Mr. Jefferson. That is a correct assumption.
Mr. Baker. If you were to look at the Road Home balance, I
understand, as of the most recent data, and it can be updated
later by other witnesses, there are about $31 million worth of
awards to 506 families, averaging $62,000 per home. That means
of the $7.5 billion for Road Home we probably have somewhere
around $7.45 billion not yet actually contractually obligated.
This is the hard part. If we were to take advantage of the
chairman's kind offer on the GSE bill, which could generate
$500 million to $1 billion more, given the HUD, FEMA, State
government, local government, everybody's problems in
communicating with each other, would you welcome a more direct
line of expenditure coming from the Federal Government to
identified professional recipients to, for example, go build a
pilot project in a community which is affordable housing
somewhere else, maybe a model community which would have a
grocery story location, or a school location, not just housing
locations?
If I am assessing your view correctly, the Road Home, even
if it were implemented perfectly, is not community restoration,
it is about helping individual homeowners, and that, my friend,
I don't believe will work. Do you agree?
Mr. Jefferson. I agree with you as long as we make the
proper resources available to do it; I agree that you have to
restore communities.
Mr. Baker. It is more about getting it done than how we do
it at this point, isn't that correct?
Mr. Jefferson. I think--I hate to concede how we do it but
I do think what is most important now is to get it done. I will
agree with this also, that there are lots of problems I have
with the way the Road Home is structured, you may have some
too. I don't know if it was a good idea to have the LRA and ICF
and all of these other people doing things. I don't know if it
wouldn't have been better to have the money go to parishes and
having the four parishes that were involved.
Mr. Baker. I am not ready to jump to a specific remedy
today. All I am trying to get is conceptual agreement among us
that what we have now isn't working, we still have resources
technically available, and maybe we can have a different
course. May I jump to that?
Mr. Jefferson. I agree with that. I go back to the Baker
bill, which has some of these concepts in it.
Mr. Baker. Now you are really cooking.
Mr. Jefferson. I think it was a very good idea and after we
all negotiated it turned out to be a wonderful program that
never got implemented. Several of the features in that bill, I
think, were good features.
Mr. Baker. Quickly, Doctor, do you have any comment? Do you
believe that Road Home is working for Rita?
Mr. Boustany. I would agree with all the comments that my
colleague here just mentioned and we are experiencing the exact
same thing in my district.
Mr. Baker. Mr. Melancon.
Mr. Melancon. Obviously the outward appearance is that they
are struggling with it. There are going to be some
representatives of LRA and I think they would probably be the
best people to address the questions of what the problems
really are.
Mr. Baker. My last comment. At one point along the way, for
the rest of our members of this committee, a great deal has
been said about $110 billion. We have not seen $110 billion.
And in fact, when you look at some of the FEMA's own accounting
numbers, in one-quarter of all money sent to the State for
recovery, 24.9 percent in one quarter went to FEMA. I think
those numbers are still north of 20 percent.
So when we are haranguing about the inefficiency of
Louisiana State government, let's not look past Washington
ourselves. We are doing a pretty bang-up job of eating up a lot
of the money on our own.
Mr. Melancon. If I could, one of the things, and I think
the people with the LRA will be here, and I will be happy to
give this to the committee to take a look at it. The $110
billion that is being touted as spent just in Louisiana has
been $59 billion that is allocated to Louisiana. Of that, $18
billion was handled by the government for debris cleanup,
housing for the employees, and transportation back and forth or
whatever, $14.7 billion was for NFIP flood insurance which was
for premiums paid by people who had a policy, not because we
gave them money. Then the rebuilding effort is $26.4 billion. I
think roughly $10 billion was to be for the Road Home Program.
The Chairman. If the gentleman would submit that. Without
objection, we will make it a part of the record.
Mr. Taylor. Mr. Chairman, if I may. As you know, I serve on
the Armed Services Committee, about 100 yards down the hall
from here. The generals and the admirals all tell us that
within our lifetimes, we will see a weapon of mass destruction
attack on the United States, and the thing that really hit me
after Katrina, in addition to everything else, is that a weapon
of mass destruction attack on the United States is going to
look a lot like south Mississippi looked after that storm; no
electricity, no water, and no food. The vehicles did not
operate either because they had been under water; they had no
fuel.
And so it is important, whether it is called the Road Home,
whether it is through CDBG or Federal flood insurance that we
do have a national program to try to get people back in their
houses, that the mistakes that were made in Mississippi and
Louisiana are not repeated, and that this is the proper forum
to correct them.
The Chairman. I thank you. I should add, too, that there
was a reference to the Community Disaster Loan Program; primary
jurisdiction of that is in the Small Business Committee.
Fortunately, the Chair of the Small Business Committee sits on
this committee, and I know that she is eager to work with
people in correcting that. We will get to her.
The gentlewoman from California.
Ms. Waters. Let me say that Mr. Baker has left but I agree
with him that you can't rebuild communities in the way that is
anticipated by the Road Home Program, and I also would like to
say to our members that despite the fact that oftentimes it is
said that the Federal Government should not try to administer
local programs, I am going to push very, very hard for the feds
to redesign how to get the money to the homeowners.
We will not simply sit back and say that--we can't point
fingers and let the past bygones be bygones. We are not going
to continue and cannot continue to allow our CDBG money to be
mismanaged in the way that it is with the Road Home Program and
any other program that is supposed to be getting money in the
hands of the people.
Now, having said that, I think that I have--and the
chairman has--basically made it very clear that we are very
concerned about the Road Home Program and we are going to move
very aggressively on it. Let me talk about public housing now.
This is a serious issue that can be resolved. It is my belief
that the judge in this case is waiting on both sides for us to
get together and work this out and make it work. And I think we
all need to hone in on this problem and let the judge and
everybody know that we are for returning everybody back to
public housing who want to come back. And we have to do it
immediately and we have to get those units rehabbed.
Secondly, we also have to think about the waiting lists
that have been there for years with people wanting to come into
public housing who have not been able to get into public
housing. We also have to ask why haven't the units that were
approved for redevelopment been done after all of these years,
and why is it now we have to take a broad brush and talk about
tearing down all of these units and redevelopment.
I would like to know if the four of you and anybody else
representing the area could possibly get together in support of
the public housing residents and sign off on letters that would
urge precisely what we are talking about in getting people back
quickly into units that can be rehabbed and use phased
redevelopment so that you get the rehab units. Then we can get
people back and they can go on with some kind of redevelopment
for the future and not wait to tell people you can come back in
5 or 6 years. Will everybody agree to something like that?
Mr. Jefferson. Absolutely.
Mr. Melancon. I agree, and my only regret is we are 17
months after the fact that we are talking about so I commend
you for bringing it to the attention not only of the Congress
but to the people of America.
Mr. Boustany. This is an issue in Calcasieu Parish for me
in my district and I would be happy to work with the committee
in any way possible to see what we can do to come up with a
reasonable solution. We are way beyond the time that steps
should have been taken, but I agree, better late than never.
Mr. Jefferson. Absolutely, it is a great initiative, and I
would fully support the community's work in that regard.
Mr. Taylor. The same.
The Chairman. She didn't ask me but I just want to join in
on that. It is absolutely essential. It is going to be the
policy of the committee to the extent that those of us in the
majority can make it, please do not do poor people the favor of
tearing down the places they now live in so 7 years from now
they can have better places to live in. It is going to be our
policy that it is very nice to promise poor people better
houses than they now have, and after you have built them you
can displace them from where they are living, but the promise
of a nice house by and by is no substitute for a place to live
right now, and we will be insisting on one-for-one replacement
with rare exceptions and the replacement has to precede the
displacement.
Ms. Waters. Mr. Chairman, yes. Let me just say that the
one-for-one replacement is extremely important and the reason I
ask our members today if they can agree on basically what I
have proposed even though it is not specific yet is because it
is going to be important to try and get the local elected
officials, State elected officials, and the Members of Congress
all together on this issue because the people think that there
is an underlying effort to get rid of poor people and to tear
down these units and send them off into the wild blue yonder
without knowing where they are going to live. And I think to
the degree that everybody gets together and sends this message,
that HUD will bend over backwards. I have met with the
Secretary and I have met with some other representatives of HUD
and it seems to me that they have been moving and backing down
a bit the more I propose, and so I think we can work this out,
yes, sir.
Mr. Boustany. I would just add, I agree with Mr. Baker's
comments about building communities and I would ask the
committee to look at my hometown of Lafayette, Louisiana, where
we are doing some very innovative things with public housing
and looking at programs that would enhance homeownership,
programs that help build homeownership for those who are in
public housing today, and the head of the housing authority is
doing a wonderful job down there and I would ask the committee
to perhaps look at that as it moves forward.
Ms. Waters. Mr. Chairman, I was in Lafayette and I am aware
of some of the things going on there, but what we have to focus
on right now is getting people back into public housing. Most
of the housing had been taken off the market in terms of being
available for people, and one of the things we have to be very,
very careful about with homeownership is reducing the number of
units that are available to poor people in the interest of
homeownership. We can have mixed use development, but we have
to always have one-on-one replacement.
The Chairman. I would just say, too, that the Chair of the
Housing Subcommittee has just articulated what will be the
policy of the majority on this full committee.
The gentleman from Texas.
Mr. Neugebauer. Thank you, Mr. Chairman, and I appreciate
you holding this hearing. What I would like to do for the panel
is to make a brief statement that these communities that you
live in and represent so well were built by the private sector;
they weren't built by government. I would tell you that your
biggest friend, your biggest hope quite honestly in rebuilding
your communities is not FEMA, not HUD. They always cut me off.
And so what I would hope we would do, and I agree with Ms.
Waters in the respect that we don't need to go move people out
and put them somewhere in a temporary holding pattern until we
build them a new place, but what I do think we need to do is to
be very strategic about the housing that we build.
And so my first question to the panel, and the gentleman
from Mississippi, I am not going to leave you out, I am going
to let you also be a part of this, tell me about the housing
activity, the rebuilding that is going on in your district
right now.
Mr. Taylor. I appreciate the gentleman's question. Let me
start by saying that when it came to something incredibly
important to people, which is insurance, our Nation led the way
in being fair with people. I didn't have one single complaint
from one constituent about not getting paid from their Federal
flood insurance plan. I have had thousands of complaints of
people in the private sector.
And so when you talk about rebuilding, part of the problem
with rebuilding is that the insurance industry didn't pay
people's claims. So here is a person, I will start with myself,
I will start with Senator Trent Lott, I will start with Federal
Judge Lou Guirola, your house is gone and your insurance agent
says that they don't see any wind damage, despite NOAA saying
there were 5 hours of hurricane force winds before the water
ever showed up.
So you take a school teacher, retired military, retired
policeman, under those circumstances, they have just lost their
house. They still have a mortgage. The insurance didn't pay it.
So part of their rebuilding problem is no insurance.
The second thing that happens is one by one these are small
communities, your insurance agent finds you and says, ``Oh, by
the way, when you rebuild we are going to quadruple your
rates.'' That has been an incredible hesitancy for people to
rebuild because gee, I didn't get paid last time, now you are
going to charge me 4 times more money and you probably won't
pay me then.
Again, when you are talking about rebuilding, you cannot
ignore insurance, and it is the number one issue in south
Mississippi right now, and again I would remind people it is
cool to be down on the Federal Government but I want to tell
you the only group that was fair with the people in south
Mississippi was the National Flood Insurance Program. That is a
program that needs to be refined but preserved.
Mr. Neugebauer. To get back to my original question, is
there building going on in your community?
Mr. Taylor. It is painfully slow because people didn't get
paid and the second part is just the scale of what happened. No
one could have imagined 20,000 houses disappearing overnight.
And we are fortunate enough to be small town America where you
know your contractor, you know your plumber, and you know your
electrician. Well, you are going to wait.
I finally got a framer after 16 months to show up on my
property. Believe me, I really do understand this. So that has
been a huge part of the problem, but it makes, to Ms. Waters'
point, it makes public housing that can be saved and saved
quickly an extremely high priority because of the need to get
labor in there to do the sort of things that need to be done.
Mr. Neugebauer. I think the question about public housing,
I have been in the homebuilding business and so one of the
things--and I used to renovate housing. At some point in time,
the economics of renovating something don't make economic sense
and so I think what we have to be careful there is that we have
the stewardship of the American taxpayers' money and so what I
think we have to determine is: Is that money better leveraged
with the private sector in other kinds of housing initiatives
that would have a longer economic, long-term life than just
going in and throwing good money for a quick fix that has very
little long-term upside.
Mr. Jefferson.
Mr. Jefferson. Just to the public housing point, as I said
in my statement, from all the evidence we have, to repair the
public housing is $450 million less expensive than to demolish
it and rebuild. The insurer for the Housing Authority of New
Orleans has done its own little look-see and it found that 20
buildings in the. C.J. Peete public housing development back
home would cost less than $5,000 each to repair most of the
units, and a few would cost more than $10,000 each.
So these places were places where families lived before the
storm. What is perplexing is why they aren't as good to live in
now as they were before the storm. Nothing happened. Many of
them weren't affected by the water because they are on the
second, third, or fourth floor, so consequently people could
move back in. We don't see why the policy is as it is except
they just don't want to let folks back in town.
On the other part that you mentioned, I think there is a
lot of self-help going on. People are really trying hard to get
back in. They are waiting for insurance that doesn't come
through. The SBA loan program isn't working for them properly.
But they are still nonetheless coming in and trying somehow or
other to get back home.
The last thing is the point I made starting out, that we
ought to look at this in a different way than just an act of
God. In our case, particularly in New Orleans where the levees
broke, where the Corps comes back and does a study and
concludes that yes, it is a reason why, the breaches in the
levee that were the fault of the Corps in design and
construction mainly was the reason why the city drowned.
In any event there is a larger Federal responsibility, it
would seem to me, than in the ordinary case of just an act of
God. So I urge the committee to look at it along those lines as
well as we go through these difficult issues.
Mr. Neugebauer. Mr. Chairman, I request an additional 30
seconds for microphone malfunction.
The Chairman. Mr. Boustany, then we will finish up.
Mr. Boustany. Just very briefly. It has been important to
recognize that you cannot separate the insurance issues from
the housing issue and a labor shortage issue. The three are
linked. And as we go forward in looking at how do we devise
policies, we have to keep that in mind.
But secondly, I want to mention how important the GO Zone
legislation was. It was tremendous. That was an example of a
well-designed program that really spurred rebuilding in my
district and it is impossible to underestimate or overestimate
how important that was. It was a very important program and it
is something that I think needs to be extended to a certain
point in time when we know that we have completed this
recovery.
The Chairman. Thank you. Ms. Velazquez.
Ms. Velazquez. Thank you, Mr. Chairman. As you know or
maybe you don't know this, but the SBA Disaster Loan Program is
the primary source of long-term financing for homeowners and
small businesses and the problem that we saw throughout the
whole Katrina, Rita experience is that SBA response was totally
inefficient and ineffective, and that is due to the fact that
for the last 5 years the Bush Administration cut SBA's budget
by 50 percent.
So, given that reality, they didn't have the manpower to
respond in an effective way to a disaster of this magnitude. So
not only didn't they have the manpower, the computer system was
not adequate, and what we found was that more than 50 percent
of homeowners' applications and small business applications
were declined, and when you compare that to the California
earthquake, that was extremely high.
The other problem that we saw with the Disaster Loan
Program is that out of the $8 billion that they approved in
loans for the Gulf Coast, only 20 percent a year-and-a-half
later has been disbursed. We will be conducting a hearing on
Thursday and we are working on revamping the Disaster Loan
Program for SBA, and I invite you to either--if you have any
witness that could share with us their experience or if you
want to come and participate in those hearings, you are welcome
to do so. But we are going to be working on legislation to
retool and revamp the whole Disaster Loan Program.
The other problem that we saw is that when it comes to
homeowners and low-income communities their credit score is
going to be very low so they do not have the collateral that
they need. In that case a loan might not be the answer for
those people; it might be a grant program. And we are going to
be working in putting together a grant program that we assist
the people to get some assistance, some cash to deal with the
problems that they are facing in the Gulf Coast.
Mr. Boustany. I would say, first of all, whenever you have
a major disaster like this it is important not to turn your
back on potential public and private partnerships. One of the
great things that happened early on would have been the use of
local talents in banks, because a lot of information was lost
but there is local information that is still held by those who
work in these banks, and partnering the SBA with local banks
might have helped to get us around many of the problems that we
experienced.
Ms. Velazquez. Since it was proven that they didn't have
the manpower or the capacity to effectively respond, we are
looking into the private sector, financial institutions to work
with SBA.
Mr. Jefferson. Your point is exactly correct, back home
without SBA authority there is no loan director, there is no
public information director, and there is no director of
technology. Because they make cuts, they eliminate these
positions and the individual who is administering the program
is doing these jobs and his job. So it is impossible to provide
a real comprehensive service where these critical areas are
left open because of underfunding, as you have pointed out, on
an ongoing basis.
The second thing is these turn-downs have really helped to
slow down this recovery. In our area, the attitude has been
that we don't know when this place is going to come back, we
don't know when you are going to be up on your feet again,
therefore it is a turn-down. Somehow or another we have to look
through this and figure out when a disaster of this magnitude
takes place, how do we deal with it? Your point about the
grants may very well be what we will have to look toward.
Ms. Velazquez. It is a lack of planning on the part of SBA.
They didn't have a disaster plan in place. We do have resources
out there like the small business development centers. They are
trained, they can process loan applications in a timely manner,
but they did not have a centralized effort to respond to a
disaster of this magnitude.
Mr. Melancon. If I could, Mr. Chairman, just quickly. Some
of the problems we have run into, Ms. Velazquez, is that FEMA
is asking--not asking but telling the homeowners who are
getting any of the moneys from the insurance company, whether
it is flood or property or from Road Home, as it comes they
have to pay off the SBA loan. The Katrina effect has a price of
rebuilding at about 150 percent of what it used to be to build
anything. You have totally devastated homes that have to be
torn down, which is one of the points I wanted to try to make
to Mr. Neugebauer. You have water that stood for several months
up to 20 feet. Those houses are uninhabitable. The integrity of
those houses is not there.
But on the SBA situation, and they have programs that they
could have used to put some businesses back, and I have one
specific instance and they did not want to utilize that
program.
The Chairman. Thank you. The Chair has--we are going to
have to yield more closely to the 5-minute rule. We do have to
move on.
Now the gentleman from Alabama.
Mr. Bachus. Thank you. I am going to direct this question
mainly to Congressman Jefferson, representing New Orleans, and
Congressman Melancon, you represent the area outside New
Orleans. This sort of demonstrates to me maybe a problem in
what I have as a member trying to figure out the true picture.
I was told, and the figures we got, are that there were
7,379 public housing units in New Orleans prior to Katrina, so
about 7,400. Now of those, only 5,100 had families in them. So
I would suppose that meant that 2,300 were vacant, is that
correct?
Mr. Jefferson. I think that is correct. I am not quite sure
why they were vacant, because there was a big waiting list for
them, but I think that is correct.
Mr. Melancon. If I can speak to it. I think the problem
with the public housing not being occupied has to do with the
Section 8 housing program whereby private owners are--and so
the money has been taken away from the public housing sector
and put into the Section 8, and now what has happened too is
that the rents are driven up so you are expending that money
even quicker than it was expended before.
I don't represent New Orleans, so I don't profess to know
about the housing situation, occupancy or otherwise.
Mr. Bachus. I am saying at first blush you wonder about
that. There are 10 major public housing communities other than
you are talking about the Section 8, there are 770-some units
scattered elsewhere, Section 8, so that accounts for 700-
something, I guess. But of the 10 public housing units that
were in New Orleans, obviously a large amount of those units
were vacant, I would think.
Mr. Jefferson. As I said, I misspoke, there weren't 18,000,
it was something like 1,800 on the waiting list. I suppose the
units may have been in disrepair; I am not quite sure why they
weren't open.
Mr. Bachus. I think that is a wonderful question, why do
you have a waiting list and a bunch of vacant units? At least
that is the information we got.
Secondly, how many of those units were destroyed in
Katrina, of the 7,400?
Mr. Jefferson. Remember, in some places the units weren't
affected at all. In some places there was no effect. In other
places it was only the first floor. The second, third, and
fourth floors were not affected by the floodwaters. So the
issue in most cases would be you go into the first floor areas,
either make them available for people to live in right away or
at least clear them so people can go upstairs.
Mr. Bachus. I understand that. I am just trying to weed
out, trying to kind of get to a number. 7,400 before the storm,
how many after the storm that you could have moved someone back
into? How many were not damaged? Does anybody know?
Mr. Melancon. I would think maybe the LRA folks might have
that statistic. I don't really know. I do know that in Orleans
Parish, HANO runs the housing authority and that probably could
be gotten from them directly, the exact number.
Ms. Waters. Would the gentleman yield?
Mr. Jefferson. I am told by the folks who know that at
least two of the public housing developments, C.J. Peete and
Lafitte, largely could have moved in there.
Mr. Bachus. How many are we saying?
Mr. Jefferson. I don't know.
Mr. Bachus. Just give me a ballbark figure.
Mr. Jefferson. I am reluctant, but of the 5,000 families
that were in public housing before, virtually all of them could
have moved back is what I am being told here by folks who know
more than I do about it. But I can't give you the answer. I
would be glad to try to supply it to you specifically.
In any case, we are talking only about the ground floor
apartments in every instance. That would be a fourth of what we
had available--
Mr. Bachus. Even the ground floor. One figure that I have
indicates that maybe 4,300 of them could have been destroyed or
damaged. Is that what they have proposed to replace? They say
they are going to replace all of them.
Ms. Waters. The problem is HUD has not agreed that any of
them were--could be returned to because their decision to tear
them down did not allow them to agree that any of them could be
repaired for return.
Mr. Bachus. Now they say they don't--they can't move back
in them because they are going to replace them, but does that
mean the undamaged units or just the damaged units?
Ms. Waters. What the residents have done is they have gone
through the housing developments and identified all of these
units that are habitable that are not damaged, particularly as
Mr. Jefferson said, where you only have minimum damage to the
first floor and the units above are in perfect condition.
Mr. Bachus. Down the line the question I am going to ask is
why are you replacing units that have minimal damage? But I
guess my first question is I have had nobody that has been able
to tell me how many units--
Mr. Jefferson. Remember, this is 18 months later so within
the first 4, 5, or 6 months even those damaged on the first
floor could have been straightened out.
The Chairman. We are going to have HUD in the next panel.
Mr. Bachus. Only 1,000 families have returned so I am not
sure that there is not another 1,000 units they could move back
into right away.
The Chairman. We are going to have HUD and another group
that might have something to say about this for tenants. So we
will be getting in a later panel of people who know that. These
are very important questions and they will be very central
there. Let's move on. I would say to the members if members can
forego asking questions now, we will give extra time later. We
do want to move on. But we are not going to cut anybody off.
Mr. Watt.
Mr. Watt. Thank you, Mr. Chairman. I think I just want to
make one point and I should be able to make it briefly by
asking Mr. Jefferson whether in addition to the public housing
that has not been occupied, there were several hospitals, I
understand, where the first floors were substantially damaged.
Can you just tell us what has happened with allowing or not
allowing patients, medical patients to move back into second,
third, or fourth floors of those hospitals versus what has
happened with the public housing residents, allowing them to
move back in the second, third, or fourth floor units?
Mr. Jefferson. I think the gentleman's question is a point
for a very powerful argument; that is to say, if we could and
we did successfully gut out and clean up the ground floor of
hospital buildings and we have permitted people to go up on the
second floors and so on and be treated, people who were
actually sick and ailing, certainly the argument is profoundly
for the notion we can do the same thing in public housing, do
the first floors and let people live upstairs without any
threat to them or their families.
And so we certainly did it back there because it was
necessary to open up the hospital facility, particularly
private ones where it didn't depend upon the Stafford Act to
get them going, but they had private insurance, they used it,
they came in and cleaned everything on the first floor and
moved patients up and got back into business. Still can do that
today. I thank the gentleman for his observation.
Mr. Watt. 17 or 18 months later has HUD done anything to
replace the public housing units that they said they were going
to destroy as opposed to allowing people to return? What steps,
if any, have they made to build any new public housing units?
Mr. Jefferson. None that I know of. They have taken the
occasion when people are out of town to talk about demolition,
when before the storm there was no talk about replacing these
units at all. One would have to ask why after the storm. I
observe that it is convenient because people are not there to
be at the table to fight for themselves and while they are away
HUD is taking this action without input from the tenants and
from the community. It is a disaster that is happening there
now, a second disaster on top of what they have already
suffered.
Mr. Watt. Thank you, Mr. Chairman. I yield back.
The Chairman. The gentlewoman from Illinois.
Mrs. Biggert. Thank you, Mr. Chairman. Dr. Boustany, you
mentioned that there was some movement or progress since
Katrina and Rita in moving more families towards permanent
housing, towards homeownership versus rental of the public
housing. Could you expand on that a little bit?
Mr. Boustany. Actually, it wasn't since the hurricanes, it
has been an ongoing program, which I think has some valuable
lessons to offer. I was urging the committee to look at that as
part of a comprehensive look at all of this.
Mrs. Biggert. Do you think that is a good goal after this
with the lack of moneys involved that people would have?
Mr. Boustany. I think it is an admirable goal and I think
we have seen some success and also satisfaction upon the part
of those who have been able to move on to homeownership. So
simply I think it is part of the equation. It may not be the
sole answer, but it is part of a comprehensive look at the
housing issues.
Mrs. Biggert. Thank you. There is a disturbing AP story
from today about how there has been so many--I will start out,
it says that the U.S. Government gave $84.5 million to more
than 10,000 households right after Katrina, but the census
figure shows that there were fewer than 8,000 homes that
existed there at the time, and then there is another story
about a woman who--she has already been prosecuted, but she had
an application over the Internet claiming damage to her home in
New Orleans, and come to find out, she never lived in
Louisiana. She received $65,000 in disaster aid, court records
show.
In your areas have you experienced this and do you think
that the government, whomever is responsible, FEMA, is trying
to get back $300,000 from people who have fraudulently said
they lived there.
Mr. Melancon. If I could, there was, for example, a sex
change operation, and Gucci purses paid for with this money by
people who didn't live in the disaster zone. Anytime the
government is handing out checks, there are people who are
going to deceive, and I hope they get every dime of it back and
prosecute those that they catch because it is a disservice to
the American public and to the people who deserve it.
From a standpoint of what transpired, that was FEMA putting
those dollars out. They didn't have a plan, obviously. They put
out credit cards at first or debit cards and that was a whole
other fiasco. People in Houston got them, people in Atlanta
didn't get them, Dallas didn't get them, Alexandria, Lafayette,
wherever. So there was supposed to have been a plan.
FEMA is supposed to be emergency response. They should know
what they should be doing and shouldn't be doing, and they
don't.
Mrs. Biggert. Do you think this is still a challenge or
that there has been progress made? Mr. Taylor.
Mr. Taylor. One of the things that I mentioned, again, was
that we are extremely grateful for the help we have received
through our Nation. One of the things I hope this committee
will pass is a full public accounting of where the CDBG funds
went, just for your reason. These are small communities. I
think that is wonderful. We all know each other, we know whose
houses are gone, we know whose houses got clobbered, and we
know which houses didn't have any damage at all. The people
will be the best judge of all as to whether or not these funds
were spent properly if there is an accounting of where the
money went, and I would welcome that as one of the things that
come out of this committee.
Mrs. Biggert. Thank you. I yield back.
The Chairman. The gentleman from New York.
Mr. Meeks. Thank you, Mr. Chairman. Let me ask Mr.
Jefferson--and first let me join the gentlewoman from
California, in that to me the public housing issue, and as I
heard you testify, as I listened intently in my office, is the
number one issue of getting those individuals back into their
homes. Because it seems to me that until they get back, that
gives all other excuses for not doing other things within those
communities like the redevelopment of the schools, the
businesses, and other businesses coming. They won't be there
unless there are schools and other opportunities.
My question to Mr. Jefferson is: Is there any link that you
see with reference to the overall economic development of those
communities with the lack of individuals coming back to the
public housing area?
Mr. Jefferson. Absolutely. The people in public housing,
some would like to suggest, don't get up and go to work every
day, but that is, of course, not true. Almost everybody there,
there was a requirement, unless you had a child under such and
such an age, you still had to be either actively looking for
work for 20 hours or finding work or whatever, but everybody
else had to be on a job, and they were. In fact a lot of the
folks are working not one but two small jobs in hotels and
restaurants. In a hospitality community like ours, the company
cannot be expected to come back without the people who are low-
income workers back in town, and a lot of these folks were in
the public housing so it is critical to the recovery of our
economy. A lot of business people right now are supporting the
public housing tenants who are here for that very reason. They
want to see them come back to town because they need their
workers back in town, people need to be there, and of course
the other things, a lot of the children who aren't in school
yet, a lot of the hospital care that we have been looking to
get back, it all depends on the low-income workers coming back
to town. We hope it will be better than it was before, we hope
the jobs will pay more than they did before, we hope we can
create a new economy, more diversity and all that, but the
truth of it is there is still a great demand for the workers
who are out of town who lived in public housing before to come
back, and it is a large number of people, 5,000 families, maybe
20,000 people who are not back and who could be back in town.
The reason we can talk about this so much is because when
we talk about public, private, and all that, public housing is
what it is, public housing built by the government, maintained
by the government, people pay rent and all of the rest of it.
It is the thing we can fix most directly, and the folks who are
most vulnerable, and some of the public housing people are also
senior and disabled, and all of the rest feeds into this, and
it is just a disgrace that we haven't fixed this problem yet.
The Chairman. The gentleman from New Mexico.
Mr. Pearce. Thank you, Mr. Chairman. I will just make a
couple of comments, and then I will yield back. First of all,
it is amazing how eventually we all come back to the moral
decisions; is it fair, is it right, is it just? I hear from
your perspective that there are many comments of the lack of
justice. Those things begin to be not quite so clear if we have
other considerations. For instance, I heard the National Flood
Insurance Program was the only program that worked properly. I
will tell you, if we have a billion dollars a year income into
that program, the losses were $21 billion we bailed out to the
National Flood Insurance Program from the last Congress by $21
billion, maybe even $23 billion. I suspect if we had given a
bailout to the private insurers, that they could have been more
generous. So we have to ask ourselves, was that fair?
Also, the observation that insurance rates have gone up. I
had a complaint last week from a guy who had a vehicle accident
and his insurance went up. Is it fair to charge him a greater
rate for his insurance or should that responsibility for his
location at that time be borne by others?
And, again, I am bringing up the point that when I look
through later documents, I see the William J. Fletcher housing,
$83 million divided by 347 units, $239,000 per low-income unit.
We don't live in $239,000 high-income units in New Mexico and
yet we are asked to pay for these units to be rebuilt, and I
ask about the fairness. That was not just in that one unit. If
we go into the Lafitte section, it is $247,000. If we go into
the B.W. Cooper units, it is $268,000. So these units are
extraordinarily high priced for low-income units.
I am trying to make my comments and yield back to the
chairman. You all can then respond if you like. The Section 8
moneys, yes, I agree that they are misspent, but I will tell
you that last week the omnibus money was taken away from New
Mexico in a rerouting of the Section 8 formula. We lost in one
area of my State 100 people off of low income. That is what we
are going to lose of low-income assistance. Another area
described is going to lose 1 month of rent for everybody in the
system.
And so yes, it is a question of fairness, but that fairness
begins to, when you look nationwide, begins to have a different
relevance. Mr. Chairman, I know that I have prompted many
comments, but I yield back and if you want people to answer, I
am more than happy to have the discussion. But it is your time.
Thank you. I yield back.
Mr. Taylor. Mr. Chairman.
The Chairman. The gentleman yielded back. Briefly, the
gentleman from Mississippi.
Mr. Taylor. In a question of fairness, I hope I made it
very clear that I want our Nation to look into the policy that
allows the private sector to adjudicate a claim and decide
whether a private company is going to pay the claim or the
Flood Insurance Program. Flood insurance lost $20 billion. The
private sector made $45 billion in profits after paying Katrina
claims. You want to look into fairness, look into that. If you
want to look into fairness, should it be fair for those
insurance companies to be exempt from the antitrust laws, to be
able to call each other up and say, let's raise our rates. We
all do it, nobody gets in trouble.
Is it fair for insurance companies to be able to say by the
way, I am not playing my claims, how about you don't pay your
claims and you don't pay your claims, and then there is no peer
pressure for us to pay our claims.
That industry made $45 billion in profits after Katrina.
They made $60 billion last year. I really hope this Congress
will look into the fairness of the insurance industry.
The Chairman. Speaking of peer pressure, I will begin to
get a great deal from my peer committee chairs if we continue
to disregard jurisdiction entirely. So we do have to try to
stick to the question of housing in Katrina. And let me now
recognize the gentleman from Massachusetts.
Mr. Capuano. Thank you, Mr. Chairman. Mr. Chairman, I don't
have any specific questions for this panel because the truth is
over the last year-and-a-half these four gentlemen,
particularly the three whom I have worked with the closest,
have driven me absolutely insane with their commentary and
pushing and shoving us to do the right thing. I will tell you
that honestly, gentlemen, I would hope some day to be as strong
an advocate for my constituents as you have been for yours.
I will also say--the only thing I have left to say honestly
is as a Member of this Congress, as an American I am
embarrassed by what we have done to your constituents or, more
importantly, more precisely, what we haven't done for them. I
think this entire mess, the fact that you are even here today
is a black mark on the history of this country, of how little
we have done for our fellow Americans when none of them asked
for this. This was not a choice by anyone; it was a natural
disaster.
The fact that we are here today talking about it, I know it
makes you gentlemen angry, it makes me angry as well, and I
would only hope that this Congress does what it can to make
your constituents whole, so that we can move forward. This
issue does raise lots of questions of what we should be doing
in the future.
That is separate from what we should have done for people
on the ground who got hurt. And again, I just want to thank you
for being such strong advocates for your constituents, and I
can only tell you your pushing me has prompted me to commit
myself again to doing what we can to make this right.
The Chairman. The gentlewoman from Minnesota, Mrs.
Bachmann.
Mrs. Bachmann. No, Mr. Chairman. Thank you.
The Chairman. You were next on the list that I was given.
The gentlewoman? No? Okay.
Then did the gentleman from New Jersey wish to be
recognized? Oh, well, the Chair is pleasantly surprised.
The gentlewoman from Tennessee.
Mrs. Blackburn. Thank you, Mr. Chairman.
I just have a couple of quick comments. I want to thank the
four panelists for their testimony, and I would note for the
record that my parents live in the Jones County, Mississippi,
portion of Mr. Taylor's district, and so I had the opportunity
to be down there right after Katrina hit.
Just two quick comments. First of all, the four of you have
each mentioned the importance of public-private partnerships in
housing initiatives going forward, and my question to you is do
you have a list of best practices that you would recommend or
guidance that you would suggest that literally would have to be
included?
And then the second thing you mentioned, the
ineffectiveness of Road Home, and I wondered if you had--to the
gentleman from Louisiana--a specific reason for what you
thought was the reason for that ineffectiveness.
And, Mr. Chairman, that is the only two questions I have,
so I will go ahead and yield back and then whatever they would
like to add to the discussion.
Mr. Bachus. Would the gentlewoman yield any additional time
she has left?
Mrs. Bachmann. I yield to the ranking member. Yes, thank
you.
The Chairman. The gentleman is recognized. The gentlewoman
yielded. The gentleman from Alabama.
Mr. Bachus. If they would answer the question.
Mr. Melancon. To the Road Home, I think you will have that
opportunity in the next panel or the panel after to ask what
the difficulties and the problems are, to explain why they are
not moving any faster.
From a standpoint of the public-private partnership, I
think that is where the community that is out there, the
bankers, the Fannie Maes and whomever else, ought to be
bringing it to the people of jurisdiction and saying, this is
something we can do. I am not a banker, I am not a homebuilder,
so I don't know where to start, but I do know--and we talked
about the cost of units, Mr. Pearce did. The cost of units is
an element of the Federal Government doing it, saying that is
what it is going to cost. I don't have a clue. I don't have
jurisdiction on it, but I do know--and I regret to see anybody
lose housing anywhere in this country for any reason; however,
if we didn't have a deficit, we wouldn't be looking at this
problem. We would have been able to probably appropriate
without the need to worry about disadvantaging people in other
parts of the country.
This whole thing from the get-go has kind of been
backwards. The FEMA trailers should have been for the people to
live in to go back and reconstruct after the water finally got
out. Instead, FEMA was paying for hotel rooms, apartments,
trailers, and anything that was available in the disaster area
to put FEMA contractors in, the FEMA people in and everybody
who is going to make some money or oversee what is going on,
while they wanted all the disaster victims to live 10, 20, 40,
50, or 60 miles out in these makeshift camps that they have put
up. And we should have been putting those workers there, making
them commute in, putting trailers in the communities where the
people want to get back and rebuild.
You can't go back and work, you can't go back and rebuild,
unless you have someplace to live. And then, of course, the
utilities, the law enforcement, the health care, the schools,
that is a hindrance to anybody coming back that has a family.
There are people who want to come back. The living conditions
with 5,000 miles of sewer lines just in the city of New Orleans
that have to be tested and figured out what is good, what is
not good. So if that is the case, then that probably equates to
gas lines, water lines, telephone lines, and power lines, you
know.
So it is very complex, and I wish we could address it all
and say, yes, we will do it, and we finish. But it is not that
way.
The Chairman. I thank the gentleman.
The gentleman from Missouri.
Mr. Clay. Thank you, Mr. Chairman.
Two quick questions, one to Representative Taylor.
Representative, what percentage of residents have returned to
your district since the hurricane? And have the businesses
reopened and been properly staffed? Does Mississippi have a
similar setup as Louisiana, like the Louisiana Recovery
Authority, and if so, how does that work?
Mr. Taylor. The State of Mississippi--I think it is fair to
say that in the southernmost part of Mississippi, the Fourth
Congressional District, that the population has not changed
much. What has happened is that people who lived right on the
coastline might now live 30 miles inland. People who lived 10
miles inland might live 40 miles inland.
In my home county, 90 percent of all the homes were either
destroyed or substantially damaged. That is a huge housing
deficit to accomplish in a short amount of time, and it has not
been accomplished. So you still have a heck of a lot of
people--starting with myself, I am living off the generosity of
my brother and his family--a heck of a lot of people living on
other people's couches or in a FEMA trailer.
We had--at the high point we had 35,000 south Mississippi
people living in FEMA travel trailers. That number is probably
still close to 30,000, and it is not their will to rebuild that
is the question, it is the ability to rebuild. They didn't get
the insurance money. It is hard to find a contractor.
Businesses, for example, Northrop Grumman shipyard, a major
supplier to the Nation, has a 1,000-worker deficit at the
shipyard, and a lot of it is due to housing. People who might
be handy might be rebuilding their own homes before they go
back to work at the yard, or they might take a job building
homes until they decide to go back to the yard. Another major
shipbuilder has brought in 1,000 people from overseas, I regret
to say, and actually had to put up the housing for them onsite
because there is no housing in the private sector.
So to Ms. Waters' question, housing is just an enormous
problem. It is going to be a challenge for probably the next
decade to get people just back to where they were the day
before that storm.
Mr. Clay. Thank you for your response. I look forward to
working with you on meeting those housing needs.
Let me ask Mr. Jefferson, and this will be my final
question. I read recently in the New York Times about the Army
Corps of Engineers' decision to--whether to restore and rebuild
the levee that protects the east bank versus the west bank.
What kind of impact will that have on the people who want to
resettle both areas? And do you agree with the decision of the
Army Corps?
Mr. Jefferson. No, I don't agree with the decision of the
Army Corps. The Army Corps is talking about a better way--it
almost sounds like a public housing discussion here--a better
way to do a more comprehensive plan, and some other part down
the river, that will do away with the need to build the west
bank levee, whereas before they had plans to do that because
they thought it was necessary for short-term flood protection.
There is still a need for that, and there will be a need
for it this next hurricane season, so we are urging the Corps
to finish the job where it started the levee system and then go
to the more expensive, wonderful thing that will happen down
the road 6 or 7 years from now. But it shouldn't leave people
unprotected as it goes about its work. As it now develops a
better idea, we ought not to penalize until we wait, because
the next hurricane season isn't going to respect that
observation of the Army Corps.
The Corps, as I said to you earlier, has to be held more
accountable for what it does here. Anytime--for 84 years the
Corps has had immunity. I haven't talked with Chairman Frank,
but I know it is not in the jurisdiction of this committee, but
for 84 years, part of that time, it only had to deal with
rivers and building levees for rivers, which is a lot less of
an issue than protecting against hurricanes. And they had that
responsibility now since the late 1960's, and they are treating
it without the sort of urgency that you need to treat this,
this situation with, the idea that they can actually themselves
be the cause of major disasters. And they have now determined
that they were the cause of the disaster that drowned our city,
because the day after the storm, of course, people were willing
to go back, pick up the branches, and do some other things, and
get their roofs fixed and go back to work, and then the levees
broke, and the place was flooded.
The Chairman. I do have to--we are having enough trouble
covering housing. I need some restraint here. Anything further?
Mr. Clay. I yield back.
The Chairman. The gentlewoman from New York. I do urge
Members to stay on our topic.
Mrs. McCarthy. I thank my colleagues for the testimony, but
I have no questions at this time. A lot of the questions I have
will actually go to the next panel.
The Chairman. Thank you.
The gentleman from California.
Mr. Baca. Thank you very much, Mr. Chairman. Thank you for
holding this hearing.
First of all, my question is to the general body, and I
would like to have Congressman Jefferson probably lead off the
original question. In light of FEMA's--I would like to give
FEMA credit. I can't help but notice its quick response to the
assistance of families who were impacted by the recent tornado
in Florida. It was a quick response in that area.
How would you compare FEMA's response to the recent
disaster in Florida to its failure to respond to families
displaced by Katrina? It is a concern that I have. I mean, we
immediately jumped on it, and it is to their credit that we
did, yet we have not responded, and that impacts all of us. And
it has been 18 months, and we are having a hearing right now.
We are having you here to testify. Can you please get your
general feelings and how your constituents feel about the lack
of response?
Mr. Jefferson. Well, there is no comparison about the pace
of response in Florida and the pace of response that we
experienced with Katrina. I would hope FEMA figured out
something about how to do this job better over this period of
time. But for us looking back, there is a whole lot more that
we can do to make this thing work better.
FEMA completely failed us in the rescue and recovery and--
rescue and immediate rescue and I guess the debris pickup and
all that sort of business, and now in the long-term recovery we
are experiencing new and different problems.
If I might just say, one of the big issues now with FEMA on
our recovery side of it is this--I guess this falls under this
committee's jurisdiction because it relates to housing. The
infrastructure part of it, the facilities part of it, you
can't--as Mr. Baker said, whole communities have to be
recovered. You have to have a police station and this and that,
hospitals up, and libraries. You have to have all of those
things working. FEMA is fussing with our city about what
valuations are ours, a huge set of issues. The city says it
takes $100 million to build back a sewer system. FEMA says it
takes $10 billion. They never get together on it. And so we are
experiencing very different issues now with FEMA, wholly apart
from the quick response to when folks just get hit by the
storm. Down the line they are making some very critical, bad
decisions now that we ought to take a good look at and figure
out how we can do a better job. Thank you.
Mr. Baca. I hope race didn't play a part in part of it. Do
you feel that race played a part in any of this? It seems like
we reacted now--
Mr. Jefferson. Race and poverty are always suspect
categories in this country, and we certainly--as I told you
earlier that 94 percent of the people who were displaced in
Houston were African American, and 64 percent of our folks who
were living in affordable housing. So you have to kind of look
at these things and see whether or not there is some
connection. I think it is an important question to ask and an
important question to get a real solid answer to, response. We
don't have an answer to it yet exactly, but we have our
suspicions about what happened.
Mr. Baca. Any other Member want to respond?
Mr. Taylor. I think FEMA treated everybody equally bad. It
was nondiscriminatory.
Mr. Baca. Thank you.
The Chairman. The gentleman from Georgia.
Mr. Scott. Thank you, Mr. Chairman.
You know, I represent the Atlanta area in my district,
which represents the counties around Atlanta in the metro area,
and we are home to the second largest group of evacuees from
the New Orleans area, next to Houston. So we are very concerned
about this failure, and it is a failure. It is an astounding
catastrophic failure of leadership at the national, State, and
local levels.
And there are two things that really symbolize this failure
to me. One is the fact that in the President's State of the
Union message last week, not one time was the word ``Katrina''
mentioned. That is astounding to me. And the other one was that
evacuees were kicked out of motel rooms when they needed them
most while FEMA had trailers in a cow pasture in a place called
Hope, Arkansas. How ironic, Hope. Those two things, very
symbolic.
I just wanted to ask a quick question about housing though.
And I want to try to get at this issue of getting money down
into the area, getting additional funds as soon as possible.
And many of the funds that we have already appropriated here in
Congress require, for example, significant matching grants to
programs such as community development block grants.
My question is to each of you. Are the requirements for
local governments to provide matching funds holding up the
projects? And if that is the case, should not Congress waive
the matching fund requirements? And then secondly, I would like
to go back and get at some assessment of the status of those
trailers, manufactured housing, that are sitting in those cow
pastures in Hope, Arkansas.
Could either of you respond to just those two issues on the
funding and what is going on with those trailers in Hope,
Arkansas?
Mr. Taylor. To give you some idea, the trailer contract in
Mississippi was let, cost-plus noncompete contract, to an
outfit called Bechtel. We put a pencil to it, and it turns out
Bechtel was paid $16,000 per trailer by the time you averaged
it out, to haul the trailer about 60 miles, plug it into an
electrical outlet, hook it up to a water hose, and find a sewer
tap. People do this every weekend when they go on vacation.
$16,000 per trailer. I realize it is not the jurisdiction of
this committee, but it is the jurisdiction of Congress to look
into that.
On the second part, in the case of Waveland, Mississippi,
the city hall, the fire station, every store in town was gone,
and cities live on sales tax. And so absolutely, to the
greatest extent possible, the Federal share has to be waived
for these communities on a case-by-case basis. Some cities
actually did okay, because if they still had stores, they had a
lot of revenue from sales tax. But certainly there ought to be
some flexibility on a case-by-case basis for those communities
that were absolutely clobbered to have the fee waived.
Mr. Jefferson. There is an exhibit prepared by some of our
folks from Louisiana which shows that for every major storm in
recent times, we have had waivers, except you see our block is
an empty--there is no check there. And at a time when it costs
more than any other case, $6,700 per capita, to try to work on
recovery here, there has been no waiver. And in our City of New
Orleans, we have had restored about 25 percent, a little bit
more of that, of our tax base. And so we have no way on God's
Earth to make this work, and our State, of course, has had to
carry a lot of new additional burdens.
I think it is only fair, because of the magnitude of the
storm, and I said before, I repeat myself, because of the
participation of the Corps in bringing about this disaster,
that it would be a good response now to permit--at least for
the time that it will take for our city to restore itself to
the full taxing authority--to have a waiver on the Federal
level to make it possible for our recovery to take place fully.
The Chairman. The gentleman from Texas.
Mr. Green. Thank you, Mr. Chairman. And I would like to, if
I may, address initially, Mr. Chairman, the question of
razing--that would be R-A-Z-I-N-G--thousands of units of public
housing rather than raising, R-A-I-S-I-N-G, these same units at
a time when thousands of persons are in need of housing. A
future promise seems to be the carrot.
Well, we have a saying in my church, ``Pie in the sky by
and by is fine, but there is nothing wrong with something sound
on the ground while you still around.'' A lot of the folks who
are in Houston, Texas, some 20,000, I am told, will probably
not be around by the time we raise, we elevate, and we
construct public housing in New Orleans.
With reference to those who contend that free enterprise
and morality should be the acid test, let me remind my good
friends that when 9/11 occurred, we allowed free enterprise and
morality to be the acid test, but notwithstanding this, we
still find that each of the families received about $3.1
million. $3.1 million, 42 percent of that coming from the
Federal Government, pursuant to the RAND Institute for Social
Justice.
We cannot treat people in New York better than we treat
people in New Orleans. People deserve the same treatment when
they have been hit by a horrific disaster comparable to what
happened in 9/11, and I support what happened in terms of
compensating those victims. We have to do a similar thing for
the people in New Orleans. And I think that this Administration
has failed miserably, because we had an opportunity to develop
a paradigm for going forward, a paradigm for all time, if you
will, that would deal with when people are displaced, that
would deal with resettlement of those persons who are on public
assistance who have been displaced in terms of their immediate
shelter, their long-term shelter, their intermediate shelter,
health care, and counseling.
We have students in the schools in HISD who have not had
sufficient counseling. They have not been given the assistance
that they need to adjust to their new environment. Their
parents, many of them, have not been counseled.
There must be a way for us to revisit all of this and to
develop a paradigm that is going to help us in the future
because it is my belief that this is not the last disaster that
we are going to have to contend with. We ought to have a
national disaster insurance program, national disaster
insurance, regardless as to whether it was a tornado or
hurricane or earthquake. When you are hurt and you are living
in the richest country in the world, there is nothing wrong
with expecting your friends and neighbors to be of assistance,
as was the case with 9/11. We need national disaster insurance.
And finally, I want to compliment both the chairman and the
subcommittee chairwoman for the outstanding job done, and I
look forward to visiting New Orleans again.
I will just mention this in closing. When we went to
Louisiana the last time, we had one person from the other side
with us, and that was the then-chairperson of the Housing
Subcommittee. I am inviting my colleagues, please, let's go to
Louisiana together, and let's work together to do something to
help the survivors of Katrina and Rita.
I yield back, Mr. Chairman.
The Chairman. Any witnesses wish to comment? If not, the
gentlewoman from Wisconsin.
Ms. Moore. Thank you, Mr. Chairman. Thank you for this
distinguished panel of my colleagues.
I actually have been perusing the testimony of the other
panels who are to come before us, and some of the things that
they have said really do--really are appropriate for me to ask
this political panel what is their take on that. In particular,
I have been reading the written testimony of the chairman of
the Louisiana Recovery Authority, and it is very--the
conclusions that I have reached have been very disturbing to
me, and I am wondering if you all would comment on it. And I
would appreciate a bipartisan response, perhaps Mr. Boustany as
well as Mr. Jefferson or Mr. Taylor.
The public law authorizing dispensing of some of these
housing funds that President Bush--Public Law 109-148 was
signed by President Bush on December 30, 2005, and Mississippi
received full funding of its program in December, and it was 6
months later before Louisiana received any funding. There was--
the legislation capped funding for any one State at no more
than 54 percent of the total appropriated, even though
Louisiana received 75 to 80 percent of the total damage from
both Katrina and Rita. So it would appear to me--and it is a
conclusion that I would welcome for you all to dispel--that
assistance was rendered to folks on a partisan basis. And we
have heard a lot about race being involved and so on, but this
is clearly--at least I have concluded that there is some
partisanship involved, and I would love for any of you to rebut
that.
You know, why would Mississippi get full funding 6 months--
I mean, right away, right after the storm, and it was 6 months
later? Why would the funding be capped at 54 percent for any
one State, even though--I am sorry Mr. Chairman. Okay.
The Chairman. No, that was an accident, but if the
gentlewoman wants to have time to answer the questions, we
should--
Mr. Taylor. Number one, Mississippi was hit with a
hurricane.
Ms. Moore of Wisconsin. I am sorry?
Mr. Taylor. Number one, Mississippi was hit with a
hurricane. As horrible as it was, it was over in 24 hours. We
knew how bad it was going to be. We knew what had to be done.
And, yes, 83 percent of all of the homes that were flooded were
in Louisiana, but we had a much higher percentage of homes that
were destroyed outright. So you are comparing a hurricane in my
district, a hurricane in Mr. Melancon's district, to a flood in
Mr. Jefferson's district where it took several months just to
drain the city.
Secondly, I cannot begin to thank Senator Cochran enough.
One of the reasons Mississippi did very well is that, thank
goodness, we had the chairman of Senate Appropriations on the
day this horrible thing happened to our State, and I am
grateful that he did it.
Ms. Moore of Wisconsin. He was a Republican chairman.
Mr. Taylor. He is a good guy. I don't care which party he
is in. He took care of my people. And we all know that being a
chairman, it puts a person in a position to help people, and
Senator Cochran was a hero of Mississippi in this instance.
But I hope that you would distinguish between the hurricane
that hit Mississippi where, as horrible as it was, we knew
Monday afternoon what had to be done. In Louisiana's case, that
flood lingered on for months.
The Chairman. Mr. Jefferson.
Mr. Jefferson. Thank God for Senator Cochran and
Mississippi.
Two things can't be right here. If the number in
Mississippi was right, then the number in Louisiana is way
wrong. I mean, I am not sure anybody sat down and tried to
figure out exactly what it would take on a real-dollar basis to
restore Mississippi, what it would take on a real-dollar basis
to restore Louisiana, but if somebody did figure out that it
took $5 billion in Mississippi's case and Louisiana had 4 to 5
times the loss of houses and 10 times the loss of businesses,
then it would take at least another 4 to 5 times more then
Mississippi's amount to get Louisiana straight.
So I don't begrudge Mississippi's money. I am sure there
was a bunch of politics going on there. But I would just hope
that right now we can revisit this whole matter of what does it
really take to fund the recovery; that somebody for a minute
take a little time and make a real application of the scope of
our losses as against the money provided for our recovery and
see whether or not they match up right. And they don't. I can
tell you that right now.
There ought to be in the pipeline for Louisiana without
regard to how well the local folks are at administering the
money, if there is such a thing as that. There just isn't
enough money starting out to match up to the scope of the
damages even though it is a huge amount of money that we talk
about here. As Mr. Melancon pointed out--I am sorry--the $110
billion, $26 billion goes to rebuild public facilities and
housing and levees and roads and all that. So it is just not--
it was never a realistic way to approach this, just numbers
pulled out of the air, and it wasn't--sort of politics won out
at the end of the day.
The Chairman. Mr. Boustany.
Mr. Boustany. Thank you, Mr. Chairman.
There were two different supplementals that had community
development block grant money. The first clearly was not enough
for Louisiana. I am not sure why it ended up being what it was
at that stage. After that, after that supplemental, there was
an extraordinary degree of cooperation between the Louisiana
Recovery Authority and Mr. Powell representing the
Administration to come up with a figure that was deemed
appropriate, and that is what we ultimately voted on. So
basically, in effect, the LRA got what it asked for at the
time, using Mr. Powell and his cooperation and the work--
bipartisan work in Congress. And that is what happened.
Now, is that figure--I think an appropriate question is to
ask at this stage, why isn't the money actually in the hands of
the people? Because a lot of that money has not gotten into the
hands of the people, and that is a question you should ask, and
we all need to find out the answers. Thank you.
The Chairman. Does the gentleman from Missouri have
questions?
Mr. Cleaver. Thank you, Mr. Chairman.
I would like to thank my colleagues for their willingness
to come before us. And I have had the opportunity to go into
New Orleans and, with the committee chaired by the Chair of the
Subcommittee on Housing, Maxine Waters, we had a chance to
discuss some of the issues with FEMA. I have a thousand
questions, but I will only ask one, because maybe some of you
have gotten this concern expressed to you.
I received a phone call from Jessica, at Tennessee State,
and Nora, who is out of a school in Missouri. They were
students in New Orleans at Dillard University, which was
completely covered with water. My son had just graduated from
Dillard, but stayed there to do a play at Tulane, a summer
Shakespeare series, so he was also there.
These students received money from FEMA, and most of them
went out, purchased clothing, laptops, whatever they could,
with the $2,000 to compensate for what they lost. About 4
months ago, students now in schools elsewhere are receiving
letters from FEMA asking that the money be returned. Do any of
you have any idea what is going on?
Mr. Melancon. I think it is just government at its best.
The Chairman. We will have a chance to ask FEMA that
question. The Members might not know.
Mr. Cleaver. I have one of the letters from FEMA.
The Chairman. FEMA will be on the next panel, unless the
Director of FEMA has left now.
Mr. Cleaver. I can't wait. Thank you. That is all, Mr.
Chairman.
The Chairman. I thank the Members. And it is unusual to
have this degree of questioning with the Members, but it is
also unusual for Members representing areas to have undergone
this devastation. And I am sorry this is taking so long, but I
don't see any way around it, and we are now going to proceed to
the next panel. We will take a 5-minute break. I do ask for
people's indulgence. This is worth a day of our lives. We will
take a 5-minute break, and then we will have the next panel.
[Brief recess]
The Chairman. The committee will come to order. The next
panel will consist of: Roy Bernardi, Deputy Secretary,
Department of Housing and Urban Development; David Garratt,
Acting Director of Recovery, FEMA; Walter Leger, chairman,
Housing and Redevelopment Task Force, Louisiana Recovery
Authority; and Gray Swoope, executive director, Mississippi
Development Authority. We will begin with the Deputy Secretary.
And you all have unanimous consent to submit your entire
statements. So you may just proceed with your statement. There
is no need to thank us for having the hearing or tell us what
the hearing is about because we already know that. Let's get
right to substance.
STATEMENT OF THE HON. ROY A. BERNARDI, DEPUTY SECRETARY, U.S.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Bernardi. Okay, Mr. Chairman. Today I want to share
with you HUD's recovery efforts in the Gulf Coast following the
devastation caused by the 2005 hurricanes. We have made great
strides in the recovery effort, yet there are still many
challenges that lie ahead, especially in Louisiana. This
testimony focuses on three things: The $16 billion, $700
million in Community Development Block Grant supplemental funds
for long-term recovery; the recovery of New Orleans public
housing; and the continuing affordable rental housing
challenges.
In response to the disasters, the Federal Government has
committed more than $100 billion to help the Gulf Coast,
including, as I mentioned, $16.7 billion for the CDBG program,
the legislation passed by the Congress for the CDBG program was
clear in its intent. The Federal Government would not and
should not dictate to local communities how to rebuild. Those
closest to the ground should do that. That is why the Gulf
States and their Governors were designated with the principal
responsibility for the design, the implementation, and the
performance of their rebuilding efforts, with HUD having an
oversight role as good stewards of the taxpayer dollar. We
understood the importance of approving those funds quickly and
getting the money into the hands of State leaders as fast and
as responsibly as possible. We will continue to offer guidance
and ensure compliance with the law, including the prevention of
waste, fraud, and abuse.
Recovery is taking time. States have only spent $1 billion,
$200 million of the $10.5 billion in emergency CDBG funds that
HUD has awarded. Leading the way has been Mississippi's
Homeownership Assistance Program, which has disbursed more than
11,000--I understand 12,000 checks now to families to help
compensate them for their losses so they can rebuild their
lives. Mississippi has also used critical CDBG recovery funding
to complete a master plan for infrastructure that develops
long-term regional solutions to the water, sewer, and storm
drainage needs of Gulf communities. While the task before
Mississippi is a tremendous one, the task before Louisiana is
substantially greater. Its homeownership program alone has over
100,000 applicants. Only a handful of loans have been closed to
date, we believe, and we hope that the State will soon achieve
a rapid escalation of program implementation over the next 6
months.
I would like to take this opportunity to explain the
situation with public housing in New Orleans and its history.
Mr. Chairman and members of the committee, even before the
storms hit, public housing in New Orleans was in a difficult
state. Some buildings were 70 years old and had not been kept
up, they were crime-ridden, and in many circumstances the units
were health hazards. In fact, the Housing Authority of New
Orleans, or HANO, did such a poor job of managing their
properties that HUD was forced to take them over 5 years ago,
long before Katrina struck the city. Also before Katrina hit, a
decision was made to redevelop some of these public housing
units in favor of mixed income housing. For example, in
Atlanta, the redeveloped areas there have borne huge social and
economic improvements such as higher test scores for children
in schools, less crime, and more livable communities, and we
want to do the same thing in New Orleans. Despite what some may
say, it is going to take more than just a little bit of
cleanup, some spick and span, if you will, to make most of
these units livable. That is why they were slated for
demolition before the storm, and the storm made a bad situation
even worse. That said, we are committed to bringing back public
housing residents, and we are fixing units to allow residents
to return in a phased-in manner until redevelopment moves
forward.
As Secretary Jackson said in August of 2006 when he visited
New Orleans, every family who wants to come home should have
the opportunity to come back. We have always felt that way. We
always will, and we will work on making sure that happens. We
will continue to work with the local community to redevelop New
Orleans public housing so families will have an opportunity to
return to better and safer neighborhoods.
We have also been aggressive in our efforts to provide
rental housing assistance to displaced families and
individuals. HUD has also worked to provide previously HUD-
assisted families and homeless individuals who were displaced
by the storm with housing during this period by paying rental
subsidies to over 30,000 persons. We have also assisted close
to 25,000 families in finding affordable rental units.
While New Orleans public housing is an important and viable
piece to providing affordable rental housing in the region, it
represents only a small number of the 112,000 rental units in
the five-State Gulf Coast region that were seriously damaged by
the storm. In total, 13 percent of the damaged rental stock in
the Gulf region was subsidized housing. Before the storm, there
was moderately affordable shelter in New Orleans but the
situation has worsened dramatically since the hurricanes, as we
all would have imagined. Not only are there 112,000 fewer
rental units in the five States, there is also increased demand
for nondamaged units. In response to the rent inflation, HUD
has increased the fair market rents for New Orleans by 45
percent since the storm. In the immediate aftermath of the
hurricanes, the Department's goal is to repair, rehabilitate,
and rebuild the affordable housing projects to the greatest
extent possible to ensure that the residents could return home.
At this time out of 82,000-plus units in the area impacted
by Katrina, there has been a permanent loss of only 263
affordable rental housing units, and that is for the FHA multi-
family portfolio. The path ahead for rebuilding affordable
rental housing is daunting. The Federal Government has done a
lot to help the States, and I am confident that the States are
working to address the many challenges. It is a path, however,
that is going to take longer than anyone would have
anticipated, longer than anyone would like.
Mr. Chairman, members of the committee, people need help
now. We remain committed to helping these families, using all
the resources available to recover and stimulate economic
development and restore hope to communities throughout the
Gulf.
Thank you.
[The prepared statement of Secretary Bernardi can be found
on page 162 of the appendix.]
The Chairman. Mr. Garratt.
STATEMENT OF DAVID GARRATT, ACTING DIRECTOR OF RECOVERY,
FEDERAL EMERGENCY MANAGEMENT AGENCY
Mr. Garratt. Thank you. Chairman Frank and members of the
committee, I recognize that the committee's focus today is
centered on the ongoing efforts to rebuild housing in the Gulf
Coast region, so I will focus my comments on the FEMA recovery
programs and initiatives that directly relate to this important
and continuing effort. Under Section 408 of the Robert T.
Stafford Disaster Relief Emergency Assistance Act, FEMA is
authorized to provide housing assistance to individuals and
households, a program which includes rental assistance, home
repair assistance, home replacement assistance, and direct
housing. I will discuss each briefly.
Beginning with rental assistance, FEMA may provide rental
assistance for eligible individuals whose homes have been made
uninhabitable or inaccessible due to the disaster and whose
insurance benefits do not cover alternative living expenses. In
the case of Hurricane Katrina, the majority of this assistance
has been provided to evacuees residing outside the damaged
area. In total, more than $2.1 billion of rental assistance has
been distributed to over 672,000 households. Currently 35,000
households continue to receive a form of rental assistance
payment.
Under home repair assistance, eligible applicants from
Hurricanes Katrina and Rita are authorized to receive up to
$5,200 in home repair assistance. Repairing a home to make it
livable where that option exists is a preferred remedy because
it keeps people in their homes, in their communities, and is
cost effective. However, in an event as massive and destructive
as Hurricane Katrina, this is not always a viable option, as
many families suffered major damage to or total destruction of
their homes. However, for the many families that sustained
minor or moderate damage to their homes, this is often the
fastest and best housing assistance remedy. Today FEMA has
provided over $318 million in home repair payments, helping
make more than 129,000 homes habitable across the Gulf region.
Home replacement assistance. FEMA is authorized to provide
up to $10,500 in home replacement assistance to eligible
victims of Hurricanes Katrina and Rita. Thus far in the four
Gulf States most heavily impacted, Alabama, Louisiana,
Mississippi and Texas, FEMA has provided more than $329 million
to over 29,000 households to assist them towards the purchase
of replacement housing. It is important to note that neither
the repair nor replacement assistance that FEMA provides is
intended to substitute for insurance, nor can FEMA assistance
duplicate any insurance benefits.
In most disaster settings, temporary housing needs can be
adequately addressed by FEMA rental repair replacement
assistance. However, as we are all acutely aware, Katrina was
no typical disaster. Katrina destroyed or significantly damaged
tens of thousands of housing resources, greatly limiting our
standard temporary housing options. In such a situation where
traditional fixed housing resources are not available, FEMA can
provide direct housing assistance in the form of temporary
housing units to eligible applicants. Direct housing assistance
can be acquired from the Federal Government by purchase or
lease, such as apartments, but most often through the provision
of manufactured housing--travel trailers and mobile homes.
Following Katrina, both options were employed. Direct leases
were secured to house evacuees outside the impacted area and
manufactured housing was provided within the heavily damaged
areas of Louisiana, Mississippi, and Alabama, providing the
option for many disaster victims to remain in their communities
close to their jobs, families, friends, and their childrens'
schools. In some cases families were able to remain on their
own property.
At present, more than 91,000 applicants continue to receive
a form of direct housing. Over the course of the last 17
months, FEMA housed more than 120,000 households in temporary
housing units. As a sign of progress, the total number of
households currently living in temporary housing has decreased
to 91,000 and 96 percent of the housing requests have been
resolved. Eighty percent of temporary housing units are on
private sites where individuals are rebuilding their homes.
Direct housing is initially authorized by the Stafford Act for
up to 18 months from the date of the disaster declaration, but
the President may extend that period if he determines that due
to extraordinary circumstances it would be in the public
interest to do so.
President Bush directed FEMA to provide an extension of
both direct housing and financial housing assistance programs.
This new extension allows FEMA to continue to provide housing
assistance through August 31, 2007. It also gives us additional
time to continue our work with the disaster victims, Federal,
State, and local partners, and volunteer organizations to
transition victims to more permanent housing solutions.
Congress recently took some important legislative steps to
help us address the challenges of disaster housing both for
those affected by Hurricane Katrina and those who may be faced
with similar housing needs in the future. In the 2006
supplemental, Congress appropriated $400 million to FEMA for a
pilot program that could identify and evaluate new alternatives
for housing disaster victims in the aftermath of a disaster.
This legislation required that FEMA target the funding and
assistance to these States most affected by the hurricanes of
2005. Accordingly, Alabama, Florida, Louisiana, Mississippi,
and Texas were invited to submit applications as part of a
competitive process to identify the most innovative and
promising alternative disaster housing solutions. This
competitive grant process was designed to ensure that those
proposed projects that met the greatest number of selection
criteria received first consideration.
The alternative housing pilot program grant guidance was
released on September 15, 2006, and applications from the five
Gulf Coast States were due on October 20th. Each of the five
eligible States submitted applications which collectively
contained 29 discrete proposals. The 29 proposals totaled
almost $1.2 billion in requested grant money, well in excess of
the $388 million made available for award, with the remaining
$12 million reserved for necessary administrative costs and
other costs. The Department of Housing and Urban Development, a
key partner of ours in this pilot program, will lead a formal
evaluation of all approved pilot projects. Five projects were
selected by FEMA for potential grants across the four States
that submitted competitive applications. Each project is being
reviewed to ensure viability and upon successful completion of
that review will move forward the funding.
The Fiscal Year 2007 homeland security appropriations bill
also made broad changes to the Stafford Act, many designed to
allow FEMA greater flexibility in meeting future disaster
housing needs. Key changes include the requirement for a pilot
program that will allow for the repair of pre-existing rental
units under FEMA housing assistance as well as the requirement
to develop a national disaster housing strategy. There are many
other changes, and work on all of them is under way.
While finding housing for the many displaced households of
Hurricane Katrina has been and will continue to be a challenge,
FEMA remains committed to providing or coordinating continued
assistance to these victims, together with our Federal, State,
local, and private voluntary agency partners. We will continue
to pursue assistance solutions that will effectively and
compassionately help individuals and households recover and re-
establish their lives in the Gulf Coast region.
Thank you. I am prepared to answer any questions you may
have.
[The prepared statement of Mr. Garratt can be found on page
299 of the appendix.]
The Chairman. Thank you, Mr. Garratt.
Mr. Leger.
STATEMENT OF WALTER LEGER, CHAIRMAN, HOUSING AND REDEVELOPMENT
TASK FORCE, LOUISIANA RECOVERY AUTHORITY
Mr. Leger. Thank you, Chairman Frank, Congressman Bachus,
Congresswoman Waters, and members of the committee. Good
morning. My name is Walter Leger. Before August 29, 2005, I was
a resident of Saint Bernard Parish. I now live on higher ground
in New Orleans. My parish, my community, had 27,000 homes, all
but three severely or substantially damaged. We are still
looking for those three. A vast majority of our community is
gone, has moved away, and many will not come back.
I thank you for allowing me to speak to you today in
connection with Katrina and Rita, the first and third largest
disasters in the history of this country. The Louisiana
Recovery Authority was created as nonpartisan by Governor
Blanco and coordinated recovery efforts related to the two
storms. I am a volunteer or I should say, I guess, a draftee,
having been asked by Governor Blanco to serve on the board and
as chair of the board's Housing and Redevelopment Task Force.
Katrina and Rita caused an estimated $100 billion in
damages in Louisiana alone. About $40 billion of these losses
were covered by insurance. We are sincerely thankful for the
estimated $26 billion Congress set aside to help us rebuild our
homes and infrastructure and levees, but that still leaves a
gap of $34 billion, or about $20,000 in unrecovered losses for
every Louisiana household.
Your focus today is on how we are reinvesting the generous
appropriations from Congress for housing. Like many of the
other members of the LRA, I lost my home to 14 feet of water.
More than 200,000 homeowners and renters in south Louisiana
suffered the same, or actually a worse fate. They lost their
photographs, their family albums, every single belonging, and
everything that made their house a home. They also lost their
dry cleaners, their dentists, their schools, and their
churches.
The LRA developed the broad policies for the Road Home
Program. We do not implement or enforce the policies. The State
Department of Divisions Administration is involved in that. The
Road Home Program is the largest single housing program ever
created, providing eligible homeowners with a grant to cover
the gap between insurance and the cost of repairs up to the
pre-storm value of their home with a cap of $150,000 and up to
$50,000 in forgivable loans to low-income homeowners. We
estimate more than 120,000 homeowners will benefit from this
program funded by $6.4 billion in CDBG and $1.1 billion in
Stafford Act housing mitigation funds, whether or not they had
some insurance and whether or not they resided inside or
outside a flood plain.
Let me outline the action taken since Congress fully funded
this program in 2006, 7\1/2\ months ago. The same week we
received program approval, the State's Department of
Administration signed a private contract to implement the
program. The company set up 10 housing centers throughout
Louisiana and one in Houston, Texas. More than 105,000
applications have been received and recorded. Housing
counselors have conducted over 72,000 in-person appointments
with applicants, and nearly 30,000 homeowners have been
notified of benefit awards, totaling $2.5 billion, a commitment
and obligation of contractual $2.5 billion. While only 500
homeowners have received their actual awards, many more are in
the pipeline. This is not fast enough. It must move faster. We
in Louisiana got our full funding for our various programs
10\1/2\ months after the storm, 7\1/2\ months after Mississippi
got full funding, but we are moving as quickly and as fast as
possible, but there have been problems.
The CDBG funds came down to us wrapped in red tape. One
particular area that should be addressed immediately is the
SBA's failure to distinguish the difference between a grant and
a loan. They are requiring homeowners to repay SBA loans with
their Road Home grants; that is, take the $2 billion that we
were given to help homeowners and give it right back to the
Federal Government.
Another obstacle is the Federal requirement that we deduct
insurance proceeds and FEMA payments from our awards. Verifying
these deductions is time consuming and, worse, it requires the
voluntary cooperation of dozens of insurance companies, of
which Congressman Taylor spoke.
An additional area of concern relates to our use of Hazard
Mitigation Grant Program funds as required by Gulf Coast
Recovery Chairman Powell. The State did not want to use moneys
in this way, but we were told that the Administration would not
support additional funding that was negotiated, that was not
all we asked for, unless we agreed to use these funds. As of
today, FEMA has been unwilling or unable to approve nearly $1.2
billion of funding that is desperately needed for the Road Home
Program. We ask for your assistance there.
Let me briefly, if I may, tell you about the rental
programs. About 82,000 rental units received major or severe
damage from the storms. In response, we set aside a total of
$1.5 billion in CDBG funds, which will supplement the estimated
$1.7 billion worth of private investments triggered by
Congress' expansion of the low-income housing tax credit
program in the GO Zone legislation. In total, with this $3.2
billion of investments we hope to create an estimated 35,000
units in a broad mix of deeply affordable units, mixed income
development, and a one-to-four unit programs. Using
approximately $667 million in CDBG funds, we hope to piggyback
with the tax credits, and also while funding developers in
these projects, we will be funding permanent supportive housing
for the elderly, deeply affordable units, and permanently
supportable housing for the disabled and market rate units.
These projects have enormous potential, yet increased
construction, labor, utility, and insurance costs have made
some deals unfeasible. To ensure that the units at risk are
successfully developed, we request that Congress extend the
December 31, 2007, placed-in-service deadline to December 31,
2009, and extend the December 2008 placed-in-service deadline
to December 31, 2010.
Briefly, the small lenders program, the LRA's small rental
property program, will provide gap financing of $869 million
for the repair of about 18,000 small rental units, landlords
who own one to four unit properties and who owned it before.
The incentive will be $18,000 or $72,000 no-interest
nonrepayable loans, assuming that you agree to deep
affordability on a competitive basis with others applying for
the program. The funds aren't sufficient to comply with all of
our rental needs, but we are being inventive in that regard.
One of the Congressmen asked about--and I will wrap up,
sir--first-time homeowner program. A $40 million first-time
buyers pilot program will soon be available to allow low- and
moderate-income renters to purchase damaged properties.
One major aspect, you have asked for things that you could
do, the cost share issue. $1 billion--we figure our cost share,
the State cost share, local government's cost share will be
about $1.5 billion. Many of the governments, my own in Saint
Bernard Parish have zero, nada, nothing in terms of ability to
repay loans. The CDBG funds you gave us will be required to do
so. Accordingly, with respect to that 10 percent match, unlike
any other major storms or disasters in modern history, we
take--you send us the $1.5 billion, and we send it right back
to you. So we lose those funds.
Gentlemen and ladies, I will be happy and look forward to
answering any of your questions.
[The prepared statement of Mr. Leger can be found on page
327 of the appendix.]
The Chairman. Mr. Swoope.
STATEMENT OF GRAY SWOOPE, EXECUTIVE DIRECTOR, MISSISSIPPI
DEVELOPMENT AUTHORITY
Mr. Swoope. Thank you. Good afternoon and thank you for the
opportunity to come before you today. First of all, I will say
thank you for your support, your funding and, most of all, your
prayers for helping Mississippi recover from the worst natural
disaster to hit the United States. I am Gray Swoope with the
Mississippi Development Authority, and as you are aware,
Mississippi has been allocated $5.48 billion in CDBG funding
for disaster recovery.
Today, I want to give you an update on where the money is
being spent. 30,000 in 41 owner-occupied homes received flood
surge damage. 19,787 homes located outside of the 100-year
flood plain received flood damage. 2,939 of those were
uninsured. 10,254 homes located inside the 100-year flood plain
received flood surge damage, 4,916 did not have flood
insurance. Working with our Federal partners, local
governments, and the private sector, the State of Mississippi
is pursuing a comprehensive approach to rebuilding in the south
of Mississippi. HUD approved $3.423 billion for the Mississippi
Homeowners Assistance Program Action Plan on April 1, 2006. The
release of funds was approved by HUD on July 10, 2006, just
over 6 months ago. The purpose of this program was to provide a
one-time grant payment up to a maximum of $150,000 to eligible
homeowners who have suffered flood surge damage to the primary
residences on August 29 from Hurricane Katrina. Eligible
homeowners are those who owned and occupied their home on
August 29, 2005, maintained homeowners insurance on the
property, received flood surge damage, and lived in homes
located outside the 100-year flood plain in six Hancock,
Harrison, Jackson, or Pearl River Counties along the
Mississippi coast. To secure the grant, the homeowner agreed to
place a covenant on the property, which provided that the
rebuild and repair would be in accordance with applicable codes
and local ordinance, that during rebuilding the home would be
elevated in accordance with FEMA advisory flood elevations, and
that the homeowner would attain and maintain flood insurance on
the property.
MDA opened three service centers on the Mississippi Gulf
Coast on April 17, 2006. Between April 17, 2006, and May 31,
2006, 15,850 applications were taken. To date, 17,654 Phase I
homeowners applications have been received through these
service centers. 84 percent of these applicants have indicated
they would repair or rebuild. Of the applications taken, 3,447
have been deemed ineligible but will be considered during the
second phase of the Homeowners Assistance Program. Currently
13,538 applicants have been notified that they are eligible to
receive a grant and 12,142 of those have completed their grant
closing. As of Friday, February 2nd, that was last Friday,
10,247 applicants have been paid a total of $681,456,302. That
is 72 percent of the potentially eligible applicants for the
initial Homeowners Assistance Program have been issued checks.
And again I emphasize that is a little over 6 months since HUD
released those funds. This also means that 10,247 properties
located on the Mississippi Gulf Coast now have covenants
attached providing for repair, rebuild, and accordance with
applicable codes and ordinances that the homeowners have agreed
to and will maintain flood insurance.
On December 19, 2006, HUD approved a modification to the
Homeowners Assistance Program to redirect $700 million of the
original $3 billion initially allocated to homeowners
assistance grants to the Phase II program. The purpose of the
Phase II program is to provide compensation grants up to a
maximum of $100,000 to homeowners who suffered flood surge,
damage to their primary residents as of August 29, 2005. Phase
II eligible homeowners are those who owned and occupied their
home on August 29th, received flood surge damage, have a
household income at or below 120 percent of the area median
income, and whose home was located in Hancock, Harrison,
Jackson, or Pearl River Counties. MDA began registration for
the Phase II Homeowners Program in July 2006. There have been
7,011 registrations received as of February 2nd of this year.
In addition, 3,447 applicants deemed ineligible for Phase I
will be considered in the Phase II program. A significant
component of this program will be financial counseling for
those homeowners to assist with their recovery plans.
Applicants in both phases of the Homeowners Program may be
eligible for a separate grant of up to $30,000 to defray the
cost of elevating their homes out of potential danger areas.
To encourage homeownership, Governor Barbour has allocated
$157 million in tax exempt private activity bond authority to
the Mississippi Home Corporation to issue mortgage revenue
bonds. Through the sale of these bonds, the Mississippi Home
Corporation is able to reduce homeownership costs by offering
below market interest rates and assistance, with closing costs
equal to 3 percent of the mortgage amount. With this authority,
more than 2,700 families statewide have received assistance
since Katrina, with 400 of those being on the coast. These
bonds are not general obligations of the State. Rather, they
are repaid as homeowners pay their mortgages. Governor Barbour
will continue to allocate additional tax exempt private
activity bond authority to the mortgage revenue bond program to
help more families achieve their dream of homeownership.
Hurricane Katrina destroyed or severely damaged 8,600
rental units in Mississippi, 95 percent of which were located
in Hancock, Harrison, and Jackson Counties. The Gulf
Opportunities Zone Act authorizes the Mississippi Home
Corporation to allocate approximately $35 million annually in
low-income housing tax credits in 2006, 2007, and 2008. The
Mississippi Home Corporation awards these Federal tax credits
based on a competitive scoring process, conducted according to
the qualified allocation plan approved by the Governor.
In August 2006, the Home Corp awarded over $10 million of
the tax credits that will facilitate the construction of over
1,000 units.
I will skip on here quickly.
The other factor on housing that you need to be aware of,
in addition to the home tax credit, HUD has approved the action
plan to amend the needs for public housing. The purpose of the
amendment was to provide funding in the amount of up to $100
million to the five housing authorities that suffered damage to
their families on August 29th. There were 2,695 rental units
pre-storm. Of that, only 2,534 were damaged. Grant allocations
have been made based on the percentage of the individual
Housing Authority dollar damage to the five housing
authorities. That program is now awaiting final application
approval pending environmental assessments.
This are other factors that are considered with the
business climate--we can talk more about that in a minute--such
as insurance mitigation, ratepayer mitigation, and other ways
that we have used the money.
The Chairman. Thank you.
[The prepared statement of Mr. Swoope can be found on page
374 of the appendix.]
The Chairman. Secretary Bernardi, the President, on
September 15th, went to Jackson Square and in his major speech
talked about his Urban Homesteading Act. He said that under
this approach, we will identify property in the region owned by
the Federal Government, provide sites to low-income citizens
free of charge, etc. That was the major housing piece.
What have been the results so far under the Urban
Homesteading Act that the President announced? Some of us were
skeptical at the time.
Mr. Bernardi. At the Federal Housing Administration, we
have recognized a significant number of properties throughout
the Gulf Coast that were obviously damaged due to the
hurricanes. We have rehabilitated those properties, and we are
offering them at a discount to individuals who have been
affected by the storm.
The Chairman. How many have been put into the hands of
homeowners?
Mr. Bernardi. I believe there are a few thousand that have
been, but I will get you the exact number.
The Chairman. A few thousand?
Mr. Bernardi. We didn't have that many to start with, sir.
The Chairman. We had asked you, hadn't we--we had asked for
that information. I am sorry to disappoint you, not to have it,
but I would think, this being a major program that the
President announced, you could give us some figures. This isn't
a trick question. That was the President's major program. You
can't tell us how much--somebody may be able to tell you.
Mr. Bernardi. The fact of the matter is that the
homesteading program can deal with raw land or it can deal with
housing. As I mentioned, there is properties that HUD owns
throughout the Gulf Coast area.
The Chairman. How many homes have resulted from this
program?
Mr. Bernardi. I will get you that.
The Chairman. Mr. Bernardi, frankly, that is very
disappointing. This is a year-and-a-half after the President
made a major speech, it is his major piece, and you can't tell
me what, if anything, has been done. I think, frankly, that it
is partly because very little has been done.
Let me ask you, we have heard a couple of specific
proposals from the members and from the representatives, one is
that we forgive the matching requirement in the CDBG. What is
HUD's position on that specific request?
Mr. Bernardi. HUD's position is that you can use the HUD
funding to meet the match.
The Chairman. That reduces the HUD funding. They proposed
abolishing the match. What is HUD's position on not requiring
the match in this case, which they say is an unusual thing?
Mr. Bernardi. It isn't the HUD match. It is the Stafford
Act.
The Chairman. I understand that, sir, but we are the
Congress, and I can vote on it. I am soliciting HUD's opinion
as to whether or not we should do away with that matching
requirement as a matter of public policy.
Mr. Bernardi. As you indicated, that reduces, obviously,
their CDBG dollars to use in other areas.
The Chairman. Thank you for restating the obvious, Mr.
Bernardi.
Mr. Bernardi. The position would be, obviously, whatever is
in the best interest of the redevelopment of the areas.
The Chairman. Mr. Bernardi, please, let's not dance around.
It is a simple question. We have asked for specifics. Does HUD
support the specific proposal that we got from some of the
members and others from the area that we rescind the
requirement for the match on the CDBG program? What is HUD's
position on that matter of public policy?
Mr. Bernardi. There is no match on the CDBG program,
Congressman. That is not a HUD initiative. We don't require a
match. You can use the CDBG dollars for the match.
The Chairman. I am not blaming HUD for the fact that it was
in there. What is your position on whether or not--
Mr. Bernardi. I would think it would be the position of the
Administration.
The Chairman. What is the position of the Administration?
Mr. Bernardi. You can talk to others who impose the match.
The Chairman. What was that again?
Mr. Bernardi. The Stafford Act, where the match comes from,
is where you would have to correct the situation.
The Chairman. Are you in favor or changing it or not?
Mr. Bernardi. I am in favor of anything that will help. The
answer is yes.
The Chairman. You are in favor of abolishing the match
requirement in this situation.
Mr. Bernardi. I would think, if abolishing the match indeed
helps the areas--but, on the other hand, as you know, Mr.
Chairman, we would like to have, obviously, the local
communities participate in the process with other resources.
The Chairman. I understand that, Mr. Bernardi, but I am
still trying to get an answer to the question. Should we
abolish the matching requirement or should we not? What is
HUD's advice on that subject?
Mr. Bernardi. HUD's advice is to do what is in the best
interest of the people that everyone is trying to serve.
The Chairman. That is ``bureaucratese.'' So I can't get an
answer on that one.
What about extending the tax credits? That shouldn't be
hard. Are you in favor of extending the tax credit?
Mr. Bernardi. Absolutely.
The Chairman. Thank you. What was the ``if?''
Mr. Bernardi. The answer is yes, absolutely.
The Chairman. I thought you had an ``if.'' I was worried
about the ``if.''
Mr. Bernardi. What are we, one for two now? We are doing
well.
The Chairman. One for two in getting an answer, not
necessarily the right answer.
Let me ask you, in your closing comments, as I read them--I
had to go outside for a bit--you say, even after housing is
rebuilt, there will be far less affordable housing stock now
than before the storm--talking about New Orleans now. There
needs to be a long-term housing solution for them.
And here is the conclusion that we get from the Department
that is in charge of this: The path ahead is daunting. The
States are on the right path to addressing their challenges. It
is a path that is going to take longer than we want.
I am not satisfied at that being the response of the
Federal Government. You acknowledge that there is going to be
far less affordable housing after the storm than before. You
talk about some rental things. What is HUD's proposal for
actually making up this deficit? Do you have any plans for
building housing, creating more affordable housing than we
would otherwise have so that we won't face what you acknowledge
would be far less than before? What is HUD's view about
increasing the stock of affordable housing?
Mr. Bernardi. With the CDBG program and the moneys that are
available to the respective States, they have plenty of action
plans that we have moved on expeditiously and that address
affordable housing as well as, obviously, business
redevelopment, and infrastructure.
The Chairman. I am talking about housing now. I can only
talk about one thing at a time.
I did hear that less than half of the units were going to
be replaced, 82,000 lost, 30 some odd thousand replaced. Does
HUD believe we should do something to make up that gap, less
than half the affordable units being replaced with the use of
the CDBG funds?
Mr. Bernardi. Exactly. The CDBG funds--
The Chairman. The CDBG funds, according to Mr. Leger, are
going to replace less than half of the housing, which will
replace less than half of the units lost, 30 some odd thousand
out of 80 some odd thousand. Does HUD have any plans for
replacing more of those units other than the CDBG program which
are going to replace less than half?
Mr. Bernardi. Those units--those affordable housing units
are coming back on line.
The Chairman. Mr. Bernardi, please, let's not play games. I
understand they are coming back on line. There will be 30,000
of them, where there had been 80,000. So the question is, what
do we do about that shortfall of about 50,000 less affordable
units than before? The CDBG, yes, 30 some odd thousand. There
were 80,000 destroyed. What about the other 50,000?
Mr. Bernardi. There will be a need for additional
resources.
The Chairman. Does HUD have any plans for providing those?
Mr. Bernardi. We don't have the resources in our budget,
no.
The Chairman. The last question, in the bill that we had
voted on last year that I hope we will vote on again soon
increasing the regulation of Fannie Mae and Freddie Mac, we
have a proposal that would result in about $500 million being
available, not in the Federal budget, not out of HUD's budget
for affordable housing ongoing, but we have agreed at the
initiation of Mr. Baker and others to put that all in the Gulf
in the first year. Does HUD support a fund of about $500
million, assuming we can agree on how it is distributed, to
help make up that defect? That would be $500 million not on the
budget, not out of your allocation, to increase the stock of
affordable housing and reduce that 50,000 drop. Does HUD
support that?
Mr. Bernardi. Mr. Chairman, I have read your proposal and
how you prepare to do that with Fannie Mae and Freddie Mac. If
you can get the resources, we will do the job.
The Chairman. Mr. Bernardi, why don't you answer questions?
I don't understand why you play games. You are telling me if we
tell you to do something, you will do it. I am asking you, as a
matter of public policy, does HUD support putting the bill
through in a way that makes that $500 million or so available
for affordable housing in the Gulf--does HUD support that as a
matter of public policy?
Mr. Bernardi. When you get it through, then, obviously, we
will do what we need to do. You are asking me to make policy. I
don't make policy.
The Chairman. You are the Deputy Secretary of HUD, and I am
asking you to make housing policy, and you act like I am asking
you to do something improper. If you don't make housing policy
and the Secretary wouldn't come, who does in this
Administration?
Mr. Bernardi. The fact of the matter is that you dispose.
If you go ahead and you can get that through the Congress, then
we will do it.
The Chairman. I am sorry, that is disingenuous. HUD often
comes up and makes recommendations. The notion that it is
somehow inappropriate to ask the Department of Housing and
Urban Development its opinion as a matter of public policy on
an important question--you have acknowledged that we are going
to have, even after the CDBG funds are spent, a shortfall in
affordable housing. I am asking HUD's opinion. You are here as
a representative of HUD.
Mr. Bernardi. My opinion is yes. If you have the funding
for us, we will do it.
The Chairman. Mr. Bernardi, please don't play that game. If
we tell you to do it, you will do it. That is not the question
I am asking you. As you well know, as a matter of policy HUD
makes recommendations to policy all the time. Are you telling
me HUD is not, for the rest of the years that the
Administration is here, going to make any recommendations about
what policy ought to be?
Mr. Bernardi. To bring back affordable housing, we are in
favor of using the resources.
The Chairman. So you would be in favor of including that
provision for the $500 million?
Mr. Bernardi. Yes.
The Chairman. Thank you.
Mr. Bernardi. Hopefully, we will have it.
Mr. Baker. I thank the chairman.
Mr. Garratt, I had a series of questions, but I am going to
stipulate those in writing for a response later. They will
include a comparative analysis of FEMA's administrative
overhead charge certainly in excess of 20 percent in one
quarter, 24.9, as contrasted with the State of Louisiana's
administrative costs for disposition of CDBG grants in the
amount of 1.5 percent. I find it very troubling that the
administrative cost would be so excessive in the administration
of public dollars in the face of an emergency response.
Also, I would like to have a better explanation of FEMA's
planned deployment practices going forward for future disasters
of this magnitude. It was, in fact, an observation that many
FEMA employees, consultants, and contracting parties did
displace evacuees from rental facilities and rental property in
order for them to acquire a platform from which to work, as
opposed to placing them in the trailers, which gets me into a
question concerning trailer deployment.
I am not so much concerned about the Hope matter. I think
that is hopeless. I am now concerned about an article appearing
in a weekend paper talking about the need for additional
handicapped disabled trailers when we have 4- to 5,000 vacant,
not utilized, in storage, and we are ordering additional
trailers which are outright designed for disabled and
handicapped, while modifications to the quite large inventory
in Hope could be done for about $1,000 a unit, saving taxpayers
considerable dollars.
Lastly, I will have a question concerning the Katrina
cottage allocation, the most recent sort of discussion in the
news, and how it was possible, given the scope of need
represented for permanent housing response, that we found the
Mississippi allocation to be so disproportionately large to the
Louisiana settlement.
I will get those to you in writing.
Mr. Leger, I wanted to hit the quick high ground as best I
can in the time available. Knowing that the Road Home is not a
community restoration program but a housing recovery program
aimed at individuals to help them make personal decisions about
how to go forward, as I understand the technical circumstance
we have had 506 closings, averaging $62,000, for a total of $31
million, but I do note on page 6 of your testimony that you
have 30,000 offer letters out in some stage of consideration
which represent a total of $2.49 billion, with an average
award, if accepted, close to $80,000.
My point is, even if that is the accurate summation of our
current condition and every applicant accepts the offer
tendered, we still have $5 billion in the bank right now
awaiting future action or disposition.
My first question is, has anyone actually received a check
of $150,000 from the program yet?
Mr. Leger. I am not sure who has received exactly what. I
know that people have been awarded $150,000. I suspect among
those 500 who have actually gotten their disbursals there may
be some who have gotten $150,000.
Mr. Baker. It would be great if you could help us to better
understand the operative nature of the deployment of these
resources, if you could provide to the committee some outline,
without, obviously, personal information but just
characterizations of classes of settlement and how they have
been disposed over the most recent 8 months.
Has, to your knowledge, there been a decision made by the
LRA or local government to preclude anybody from redeveloping
or rebuilding in any area or has the general approach been if
you want to rebuild, we will help you?
Mr. Leger. Congressman Baker--and, again, thank you for
your bill, which we all unanimously supported some time ago--
the planning process in New Orleans is just completing with
recommendations for patterns of redevelopment.
In Saint Bernard Parish, where I co-chaired the Citizens
Recovery Committee appointed by local government, a plan was
developed with recommendations with respect to green space and
no redevelopment in certain neighborhoods about 10 months ago.
Parish government unanimously supported that proposal and plan
and are still working through the process of formally--
Mr. Baker. The chairman is going to press me here in a
minute, but has any of the hazard mitigation money been used
for buyouts of individual homes to preclude redevelopment?
Mr. Leger. No, sir. It is my understanding--and that is one
of the points I made very quickly--about $1.2 billion of hazard
mitigation money was directed to us to be used in this kind of
deployment. FEMA has yet to approve our use of those moneys in
the Road Home program. So, no, sir.
Mr. Baker. None of the hazard mitigation money has yet been
contractually obligated.
Mr. Leger. It was always the concept and plan that the
money would be adjusted in an accounting methodology.
Mr. Baker. Let me get to my specific point using your
Parish of Saint Bernard. There have been 5,105 people,
according to your data, elect to keep their homes, 4,534 elect
to sell but stay in the State, and 459 elect to sell and leave.
That means 4,993 people have elected to take a settlement and
leave town, with 5,105 electing to stay within the parish.
It would seem extraordinarily evident to me that using
hazard mitigation funds for that purpose and those buyouts
would serve us well going forward to reduce future flooding
exposure. Is that something the LRA supports?
Mr. Leger. Absolutely. Congressman Baker, that has been the
concept all along. There will be certain neighborhoods, one
right near mine, part of mine, which 90, 95 percent of the
people will choose not to return.
Mr. Baker. I will follow up for a little more detailed
question and explanation on that.
I am also troubled that if you have half the parish sold
out and can't be used for commercial or any other governmental
purpose, who is responsible for keeping it and what is the
future of that going forward? As I understand the hazard mit
rules, you can't even put a baseball park on it. It is gone. If
you have Jack O'Lantern sections of land isolated from commerce
and the local government has no resources, it looks like we
have a long-term problem going forward.
Mr. Leger. Actually, Congressman, the short version of what
is going to happen is, as properties are purchased by the State
by a corporation created by the legislature, the local
governments are notified of the densities of acquisitions and
otherwise and the local--the property will eventually be passed
to the local governments for their planning concepts and for
planning development.
There will be some neighborhoods where one house or one lot
is purchased, and those may be presented for--
Mr. Baker. Let me summarize, because I know my time is
limited here, and I assume we have votes pending.
There is great frustration, Mr. Leger, as you can
understandably get from the hearing proceedings this morning. I
think it is incumbent on us to do a thorough examination. I am
also told the LRA is getting near the conclusion of its work,
that the administration of these remaining grant applications
is probably about it. Most all of the money, at least from your
perspective, has been in some form or fashion obligated for
some purpose and that the resources are running out.
My opinion looking in is that we have extraordinary vast
regions of desolation with--whether it is affordable housing,
privately owned housing, commercial business enterprises,
across the economic landscape, the recovery, it is a great
chasm between expectation and reality, and we are going to have
to do something differently.
The Chairman. The gentlewoman from California. After the
gentlewoman from California, we will break for votes.
Ms. Waters. Thank you, very much.
Mr. Chairman, I would like to try and deal with several
aspects of the Road Home program and the Mississippi Homeowners
Grant program and, of course, public housing. Let me start with
public housing.
Mr. Bernardi, you talked about the state of affairs of
public housing and basically supported HUD's decision to tear
them down. C.J. Peete, 723 units; in 1997, 202 units were
approved for demolition. What happened? Why wasn't it done?
Mr. Bernardi. It was slated for demolition in what year
again?
Ms. Waters. 1997. What happened to the 202 units that were
approved for demolition back in 1997?
Mr. Bernardi. As you know, the history of the Housing
Authority, the situation required us to take it into
receivership in 2001.
Ms. Waters. I know. Who does the approval?
Mr. Bernardi. The approval of the demolition?
Ms. Waters. The approval of any housing units that are
scheduled for demolition. Does HUD do that? Once you do it,
what is your responsibility for oversight and follow-up? Why
didn't it get done?
Mr. Bernardi. The responsibility is to try to run--keep the
units occupied as long as you possibly can, to repair them when
you can.
Ms. Waters. Since 1997, you had approval.
Let's go on to B.W. Cooper. 352 units were approved in
2003. Why didn't those get done?
Mr. Bernardi. Pre-Katrina they were all slated to be taken
down.
Ms. Waters. Since 2003--first, 1997, 1996 in Saint Bernard,
you had 45 units approved. Why didn't you do that?
Mr. Bernardi. They were all slated for demolition.
Ms. Waters. What it says to us is that if you wanted to do
demolition, if you wanted to do new development--you have given
the approval to HANO to do this. Nothing happened. And now you
are telling us that not only do you want to demolish those
units but you want to do them all. You are telling people you
can do all of this and they can be back in their places in 5 to
6 years. Why would anybody believe that this could be done?
Mr. Bernardi. The situation--as I mentioned earlier, pre-
Katrina there were 7,000 units in the New Orleans Housing
Authority; 2000 of those were vacant. They were vacant because
they were uninhabitable.
Ms. Waters. They were vacant because they were
uninhabitable because the maintenance and care of the units was
not done by the Housing Authority, and HUD didn't do oversight,
didn't enforce it. You boarded them up, and you reduced the
number of units that were available to poor people. They were
boarded up, and poor people--you had a waiting list.
What is HUD's responsibility when you have a waiting list?
You have boarded-up units, and you have permission to demolish
and to redevelop. What are we to think? Are we to trust you to
talk about redeveloping housing and giving us one-on-one
replacement and getting people back into their units?
Mr. Bernardi. I know you have been on the site, Madam
Chairwoman, yourself, and you have seen those units. They are
in very, very difficult condition.
Ms. Waters. They are.
Mr. Bernardi. The proposal is to take those four complexes,
those 3,900 units, to take them down to make a mixed community
out of that.
Ms. Waters. What are you going to do with the people who
are waiting to come home in Dallas and Houston?
Mr. Bernardi. Right now, there are 1,150 people who have
been placed back into public housing.
Ms. Waters. What are you going to do with the people who
want to come back right now?
Mr. Bernardi. We are right now contacting folks wherever
they are located. We made 800 calls and contacted 200 people.
It is very difficult to get ahold of many of the individuals.
150--
Ms. Waters. Do they know they have transportation costs?
Many of them left. All of their furnishings are still in those
units just as they were when they were evacuated. They have
nothing. What are they supposed to do? They are waiting to hear
from you. You have money for transportation. You have units,
and money to replace the household items and goods that were
lost. You have all this down and you are ready to do it, is
that right?
Mr. Bernardi. They have a disaster voucher which they are
utilizing right now. No one is without shelter. We are trying
to bring them back.
Here is the response we are getting from many of them: We
will talk to you in 60 days, maybe 120 days. Some don't want to
come back.
The fact of the matter is, outside of those four complexes
and even in one of those we are repairing units as we speak.
1,150 have come back, we have another 4- or 500 who are in the
process and they should be back any time. And when we complete
the demolition of these four complexes we will be adding not
only 3,000 public housing units but 800 affordable units and
also some individual housing within those complexes. We need to
make that--
Ms. Waters. I know about the plan, but there is a
philosophical disagreement here, and it is this: If you have
habitable units that could be repaired in a cost-effective way,
and people who want to return to them, why should they be
demolished?
Mr. Bernardi. The inspections were done by the real estate
and assessment section and they were deemed uninhabitable. I
have heard other speakers here, folks indicate the only damage
was on the first floor. The second and third floors are okay.
Quite honestly, from a personal perspective and from also a
policy perspective, we don't want to put anyone in harm's way.
What kind of health concerns are there? What kind of safety
concerns are there?
Ms. Waters. There have been other assessments that have
been done that talk about a cost-effective way to take some of
those units at the first floor level that have minimal damage,
clean them up, deal with mold or whatever problems that you
have, and some of the units above that were not damaged, that
they can be replaced, they can be repaired.
Mr. Bernardi. I would respectfully say that is a stop-gap
measure. What we would like to do here is everyone has a
voucher they are utilizing. If we get the go-ahead to rebuild,
they will have a tenant protection voucher that will take them
to the day when they open and they will have--
Ms. Waters. Why don't you just take the units that you have
been approved of for all of these years and show us that you
can do those. Let the people come back to all of the other
units that we perhaps will not agree with you on demolishing
and maybe take one like Lafitte, where you have enterprise with
the demonstration project with all of the social services not
only for Lafitte but for the entire community and see if that
model can provide extended support and services just for
Lafitte, the units that you already approved? Everything else
gets rehabbed.
Mr. Bernardi. Madam Chairwoman, as you know, you have met
with Secretary Jackson, we are willing to listen and go over
any ideas and proposals that you have.
The Chairman. We have to go vote. I would ask that we get
answers to these questions in writing. I think these are very
important questions. I know other members will have questions,
but we really are going to need some answers in writing to the
very specific questions the gentlewoman was asking.
We will now break to vote.
[Recess]
The Chairman. The hearing will reconvene. There will be no
further votes today, so we will be able to proceed without
further interruption.
The Chair now recognizes the ranking member of the Housing
Subcommittee, the gentlewoman from Illinois, Mrs. Biggert.
I am sorry. We don't have everybody back yet. The
gentlewoman will suspend.
Mr. Watt. Mr. Chairman, I am told there was a heated
discussion in our absence. Maybe the residents of the Gulf
chased the HUD representative away.
The Chairman. I trust that was not the case.
Mr. Watt. He is missing in action.
The Chairman. We should remind the participants that
rudeness towards witnesses is the prerogative of Members of
Congress.
Mr. Watt. I am joking, of course.
The Chairman. We will wait.
Mr. Watt. If he didn't answer questions any better for them
than he answers them for the committee, maybe we will get
better answers if he is not here, Mr. Chairman.
The Chairman. I appreciate the witnesses having spent a
long time here. I know they were supposed to be up earlier, and
so I appreciate them bearing with us, and I realize we didn't
give a lot of notice.
The hearing will now resume with the gentlewoman from
Illinois.
Mrs. Biggert. Thank you, Mr. Chairman.
Secretary Bernardi, in your statement, on page 2, you say
that HUD has and will continue its role in offering guidance
and assurance and assure compliance with the law, including the
prevention of waste, fraud, and abuse. Could you elaborate a
little bit on that, particularly in light of the AP story that
talks about--and I would like to know how you connect with FEMA
and HUD. FEMA has asked for 300 some thousand dollars back from
those in housing where it has been shown that they received
money that they were not entitled to, with fraud involved.
Mr. Bernardi. When it comes to the monitoring of the
resources, we have conducted monitoring in Mississippi and we
are beginning monitoring in Louisiana. I think it was said
earlier that just a little over a billion dollars has been
actually spent, with almost a billion dollars in Mississippi
and about a hundred some odd million dollars in Louisiana.
We monitor for oversight and compliance to the applicable
Federal statutory and regulatory requirements, and we also
include the oversight for waste, fraud, and abuse. We have
people not only at headquarters but people in the respective
Federal offices in New Orleans and in Mississippi, and whenever
the action plan is approved and the money is being expended, we
make sure that each entity abides by the regulations and rules
that they have.
For example, I think the States have opted when it comes to
procurement that they would follow, instead of the Federal
guidelines, the State guidelines. So we just monitor to make
sure the money goes to the people it is intended to and is
spent for those purposes.
Mrs. Biggert. And then how do you work with FEMA?
Mr. Bernardi. We work very well with FEMA. I am not really
familiar with the $300 million. Is that what you mentioned?
Mrs. Biggert. Well, I will now go to Mr. Garratt.
The article in the paper, the AP story this morning, that
you want $300 million in Katrina aid back, are you aware of the
article that--
Mr. Garratt. Yes, ma'am, I am.
Mrs. Biggert. Could you comment on that?
Mr. Garratt. Certainly. As a standard part of any disaster,
an unfortunate but standard part of any disaster, we inevitably
need to recoup money that was provided improperly for a host of
reasons to individuals who were not eligible for that
assistance. That is the case here as well.
In this particular case, it was complicated or the amount
of recoupment that we are going to have to end up doing was
complicated by the circumstances of the event, both the scale
of the event and by the fact that we implemented expedited
assistance at the beginning of that event. We have identified
just shy of $350 million that we expect to recoup.
Mrs. Biggert. I suppose you couldn't say that this was much
more major, because this has been a major disaster that has
occurred, but do you work with local authorities? Have you
worked with HUD on this?
Mr. Garratt. We don't typically work with HUD as part of
the recoupment effort. That is done by our own disaster finance
folks in conjunction with the Department of Treasury.
Mrs. Biggert. Why would you think you have the recoup,
other than the fact that it was checked out before the money
was given?
Mr. Garratt. Again, back to the circumstance of this
particular event, we implemented expedited assistance very
early on into this, and expedited assistance, by its very
nature, means that we are expediting assistance without going
through the normal checks and balances and controls that we
typically go through when we issue assistance.
Those typical checks and balances include sending an
inspector out to someone's house and that inspector then
verifies the damage, reports the damage that the individual is
eligible for, ensures that the individual is, in fact, the
homeowner, and then issues assistance. We have that. That
exists in a normal disaster environment.
When we expedite it, we do that in advance of doing
inspections. So we are basically taking the word of the
individual who is calling up that they are who they say they
are and they need the money that they say they need, and we
issue that money. We then will go back at the end of that
process and begin validating those payments. We do not want to
validate them at the front end or we did not want to validate
them at the front end and slow down getting assistance to
victims who urgently needed it.
Since then, we have put protocols in place that now enable
us to do identity verifications on all disaster applicants when
they either call us or when they register online. Last year, we
only had the ability to do that for individuals who registered
online. We were setting up the ability to be able to do that
for individuals who called us, but it wasn't ready to go yet.
That is ready now, so we can now do identity verification. So
in the future if we are faced with an expedited assistance
situation, you will not see this level of recoupment activity.
Mrs. Biggert. Have you ever considered working with
regional coalitions, preparedness coalitions? In Chicago, there
is a financial preparedness coalition called Chicago First.
Mr. Garratt. I am not personally familiar with Chicago
First, ma'am. I cannot authoritatively say that FEMA or parts
of FEMA are not working with Chicago First or potentially parts
of DHS preparedness are not working with Chicago First, but I
can't confirm that.
Mrs. Biggert. Thank you. I yield back.
The Chairman. I thank the gentlewoman.
The gentlemen from North Carolina, the Chair of the
Oversight Subcommittee, which will be holding a hearing on the
insurance aspects of this in a couple of weeks.
The gentleman from North Carolina.
Mr. Watt. Thank you, Mr. Chairman.
Mr. Leger, at one point, in response to a question of one
of the members--I can't remember who--you said that none of the
Road Home funds had been disbursed, is that correct?
Mr. Leger. Oh, no, sir. Actually, we have obligated and
made offers--I say ``we'', the State of Louisiana--to 30,000
homeowners totaling $2.49 billion. Five hundred grants or so
this week have actually been disbursed.
Mr. Watt. What was it that you were saying that FEMA was
holding up? I am trying to get that. I thought that was Road
Home. Was it something else?
Mr. Leger. There are several issues with FEMA, but
particularly with respect to Road Home. The budgetary process
involved our use of $6.3 billion of CDBG moneys, another $1.1-,
$1.2 billion in hazard mitigation funds through FEMA, Stafford
Act funds. However, FEMA has yet to--either been unwilling or
unable to approve the use of those hazard mitigation funds to
assist us in the Road Home program.
Don't misunderstand, though, sir. That is not slowing up
the process at this point. But until those funds are allocated
and approved--or rather approved by FEMA for us to use in the
Road Home program, the financial viability of the program is
severely at stake.
We didn't ask to do that. In the negotiations with the
White House, we asked for a lot more. We got a disproportionate
allocation of assistance in December of 2005 capped at 54
percent, and we got $6.2 billion. We were told by the White
House, use $1.2 billion of hazard money.
Mr. Watt. I am trying to deal with what has been
authorized.
Mr. Garratt, what do you say in response to Mr. Leger on
this issue?
Mr. Garratt. Mr. Leger is entirely accurate, sir.
Mr. Watt. What is the hold-up?
Mr. Garratt. The issue--and we are working with LRA to try
and resolve this issue--is a legal issue.
Mr. Watt. What is the issue?
Mr. Garratt. Under HMGP, the funding has to be distributed
impartially and equitably, and that is--FEMA believes that the
protocols that they have in place to distribute that money and
some of the restrictions that they have in place call into
question both the impartiality and equitably as well as
potentially raise issues of discrimination. Until we can
resolve those issues--
Mr. Watt. How long has this money been authorized for this
purpose?
Mr. Garratt. Well, sir, we were--
Mr. Leger. Seven, eight months.
Mr. Watt. This is not a trick question. I am just trying to
figure out how it takes 7 months to resolve something that--I
mean, you have people sitting there waiting on this to happen.
Why does it take 7 months to resolve what is characterized as a
legal issue?
Mr. Leger. We have been asking for 7 months to help resolve
this issue. HUD has no problem in using CDBG moneys with these
issues. We have made an exception to help senior citizens get
additional funding in the program. There seems to be some
obstacle there.
Mr. Watt. How close are you to resolving this issue so that
this money could be released, Mr. Garratt?
Mr. Garrett. My understanding is we are not necessarily
particularly close to resolving this issue, sir.
Mr. Watt. So FEMA and the local authorities and HUD have
three different positions on this issue, is that what I am
hearing, and it can't be resolved?
Mr. Leger. It seems like there are two positions.
Mr. Watt. HUD and the local authorities on one side and
FEMA on the other side, and you can't resolve it and not even
close to it. It has been 6 months, and you are telling me you
are not even close to resolving it. Is that what I am hearing?
Is that correct, Mr. Garratt?
Mr. Garratt. I would say we have issues that we have yet to
resolve and still need to resolve and have no assurances at
this point that they will be resolved.
The Chairman. Ever?
Mr. Garrett. In the very near future, sir.
Mr. Leger. We plead with this Congress for resolution.
Mr. Watt. Mr. Bernardi, I am looking here at a statement
from the local Housing Authority which describes the damage at
the C.J. Peete public housing project as minor flooding. I
noticed that C.J. Peete is one of the public housing
developments at the bottom of page 2 and the top of page 3 of
your testimony which you indicate is in the process of being
redeveloped to make way for a mixture of public housing,
affordable rental housing, and single family homes.
Two questions arise from that. Number one, why would you be
redeveloping something, a public housing community that had
only minor flooding as described by the local Housing
Authority; and, number two, in the redevelopment plan, assuming
that it makes sense to redevelop as opposed to renovating and
restoring, have you proposed one-for-one replacement of the
low-income housing units in that particular development?
Mr. Bernardi. The four developments--
Mr. Watt. I don't want to know about the four developments.
I asked you only about one development, Mr. Bernardi.
Mr. Bernardi. We are looking to do one-for-one replacement
with those four developments.
Mr. Watt. I didn't ask you about four developments, Mr.
Bernardi. I asked you about the Peete public housing
redevelopment that you are proposing. That is the only one I
asked you about.
Mr. Bernardi. The answer is yes. One-for-one redevelopment.
Mr. Watt. This question--in your redevelopment plan, you
propose one-for-one redevelopment of the Peete public housing.
Is that correct?
Mr. Bernardi. That is correct.
Mr. Watt. One-for-one replacement.
Mr. Bernardi. That is correct.
Mr. Watt. Why are you proposing to redevelop, as opposed to
renovate, when there has been only minor damage?
Mr. Bernardi. Well, the inspectors from the Real Estate
Action Center inspected those properties and the decision was
made--redevelopment was scheduled prior to the hurricane and a
decision was made to redevelop not only Peete but the three
other entities as well to create 3,900--to create 3,000 new
additional public housing units.
Mr. Watt. Thank you.
The Chairman. I would not only thank the gentleman for
yielding back, but the decision was made, and no one appears to
have made it. When decisions are made impersonally, there are
often some questions.
The gentleman from Alabama, the ranking member.
Mr. Watt. Can I just thank the chairman for saving me from
myself?
The Chairman. The gentleman from North Carolina and his
wife can both thank me for that.
Mr. Bachus. Mr.--is it Leger? Can I call you Walter?
Mr. Leger. You can call me Walter, yes, sir.
Mr. Bachus. The Blanco Road Home program, that was--it will
eventually make $7.5 billion available to property owners whose
homes were damaged.
Mr. Leger. That is correct.
Mr. Bachus. There have been, I think, 100,000 applications
for funding under the program. Can you tell me to date how many
grants have been distributed out of that 100,000?
Mr. Leger. Yes, sir. There have been offers and obligations
of $2.49 billion, actual disbursements of 500 persons. There
have been offers to 30,000 people, 30,000 accepted, 500 actual
disbursements.
But, if I may, Congressman, we had a late start. We were
delayed by the fact that we needed to seek additional funding
to fully fund our program because of the disproportionate share
we were given in December of 2005 relative to our needs. And
the program has had--
Mr. Bachus. You are talking about getting the program off
the ground.
Mr. Leger. To even be fully funded.
Mr. Bachus. Now the first funding came in December after
the hurricane.
Mr. Leger. That is correct.
Mr. Bachus. When were the first funds distributed?
Mr. Leger. We were allocated about $6.25 billion;
Mississippi was allocated $5.2 billion. We had to rapidly make
a decision whether or not we would try to offer half of our
people all of the benefits of the program or all of our people
half of the benefits. Our legislature requires that it be
approved by the legislature. They said, let's wait.
Mr. Bachus. The legislature? The Louisiana legislature?
Mr. Leger. The Republicans and Democrats alike.
Mr. Bachus. That is what I was wondering. It wasn't a lack
of Federal funding.
Mr. Leger. It was a lack of Federal funding because we feel
like we didn't get funded proportionately enough in December.
Mr. Bachus. But you had billions of dollars of funding that
you didn't turn loose in grants.
Mr. Leger. We had billions obligated, but it was
insufficient to meet our needs, and we thought it was most
appropriate to attempt to get as much funding as we could get
to meet the needs.
Mr. Bachus. I understand you are seeking more funding, but
there are hundreds of millions of dollars that you weren't
distributing.
Mr. Leger. That is right. As you may know, it takes time.
What we were saddled with--and so was Mississippi--is what I
call federalism with strings. The money was appropriated--
Mr. Bachus. I understand.
Mr. Leger. It was tied and red tape and strings back to
Washington. We were told, and we designed, and when the White
House agreed to support an additional $4.2 billion, we
immediately released this full program. It took us until June
to get funded. We could not move forward. Our legislature would
not authorize us to move forward. We didn't think it was good
policy to move forward until we knew we had the money.
Mr. Bachus. You resubmitted the program, is that right?
Mr. Leger. That is a good point. We submitted the program,
but because of HUD regulations, which would have required on
CDBG money, which would have required us to do an environmental
impact study on every single one of the 124,000 properties,
which would have taken 3 to 6 months and been very expensive,
we had to redesign the program into what has been called the
compensation program.
Mr. Bachus. That wasn't anything new.
Mr. Leger. It was new to us, that we were going to have to
do an environmental impact statement on 124,000 individual
properties.
Mr. Bachus. To change that you had to have a Congressional
fix, I think, right?
Mr. Leger. No, actually, we didn't get a Congressional fix.
Jan Opra and others at HUD worked very closely with us to
maneuver around the regulations that required the complications
and adjusted the program accordingly. That caused other
difficulties.
Mr. Bachus. How long did the inaction or whatever with the
Louisiana legislature hold up funding?
Mr. Leger. I don't think there was any inaction by anybody.
We were waiting to be funded. The legislature and in our
meetings with the Black Caucus, the Rural Caucus, Republican
Caucus, the idea was that it might be irresponsible for us to
offer a program that wasn't fully funded. Honestly, I think we
also were concerned with that Congress--that if we started
offering half of the money to people, they might--Congress
might say, you guys have enough money.
Mr. Bachus. Let me just--you received first funding in
December, and then in February, the President submitted the
request to Congress for additional funding.
Mr. Leger. Yes, sir.
Mr. Bachus. It was for the amount--at the time, you said it
was sufficient.
Mr. Leger. No, sir. We asked for more. That was a
negotiated amount.
Mr. Bachus. But you didn't move forward with what you had.
Mr. Leger. Sir, we didn't ask for more?
Mr. Bachus. You didn't spend the money you had.
Mr. Leger. We are spending the money we have.
Mr. Bachus. Now, but you didn't then.
Mr. Leger. We put everything in motion to spend the money
that we were allocated.
Mr. Bachus. When did the first moneys get to Louisiana?
Mr. Leger. The first moneys get to Louisiana? I understand
most of the moneys are still here in Washington. That the
moneys get to Louisiana after they are approved by the various
programs.
Mr. Bachus. It took HUD just a week or two to approve your
second plan that you submitted.
Mr. Leger. We were working with HUD for 6 or 7 months on
this program. We unveiled the program on February 20, 2006, 5
days after the White House said they would support it. We put
it out in the public domain, and, honestly, those months gave
us some clarity. With all due respect to Mississippi--
Mr. Bachus. I know you had mentioned that you are not
getting as much as Mississippi, and there is a dispute over
what you are getting. The money that got there was held up by
State and local restraints.
Mr. Leger. The money didn't get there. It was in Washington
until the programs are approved. We didn't feel like and I
still think it would be--in fact, I understand HUD would not
approve a program that wasn't funded. So until--we could have
offered a half program, a program for only half of our people,
or we could have offered a program for all the people for half
the money. We thought that was unwise.
Mr. Bachus. Let me ask you about this. This will be my last
question. This is Governor Blanco on February 15th when $4.2
billion--
Mr. Leger. We were delighted.
Mr. Bachus. You were delighted. It was a dark and almost
frightful evening that evening in September in Jackson Square.
It was a very quiet, eerie feeling in a place that had only
known life and vitality until Katrina rolled through. But when
the President of the United States stood there that night with
lights beaming on him and I sat on a warm bench watching him
commit to the Nation--and here is the key part--his making a
commitment to Louisiana and the Gulf Coast region for its
redevelopment, I sat there wondering and hoping this promise
would become a reality.
Today, I know that he is fully committed to helping our
people, and so, on behalf of the people of Louisiana, I have to
say a very special thank you. Mr. President, you are committed.
We know you are there. We know you care. You sent us Don
Powell, who we have come to know, to say that these numbers
didn't just come out of the sky, the $4.2 billion. They were
carefully crafted, legitimate numbers analyzed after--analyst
after analyst, evidence after evidence. We took it seriously.
We didn't just make up a number. We know that just doesn't fly
here in Washington.
So she said it was sufficient.
Mr. Leger. No, sir. What she said was that we were thrilled
to get the additional $4.2 billion--and we were--and it was
carefully crafted based on mathematics and estimates of loss.
It wasn't enough, but we were thrilled. Because that first
allocation in December of 2005, we are not sure what it was
crafted on, but it certainly wasn't relative to proportion of
damage. We had 4 times more damage than Mississippi, and we
were capped at 54 percent of the allocation. That $4.2 billion
was welcome, and an additional $1.2 billion was assured to us
and, by the way, we are thankful.
Mr. Bachus. But you thought $4.2 billion was sufficient. I
know you found out that Mississippi got a different amount.
Mr. Leger. We already knew that. That is why we went after
the additional $4.2 million. And we are thankful to the
President and Don Powell and his office, but, again, that $1.2
billion of hazard mitigation money still has not been--and by
the way, I correct myself. It was not 7 months ago. It was from
February 20th that we announced we needed to use that $1.2
billion of hazard mitigation money, so it is 11 months.
Mr. Bachus. Okay. Thank you.
Mr. Leger. Thank you, sir.
The Chairman. The gentleman from Texas, Mr. Green.
Mr. Green. Thank you, Mr. Chairman.
Mr. Chairman, if I may, I would like to talk for just a
moment about Houston. In the 19th Congressional District, we
have approximately 20,000, I am told, survivors. And we have
gone from deadline to extension to deadline to extension.
My question, Mr. Garratt, sir, is: With the 130,000-plus
persons approximately, households, has the assistance for them
been extended, Mr. Garratt?
Mr. Garratt. Yes, sir. All of the evacuees in Houston who
are eligible for assistance, rental assistance, and were
receiving that at the end of the 18-month period will be
extended--are for another 6 months.
Mr. Green. And have they been notified?
Mr. Garratt. They have been.
Mr. Green. And of those persons, there is a cap of $26,200.
Has that cap been reached by some of the these persons?
Mr. Garratt. It has been, sir.
Mr. Green. Do you have some idea as to what percentage,
please, sir?
Mr. Garratt. It is a relatively low percentage at this
point, sir. I do not have the exact percentage, but I can tell
you that FEMA is continuing to assist those personnel through
our direct assistance program.
Mr. Green. We are talking now about the persons who have
exceeded the cap?
Mr. Garratt. Yes, sir.
Mr. Green. And is there some longer term housing solution
available to these persons, sir?
Mr. Garratt. After the extension?
Mr. Green. Yes, sir.
Mr. Garratt. Well, we are actually working on trying to
craft just such a housing solution right now, and we are
working with our partners in the Federal Government. We are
working with our partners in the volunteer agency communities,
and we have been working closely with Mayor White as well, to
look at not only coming up with a long-term solution for that
but improving our case management and making that more
aggressive so that we can do better hands-on, door-to-door,
face-to-face case management with those households and families
who are finding it most difficult to make the transition from
Federal assistance to self-sufficiency.
Mr. Green. In Houston, Mr. Garratt, sir, we, I think,
performed fairly well. We entered into an agreement--and when I
say ``we,'' I mean the City of Houston--with, I believe, FEMA.
We entered into the agreement, we meaning the City of
Houston, as a co-signer, if you will, of lease agreements with
the understanding that this arrangement would have a duration
of about 1 year. Shortly after entering into the agreement,
there was an effort to set aside the agreement, if you will,
and move from 403 to 408 housing. In so doing, this would leave
a lot of the Houston apartment owners with tenants that they
did not vet because they assumed that, by entering into a 1-
year lease, they would have the opportunity to cover
themselves, and without that 1-year lease, they felt that they
might not have the opportunity to recuperate the emoluments
necessary by virtue of entering into their arrangement.
So the question becomes: Why was there an effort after the
agreement to diminish the time, the 1-year time frame?
Mr. Garratt. You have characterized that quite accurately,
sir.
Immediately after Hurricane Katrina struck--I think it was
on September 7th--we issued a disaster-specific guidance that
authorized 403 funding, which is public assistance funding, to
be used to shelter individuals and place them in hotels, motels
or apartments. Further, recognizing that it would be difficult
to secure short-term leases, we authorized States to enter into
up to 12-month leases, under 403 funding, with every intention
of funding those apartments to the end of that 12-month period
in those cities where they elected to do so.
However, it was subsequently determined that our use of 403
authority for that period of time was not legal. We, therefore,
had to come up with the best method of transitioning
individuals into what was an eligible, longer term housing
program. The only program available to us was under the 408
program for individuals and households assistance programs.
That program, unlike the 403 program, has eligibility
requirements. So, as a result of that, we had to--or those
individuals, those households who were in apartments under 403
and were not meeting any eligibility requirements other than
they were legitimate evacuees, now had to meet certain
eligibility requirements. They had to be the owners--it had to
be their primary residence. They had to be U.S. citizens. As to
those individuals or households who did not meet that
eligibility criteria, we ended their assistance under the 403
program.
We began that process in February of 2006, and those
individuals who remained eligible or were eligible under 408
were transitioned to that program, and many of them remain
eligible and continue to receive assistance to this day.
Mr. Green. Thank you, Mr. Chairman.
The Chairman. I would like to ask one question. You said,
Mr. Garratt, that it was determined that 403 use was illegal.
Who determined it?
Mr. Garratt. The General Counsel.
The Chairman. Of your agency? Of FEMA?
Mr. Garratt. [Nods in the affirmative]
The Chairman. Nods do not make it into the record, Mr.
Garratt. You must speak.
Mr. Garratt. It was a Department decision.
The Chairman. It was the General Counsel of FEMA who made
the ruling?
Mr. Garratt. Officially, the General Counsel or Chief
Counsel of FEMA made that decision. That is correct, sir.
The Chairman. How long after FEMA had been running the
program did FEMA decide that it was running it in an illegal
fashion?
Mr. Garratt. We implemented that program in September, and
I believe that concerns were raised either in late November or
December. We worked through those concerns or tried to work
through those concerns, were unsuccessful, and began trying to
come up with a transition replacement solution for that.
The Chairman. Okay. The gentleman from Texas.
Mr. Green. Thank you for yielding, Mr. Chairman.
Just one additional question, sir. With reference to the
apartment owners, have you made any overtures with reference to
making them whole for having to have their leases terminated
early?
Mr. Garratt. Well, what we agreed to do was honor the early
termination requirements of any contract that we terminated.
So, as a result, if an apartment owner had--if we had a 12-
month lease with an apartment owner and the termination clause
said that we had to pay them 30- or 60-days' worth of rent as
part of that termination, we did that.
Mr. Green. And I applaud you for doing that, but many of
these owners entered into the agreement assuming that it would
be for 1 year since they were dealing with the Federal
Government, an honorable institution. And when it was
terminated, the 3 months or the 1 month was not enough to
compensate them for much of the damages that they suffered, and
they are still complaining about this.
Mr. Garratt. Noted, sir.
The Chairman. The gentleman from New Jersey, I believe, is
going to be next, Mr. Garrett.
Mr. Garrett. Thank you, Mr. Chairman, and I appreciate your
holding this hearing today, and I thank the members of the
panel as well.
You know, recently, I had the opportunity to travel to New
Orleans and personally view the destruction and also the
recovery in certain areas and the lack thereof in other areas;
I walked the area; I rode in a bus; I had the opportunity to
take a helicopter tour of the area; and I also had the chance
to sit down with the people who lived there and, actually, the
people who are no longer living there--some business people,
some civic people and also contractors as well--to discuss with
them what problems they are experiencing. And one of their
comments was, as we have already laid out today, there are
certainly problems on the Federal level--and I will be getting
into that as well--but they also were frustrated with the red
tape that they were experiencing, even at the early stage, both
from a local level, whether you want to define that as ``city''
or ``local,'' and at the State level as well.
To one of those points, following up the ranking member's
comment, Mr. Leger, when I was there your organization was
still in the founding process, and I think you said--correct me
if I am wrong--it took 10 months from the date of the disaster
to the time that, actually, the legislation and everything was
established.
Is that the correct period of time?
Mr. Leger. Well, we were actually created and appointed by
the Governor in October of 2005, 2 months after the storm.
Mr. Garrett. Okay.
Mr. Leger. It took 10 months for us to get full funding
after the storm--
Mr. Garrett. Okay.
Mr. Leger. --or, you know, what was said to be full
funding.
Mr. Garrett. Was everything up and running, though, during
that period of time as well? Because when I was talking to
local folks, they got the idea that all of the appointments and
everything necessary from the political nature of it had not
yet been completed, even when I was down there going into it.
Mr. Leger. Well, you have to understand. I was a rookie in
government, I guess, and I was a volunteer to begin with, but I
appreciate there were like two or three special sessions in the
fall, and at some point, the legislature confirmed the creation
and the appointment by the Governor, but nonetheless, we were
functioning pretty much full time, without staff, for many
months until we were fully funded. That is why many of us
volunteers became like staff.
Mr. Garrett. I guess you can appreciate, maybe, where the
ranking member was questioning and where there was probably
frustration from the folks who lived there when they probably
turned on the TV and said, ``Hey, there is $4.2 billion that is
coming down from Washington. We are going to start getting
relief, if not tomorrow, then next week or next month,'' and
then from your point of view, you wanted--or from the
legislative point of view, not your point of view--you can
understand the frustration of the people not seeing the dollars
there.
Mr. Leger. I am one of those people--
Mr. Garrett. Yes.
Mr. Leger. --and we were delighted in February--that is
what I was telling Mr. Bachus--about the name we know well in
New Orleans--but I was telling Mr. Bachus we were delighted to
hear of the additional $4.2 billion that would be supported by
the White House and are grateful for it, but it took until June
for it to be confirmed. And I have to admit I was reminded, as
I was thinking about it afterwards, we were defending that $4.2
billion the whole time. You know, surrounding States were
trying to get a little piece of that $4.2 billion of additional
moneys during that time. That is another reason why, you know,
we were reticent to develop the program, but we did.
Mr. Garrett. I appreciate that.
Now, I was one of the few who held off my vote initially,
right after this, and said that before we start allocating any
dollars to this program--we initially allocated $10 million. I
think it was in a Thursday session, if I am not mistaken, and
then there was an additional $53 million. I was the one who
withheld the additional $53 million because I said that there
did not seem to be all of the checks and balances in place on
the Federal level and on the State level in order to get these
things done. And now we seem to find out that--we are finding
that both on the local level, State level, and the Federal
level, there were no checks and balances because, you know, my
point of view is that a dollar does not do anybody any good
that we appropriate up here if it does not actually land in the
pocket of somebody, actually, to build their house, or for the
Federal Government to make sure that the State level gets the
job done.
It sounds to me, from the testimony we have had so far
today, that we see a mix of responsibilities there.
Mr. Leger. Yes, sir. And I would suggest to you, having
become, I guess, a veteran now in government after a year, that
what we saw initially was maybe not fear that there were not
enough checks and balances and hearing of $1.6 billion being
lost to fraud by FEMA. We thought every $1 billion of ours was
very precious, and we could not afford to lose any. We built a
lot of checks and balances in, and now we found the checks and
balances to the Federal, State, and local levels are often at
cross purposes. We have tried to eliminate some of them.
Mr. Garrett. I just have limited time. I thank you. I have
just two final questions--one for Mr. Garratt and one for
Secretary Bernardi.
If you could, just fill me in a little bit more so I get a
better picture of what the existing housing stock in that area
was. My understanding, if I heard the testimony right, is that
you are looking at 50- or 60-year-old housing stock that, if I
heard you right, went into receivership basically, and HUD had
to step in to deal with it.
So, if you can, just give me a little more information on
the picture of what the situation was there beforehand. It
sounds to me from your testimony, if I heard you right, that
there was not a directed, concerted effort to make sure that
the folks in town actually had adequate housing before the
disaster came and that HUD was responsible a year or so before
you stepped in. So, if you could answer that.
Also, Mr. Garratt, my final question is with regard to--if
I may, my final question is--well, I see my time is up.
So, Mr. Bernardi, if you can answer that.
Mr. Bernardi. Pre-Katrina, of the New Orleans Housing
Authority, there were 7,000 units; 5,000 of those were
occupied, 5,100. The fact of the matter is that the New Orleans
Housing Authority has been a troubled authority for a
considerable period of time, and in 2001, HUD took over the
Housing Authority of New Orleans' receivership. And what we are
looking to do, and what we have been doing is, outside of the
four complexes that I mentioned, we have been able to
rehabilitate and restore close to 2,000 units, and folks are
coming back to those. We are in the process of putting forth a
plan. Right now, it is in legal limbo, if you will, to
redevelop those four complexes--about 3,900 units--and take
them and make them a better situation.
I just chatted with some of the good folks who reside in
public housing here during your vote, and I sympathize with
them, and I understand the feelings that they have. That is
home. They feel they can claim them.
The fact of the matter is that our inspectors tell us that
those should be displaced, and new housing should be
constructed, and within 18 to 24 months, they would have a
voucher to continue to reside, and then they would have the
first choice of those units, the people who actually had a
unit. And then after that has been exhausted, the people who
came from those complexes would utilize those vouchers, and
then it would be open to people who need assistance. It is a
very difficult thing to put forth, but we feel strongly that we
want to--you know, you do not want to have it the way it was. I
mean the way it was was not good, and there are a lot of
reasons as to why it was not good. Some people are going to
say, well, HUD did not take care of it in the previous
Administration or this Administration.
The fact of the matter is, you know, in all of this dire
circumstance, there is an opportunity to do something better,
and all it takes is cooperation. And we at HUD plan to
cooperate not only with HANO but with the good folks and,
hopefully, this committee to be able to bring some conclusion
to this, not add a moratorium on the demolition. That would
just set things back even further.
The Chairman. The gentleman's time has expired.
I will note that Mr. Leger noted the familiarity of the
name of the ranking member, but having known the ranking member
for some time, please do not expect him to throw you any beads.
Next, we will go back to the regular order, but the
gentleman from Missouri has been faithfully here all day, so I
recognize the gentleman from Missouri, Mr. Cleaver.
Mr. Cleaver. Thank you, Mr. Chairman.
I am hoping this is not televised on C-SPAN, because I can
imagine the frustration of people all around the country when
they hear that two Federal agencies have an issue and that a
representative of one of the agencies says that we do not think
we will ever resolve the differences. That is why people hate
their own government, because they get frustrated with the
inability of us to just make things move. That is my editorial
comment.
To Mr. Garratt, I raised the question earlier about the
students in the schools, in the colleges, in New Orleans who
were given $2,000 immediately after the flood, and now those
students are receiving letters asking that they repay the
$2,000. Can you shed any light on that?
Mr. Garratt. Yes, sir, I can. Before I do that, however, I
need to address two issues.
One, if I suggested that I thought we would never resolve
this issue with our partners in the LAA, that was not my intent
at all. I think we will resolve this issue. We are at a
difficult impasse right now, but we will continue to work with
them, and we are just as anxious to solve this problem as they
are.
Secondly, I may have left the impression in my discussion
of 403 that our using 403 to shelter individuals was illegal.
It was not the case at all. Using 403 for that purpose was
perfectly legal. Using it for the extended period of time that
we wanted to do it was where the legal issues came in.
Back to your question, sir, regarding the students in
dormitories. Indeed, letters have been going out to a number of
students in dormitories, advising them that expedited
assistance and other forms of assistance that they may receive
they need to return in some instances; and I want to make the
point they all have an appeal capability with this, and we
recognize that there are going to be circumstances and special
circumstances for a number of these. But let me just give you
an example of the sorts of situations that would drive us to
want to recoup money from a student who is in a dormitory.
We do not typically regard dormitories as a primary
residence. If a student were in a dormitory when this struck
and they went home and they registered for assistance, we sent
them $2,000 expedited assistance, and then they went home to
live with their parents. Their father may have also received,
or their mother, a $2,000 expedited assistance payment. We are
not authorized to duplicate payments to a household. One
expedited assistance payment per household. That is an example
of a case where a student may have received expedited
assistance, and we may be asking for that expedited assistance
back.
On the other hand, these students are authorized to receive
other needs assistance for personal property and other forms of
property that--in other words, we are not going to be asking
for all of the assistance that we necessarily provided any
student back, but if it appears that we have a duplication,
that we have multiple individuals receiving assistance and that
they are living in the same household, then we will be asking
for some of that funding back.
Mr. Cleaver. And that sounds fair.
The problem is that there are students who are receiving
letters who live in various parts of the country whose parents
did not get the $2,000, and they are receiving a letter, and
they are wondering now when FEMA will ask the U.S. Attorney or
the FBI to close in on them.
Mr. Garratt. We are dealing with all of these students on a
case-by-case basis because we recognize that it is not a one-
size-fits-all solution for the--
Mr. Cleaver. But there was no means test in the first
place?
Mr. Garratt. Not for expedited assistance.
Mr. Cleaver. Okay. Let me move on. My time is running out.
Now, if it is cheaper in terms of saving money to put
people back into public housing instead of using the expensive
vouchers which are approximately $1,100 a month, why are we not
doing that? Vouchers versus repairs of units in each
development; what are the pros and cons?
Mr. Bernardi. What we have are vouchers for everyone who
was displaced because of the storm.
Mr. Cleaver. But doesn't it cost more--I mean am I right
about the $1,100? Isn't that about what it averages?
Mr. Bernardi. Well, whether it costs more than what it
costs us to have them in a subsidized unit or in a public
housing unit, I am not quite sure if it is or it is not, but
the fact of the matter is that we cannot place people in the
units that are uninhabitable.
Mr. Cleaver. Okay. But isn't it cheaper to make the
repairs?
Mr. Bernardi. Well, many people will tell you, if you put a
dollar into repairs, that takes a dollar away from development.
And you know, quite honestly, the situation is that inspectors
have looked at it and have deemed that many of these units--
perhaps not every single unit in each development, but many of
these units are beyond repair. It would be prohibitive, and the
best thing to do would be to take these units, to raze them and
to develop mixed-income housing. We would do public housing
there, affordable housing, some homeownership, a bigger
footprint, if you will, so maybe we could even do more than
one-for-one replacement.
Mr. Cleaver. Okay. Thank you.
I have lived in public housing, and I have gone into the
public housing units in New Orleans, and is it possible for you
to understand that the people do not trust HUD? I mean they are
absolutely convinced that when you say, you know, ``Instead of
repair, we are going to rebuild,'' that next year they will be
sitting over here in this front row, and then the next year and
the next year. That is the history. That is the history.
So I mean, when you tell them, ``Do not worry about it. We
are not going to repair it, we are going to tear these babies
down, and we are going to build, you know, some Hollywood-style
units for you. Just wait,'' do you understand the paranoia--
Mr. Bernardi. I understand that, sir. I was mayor of the
city of Syracuse, New York, and our housing authority--I worked
hand in glove with our folks that ran the authority and,
obviously, residents who lived there, and I spoke to these
folks. When you all went to vote, I spoke to a number of them.
Mr. Cleaver. I heard it all the way over at the Capitol.
Mr. Bernardi. Well, it probably was not yelling. It was not
an exchange like that. It was a good exchange, and I
understand, and what we are trying to do--like I heard here, it
is going to take 5 to 7 years. It is not going to take 5 to 7
years.
Mr. Cleaver. How long?
Mr. Bernardi. It will take 18 months to 2 years once we
have the necessary approvals, and you know, the developers--the
request for proposals are out there. The developers have been
meeting with HANO and with HUD, and the people are ready to
build. The financing is being put in place, the low-income
housing tax credits, and we are going to need an extension of
that, as the Chairman and others have indicated. We can do
this, and we would not do it--the decision would not be made by
Secretary Jackson or all of us at HUD if we did not feel in the
final analysis at the end of the day that we would have people
in safe, clean housing.
Mr. Cleaver. It is the end of the day that they are
concerned about.
Mr. Bernardi. I understand that. But that is why we have
the vouchers that we have out there. That is why the disaster
voucher program which started with--
The Chairman. Would the gentleman yield?
The problem, Mr. Bernardi, is that the disaster vouchers
are vouchers for existing housing, which is in very short
supply. As Mr. Melancon said, the price is going up. When the
number of affordable units has been cut from 80,000 to 30,000,
the trouble with vouchers is they add to the demand for housing
in a way that does not help the supply, and vouchers in this
case are very problematic when there is a physical shortage of
housing.
Mr. Bernardi. That is true, but these vouchers are not just
being used in Louisiana. They are being used all over the
country. People have been displaced, and what we would really
like to accomplish here is--those 25,000 vouchers are now down
to 12,000 disaster vouchers that are out there. Some people
have made their way and have been able to return home, wherever
home was initially.
Now we need to ensure--of that 12,000 that are out there
still on disaster vouchers, a significant number of that is
public housing but also some Section 8 vouchers, some housing
that we deal with, the FHA, 202, 811, our senior citizen
programs or disabled programs--we need to continue to make sure
that we bring everyone home but that we place them in a
situation. The same thing with the Road Home program, I think.
Some of the difficulties--
The Chairman. Do not get diverted or we will never get out
of here.
Mr. Bernardi. The fact is that it is taking time. It is
taking more time than anyone would like, but we really want to
make sure that we utilize all of the resources we have in
cooperation with the Louisiana Recovery Authority, and
Mississippi and the other States as well, to put something down
at the end of the day that people can be proud of, that they
can live in and feel safe in and that will be a house that they
can be proud of in a community.
I have been down there just as you have, sir, and I can
tell you the situation. Housing, by itself, is not going to do
it. That is why we passed action plan after action plan at HUD.
With the amount of money that these gentlemen have talked
about, you know, there needs to be infrastructure work. I mean,
you need to rebuild these neighborhoods. You cannot just
rebuild some public housing and put it up there without any
amenities or anything around it. This is a daunting process,
and we are proud of what we have done with our disaster voucher
program. The IG gave us tremendous grades for it. Imagine that.
The Chairman. We are off the--does the gentleman have any
further comment?
Mr. Cleaver. I just want to know what approvals you need. I
mean what do you want us to do? What do you want us to do to
help make this happen as quickly as possible?
Mr. Bernardi. I know Chairwoman Waters has been meeting
with Secretary Jackson, looking to see if we can come to some
sort of resolution with the proponents and opponents of this
and take it out of the hands of the judiciary and go ahead and
give us the opportunity to proceed with the redevelopment.
The Chairman. The Chair will submit statements from Habitat
for Humanity, the American Association of Homes and Services
for the Aging, the National Association of Housing
Redevelopment Officials, the National Association of Realtors,
the Financial Services Roundtable, Volunteers of America from
Greater New Orleans, and the National Association of Home
Builders.
Is there any objection?
Hearing none, they are included.
I just have an announcement. The gentlewoman from
California, the chairwoman of the subcommittee, has of course
been very diligent in her attention to this. She is now in a
meeting with the Speaker on probably the only issue that could
have taken her away from this hearing, namely, what we should
be doing about the war in Iraq. So I assume people will
understand her temporary absence. She is monitoring this
through her staff, and she will be back soon.
The gentleman from Louisiana.
Mr. Baker. I thank the Chairman. I shall be very brief.
I want to turn for a minute to Mr. Garratt about emergency
response deployment. We just recently acted in the last
Congress to adopt a provision requiring the agency to evaluate
the most effective taxpayer remedy to the emergency shelter
provision, which has led to a discussion for what is now called
``Katrina cottages.''
As I understand the deployments made in the early months of
the storm and continuing today, there were on average about
$70,000 of expenditure for each siting and occupancy of
trailers deployed to meet the needs of displaced individuals.
We have a study indicating that modular housing on slabs could
have been constructed for much less money in about the same
timeline that it took to find the sites, get the infrastructure
in place and prepare the units for occupancy.
Has the agency in the interim, since the passage of the
bill until now, given thought to moving toward this permanent
remedy? Because the legislation removed the obstacle that
previously barred the enterprise from doing permanent
solutions. You were mandated to waste money. In this case, you
now have the option to evaluate and to decide the best course
of action.
The reason for asking this is as follow-up as there has
been a recent announcement of additional trailers being
purchased when it appears that we have a very significant
problem in finding acceptable sites on which to put the
trailers. They are not being decidedly helpful in the face of
another storm coming on land. It would seem moving to a modular
structure would be safer for the occupants.
Has there been discussion, evaluation, any consideration of
moving toward a permanent remedy as opposed to the trailer
solution?
Mr. Garratt. Yes, sir, and thanks for asking the question.
We stood up a number of months ago an entity called the
Joint Housing Solutions Group, and that Joint Housing Solutions
Group was charged specifically with going out and looking at
the universe of potential replacement structures for the
standard travel trailer/mobile home response that we have had
in the past. We have money that we assigned to that project.
Then we got some contractors supporting that activity, and they
also linked up with the $400 million alternative housing pilot
project. They are going to be involved in the evaluation
portion of that, working with HUD, to help evaluate the
effectiveness of the projects that were preliminarily approved
for that project.
Mr. Baker. Let me make this a little simpler. This thing
keeps jumping in and out.
Have you stopped the acquisition of new trailers at this
point?
Mr. Garratt. No, sir. We are still procuring new UFAS
compliance trailers in accordance with the settlement that we
reached under the Brown litigation.
Mr. Baker. But why is it necessary to purchase additional
if we have significant numbers not deployed and not occupied
and not even ready for occupancy? Modifications could be made
to the existing inventory much less expensively than acquiring
new property and storing it not to be used.
Mr. Garratt. Sir, I heard you mention that before. You
mentioned a figure. You thought that it would cost about $1,000
to retrofit those mobile homes to make them UFAS-compliant. If
that is true, then you have a really good point. I am not
familiar with that figure or where that came from, but I made a
note that I want to go find out.
Mr. Baker. I got that from an industry person.
Mr. Garratt. If that is in fact true and we can retrofit
those for $1,000, then, yes, we have no business going out and
ordering new trailers under new specs to replace them.
Mr. Baker. And can you just speak briefly, because I know
we have been here forever, as to the outrageously high
administrative costs associated with the administration of
these programs, not any particular one?
In the course of evaluating the money sent to the State,
from a Louisiana perspective only, there was one quarter in
which the administrative cost--and this was early on. I guess
maybe there was some ramp-up expenses that could justify it
possibly, but anything over 3, 4, 5 percent in the business
world of administrative cost to administer a pot of money
starts raising flags. And when you get over 20, something has
to be wrong, and this goes to travel. I even found a category I
did not know existed before. It was a category for the
transport of things. Apparently, if it is something that has a
shelf life of longer than 12 months and it is an expensive item
in Dubai, you buy an airplane transport ticket to fly it as
opposed to renting one locally. It was something that was an
anomaly to me. I never knew we had the transport of things as a
budget category, but it was in there.
What can we do going forward? Not to be so much concerned
about what has transpired. You cannot get that money back.
Can't we develop a better model for emergency response and
getting housing to people who need it without that level of
administrative expense?
Mr. Garratt. I agree, sir. I am not familiar with the
specific programs to which you refer that we are paying 20
percent in an administrative fee.
Mr. Baker. I am at the end of my time, but I got it off the
Web page where it says ``administrative expense,'' and they
have a bunch of subcategories, and down at the bottom, they
give you the numbers.
Mr. Garratt. Can I follow up with you on that analysis?
Mr. Baker. Absolutely. I will give you my data.
Mr. Garratt. Can I also add just one clarification?
Regarding the $70,000 for installing trailers, that does
not apply to the 80 percent of travel trailers that we place on
individuals' private sites.
Mr. Baker. In broad definition, what I really was talking
about is the acquisition, transport, and preparation of sites.
Getting the lot ready for a person to take the key and walking
into his trailer, I am told, averages in excess of $70,000.
Mr. Garratt. I would say, for a number of group sites that
we had to develop from scratch, that there were some pretty
high costs associated with them. Yes, sir.
Mr. Baker. I yield back.
Mrs. Maloney. [presiding] Thank you.
My colleague from Massachusetts, Mr. Lynch.
Mr. Lynch. Thank you, Madam Chairwoman.
I also want to thank--I know she is in another meeting with
the Speaker--Ms. Waters for holding this hearing and also the
ranking member.
Like my colleague from Missouri, I grew up in public
housing--for me, the housing project in South Boston,
Massachusetts--but I lived there for 15 years, and while it was
a very tough neighborhood, the one thing that could strike fear
into the hearts of anyone in public housing was to hear the
words, ``Hello, I am from the government, and I am here to
help.'' I think that for some of my friends in Louisiana and
Mississippi that their feelings must be pretty much the same.
I guess my questions are more for Mr. Bernardi and Mr.
Garratt. I know that the current disaster voucher program--I
gather the money comes out of FEMA, but it is administered by
HUD. That is scheduled, as I understand it, to expire sometime
in the fall, so we have about 6 or 7 months left, and at the
same time--I think it is section 408--the rental assistance
program run by FEMA is also scheduled to phase out in a few
months.
What assurances do we have for a lot of the families who
are relying on that right now? And this includes some of the
poorest families, some of the families who are in the toughest
situations. They are homeless. What are we doing right now,
because that is not a long way off? What are we doing right now
to make sure that those families who really are in a tough spot
will continue to get some type of support?
Mr. Bernardi. Mr. Lynch, in the disaster voucher program,
you are correct, it is due to expire, I believe, September 30th
of this year. And I mentioned earlier that we started with
30,000 families. We are down to about 12,000 families who are
still using the disaster voucher program.
At that time, the resources that we received were
approximately $390 million for that program. If they are
expended, those individuals would go back to the voucher that
they had, the tenant-based voucher. They would not be without a
voucher. We had that in reserve. The HANO, New Orleans Housing
Authority, when that went down, the vouchers followed the
people, and so HANO is still being funded year after year, as
are our other public housing authorities in Mississippi where
those vouchers are available and will be given to those
individuals when the disaster voucher program sunsets.
Mr. Lynch. And, just so I understand, a lot of these people
were wiped out completely in terms of their homes, where they
were living, their belongings. I understand there has been some
difficulty in their verifying their previous voucher. Are you
telling me that has been taken care of at this point?
Mr. Bernardi. Well, our responsibility which we met--and I
think we did it very well--was for everyone who was part of our
program prior to the disasters that struck that we were
responsible for, and we have been using the disaster voucher
program for that. But as I just mentioned a moment ago, those
funds--there is a reserve fund there, and those people will go
back to their regular voucher program.
Mr. Lynch. Okay. Thank you.
Thank you, Madam Chairwoman.
Mrs. Maloney. Mr. Ross, would you like to ask any
questions?
Mr. Ross. Yes. Thank you, Madam Chairwoman.
You know, I have a confession to make. Sometimes this
problem seems a long way away for me. I did not grow up in
public housing. I have not visited Katrina. I have read about
it, saw it and so forth. But I guess the question just from
somebody who has been sitting here today is: Is anybody who is
trying to wrestle with this whole problem taking the 30,000-
foot viewpoint of this and saying where is the--I have heard a
lot of advocates sort of defending public housing today, and I
have never really had a high view of it. It seems in the
Chicago area there have been people trying desperately to get
out of a trap of public housing.
Could you offer any insight to a suburban Chicago district
like I represent--where is the creativity and the opportunity
to change the dynamic for people who got dealt a pretty
difficult set of cards, because it strikes me that the way the
debate is being framed right now it is simply to put it back
the way it was.
Well, isn't there an opportunity there to change this to
make it better? And where is the opportunity for folks to come
out of a very, very difficult situation and not just go back
into a public housing situation but into something that is
actually transforming and into something that creates far more
opportunity?
I have not heard--and I have been in and out, admittedly,
which is why I was a little bit sheepish in asking questions
because maybe you discussed this earlier, but I have not sensed
that in the time that I have been here, maybe just kind of
casting a bigger picture.
Mr. Bernardi. With public housing, I did indicate that in
New Orleans, there are four complexes there that HANO has
indicated would be demolished and rebuilt pretty much to make
it simplistic, but it is the fact that it would be rebuilt in a
different way. It would be rebuilt so that it would not just be
public housing. There would be affordable housing. There would
be market rent housing there. There would be homeownership,
making that footprint bigger as to where they are right now, to
expand it, to put amenities nearby it.
I mentioned earlier this is going to take--it is not just
housing. To realize what you talked about--to provide more
opportunity, a better quality of life--we need to improve
neighborhoods, not just a particular housing complex but
everything that is around it. And we have approved action plans
for all States, but especially Mississippi and Louisiana, where
I believe I have faith. I believe--and I am a positive person--
that it will come together, the infrastructure, the
infrastructure that is going to be needed to develop these
communities, to redevelop them and to take out the traditional
three-, four-stories high of public housing. You are isolated.
You know, in real estate, they say location, location,
location. Well, folks in public housing, they deserve a good
location as well. And we can make all of this happen if we just
all coordinate together. Coordination, coordination,
coordination, and that is what we do with our Federal partners.
That is what we are doing with the folks who are sitting here
at this table. I mean, they will tell you that we are in
constant communication with them.
There has been some talk about Louisiana, if I may, that
they were late in receiving their resources, but they had
amendments to their proposal, and those amendments were to try
to make it better, and then they had difficulty--not
difficulty, but they had to have the approval of their
legislature. So you cannot really compare Mississippi with
Louisiana.
To answer the question on public housing, we used HOPE VI
moneys in Chicago and in Atlanta. And you build communities,
you do not build back just public housing. You have seen
enough, and I have as well, where you go through a community.
You can spot the public housing right away. Oh, that is public
housing. We do not want to do that. We want those people, like
everyone in this country, to be part of a neighborhood, to be
part of a community.
The Chairman. I thank the gentleman.
I am about to recognize the gentlewoman from New York, but
I did want to say, Mr. Garratt, before you leave, that I have
consulted with a few Members on this dispute between the
Louisiana Recovery Authority and FEMA, and I do not take much
hope when you use words like ``impasse,'' and so I will tell
you it is highly likely in my view--and I have talked to some
Members on the other side--that we may just pass a bill on
suspension, directing FEMA to comply. The notion that this
money should be held up by this kind of dispute over the rules
is very frustrating to us, and I hope it can get resolved. But
if it is not resolved very soon, you can expect a bill to come
to the Floor from this committee, I think overwhelmingly
supported, that would simply direct FEMA to withdraw its
objections. I am sure if you can work something out, we would
be glad to do that, but I do want to put you on notice that we
are very frustrated by this.
Mr. Garratt. Thank you, Mr. Chairman.
The Chairman. If you want to say something, you may.
Mr. Garratt. We are also very frustrated, and we are also
interested in getting this resolved, but all I would suggest is
that you take a look at FEMA's reasons for this issue. Again we
are talking about, from our perspective, issues of potential
discrimination, age discrimination, of equity and impartiality,
and the delivery of that. We think--
The Chairman. We would be glad to look at it.
Mr. Garratt. --those are important issues.
The Chairman. We would be glad to look at it, and we would
be interested to see what people in the area thought as well,
but we do urge you to get it resolved, because if it is not
resolved, somebody has to resolve this and we would appear to
be the only ones who can.
The gentlewoman from New York.
Mrs. Maloney. Thank you, Mr. Chairman.
I want to go back to one of the things that Mr. Frank was
talking to Mr. Garratt about, and that was, I believe, if I
wrote it down correctly, the 408 funds that you could not use
because it was considered illegal to use those funds.
Mr. Garratt. Are you referring to the 403-to-408 conversion
discussion that we had, ma'am?
Mrs. Maloney. Yes.
Mr. Garratt. Okay.
Mrs. Maloney. I wanted to ask you, when you say it was
illegal to use them, was it illegal because we in Congress had
written it that way, going back whenever it was enacted, or was
it because that is the way the Justice Department told you it
was illegal?
Mr. Garratt. I think it was a combination of the
interpretation of the Stafford Act and the regulations that we
have to support the Stafford Act.
Again, I need to make the case that using 403 and the
purpose for which we began to use it as creatively expanding
the sheltering to include hotels, motels and apartments was
creative, but it was not illegal to use it for that purpose.
When we did our disaster-specific guidance, I said that we were
going to do this for 12 months, or we authorized States to sign
apartments up for 12-month leases. Subsequent to that, it was
determined you cannot do that for that length of time under
that authority.
So it was not that the use of that was the problem. It was
the length of time that we were going to employ that. It was
essentially an emergency protective measures authority for an
extended period of time. You can only do that for 6 months. And
as a result, it was the determination that was made. We had to
look for ways to transition those individuals out of that
program into another one. Because we only had the 408 program
available to us, some of the individuals receiving 403
assistance fell out of that because they were not eligible for
408.
Mrs. Maloney. Well, I was just wondering. Being that it was
obviously, you know, a collective bargaining of where the rules
came from, did you come to any of the chairmen to see if you
could do a technical change for a while? Because we were
reacting very fast here in Congress in getting the funds that
needed to be done, I was just wondering if you had come to us
to see if, you know, we could have changed the wording around
so you would not have had to go through everything and then
cause, you know, some hardships on some of the families. I am
just curious about that.
Mr. Garratt. Ma'am, I am not personally aware that any of
the chairmen were approached.
Mrs. Maloney. In hindsight now, do you think that might
have been a good idea, being that Congress was willing to do
whatever we could to help you out?
Mr. Garratt. Yes, ma'am, I would agree. In hindsight, that
would have been a good idea.
Mrs. Maloney. Well, hopefully, you will, you know, remember
that. If you have a problem, come to us. You know, we are
trying to help everybody.
Just one quick question. I know going back--and I know some
of the activists, you know, were talking about it. With FEMA as
lead Federal agency on housing response to Hurricane Katrina, I
know that there was here in Congress some debate about that.
But I know that a lot of the activists had basically asked if
HUD could come up--they urged HUD throughout the process for
HUD to play a more active role in the housing response to
Katrina.
Has HUD actually developed a long-term plan for recovering
permanent affordable housing in the Gulf?
Mr. Bernardi. We have had conversations in the planning
stage with FEMA to look toward the future, unfortunately with
other disasters, where we would take responsibility after the
initial 30- or 60-day emergency to look at the temporary
housing that FEMA presently is responsible for. There are about
34,000 families who are located throughout the country who are
using FEMA vouchers. The majority of them, many of them are in
Houston and in other parts of Texas.
Mrs. Maloney. Are you going to try the new plan with what
just happened in Florida to see if that actually works, you
know, with all of the homes there that were knocked down and
gone?
Mr. Bernardi. The plan is to look at the possibility of
handing that off to HUD where we would, obviously, have the
expertise and we have the administration in place. It would
take additional resources, and it would take a funding level,
aside from our appropriation, to do that into the future, but
yes, we are looking at that.
Mrs. Maloney. And I think one of the things, you know, that
you were talking about earlier on looking at a sustainable
community--I mean, I think that is the term. We have a project
like that back on Long Island where I live. But with that being
said--and I think here is where a lot of us get nervous about
it.
I think all of us agree that you have to have a sustainable
community, but we are concerned about how you are getting
there, where those who need housing are going to go. Because I
know in my area, they want to knock down several HUD buildings.
Where are the people supposed to go until these new buildings
are built? That is our concern.
Mr. Bernardi. Anytime there is a demolition that HUD is
involved in, those tenants all receive a voucher. It is a
voucher that they utilize until they can either be back into
that particular building, if it is being rebuilt or
redeveloped, or they use that voucher. It is portable, they can
use it anywhere--and also in the area where they are from, of
course.
Mrs. Maloney. But here is the problem, and I take it this
is what we are hearing on New Orleans. Prices are going up. On
Long Island, someone who might be in a Section 8 building,
getting help--if they were kicked out I can guarantee you,
because we have such a short supply of apartments anyhow, that
they would not be able to find an apartment to live in. We
found that with our military. They went to tear down the
housing in Mitchel Field, by me, and they were going to give
each family $1,500 a month.
Now, most of the military families had two to three
children. I invited the admiral to come to Long Island and try
to find any housing with three bedrooms or even two bedrooms
for $1,500. They could not find any. We have rebuilt the area
for the military.
With that, I yield back the balance of my time.
The Chairman. I thank the gentlewoman.
I just want to again mention something that people should
know about. I was very pleased to hear of the conversation
between HUD and FEMA on sorting out the housing responsibility.
I frankly was a little surprised to learn that FEMA was still
in the housing business 18 months forward, instead of claiming
that is not what they are set up for.
I have already spoken to Ms. Waters. We spoke to Chairman
Thompson of Homeland Security. It is our intention to look--and
I think it probably needs some legislation here, and we would
be glad to work with you to effectuate what you were talking
about, Secretary Bernardi; namely, to put FEMA firmly in charge
in the emergency phase and then have HUD do the housing going
forward with appropriate additional financing, since we do not
want to put other housing at a disadvantage.
That is something in the longer term, later this year, we
will be looking at, and we will be glad to work with you on
that.
That appears to conclude--
Mr. Bachus. Well, Mr. Chairman, as opposed to asking a
question, I would just like to offer a quote from our third
panel if I could, and I can ask Mr. Bernardi how it affects
what they are doing. But on our third panel, we have the
testimony of Sheila Crowley, who is president of the National
Low Income Housing Coalition, and I found it interesting that
she makes this statement in her testimony: ``The Housing
Authority of New Orleans has long had the reputation as a
dysfunctional and corrupt institution, plagued by
mismanagement, rapid leadership turnover, and interference in
its operation by local officials. The HANO authority has
allowed its properties to deteriorate into seriously
substandard condition or allowed its properties to deteriorate
into seriously substandard condition due to the poor quality of
its stock, and its many management deficiencies of housing
authority was taken over by HUD.''
You have been criticized for your plan to replace the 7,500
units, about 2,000 of them which were vacant before the
hurricane. I guess, did your decision to replace these units,
as opposed to repair them, have something to do with what she
says, that a lot of the properties have deteriorated into
seriously substandard condition and were of poor quality to
begin with?
The Chairman. The gentleman can take a minute or two to
answer, and then we have to move on.
Mr. Bernardi. Yes. The short answer is yes.
What I would like to say is that a housing authority, when
it is not managed correctly--there are 2,400 housing
authorities in the United States. Of those that are managed
correctly, of those that have people that have good boards, you
find that they run as well as they possibly can. There is no
way that we at HUD and myself, that I want to place anyone in a
situation.
In talking to the tenants here from HANO, they complained
an awful lot about the housing authority and how they were not
paying attention. What does that lead to? That leads to
deterioration of structure. That leads to less enforcement of
the law. That leads to people not caring.
We can provide all of the resources here, but at the local
level--excuse me--it has to be done there, and we are always
willing to help and provide all the assistance that we can. We
want to place these folks in a better living condition.
The Chairman. I thank the witnesses, and we will move on to
the next panel. I will ask people to move quickly, please.
Speed will have to take precedence over graciousness at this
hour. We need people to leave quickly, sit down and get
started.
I will recognize the gentleman from Texas who wanted to
make one introduction.
Mr. Green. Thank you, Mr. Chairman. I do have the privilege
pursuant to--
The Chairman. The gentleman will suspend.
The people will take their seats and be quiet, and please
close that door. Close the door, please.
The gentleman from Texas.
Mr. Green. Thank you, Mr. Chairman, for according me the
honor of introducing Mr. Kirk Tate.
Mr. Tate is the chief executive officer of Orion Real
Estate Services. This is a Houston company, and Orion manages
over 16,000 apartments throughout Texas and Colorado. Mr. Tate
has over 30 years of experience in the apartment industry, and
is a past president of the Houston Apartment Association as
well as of the Texas Apartment Association. Mr. Tate served on
Mayor Bill White's Hurricane Task Force for the City of
Houston, and he has acted as a liaison between the apartment
owners and the operators and the City of Houston. And Mr. Tate
is in a position, Mr. Chairman, to address and discuss the
damages suffered by Houston landlords as a result of the lease
arrangement between the city and FEMA, and FEMA's being negated
prematurely.
The Chairman. I thank the gentleman.
We also have the aforementioned and widely quoted Ms.
Sheila Crowley, president of the National Low Income Housing
Coalition, who will not have to give her whole statement now
since we already have part of it; Mr. Ghebre Selassie Mehreteab
of the National Housing Partnership, with whose work I am very
directly, personally, and favorably familiar; Mr. James Perry,
executive director for the Greater New Orleans Fair Housing
Action Center; Mr. Edgar Bright, who is president of Standard
Mortgage Corporation of New Orleans and is here on behalf of
the Mortgage Bankers Association; and Dr. James Richardson, who
is a John Rhea professor of economics at the E.J. Ourso College
of Business at Louisiana State University.
The Chairman. We will begin with Ms. Crowley.
STATEMENT OF SHEILA CROWLEY, PRESIDENT, NATIONAL LOW INCOME
HOUSING COALITION
Ms. Crowley. Thank you, Mr. Chairman. I am happy to be here
today, and I appreciate the invitation.
A year-and-a-half after the storms hit the Gulf Coast, we
do not really know how many people are still displaced, but
certainly it is no less than 150,000 families, and the many
problems we are having getting rebuilding funds into the hands
of middle-class homeowners pale in comparison to what has and
has not happened for low-income people. It is important to
distinguish between the temporary housing response and the
housing building response, and to understand how they are
related, to attempt to further comprehend the complexity of
what faces us.
In the interest of time, my oral testimony will cover the
rebuilding issues, and I hope to discuss the temporary housing
issues in the question period.
In regard to the public and assisted housing damaged or
destroyed on the Gulf Coast, it was HUD's responsibility to
determine what it would cost to repair or redevelop public and
assisted housing and request whatever amount was not covered by
insurance from Congress. That did not happen. Rather, HUD has
relied on the community development block grant funds and the
low-income housing tax credits that were allocated to the
States for the purpose of meeting the housing needs of the vast
numbers of families who did not live in federally subsidized
housing. That was wrong, and it has delayed the reopening of
public and assisted housing.
We recommend the following principles in determining the
future of public housing developments on the Gulf Coast:
One, any public housing that was evacuated but can be
reoccupied with repairs only should be repaired and reopened as
soon as possible.
Two, there should be a moratorium on any demolition and
redevelopment of public housing on the Gulf Coast for the
foreseeable future--any that is currently occupied, for the
foreseeable future.
Three, in those cases where an independent evaluation
determines that the public housing is beyond repair and must be
partially or completely redeveloped, HUD must assure one-for-
one replacement of all units, the absolute right to return for
all tenants in good standing, and authentic participation in
the redevelopment planning by displaced residents who desire to
be involved.
A word about the situation of public housing in New
Orleans. HANO has long had the reputation of a dysfunctional
institution, and Mr. Bachus went on with a broader description
of that. Due to the poor quality of its stock and its
management deficiencies, HANO has been in partial receivership,
and I do want to correct my written testimony. It has been in
partial receivership since 1996. It has been a troubled housing
authority since 1979 and has been in full administrative
receivership since 2002. Please note that of all of the public
housing agencies nationwide, only 15 have ever gone into
receivership since 1979. So these are the most seriously
dysfunctional agencies.
If a troubled agency is taken into administrative
receivership under the statute, HUD is required, after 2 years,
if it has not been able to restore it to a nontroubled status,
HUD is required to turn it over to a judicial receiver. That is
the law that was passed in 1998 with the Public Housing Reform
Act. HUD has long overstayed its time as the receiver for HANO,
and we think that a very immediate resolution to many of these
concerns would be to move it into the hands of a judicial
receiver.
There is no discernible difference between HANO and HUD at
the moment as decisionmaking authorities, and the conflicts of
interest of HUD as the HANO receiver are quite problematic. HUD
has to review demolition applications from public housing
agencies and warrant that the necessary engagement of resident
and community input has occurred. HUD and the public housing
agency are one and the same, as are HUD and HANO. There is no
one to protect the interests of the residents or the community.
Now, a very troubling situation has arisen in this
particular situation. HUD, as HANO, has applied to the State of
Louisiana for both GO-ZONE low-income housing tax credits and
CDBG disaster recovery funds for the redevelopment of four
public housing complexes in New Orleans. As the Federal agency
responsible for oversight of the CDBG funds, HUD should not be
competing for these funds as a local grantee. It is simply
inappropriate.
Recommendations. Congress should direct HUD to immediately
appoint a judicial receiver for HANO. HUD should adopt the
rules and regulations for all public housing in the affected
areas that reflect the principles outlined above, and HUD
should immediately issue an RFP for independent contractors to
assess the current condition of all public and assisted housing
and estimate what additional resources are needed to complete
repairs on reconstruction, and Congress should appropriate
those funds. We have no comprehensive understanding about what
the repair needs are.
Turning to the rest of the affordable housing needs on the
Gulf Coast, the major Federal resource for rental housing was
the allocation of low-income housing tax credits. The initial
estimate was that these tax credits would produce 54,000 units
of public housing in Mississippi and Louisiana. I will note
that in Louisiana alone, they report the loss of 82,000 rental
housing units. Because of construction costs that have
skyrocketed, the number that will be produced for these tax
credits may be as low as 25,000, and many of those will be lost
if Congress does not extend the placed-in-service dates of tax
credits as you have been requested to.
I will now turn to Mississippi. Of Mississippi's $5.6
billion in CDBG's, $3.2 billion was dedicated to a
homeownership program; $100 million was set aside for public
housing, and $125 million for a rental repair program.
Mississippi still has $1.5 billion for which it has no plans at
this point, and meanwhile, 30,000 households in Mississippi
remain in FEMA trailers. In a recent study done by the Columbia
University National Center on Disaster Preparedness, HUD
assessed a serious deteriorating quality of the mental and
physical health of the folks there.
I realize that I am running out of time. Let me close with
a statement about the need for additional resources going into
the Gulf and that it should be resources that are dedicated to
the rental housing needs of the lowest income population. To
date, no resources have been dedicated to producing rental
housing for people with incomes below 30 percent of the area
median. In New Orleans--
Ms. Waters. [presiding] Ms. Crowley, you will have to wrap
it up and move forward so we can make sure our other panel gets
up here sometime today.
[The prepared statement of Ms. Crowley can be found on page
267 of the appendix.]
Ms. Waters. Next, we will have Mr. Tate.
STATEMENT OF KIRK H. TATE, CHIEF EXECUTIVE OFFICER, ORION REAL
ESTATE SERVICES, ON BEHALF OF NATIONAL MULTI HOUSING COUNCIL
Mr. Tate. Chairman Frank, Ranking Member Bachus, and
distinguished members of the committee, my name is Kirk Tate,
and I am the chief executive officer for Orion Real Estate
Services based in Houston, Texas.
In the days, weeks, and months following both Hurricanes
Katrina and Rita, I acted as the liaison between apartment
owners and operators and the City of Houston. I am here today
on behalf of the National Multi Housing Council and the
National Apartment Association. I will focus my statement on
the lessons we learned with regard to the Federal response to
providing rental housing assistance to displaced families and
the recommendations we have for housing long-term disaster
evacuees.
Since I am from Houston and my firm manages 48 properties
throughout the Houston area, I thought my own insight would be
helpful as we began to plan for future disasters. At the onset
of any disaster, FEMA should have a process to quickly
determine whether the need for post-disaster housing will be a
short-term or a long-term event. Apartments are not an
appropriate response for disasters where evacuees will be
moving home to rebuild within a matter of days or weeks.
Hotels are not cost efficient to house people in the long
term. Apartments are a much better solution. The inappropriate
response to what was clearly a long-term housing crisis
resulted in millions of wasted Federal dollars. The average
hotel/motel rate at $59 per day works out to $1,770 a month,
which exceeds the median cost of rental housing, even in some
of the Nation's most expensive housing markets.
In order to provide shelter quickly, many apartment owners
lowered rents, waived security deposits and application fees
and offered flexible lease terms. Although the apartment
industry stepped forward to do what was asked of them when
Katrina struck, our industry would not be as eager to assist in
future disasters unless we all learned from the many mistakes
that were made at the Federal level.
I would like to first highlight our concerns and then
provide recommendations for housing evacuees in the future. We
are concerned that the local fair market rent did not provide
for an adequate number of apartments. We are concerned that
with the payment of utilities for the evacuees, the 403 program
did not allow for us. We were concerned with the rental payment
process and program. It was a disaster from both an evacuee and
an owner perspective. And finally, we did the right thing and
housed people without a security deposit, which has left owners
with no recourse for damages or lost rents.
The future recommendations are as follows: FEMA housing
programs were not designed to handle long-term housing needs
for the future. A single entity should administer the housing
response to any disaster. While FEMA set no limits on the hotel
rates, they would reimburse its housing program set a rent
ceiling based on HUD's fair market rents, which, in many cases,
are below the true market rates. HUD's FMR's are not sufficient
to cover the rent in the majority of housing located in any
American city, so rent levels should be established that more
closely reflect the average rental costs in the affected
cities. By limiting FEMA's payments to Houston, they restricted
the number of apartments available to evacuees leaving more
evacuees than eligible to apartment units. The Stafford Act
should be permanently amended to allow utility payments for all
housing-related programs. It could also allow for utility
payments sufficient to cover the actual cost of the utilities.
It took way too long for FEMA to process rental payments to
apartment owners. In the future, money should flow through the
government through a corporate lodging consultant type entity
to ensure the evacuee has housing and the owner gets paid. And
because FEMA's housing program did not provide evacuees with
funding to cover security deposits, owners are now left without
recourse for damages. Future Federal housing efforts should
ensure that mechanisms exist to cover a security deposit.
In conclusion, when Katrina struck, the Nation's apartment
owners did everything right. They stepped up and they worked
with local communities to provide housing and other services to
those in need.
As an industry, we are very proud of our actions during a
time of unprecedented national need. We took on business risks
and potential costs inherent in solving such a massive housing
crisis. Would we do it again? We would certainly like to, but
after the Katrina experience, many apartment owners will be
reluctant to accept a sizable number of evacuees unless they
are convinced that the government has learned from its mistakes
and has created a better disaster housing program.
We look forward to working with Congress to ensure that
future evacuees and the cities that help them are not burdened
with confusion, debt, and heartache.
I thank you for the opportunity to testify on behalf of the
National Multihousing Council and the National Apartment
Association and wish to offer our assistance to this committee
as you continue your important work.
[The prepared statement of Mr. Tate can be found on page
379 of the appendix.]
Ms. Waters. [presiding] Thank you very much.
Next we will have Mr. Mehreteab.
STATEMENT OF GHEBRE SELASSIE MEHRETEAB, CO-CHAIRMAN AND CEO,
NHP FOUNDATION
Mr. Mehreteab. Congresswoman Waters, Ranking Member Bachus,
and committee members, I thank you for inviting me to speak
today. I am the chief executive officer of the NHP Foundation
headquartered in Washington, D.C., with a regional office in
Baton Rouge, Louisiana. In 1989, the National Housing
Partnership, a chartered corporation, established the NHP
Foundation, a nonprofit organization to address America's
affordable housing crisis. Since 1994, the NHP Foundation has
preserved 44 properties totaling approximately 9,000 units in
14 States. Included in this portfolio are four properties
damaged as a result of Hurricane Katrina amounting to 952 units
in New Orleans and the vicinity.
As many of you know, one of the challenges in the
production of affordable housing is a financing gap primarily
due to the increased cost of construction and the cost of
insurance premiums. Despite the government's attention and the
commitments of the reconstruction efforts, this financing gap
is real and has significantly impeded the rebuilding efforts.
There is now a significant need for grant funds from financial
institutions and corporations. We believe private sector
institutions, especially those that have an interest in
housing, can provide grant funds and close this financing gap.
To the extent of this capacity, the NHP Foundation has met
the financing challenge through an innovative strategy
combining public and private funding. The NHP Foundation plans
to build 3,000 affordable housing units serving approximately
12,000 people in the Gulf Coast region. The total cost of this
rebuilding effort is estimated to be approximately $300
million. As a result of implementing our financial material,
the NHP Foundation has made some modest progress on the ground.
To date, I am very happy to report that we have 1,000 housing
units under development and 2,000 units in the pipeline in the
State of Louisiana.
The total cost of the development of the first 1,000 units
is estimated to be $100 million. Towards this $100 million, we
have implemented a financial structure composed of three
funding streams: Low-interest, low-income house tax credit
equity amounting to 45 percent of our total funding; community
development grant and private grants amounting to 25 percent of
our total funding; and the remaining 30 percent was raised from
conventional loans from Bank of America and tax-exempted bonds
from the Bank of Louisiana.
Our generous private sector donors included the Freddie Mac
Foundation, the Ford Foundation, the MacArthur Foundation, the
Bush/Clinton Katrina Fund, JP Morgan Foundation, and
NeighborWorks America. The NHP Foundation's modest progress
does, in fact, prove that it is possible. Rebuilding is
happening very slowly at this very moment. Our financial
strategy could also serve as a model for either for-profit or
nonprofit organizations.
We believe that the mere construction of affordable housing
is not enough. The NHP Foundation empowers residents to break
the cycle of poverty by providing supplemental education
programs for school-aged children and access to health and
wellness opportunities. In short, we must work to build
America's next generation.
It is imperative that all of the people displaced by
Hurricane Katrina are placed again as soon as possible. We ask
that financial institutions and corporations increase their
grant contributions and combine their resources with the
private sector and help us close the financing gap. This
approach will ensure that the Gulf Coast is rebuilt and our
fellow citizens have the housing they need.
Thank you for your time.
The Chairman. Thank you for your time, namely for 4\1/2\
minutes. You are a role model, and not just in housing.
[The prepared statement of Mr. Mehreteab can be found on
page 352 of the appendix.]
The Chairman. Next is Mr. Perry.
STATEMENT OF JAMES H. PERRY, EXECUTIVE DIRECTOR, GREATER NEW
ORLEANS FAIR HOUSING ACTION CENTER
Mr. Perry. Thank you, Chairman Frank, and Ranking Member
Bachus, for allowing me to speak today. I regret to inform you
that housing discrimination persists as a problem in New
Orleans and Louisiana. I testified before this committee 1 year
ago and talked about many, many problems that we face. Many of
those issues persist and new issues have come up, the first
issue in zoning and policy and discrimination by local
governments. What has happened is that local governments have
sought to prevent minorities from moving in through zoning. In
2006, Saint Bernard Parish passed an ordinance which restricted
the rental of single-family homes to blood relatives of the
property owners. Because 93 percent of the popululation in the
Parish are white, African Americans and other minorities will
be virtually excluded from renting homes in the Parish. The
message was that no minorities were allowed. In order to fix
the problem, my organization filed a lawsuit seeking a
preliminary injunction prohibiting the Parish from enforcing
the blood relative ordinance. We were granted that injunction,
and we are still pushing in that fight.
Both in the City of Slidell, Louisiana, and Jefferson
Parish have engaged in comparable discriminatory efforts to
restrict housing within their borders. Of significant concern
for the Fair Housing Action Center are actions with regard to
public housing. Prior to be Hurricane Katrina, the Housing
Authority of New Orleans provided housing for approximately
23,400 New Orleans families. In addition, there were 10,873
families who were on waiting lists for public housing. That
demonstrates a need for public housing for 34,273 families.
Well, today, HUD has talked consistently about the disaster
voucher program and about getting people back into public
housing but their numbers show only 13,300 families are back in
public housing, only about 38,000 of the people who needed
public housing before the storm and even after the storm. This
means there are 20,973 families who still need public housing
and who are not being provided that public housing by HUD. We
have seen that problem in our own work.
I would add that one of the things that HUD has said is
vouchers; we are giving vouchers on top of vouchers. There are
two problems. The first is that there aren't enough vouchers
and the numbers indicate that. The second is that landlords
consistently deny people who show up and say they have a
voucher. We have a client who is a perfect example of that, a
woman named Dasher Corner who had a disaster voucher, but ended
up living in a car with her daughter after the storm because
she couldn't find a landlord who would accept a voucher.
The most difficult thing about Ms. Corner's case is that
she had a preference to housing at the renovated St. Thomas
housing development in New Orleans. But she was denied that
housing because HANO had moved its own employees into the
housing that was set up for her and for other residents of
public housing. We ended up filing a lawsuit on behalf of Ms.
Corner on that case to enforce this right to public housing
that she and other residents had.
The Chairman. When did this happen with HANO?
Mr. Perry. We filed the lawsuit in the fall of 2006. The
issue with their employees moving into the public housing
complex was right after the storm.
Mr. Baker. That was when HANO was under Federal
administration. So it wasn't under HUD, not the old HANO.
Mr. Perry. That is the case. So we have advocated on behalf
of our public housing residents.
My concerns about public housing are far too excessive for
me to discuss in 5 minutes. I have included many of them in my
written comments, but I would invite the committee to talk with
me about other concerns that we have.
Another issue is one that we talked to this committee about
last year is discriminatory advertising on the Internet. I
opened my comments that year and I quoted some of the ads. The
first ad that I quoted to the committee was, ``I would love to
house a single mom with one child. I'm not racist but white
only.'' That was an ad that appeared on the Net trying to
assist people looking for housing after the hurricane. We met
with staffers of members of this committee and we worked in
order to figure out an answer.
So we said that we would try to see if the lawsuits and so
forth in that area would work out. Well, so far, those lawsuits
haven't worked out, there was a lawsuit against craigslist.com
and craigslist actually won the lawsuit. It was ruled that they
are not liable when people post discriminatory advertisements
on their Web site.
So I called upon the members of the committee to help to
change the Communications Decency Act so discriminatory ads
cannot be posted on the Net. If such ads were posted in The New
York Post or The Washington Post, they would be held liable and
they would be illegal. But just because it is an Internet ad,
they are given an exception. And it is not fair.
We have specific concerns about issues concerning people
with disabilities. FEMA has worked to ensure that people are
able to raise their homes by getting funding through FEMA and
other sources. The problem is that none of the programs through
FEMA or anywhere else provide a way for people who use
wheelchairs to get up into a house after it has been raised. If
a house is 10 feet tall and you use a wheelchair, you can't get
into it.
Another concern for people who use wheelchairs or are
otherwise disabled is that our State adopted a new building
code. The building code was a safe harbor. That means that it
was okay enough so that it passed the test for the Americans
With Disabilities Act and the Fair Housing Act so that people
with disabilities would be able to use the buildings that were
built under that code. Well, unfortunately, our State gutted
those provisions from the building code. So we need your help
to urge the State to put those provisions back in to make sure
that buildings in the city and in the State are accessible.
These are some of our concerns and we have many more, but
we thank you for the time, and we invite your questions.
[The prepared statement of Mr. Perry can be found on page
358 of the appendix.]
The Chairman. Thank you, Mr. Perry.
Before I forget, I want to note the issue of the immunity
for the Internet is actually not, I think, within our
jurisdiction. It is within the jurisdiction of the Committees
on the Judiciary and Energy and Commerce. There is an effort to
hold them responsible for content, and we will be talking to
our colleagues about that fix.
Mr. Bright.
STATEMENT OF EDGAR BRIGHT, III, PRESIDENT, STANDARD MORTGAGE
CORPORATION, ON BEHALF OF MORTGAGE BANKERS ASSOCIATION
Mr. Bright. Thank you, Chairman Frank, Congressman Baker,
Congressman Jefferson, and the rest of the Financial Services
Committee who are here in attendance.
After the storm, I was faced with the immediate task of
accounting for my staff. All of them and their immediate
families were safe, but many of their homes were under water,
including mine. This is a picture of me in a boat coming from
my home.
Shortly after Katrina, we met in Dallas with our data
processing company in Fannie Mae and began executing our
disaster recovery plan. Our headquarters were flooded and we
could not go back to our building for 6 weeks. We moved
temporarily to Baton Rouge while a Standard Mortgage SWAT team
pulled all essential data files from our headquarters. We
instituted forbearance on all loans in the Katrina area. This
caused major capital shortages for us. We borrowed significant
funds to make investor payments and to meet payroll.
We also made sure that our customers had access to their
loan and insurance information. And we reassigned 75 percent of
our staff to process the thousands of insurance loss drafts in
the ensuing months.
Of the 28,000 loans we served pre-Katrina, 20,000 were in a
FEMA-declared disaster area. Of those 20,000 loans, 8,000 were
in the highest impacted areas. The industry and our regulators
also responded. The entire industry instituted broad
forbearance and began to try to contact customers who had been
evacuated and who were out across the country. The initial
period of forbearance was critical in the short term, but it
was granted at a price. Whoever services the loan has a
contractual obligation to make payments to the investor,
whether or not a borrower is making payments.
The mortgage industry created a working group made up of
leaders, servicers, and their trade associations to help work
on immediate and longer term public and private sector problems
and solutions.
One of the problems we faced was the end of the first 90
days of forbearance when foreclosures usually begin on loans
that are overdue. Working with all of the stakeholders, we were
able to avoid disaster, and the industry practice was
established that forbearance in the worst impacted areas was
continued and should be revisited every 90 days. This was a
watershed event. Despite predictions of mass foreclosures,
virtually nobody impacted by the storm has been foreclosed
upon.
Our forbearance policies have worked immediately after the
storm with almost 5,000 loans that were over 90 days past due.
By September 2006, that number had fallen to fewer than 17,000,
but foreclosures were begun on fewer than 4,000 properties, and
most of these were outside the storm area. The fact that so
many loans in these States are over 90 days past due, yet
foreclosure rates are low, shows that there are thousands of
people who continue to receive forbearance, about 10,000 people
in Louisiana and 4,000 in Mississippi.
The cost to the mortgage industry to offer forbearance on
this scale is enormous. The interest payments that services
must advance to investors amount to an average of $10,000 per
home per year. A reasonable estimate of the total out-of-pocket
costs for lenders of these policies is $258 million.
Congress and the President put the region on the path to
recovery by funding the CDBG program. There are important
lessons for future action, which I discuss at length in my
written testimony. The National Environmental Policy Act or
NEPA, hamstrung the States in how they could design their grant
distribution program. The President should be able to activate
the NEPA exemptions for the purpose of rebuilding housing.
Second, Federal agencies are not permitted to give recipients
of Federal assistance duplicate benefits. While in theory this
makes sense, in practice it is causing deficiencies in funding.
Third, valuations of damaged properties are often conducted
numerous times by numerous agencies. And there should be some
mechanism to share this information.
Next, FHA generally pays an insurance claim when it takes
title to a property as a result of foreclosure. To convey a
property and convey insurance benefits, FHA requires that the
property be picked up so it can be sold again. Obviously,
events such as Katrina causes problems.
Finally, VA should have the authority to waive requirement
and declare no bids. The mortgage industry responded admirably
to the many challenges of Katrina and Rita despite significant
costs. We will do all we can to ensure that the region is
better than ever. We have shown our willingness to sacrifice
but that will not be enough. This is a national problem and
national solutions need to continue to ensure that the region
returns better than it ever was.
[The prepared statement of Mr. Bright can be found on page
167 of the appendix.]
The Chairman. Thank you.
Professor Richardson.
STATEMENT OF JAMES A. RICHARDSON, JOHN RHEA PROFESSOR OF
ECONOMICS, E.J. OURSO COLLEGE OF BUSINESS, LOUISIANA STATE
UNIVERSITY
Mr. Richardson. Thank you, Mr. Chairman, and members of the
Committee on Financial Services. I am James A. Richardson,
professor of economics in Baton Rouge, LSU.
One of the items in the call of this committee is to
connect the housing problems with the economic recovery issues,
and I have tried to shed some light on that in my testimony.
Prior to Katrina, there were about 620,000 people working
in the New Orleans metropolitan area, which is a 7th Parish
area. There were about 550,000 homes at that time. There was
not a housing deficiency.
After Katrina, and in 2006, we had about 450,000 people
working in that metropolitan area, a reduction of over 30
percent. But in terms of housing, housing had declined by over
40 percent. There was a deficiency of housing of over 70,000
homes, which was made up by trailers, people living with
friends and relatives, and by commuting from areas outside the
metropolitan area.
Now in the process, one of the results, obviously, is you
have a shortage of housing, a deficiency of housing. You had
price increases. The allowance for military housing in the New
Orleans area jumped by 44 percent in 1 year.
The Brookings Institution put out a Katrina index in which
they surveyed apartment rents and over a 1-year period, they
noted that apartment rents had jumped by about 44 percent. The
New Orleans Picayune Times did a survey of housing from October
just before Katrina to October 2006. Apartments jumped by 70
percent. Obviously, this has an impact on lower middle income
people more than it does on other income groups.
But the other element we need to be aware of is that the
housing deficiency over the next several years is not going to
get any better. It is actually going to get a little bit worse
if the economy grows. If you are able to increase employment
over the next several years to about 500,000 people working,
again, that is only 80 percent of what was there before
Katrina. The housing deficiency would grow, even accounting for
the fact that there will be some new buildings. And in
addition, we assumed that the building would be twice as fast
as had normally been done in New Orleans before Katrina. So
housing deficiencies will grow. By 2008, the projection is
housing deficiencies will be 130,000 homes.
The question, is how do you make it up? Well, people could
still be living in trailers 3 or 4 years after Katrina. That is
a possibility. They have had other homes, as Congressman Baker
talked about, Katrina cottages. You would have more commuting,
or alternatively the recovery just wouldn't occur. It would be
plateaued out, flattened out much earlier because there simply
is not shelter for the workers and their families.
You know, the question is how can we accelerate that and be
upfront. One of my points is we have to have very realistic
expectations. We are dealing with a supply issue here. You
don't rebuild 200,000 homes overnight. In fact, if you are to
rebuild them at the rate that Louisiana built new homes over
the last 10 years, it would take 15 years to replace all of
those homes.
So you are talking about not trying to be pessimistic, but
trying to be realistic and we are talking about a long-term
issue. It is not going to be over within a year or two.
Now there are a couple of things that can be done. For
example, I think it was mentioned several times today about
extending the tax credits associated with Go Zone. There are
about 17,000 units that are now underplanned based on tax
credits that are supposed to expire by December 31, 2008, and
that can be moved to 2009 and 2010. That will permit those
17,000 new units to come online in an appropriate way.
Another element is that they have the Road Home program. It
has implemented a rental policy or rental program for lower
income homes that have connected, they have price controls
built in based on loans that they give out that will be given--
become grants after a certain period of time if they maintain
that low rent. It is going to be a long time process. But I
appreciate your interest, your commitment, and your concerns.
Thank you.
[The prepared statement of Mr. Richardson can be found on
page 363 of the appendix.]
The Chairman. Let me begin with you, Professor, and that is
we would throw in the--we think we have maybe $5- or $600
million to contribute from the DSE's. But let me ask you this
way. Looking at the current branch, forget about any new
resources. What we heard was uncontested--82,000 rental units
were destroyed and there is a maximum number, about 32 or
33,000, that can be rebuilt using the CDBG. Do you see any
other source under current proposals from HUD and elsewhere for
making up that deficiency?
Mr. Richardson. There are no other sources from the
government that I can see. Only the private sector decided that
it was something for them to do.
The Chairman. That the private sector would decide that
building housing for low-income people from New Orleans was
profitable. And the likelihood of that, Professor?
Mr. Richardson. Well, it is not a very likely thing right
now unless there are other things to do.
The Chairman. And the private sector is a valuable
participant, but only with the right kind of incentives, and I
think you help us make the case for other ways to supplement
the resources.
We ought to be very clear. This is uncontested. Under the
current set of public policies in place, the result will be a
reduction by more than half of the number of rental units
available in the City of New Orleans. That makes it a very
different City; a City much harder for low-income people. It
will have negative economic consequences, as you point out,
because of the destruction of rental housing and the failure to
replace it means you don't have that work force. So then the
question is how do we replace it, and to Mr. Mehreteab, whose
work I am familiar with, obviously we are not going to make it
all up with the Federal funding, but we talked in my office.
Do I remember correctly, Mr. Mehreteab, that I believe that
if we put some public resources in there was kind of a gap
filler along with the extension of the tax credit? Nobody has
to waste any time talking about that again. That is done. I
spoke with Mr. Rangel when I went over to vote. He is the
chairman of the Ways and Means Committee. We will extend those
tax credits. I can't believe there were many opponents to that.
I would even venture to say that it might even pass the United
States Senate quickly, although I don't want to bet on it.
But Mr. Mehreteab and any others, what else can we do in
terms of resources and what kind of multipliers could we expect
if we make some resources available?
Mr. Mehreteab. You are right, Congressman. I don't believe
the issue is extension of the low-income housing tax credit;
one way or another it will be extended. As you and I discussed
in your office, there is approximately $160 million of annual
tax credit which should generate $15 billion. With that much
money, if you take my formula of 45 percent, we are talking
about, we might be able to raise another $10 billion or so. But
there is a gap of approximately $500- to $800 million. That
money is not available in the community. That money is not
available to the tax credits. It has to come from some other
institutions that have good reason to believe that they ought
to do it.
What we have covered in the--what I presented to you is
that we were short 10 to 20 percent per project. We went to the
Ford Foundation, which I happened to have worked there so it
was much harder to get money, and we went to the Bush and
Clinton Administrations, and the others, but that is a very,
very small amount of money. So as you have suggested--
The Chairman. I appreciate that, and you said we should
find some institutions that think they ought to--two that come
to my mind are Freddie Mac and Fannie Mae, and what they think
they ought to be able to do ought to be in law. I hope we will
go forward with that.
The numbers you give, reassure me that is money that can be
strategically--that it would leverage the money and we will be
looking for input from many of you because the gentleman from
California has correctly said that we now have to focus on how
it is spent and how it is done appropriately. We will be
looking at that.
I am going to yield at this time and recognize the ranking
member.
Mr. Bachus. I thank the chairman.
What the chairman is talking about is a housing fund that
he has proposed under the GSE bill, the funding for the first 2
or 2\1/2\ years would go to Katrina rebuilding; Katrina housing
is what he is referring to.
Let me just say one thing. Reading your testimony, it was
all very interesting.
Ms. Crowley, one thing I noticed is that we have heard a
lot about practice, the parity of funding between Mississippi
and Louisiana, but one thing you mentioned, I don't know if you
mentioned this in your oral or written testimony, you said that
Texas sustained direct damage from Hurricane Rita and sustained
more Katrina evacuees than any other State. So far, Texas has
received only 3 percent of housing funds. So in your estimate,
Texas was not treated fairly.
Ms. Crowley. I don't think Texas was treated fairly at all.
I think that both the damage that was done by Rita but also the
enormous burden that Texans took on as the result of the
evacuation was extremely expensive and the reality is that many
of those folks who evacuated to Texas are going to stay there.
The polling data that has been done with evacuees in Texas
generally show that about half of the folks want to stay and
the other half want to return home. That may or may not be
their sentiment today; it was at the moment of the instance.
And housing needs in Texas need to be dealt with as well.
One of the things about--the important things about the
affordable funds in the housing bill, in the GSE bill, is that
it would go directly to States whose housing markets were
impacted by Hurricane Katrina. So some of that money could go
to Texas, and I think that would be an important part of
whatever distribution system was developed for that.
Mr. Bachus. Thank you. I would say the only response I
would give is that the magnitude in Louisiana just engulfs all.
In Alabama, we lost homes, but when it is a small hurricane,
the economy bounces back fairly quickly and this just in
Louisiana, and I think Dr. Richardson, your testimony, this is
something that occurs about once every 100 years. That we are
dealing with a totally different animal, not only in size but
in character.
Mr. Richardson. Katrina was not your normal everyday
hurricane, and I am not sure we have ever had to respond to
one, at least in our lifetimes. It has been probably 100 years
since we have had a storm like this, and there is no doubt
that, to a certain extent, it overwhelmed our institutions,
Federal, State, and local. And we are now trying to learn from
it. This was not a catastrophe; it was a megacatastrophe. I
think, as a country, we need to know how to learn how to deal
with it more appropriately, more quickly, and more effectively.
Mr. Bachus. You mentioned the refugees--I am sorry, the
evacuees, still in Texas, some may want to return, some may
not; of course it depends on their job situation. They may want
to return but there are no jobs in New Orleans. So do they want
to return or do they not? I mean it is a--I'm not sure how you
would categorize someone who has a job in Texas and not in New
Orleans so they don't want to return.
Mr. Richardson. In New Orleans right now, you find ``help
wanted'' signs every place. In Baton Rouge, throughout the
south part of Louisiana, there is not an issue of jobs that are
available. The issue is that workers are not available simply
because of the shortage of housing, and shortage of other
things, too. Other people live in other cities and they have
accepted that.
Mr. Bachus. That leads to another point. I have heard the
question posed, is it the chicken or the egg? You know, did
the--is it housing or is it jobs? So actually what you are
saying is that it is housing.
Mr. Richardson. The jobs are there. It may not be the job
that they had exactly, but the jobs are there in terms of, we
talked to the people, and talked to the businesses; they need
workers.
Mr. Bachus. I will ask the whole panel. Has there been any
survey or study done of the number of residents who were
displaced and have not returned? What percentage of them want
to come back and how many of them have made a decision to
permanently relocate?
Mr. Mehreteab. My answer is not scientific, but as I have
indicated to the committee, we had 952 units that were
destroyed. Our property management informs me at least 85
percent of our residents would like to come back. Again, that
is not a scientific answer, but based on the 952 units we own,
and they were all destroyed in New Orleans and Jefferson
Parish, 85 percent of the people continue to call and want to
return. We have not heard from the other 15 percent, and today,
5 percent of the people are all over the country. Again, that
is not scientific.
Mr. Bachus. Mr. Bright.
Mr. Bright. This was in response to an earlier question on
the multiplier effect. I think one thing is that they have
these housing agencies around the country, and in Louisiana
there is NOMA, as a multiplier effect. There is an institution
that is a government institution that works with the private
sector. So, for instance, anybody can originate their loans,
and if as a multiplier effect, you could direct some extra
money to that institution that is already working that deals
with big numbers, I think that would be something that would
give you a multiplier effect and it goes for low- to moderate-
income.
Mr. Bachus. You say if we directed funding or if we decided
to address the lack of affordable housing or the lack of homes,
housing in the New Orleans metropolitan area, that that would
be a way to approach it?
Mr. Bright. If the interest rate on a 30-year mortgage is 6
percent, the LFHA might be 5 percent. So you could maybe do
something where you put some of these CBDG moneys where you
could address the high percentage rates possibly or go towards
construction loans or something like that, and then maybe offer
even a 5 percent or a 4 percent and it would not cost, in the
grand scheme of the numbers that I am hearing around here, it
would not be as costly. I mean, $100 million, that is a big
number to do a lot of work.
Ms. Crowley. On your question about polls. I just--there
have been some policies and I have here, a Zogby poll that was
done for the City of Houston and in 2006--
The Chairman. How did Mr. Green do in that poll?
Ms. Crowley. And at this point they were talking to
evacuees from both Katrina and Rita and 58 percent intended to
stay in the Houston area. Now having said that, I think that it
would be money well spent if we did two things. One is do a
representative survey of all of the HUD-assisted households who
have been displaced, and HUD says there are 32,000 of them. I
am concerned that Mr. Bernardi is saying only 12,000 are still
getting disaster vouchers. I don't know what else they are
getting. The last we were told was that 22,000 were getting
disaster vouchers. So they know where they are.
And all of this notion about the future of public and
assisted housing needs to be done with some scientific
understanding about what it is that the residents' intentions
are, and we could do--very easily do a good survey that would
represent those folks.
In terms of the broader population, we have no good data
about what their intentions are and what their current
situations are, how they are faring, and it is a real lack in
terms of being able to do effective planning.
The Chairman. I did want to say this. Frankly, I think the
likelihood of our being able to get nearly back to where we
used to be is so slight that we are not going to run out of
people who want to come back. I mean, sadly, the percentage of
people who want to come back, I am afraid, may be academic. We
will be doing well to allow even half of them to return. We are
going to work very hard to do that. And I think that is the
reality that we will almost certainly wind up with--more people
who want to return than we can accommodate.
The gentlewoman from California.
Ms. Waters. Thank you very much. I have several questions
here.
Let me start with Ms. Crowley. Ms. Crowley, you had some
very direct suggestions about what to do with public housing.
Have you been in interaction with the advocacy project, the
lawyers who are representing the tenants? Has there been any
discussion with them about some of this things you see, and do
they make good sense?
Ms. Crowley. I had a discussion with Judith Browne about it
several months ago, but have not had a discussion with her
recently. I have been following what they have been doing with
reports from other folks but not direct discussions.
Ms. Waters. In your recommendations, you did not recommend
phased development at any of these public housing projects; is
that correct?
Ms. Crowley. We have recommendations about New Orleans
public housing, in particular it is about all public housing in
the Gulf. The recommendations are that if it can be repaired,
it should be reopened. If it cannot be repaired, then it must
be redeveloped. We should do it on a one-for-one replacement
basis, and there should be an absolute right to return.
The rub is who determines what is repair and what is
redevelopment, and I am not sure that we will know the truth
about that because there are competing experts, now, with
opinions about that.
Ms. Waters. When you are talking about a development, say,
like Saint Bernard with all of the units, I don't know how
many, in their 1,400 units or so, are you talking about some
parts of it, or are you talking about all of it? Obviously,
there may be different levels of disrepair. Are you suggesting
that some of it should be saved if it can be, if other units
cannot because they are in terrible disrepair, or are you
talking about if there are enough units that are in good repair
that you save the whole project?
Ms. Crowley. I think it depends on the particular building.
But let me just say that I think it is a mistake to say well,
there are 30 units in a building and 5 of them are habitable.
So I am going to let folks move into those 5 because then you
have 25 vacant apartments that are serious problems. So I don't
think that is a community. I don't think that is an answer.
I think it has to do with the configuration, and if you
can--you can pick a particular building that is not as damaged
as another and bring that back and move folks into that, the
notion that people can go back to their own units, if the units
are scattered all over the place, I think, is not realistic.
Ms. Waters. You mentioned a moratorium. That kind of
conflicts with what you are describing now.
Ms. Crowley. No. The moratorium is on demolition of the
public housing in the Gulf that is currently occupied. Anything
that is occupied should be continued to be occupied until we
have solved the other problems. We don't need to do any
demolition plans on anything that is occupied. There is
discussion about--
Ms. Waters. We have public housing developments where you
have partial occupation. You have units that were boarded up
before Hurricane Katrina and Rita and you have units that have
been vacated, and you have units where you may have a few
people. What do you do with that?
Ms. Crowley. I think that is a very dangerous situation for
the people who are there. And I think that it is really
important to figure out what the best choice is for those
folks.
On the issue of the moratorium, let me say that part of the
impetus for that is the discussion for public housing in
Mississippi that was not even damaged in the hurricane which--
where people never even evacuated, where those housing
authorities were proceeding with demolition plans as if the
hurricane had never happened. So we don't want that to be the
case.
When it comes to New Orleans, and I have been to all of the
public housing in New Orleans; I have been to visit all of it.
And I think you have to answer it on a case-by-case basis.
Ms. Waters. Mr. Mehreteab, you are developing 1,000 units
in Louisiana, is it?
Mr. Mehreteab. Yes. In New Orleans--Jefferson Parish and a
place called Saint Charles.
Ms. Waters. Did you have a difficult time doing the land
packaging on that to be able to develop those units?
Mr. Mehreteab. Some of those we already owned that were
destroyed. Some years we had some putting the one acquisition
in the new places.
What we did, Congresswoman, I mentioned to you that we had
four properties that were destroyed. One was in New Orleans off
I-10, and we decided to completely demolish that building, so
we are starting from scratch. Another was in Algiers. That one
was 100 percent destroyed, but we were able to maintain the
structure. And the last one was in Jefferson County. But we did
have difficulties; I don't want to give the impression that
this was an easy process.
Ms. Waters. No. You have indicated pretty well that the
financing is complicated and you seem to suggest that no
private contractor coming in to build low- and moderate-income
housing can do it without subsidies and grants, and the mix
that you put together seemed pretty extensive and complicated.
And are you basically saying that is the way it has to be done?
Mr. Mehreteab. Well, our trip objective is to provide
quality housing, but also to maintain our rents. Our rents
range between $130 to $820 a month, and the average cost to buy
is $100,000. Tax credit alone and community development grants
alone would not cover those costs. So, as I have indicated, we
went to at least six or seven different financing sources.
You may recall, Congresswoman, I came to your district with
Mrs. Shockley many years ago.
Ms. Waters. I can't remember those things, I am so old.
Were you there?
Mr. Mehreteab. Yes, I was.
Ms. Waters. How many years ago?
Mr. Mehreteab. Right after you took office.
Ms. Waters. In 1991?
Mr. Mehreteab. 1987 or so.
Ms. Waters. I don't remember.
Mr. Perry, your work has not been unnoticed, and I was just
talking with my staff, as I did recall your testimony about the
zoning and the disabled and other kinds of issues that you have
brought to our attention, and I am asking my staff as we look
toward developing comprehensive legislation to deal with some
of these problems, how can we can we make sure that Federal
money cannot be used in jurisdictions that are proven to be
discriminatory? Some of the issues that you have raised, like
the zoning, we may not have the answers for, but we are
listening. We do have an opportunity to provide leadership on
these issues now, and I will certainly pay attention.
Mr. Perry. I didn't mean to imply that you weren't paying
attention. As a matter of fact, when the issue came up with
Saint Bernard Parish, I was immediately contacted by members of
your and Representative Frank's staff, and they worked with us
on that issue. So we know that the commitment is there, and we
look forward to working with you in the future to ensure fair
housing on the Gulf Coast.
Ms. Waters. Thank you very much.
Let us see who is next. Mr. Green.
Mr. Green. Thank you, Madam Chairwoman.
Mr. Tate, you indicated in your testimony that the
landlords had no recourse for damages suffered. Could you
please give us the categories of damage? You might not be able
to give us a dollar amount, but give us a category of damages
and indicate whether or not there can be computed some estimate
as to what the amount of damages are, whether you can give me
that number now or not. I am just curious as to whether there
is a methodology at which you can arrive at a number.
Mr. Tate. There are different types of damages that
apartment owners sustained. Actual damages done to the
sheetrock, carpet, etc. Damages of appliances being taken. And
then the actual rent loss damage. How did we have rent loss
damage? Let me explain that as we go through the course of the
termination notices coming from FEMA that we are going to stop
paying and recertify violation.
There were a lot of people who failed to recertify. Whether
they were eligible to recertify or not are two different
questions. But the fact is that rent stopped being paid for
those people.
And those folks had really nowhere to go. They remained in
the apartment. And after trying to work with these folks,
trying to communicate with FEMA, and communicate with the City
of Houston, once it was determined that no rent would be coming
to these folks, apartment owners were then forced to do
something they really didn't want to do and that was to file an
eviction in the local JB court, and they would file the
eviction. Eventually the day would come and they would appear
in court and either be granted an eviction some weeks later, or
that particular resident would be represented by free legal aid
that would then file either an appeal or file a property
affidavit again extending the period of time another 30 days
before another hearing and attempt to have the apartment
vacated.
So in many instances, the apartment remained occupied with
no rent being paid on it for as much as 90 days after the rent
ceased.
Mr. Green. Having been president of the Houston Apartment
Association, is there a means by which you can calculate some
estimate of what these damages are?
Mr. Tate. Most apartment management companies and
operators, when an apartment finally is vacated, they will
complete what is done as a security deposit disposition report.
Because normally we have 30 days in which to refund a security
deposit or apply charges against it.
Mr. Green. Is the answer yes to this one because I--
Mr. Tate. Yes.
Mr. Green. Mr. Perry, sir, you indicated that housing
discrimination still exists. What about with reference to
language in terms of the Asian community? Did you encounter
housing discrimination not only with the ethnicity but also
with the language, and if you could be brief with that. I have
one follow-up.
Mr. Perry. You know, I think it is happening, but I will be
quite honest that our organization was not as prepared as we
would have liked to have been for people who don't speak
English. That is one of the ways that our organization has had
to grow over the last several months post-hurricane. For
example, we have had a great influx of Latinos in New Orleans,
so we have to grow to learn how to assist that population.
Mr. Green. Would it assist you in acquiring empirical data
to have access to what is called testing? Are you familiar with
testing?
Mr. Perry. You know, it is the most important thing that we
use. I would say in a few months, we are probably going to have
a press release about several big cases where we found cases
discriminated based on race and the fact that they have
children. The only way we were able to find discrimination was
through testing. And we did about 30 tests last week, and in
the majority of those tests, we found discrimination.
Mr. Green. Mr. Chairman, if I may, I have before me a
report from Fair Housing, the National Low Income Housing
Coalition, that addresses the deficit of affordable housing
units available in the Gulf Coast area. May I submit this for
the record please, if there is no objection?
The Chairman. Without objection.
Mr. Green. I yield back the balance of my time.
Thank you.
The Chairman. Mr. Baker.
Mr. Baker. I would like to address this to you, Professor.
Relative to your commission's observations and the necessity of
housing first, as I understood your presentation, the average
home, number of homes constructed in the State over the past
decade has averaged something in excess of 13,000 but that is a
statewide number. Do you have any tab that tells you what that
number looked like in the New Orleans metro area before the
storm?
Mr. Richardson. In the New Orleans area, it would be 30 to
35 percent of that.
Mr. Baker. In your normal recovery efforts, that would take
using the 15,000 figure, you are really looking at decades if
you take the traditional historic construction norm pre-Katrina
for the Orleans metro area.
Mr. Richardson. If you take that number, you are looking at
40 years.
Mr. Baker. Obviously a time horizon which is not acceptable
to most us of us.
I am also correct that there are speculators in the market
who are buying up distressed properties where they can get a
particularly attractive price on a good corner or a very nice
private residence. I spoke with a fellow in the Baton Rouge
Airport just this week who was a former New Orleanean, and who
lived in Lake View, who had not only relocated his residence
but his significant business to the Baton Rouge area and did
not have an intent to go back. He had sold his home to such a
speculator. And he is a very sophisticated smart business
person, but he had bailed out. My concern going forward is not
just the slow pace of recovery if we resume the normal historic
development rate but that, with the advent of speculative
interests now in the market who don't have any particular
interest in doing anything but holding, that is also going to
be an additional drag on the recovery.
Further, in talking with business communities' leaders in
the Orleans area, there are several prominent restaurants which
are having trouble because they don't have customers. It is no
longer a question of not having staff. They don't have people
coming through the front doors to pay the bills. So we really
do have a need for the restoration of affordable housing, but
we need to have a more economically broadbased plan than just
addressing the shortfall and affordable housing if the historic
nature of this city is ever going to recover. It really needs
to be a small business-homeowner-affordable housing endeavor
with the addition of essential public services. You are not
going to move into a new subdivision if there are no policemen
or firemen or schools.
To date, I don't think there has been any plan developed or
talked about on any scale, whether it is a single community or
a stormwide imprint that encompasses all of those elements.
Isn't that really what is needed now rather than the Road Home
alone?
Mr. Richardson. Yes. Congressman Baker, you mentioned a
number of items that are all very important. In an ideal world,
we would solve all of these issues simultaneously.
Unfortunately, our world is not ideal all the time. We have to
start someplace, and housing is a place to start.
But you are absolutely correct. In New Orleans right now,
if you look at the employment base and what can come back,
certainly the tourist base, but if they don't come back, those
restaurants you are talking about, the ones that have
complained to you, and complained to me about not having enough
customers throughout the day, they are thinking about closing
down. It would be an enormous shock to that community if
certain restaurants closed down.
Mr. Baker. I think it is across-the-board. I have talked
with a guy who is in a radiator and brake repair business. All
of his employees were back. His house was fine. He didn't have
anybody in his business, and I don't know where he is now. That
was about 4 months ago, but he was at the point of having some
difficulty with his lender over the status of his business
loan. I know you can't do all of it at once, but we at least
ought to be talking about it.
Mr. Richardson. You have to have all of these elements if
you are going to come back to New Orleans. For example, if you
walk around New Orleans, you see different things happening in
different neighborhoods. Gintilly, which is a neighborhood
right by Dillard University, old fashioned New Orleans homes,
middle income, lower-middle income families, you see more
trailers per block in that neighborhood because those people
are back working on their homes themselves.
You go to Big City, which is down from Canal Street--
Mr. Baker. If I may, I don't mean to cut you off. I am out
of time, but one other further observation, if we were to
select an area and go in and do the kind of multi-family mixed
use development where we brought in the affordable housing,
some commercial sites reserved for the bakery, the dry-cleaner,
some middle income housing, that is the kind of mixed use pilot
that would offer a great deal of hope for people out of all of
this despair to see a few city blocks to recover would be
enormously helpful.
Mr. Richardson. I think that would be one of the barometers
we are moving. Right now, it doesn't look like we are moving.
We need a barometer.
The Chairman. I thank the gentleman, and because we had we
had two Democrats in a row, we will now go to Mr. Roskam.
Mr. Roskam. Thank you, Mr. Chairman.
Mr. Tate, just a quick question. The membership that you
represent, you raise the issue of concern about damages. But
has your membership made money off of the rents and so forth? I
mean, the bottom line figure, are you in the black or in the
red based on--
Mr. Tate. Certainly, some apartment communities may have
fared well; at least two corporations came and took lots of
apartments. I know of a property that went through the court of
appeals and that worked out okay. But the majority of the
apartments that were leased by the City of Houston are
contracted, so no, they did not fare well. They spent millions
of dollars. I understand that right before the folks arrived in
Houston, they were coming from Louisiana.
We had to prepare almost 40,000 units. We spent millions of
dollars on vendors--painters, carpet shampooers, and cleaners.
We had to get all of these apartments ready for these folks to
move in because they are not always ready sitting there vacant
and ready. So we spent a lot of money getting them ready. We
moved people in, and in some cases, they were there a short
period of time, maybe 2 months, maybe 3 months, maybe they were
there for a longer period of time. But then they left, and we
still have about 14,000 left.
So about 22,000 have vacated. I dare say that of the
22,000, very few of them were left in a condition that we could
lease them again without spending a lot of money to have those
apartments prepared again for another move-in.
Mr. Roskam. Was it primarily the damage issue, or was there
something else, or is the difficulty really the damage
situation?
Mr. Tate. The difficulty is the damage and the amount of
time that it took to receive the rent. When we first started
moving people in, in September and October, rental payments did
not start coming to these properties until December or January.
Mr. Roskam. Did they make it? In other words, did the right
amount eventually arrive so you lost the value of that money?
Mr. Tate. Right. Lost.
Mr. Roskam. So you lost the value of the money in the
interim. In other words, you lost the value of those dollars,
your control over those dollars in the interim but eventually
the right amount showed up?
Mr. Tate. In most cases, the right amount showed up and we
were finally able to pay all of the shampooers and the painters
and the folks who cleaned the apartments back in September and
October. We weren't able to pay them until almost January or
February. They were small business owners that operate.
Mr. Roskam. Mr. Bright, just a quick question.
Well, what you described was really fascinating to me. The
idea that very low default rates in this whole situation, was
that intentional? I mean, did everybody--is this like the scene
in, ``It's a Wonderful Life'', you know, when George Bailey
gets what is going on and nobody panics and everybody says,
``Okay, let's not sell to Mr. Potter.'' Did everybody in the
industry say, ``Look, if this all goes, this implodes into a
financial sinkhole and we are all losers here, so let us be
good to one another and go very, very slowly.'' Is that
essentially what happened or was there something--in other
words, are you guys this good?
Mr. Bright. Well, it is a terrible disaster, so you don't
want to say that.
Mr. Roskam. In terms of the response.
Mr. Bright. I believe that it really did work well. By us
giving this foreclosure, by not having any foreclosures it did
two things: Number one, if you had foreclosed on all of these
properties, it probably would have driven the values of
properties down. It could have gotten into a vicious circle of
property values going down, down, down.
And then secondly, it gave people a chance to get back on
their feet, namely there is this thing called forbearance, and
really, government officials or whatever people said let us
give mortgage holders forbearance.
Mr. Roskam. Is forbearance a term of art?
The Chairman. Yes.
Mr. Bright. It is a term of art.
The Chairman. Yes, in the sense that it is a specific weak
term with legal meaning, and in fact earlier today I released a
letter that we received yesterday from the five bank
regulators, the credit union, the Federal Reserve that controls
the currency, and the FDIC and OTS, reiterating their
encouragement to the lenders to show forbearance.
Mr. Roskam. So they will not hammer--
The Chairman. Right. As long as we talk about an ultimate
path to repayment, they will not in any way penalize people who
go out, stretch out, and forbearance in that specific--
Mr. Roskam. Okay.
Mr. Bright. If you will, I would like to go down that road
a little bit. What it means is, what was done is, people were
told that they did not have to make their mortgage payments, so
it first went on for 90 days. We still have people who are not
making their mortgage payments, 18 months later, or whatever it
is. Now, for the financial system in the United States to work,
there are bondholders that own these bonds, and those people
have to get their payments. So it is like we are a private
company and you had certain people say don't charge--don't make
people make their payments, but we have to forward the tax and
interest to the bondholders, specifically in the FHA program.
We were required to do that.
So in our case, we are having to front, you know, on a
$100,000 loan which we make $250 a year on, we are having to
front about $10,000, I think is what we figured--$12,000 say a
year to--now, we eventually hopefully will get the money back,
but in the case of FHA loans--now this only occurs when you
foreclose on someone, and you can see there has practically
been no foreclosures taking place in Louisiana for the reasons
that I was just talking about. But at some point you are going
to have to foreclose on people; namely, you have to dispose of
the property. You have to come up with something to do with the
property. Right now the borrower still owns it. So in the case
of FHA--and this is just something that does not work in the
case of Fannie Mae and Freddie Mac. They do things a little bit
differently. But in the case of FHA, when we foreclose on the
borrower, and the borrower may not have applied for the Road
Home money. They would have been eligible for the Road Home
money, but they didn't apply for it for whatever reason, so
they are distraught, for whatever reason. A lender can't apply
for the Road Home money, but we now need to foreclose, in the
FHA case. We have to bring the property value back up to its
usable condition before you can convey that property to the
FHA, and in order to do that--you have heard all this
description of how the properties have laid fallow and things
like that, it will take just it is--you could lose--if the
house was worth $100,000, it might be worth, you know,
Congressman Baker would know, but maybe it is only worth
$20,000 for the lot. So the lender would have to take a hit.
The Chairman. We are running out of time. I just will say
two things. I believe it may have been Mr. Miller of California
who brought that particular FHA issue to our attention, and
that is something fixable by us and it is statutory, you
understand. We make the laws. So that is a law, and if the FHA
is imposing a requirement that is not right, we can change that
requirement. You are shaking your head.
Mr. Bright. It would be a huge benefit.
The Chairman. But I need to encourage people--it is true,
if you are in court, or you are elsewhere, the law is a fact of
life that you have to confront. We change laws, that is our
job, so if there is a rigidity in the FHA, and in fact I
believe we are already talking about that issue, we can give
authority--not as a blanket matter but in these kinds of
situations to deal with it. So the other thing I would say is
this, with regard to Fannie Mae and Freddie Mac, and it is part
of another argument that Fannie Mae and Freddie Mac have been
able to show some forbearance if they haven't securitized the
mortgage. That is, for mortgages that are still held in Fannie
Mae and Freddie Mac's portfolio, we have asked them to show
some forbearance. If they have sold it into the secondary
market, they are in the same shape you are in, where they have
obligations and therefore that can't be done.
Mr. Bright. At least in that case, it is Fannie Mae and
Freddie Mac's obligation, and not my obligation.
The Chairman. I don't mean to--but that particular
perspective is not the one we take in public policy. I
understand your concern. We have to look a little bit more
broadly.
Mr. Perry, and then we will move on.
Mr. Perry. Just really quickly, I agree for the most part
with Mr. Bright, but I would note that there is one segment of
the lending population that hasn't done as good of a job, and
that is with respect to subprime lenders. My organization has a
hurricane relief project where we work with people who have
difficulty with their loans and we have seen significant
problems in the subprime market, particularly people who have
predatory loans, and there is one loan in particular, it is the
228 loan.
The Chairman. We appreciate that. We will be dealing
separately with the question of predatory loans.
The gentlewoman from Wisconsin. If you want to talk, go
ahead.
Ms. Moore of Wisconsin. I am stunned that I get a chance to
talk. How are you? This is such a distinguished panel. I just
want to thank the chairman and the subcommittee chairwoman for
amassing this particular panel because I think it really has
given me a picture, a complete picture of some things that are
happening in New Orleans. I have listened very carefully and
what the picture that is emerging--I guess I just want to throw
this out and ask you what you think of it. It seems to me that
we are looking at--one of the 800-pound gorilla that is in the
room is--and I don't see it reflected in any of the testimony,
is the actual environment and what portions of New Orleans can
actually be rebuilt.
Secondly, you have talked about the high labor costs that
exist for rebuilding New Orleans and of course that provides a
difficulty in financing for the creation of low-income
housing--I think Mr. Mehreteab--I am sorry if I mispronounce
your name--that you have had to use a lot of creative financing
to pull together more financing. I think Ms. Crowley talked
about the fact that there is so much deferred maintenance on
public housing in the first place, hidden in there with public
housing, and there is a question about what you can rebuild and
what you can't rebuild and what the costs of that will be. I
think Mr. Bright talked about the tremendous effort that has
been made on the part of the mortgage bankers to forbear and
their touting a pristine record of really not that many
foreclosures, which I think speaks of the particular class of
people. These are homeowners that you are dealing with, and I
think Mr. Perry made the distinction that these are not
homeowners at the lower end of the income spectrum necessarily.
Dr. Richardson's research talked about the economic factors,
the fact that you were attracting a different kind of labor
force to New Orleans, and of course I am so sorry that the
gentleman from the rental organization had to leave, but I do
think that we have seen rents in the New Orleans area
skyrocket, and I guess I say all that to say, are we looking at
rebuilding a New Orleans that is going to be populated by the
survival of the fittest? Are we going to build a New Orleans
that really is going to be a middle class population?
I am concerned. That is a question that I have pondered
previously, but after hearing this panel I just want, I guess,
your reaction to what we could do to make sure that there is
some economic and class mixture in a rebuilt New Orleans. Thank
you for your--
Mr. Mehreteab. May I make a comment? Congresswoman, you
asked me a question, and I probably didn't give you a full
answer. Sure, we can build housing for $100,000 very easily,
actually the cost ranges between $80,000 to $150,000, depending
on the location. The question becomes how much of that money
can we finance if we are to serve low- and moderate-income
families. That is the key. The higher subsidy we have, the
lesser rate we could charge. Exactly what you said,
Congresswoman, you are right. I felt the way community
development broke down in the low-income housing tax credit
structure right now is simply to serve people who make below 60
percent of the median income. However, how that translates in
New Orleans is that will be an average of $600 a year. That is
a lot of money. What we are shooting for or what we are hoping
to do is to decrease that to $400 or $300. In order to do that,
one needs to close the financing gap, either from what the
chairman has suggested, we need a huge capital infusion from
the two big entities or others or we have to come out with
something. But as it stands right now, if everything is to be
the way it is with low-income housing tax credit and the
community development programs, will only be serving a higher
income of families. But the goal of the NHP Foundation is not
simply to serve what had been called the moderate income. We
really want to serve lower income people. If we want to do
that, we are going to need what I have referred to as the
financing gap, the infusion that Congressman Frank has been
talking about.
I don't think there is anybody--well, there might be very
few people, the way that lid is very clearly understood by the
chairman. When he talks about $500- or $700 million he is
absolutely right. That difference, which could represent
anywhere between 5 to 10 percent, will make a tremendous impact
in lowering the rents from $600 to $400, or from $400 to $200 a
month.
The Chairman. Ms. Crowley will be the last one.
Ms. Crowley. I think your question is absolutely imperative
for us to get to the bottom of, and that the resources that
have been dedicated to date to housing for the Gulf Coast, in
New Orleans in particular, do not in any way, shape, or form
provide enough to, or any for that matter, to get to the
lowest-income people. The tax credit income targeting is
higher. The CDBG income targeting is pretty high and the
Secretary can waive the income targeting requirements if the
State of Louisiana asks for it. He has already waived the
income targeting requirements in Mississippi. And the design of
the Road Home Program for what they call the piggyback program
was to put CDBG dollars into subsidizing and operating or
capitalizing an operating subsidy for tax credit properties
going forward at and doing some of those at 20 percent, 30
percent through some mix of that. The reality is that a lot of
the CDBG money has had to now be spent on gap financing because
the cost of construction is so much higher.
So even that program, which we think was very ill-
conceived, will not have the funds that is required to be able
to create the operating subsidy. It is essential that we put
more project-based Section 8 vouchers into New Orleans and into
the Gulf Coast. We urged that in the first go-around in the
supplemental. We looked at it in the second go-around of the
supplemental. It is still within your power to do that, and
that is the single most important tool to make sure that any
housing that is developed is affordable to the people that you
are talking about.
The second thing is that the affordable housing fund in the
GSE bill will provide money that will be for the construction
of housing that is affordable to that income group. The project
Section 8 vouchers will provide the operating subsidy.
And the third thing I want to say is that the importance of
public housing in New Orleans, with all, with complete respect
for how people feel about their individual buildings, is that
going forward for the future of New Orleans and for the future
of low-income people in that community is that we not lose the
subsidy that is attached to each one of those units, and that
the subsidy continues so that eventually when one family is
moving out of public housing, there is still a subsidy there so
another low-income family can move in. And that is--we need to
keep our eye on that ball as we move forward on redevelopment,
and as important as the structures are, that is the essential
thing that we need to understand about the future of housing in
New Orleans for very-low-income people.
The Chairman. The gentleman from Missouri.
Mr. Clay. Thank you, Mr. Chairman. I will be brief. I have
one question for the entire panel, for anyone who wants to give
me a reaction, you are welcome to. I am just curious as to the
response you have gotten from State and local elected officials
in Louisiana as far as Governor Blanco, I understand, was here
today, went and had a meeting with our caucus but felt--did not
want to come here. Tell me about your experiences with the City
of New Orleans, with the Mayor in particular, with the State
legislators, and with the City Council people. Does anybody
have a reaction to that? Could you share with us what kind of
cooperation you have gotten?
Mr. Perry, you look like you may want to start off.
Mr. Perry. You know, one of the most difficult barriers
that we have had is dealing with local government, particularly
in Jefferson Parish. After there were so many tax credits
allotted to the Louisiana area, a councilman in the Jefferson
Parish said all low-income people were ignorant and lazy and
therefore we don't want tax credits in Jefferson Parish, and so
as courageous as it was for the money to have been allotted in
the form of the credits it made it almost impossible to use the
credits in the parish, and so he, working with the Council,
passed a resolution asking for the credits to not be used in
the parish, and I think that is a great example.
The second example is in Saint Bernard Parish where, as I
mentioned before, the Parish passed an ordinance that said that
you cannot rent your single family home to someone that you are
not related to. As I mentioned earlier, 93 percent of the
people in the Parish are white, so it made it almost impossible
for minorities to rent homes in the parish. And we see this
kind of--and I can give you a very long list of circumstances
where in parishes the government has worked I think, in a way,
that makes it very difficult, if not impossible, for low-income
people to return, and I would add that it has made it very
difficult, if not impossible, for minorities to return and I
think that your question is dead on, that government has played
a very big role, particularly local and State government have
played a very big role.
Mr. Clay. Thank you.
Mr. Bright. I would like to relay a story and try to do it
quickly. I was flooded, and lots of people were flooded, and I
evacuated to Atlanta, and took my family there. We went to a
school, and my kids go to a private school, so I was going to
pay some money--and I sent my youngest to a public school and
my two oldest to a private school, but anyway, as we moved back
to New Orleans, we wanted to pay--give something to the Atlanta
people because they took us in, didn't charge us anything, were
so nice to us, so we come back and we gave a little gift to
that school. Two weeks ago these Atlanta people came down, they
brought 16 kids and 4 teachers, including the head of the
school, the head of the school got up at 4:00 in the morning--
The Chairman. You have to move this quicker.
Mr. Bright. --4:00 in the morning Friday, worked alongside
us in Lakewood and we helped build houses, okay, only one out
of six homes, one out of five homes in Lakewood, which is a
nice neighborhood and all, are people moving back there, and it
is because they don't have--I think the government--they still
need to get electricity in there. They still need to get
services in there and stuff. I think people want to help us.
And I appreciate that all of you are here, but we need the
government to just do its job.
The Chairman. The gentleman yields back. I thank the panel.
I really appreciate everybody's patience. We will take our last
panel now.
Oh, Mrs. Biggert, did you have any questions? I apologize.
Mrs. Biggert, please be seated. The Chair was in error. Mrs.
Biggert has questions.
Mrs. Biggert. Sorry. I will be brief, and this is really, I
think, to address to--
The Chairman. The gentlewoman is entitled to her time.
Please don't feel rushed.
Mrs. Biggert. Okay. When you are planning for rebuilding,
sometimes it seems like the chicken and the egg scenario. You
can't rebuild the housing communities without jobs and services
but the jobs and services won't come until there is adequate
housing. So how would you solve this problem, and with
balancing the need for a solid middle class and the desire for
lower income families to return?
Mr. Mehreteab. Is that question addressed to me?
Mrs. Biggert. Yes.
Mr. Mehreteab. I guess I am the only person here who is
building housing. Out of our 1,000 units, we are trying to be
as diverse as possible. One of our properties, which is off I-
10, Walnut Square, used to be 284 units, but we had to destroy
it because of damage from Katrina. We are rebuilding it and
converting it into 208 units of mixed income, one-third very-
low-income, one-third moderate-income and one-third market
rate.
The other 600 units are what we call, ``below 60 percent of
median income.'' Two of our properties, totaling 126 units
outside of Lake Charles and Ponchatoula, are single family
homes that will be converted to homeownership.
So Congresswoman, our strategy is to have housing that is
as diverse as possible; A, it is good for our portfolio and, B,
we will also be responding to the demands of the community.
Mrs. Biggert. And how long will this take?
Mr. Mehreteab. The first occupancy for our property address
in New Orleans will be in May, this May, and it will be, I
would say, between 12 to 18 months from where we are today.
Mrs. Biggert. Okay. So then would the jobs and the services
follow?
Mr. Mehreteab. Well, when you are a developer, be it a
nonprofit like us, or a for-profit, there is a sense of having
to be optimistic, so we have to be optimistic. The fact that
there is so much demand and the fact that there are so many
people commuting from outside New Orleans, and I am sure the
Congressman will know better, gives me the optimism that in
fact we will not have people filling our units.
Mrs. Biggert. Thank you. I yield back.
The Chairman. We will call the next panel. We will now
excuse the panel, and I appreciate it. And as the next panel
comes in, I am sorry this is taking a lot of time, people, but
I have to tell you, we have been talking amongst ourselves. You
can leave. I won't be offended. And you should leave. I want to
make sure everybody that has been here--seriously, get out of
here because the next panel has to sit there, evacuate. Mr.
Green will take you home to Houston. But I do want to be--we
have been talking amongst ourselves. This has been extremely
useful in our formulating some very specific things we think we
can do to aid this process. So I do really appreciate what
everybody has been doing here.
The next panel, please be seated. Let's move quickly here,
people. We will begin, and I will just call on people as we get
settled.
Doris Koo is president and CEO of the Enterprise Community
Partners. Please, Ms. Koo.
STATEMENT OF DORIS W. KOO, PRESIDENT AND CEO, ENTERPRISE
COMMUNITY PARTNERS
Ms. Koo. Thank you, Chairman Frank, Subcommittee Chairwoman
Waters, Ranking Member Biggert, and distinguished members of
the Financial Services Committee, for the opportunity to speak
before you today. My name is Doris Koo, and I am president and
CEO of Enterprise Community Partners.
Enterprise is a national organization founded in 1982. We
have worked with thousands of nonprofit partners, local
governments, financial institutions, and private corporations
to develop over 200,000 affordable homes and invested $7
billion in communities across the Nation. Right after the
storms of 2005, Enterprise made a long-term commitment to help
the residents of the Gulf Coast rebuild. We committed to
providing $200 million in investment to create 10,000
affordable homes.
It has been a long day, so I want to quickly jump to some
principles that will help guide the rebuilding effort in the
Gulf Coast, followed by several policy recommendations. First
it is our experience that affordable housing must never be
built in isolation. We have learned that residents are most
successful in communities with support services, access to
jobs, quality health care, and education and support services.
Second, we have learned that large scale rebuilding such as
that in the Gulf Coast requires public-private partnership.
There is not enough government money to do it all or to do it
right.
Third, time is of the essence. We must maintain the sense
of urgency to meet the compelling needs of our fellow citizens
in the Gulf Coast. Let me give you an example. Before I joined
Enterprise 6 years ago, I was deputy director of the Seattle
Housing Authority, leading four public housing redevelopments.
We relocated thousands of residents but we gave them choices in
support services and guaranteed them the absolute opportunity
to return. We demolished thousands of obsolete public housing
apartments, but we replaced them all, one-for-one, with quality
new affordable homes in thriving mixed income communities. We
leveraged $135 million in Federal grants 5 times over and
attracted more than $600 million in private investments. We
made sure public housing residents got jobs in construction,
groundskeeping, and maintenance throughout the redevelopment,
and helped many of them become homeowners through family self-
sufficiency programs.
Success stories like these have been repeated around the
country, including in HOPE VI communities built or financed by
Enterprise. There is a way to do it right and to do it now, but
it requires all of us working together. This is what we hope to
do at the Lafitte Public Housing Development in New Orleans via
phased development together with our partner, Providence
Community Housing.
So far, we have raised over $12.8 million in low-income tax
credits, which will roughly translate into $100 million in
investment equity for Lafitte, $27 million in CDBG grants, we
conducted charettes and planning sessions with former Lafitte
residents, including meeting with them in Houston. We secured
over 200 offsite properties that can be committed as
replacement homes, and Providence has pledged $2.5 million in
case management support. And through phased redevelopment,
using on- and off-site, we are prepared to build replacement
homes for the Lafitte redevelopment in the Treme neighborhood,
with replacement housing possibly coming online in as early as
within 9 months.
So we have three policy recommendations. First, we must
adopt the principle of comprehensive community development in
the long-term rebuilding of the Gulf Coast region. People can't
and won't return to communities that don't offer quality
education, health care, mental health assistance, recreation,
and out-of-school support for children to keep them safe. This
is true not only for low-income people, but for attracting back
the workforce of teachers, health care professionals,
librarians, carpenters, plumbers, and so many others that the
Gulf Coast needs to rebuild. That is why we work not just to
rebuild or repair what was lost, but to create economically
diverse, healthy, and environmentally sound communities.
Second, we must make affordable housing finance work in the
Gulf Coast by drawing on the best practices from the last 30
years to remove barriers and to solve problems. Many of the
State's policies, including those in the Road Home Program, to
use CDBG for renters and small landlords are sound policies, we
just need to cut the red tape and simplify implementation. We
need to address the very real issues, the rise in insurance
costs, construction, operating costs, aging infrastructure, and
certain needs for Federal subsidies and flood elevation
guidelines. We need to extend the placed-in-service date for
the GO Zone tax credits. We need your leadership to pass
affordable housing fund legislation and target the first
resources to the Gulf Coast, to set up an insurance pool or
other risk mitigation measures to solve some of these very
difficult problems.
Finally, we need to make a commitment to help our most
vulnerable citizens, including the elderly and those living in
public housing, to return. We recommend that HUD and all
housing authorities in the Gulf Coast region, if they have not
yet done so, conduct immediate relocation counseling to every
displaced public housing resident, enabling them to make
choices and offering them the absolute opportunity to come home
to comparable or better housing, paying comparable rents,
consistent with the Federal Uniform Relocation Act. We
recommend that HUD and housing authorities commit to one-for-
one replacement of public and all HUD subsidized housing in the
Gulf Coast region, preserving affordability even if we can't
physically preserve existing housing units. This will take
special allocation of resources beyond what we might have
already, but it absolutely can and must be done. And Enterprise
is prepared with our resources and expertise to be part of the
solution to partner with you and all of the good people on the
ground with our collective will to make it so.
Thank you very much.
[The prepared statement of Ms. Koo can be found on page 320
of the appendix.]
The Chairman. Thank you. Next, our return witness Mr.
Derrick Johnson, from the Mississippi Conference of the NAACP,
who had previously testified, I believe, before Ms. Waters. Mr.
Johnson.
STATEMENT OF DERRICK JOHNSON, PRESIDENT, MISSISSIPPI STATE
CONFERENCE NAACP
Mr. Johnson. Good afternoon, and thank you, Chairman Frank
and members of this body, for allowing me to come before you.
My name is Derrick Johnson, and I am the state president for
Mississippi NAACP. I will abbreviate my comments, as you have
my written statement.
NAACP was founded in 1909, and the Mississippi State
Conference NAACP has been active for over 62 years. One of the
things that I want to make clear today is that Mississippi in
many ways is just like New Orleans, we simply have three things
that are different: One, we don't have the large media that the
New Orleans media market have; two, we did not have the
residual flooding; and, three, our Governor had a better public
relations firm than Louisiana's Governor. But otherwise, many
of the issues that exist in New Orleans also exist in
Mississippi.
I am sure you heard of the damage that has taken place, not
only in Mississippi but across the coast, and by every means,
Hurricane Katrina is by far the worst natural disaster in the
State's history. Shortly after Hurricane Katrina made landfall,
the Governor of Mississippi announced the formation of the
Governor's Commission on Recovery, Rebuilding, and Renewal, of
which I was later invited to serve as a Vice Chair. The
Commission's final report to the Governor found among many
things that they recognized the role of personal assets that
enabled people to survive, that recovery is important, and that
the presence or absence of assets and insurance on those assets
would determine who can participate in the long-term building
in south Mississippi. Unfortunately, many individuals who were
most vulnerable before the hurricane are still left out of the
recovery effort in Mississippi. Many of the findings of the
Governor's Commission report fell on deaf ears from the
Executive Branch. The Federal Government appropriated just
under $5.1 billion in CDBG funds, which is an amount that is
greater than the total State budget of the State of
Mississippi. However, those funds were completely administered
by the Executive Branch with no provision for a State or
Federal--under State or Federal law for any oversight or input
from our State legislators.
As a result, there have been numerous concerns raised about
contracts awarded to private companies to administer the CDBG
funds, including questions about a lucrative contract that a
current sitting State Senator received to administrate the CDBG
funds. With the requirements that 70 percent of CDBG funds be
used to benefit primarily low- and moderate-income persons
being waived by the Federal Government, Mississippi
additionally instituted a plan that provided no provision for
home renters and other low-income victims of the storm. The
Executive Branch designed the Hurricane Katrina grant program
exclusively for Gulf Coast homeowners and excluding home
rentals. The program was highly undersubscribed and only about
half of those expected to apply did. Today approximately 10,000
people have received checks amounting to just under $680
million out of the $5.1 billion allocated to the State. Through
ongoing community pressures, however, the Governor, after the
November elections, mind you, decided to implement a Phase II
program that would include more people under the plan, but
still today home renters are completely left out of the
recovery process.
Affordability has emerged as the most prominent threat to
the rebuilding efforts on the Mississippi Gulf Coast. Insurance
is undermining the ability of individuals to rebuild. That has
had an effect of monthly insurance payments increasing some
$200 to $300 per month. Property values have also risen
significantly since the storm, making homeownership less
attainable than prior to the storm. All policies renewed, all
insurance policies renewed and new policies written by the
Mississippi Windstorm Underwriting Association have experienced
a 90 percent increase since October 2006, and I will say, this
is not an insurance committee hearing but this is drastically
affecting the ability for home renters and other low-income
individuals to rebuild because they can no longer afford the
insurance. In fact, even rental units cannot be rebuilt or
repaired because they cannot afford to carry the insurance for
those rental units. And homes valued at $100,000 with $40,000
in contract would jump and yearly premium payments from just
over $1,000 a year to $1,924 in insurance premium payments.
Additionally, homeowners are expected to have hazard insurance
and flood insurance to go on top of that. Renters also face a
unique set of circumstances considering affordable rental units
may not be replaced one-for-one, as this requirement was waived
by the supplemental bill and the 2005 supplemental bill passed
by Congress.
According to FEMA, estimates of nearly 6,000 rental units
were either severely damaged or destroyed, and there is no plan
currently to replace those units. In fact, we have a unit in
Gulfport, Mississippi, that is currently being utilized that
the Section 8 authority that is overseeing it is slated to
demolish those units in which 400 individuals currently reside
and redevelop as a mixed-income development. According to a
2004 apartment survey conducted by the Gulf Coast Regional
Planning Committee, the average rent for a two-bedroom
apartment in Gulfport and in Biloxi was just under $600. Recent
information collected from that same body put those figures now
close to $700 and in many situations out of the range of
Section 8 vouchers so the working poor on the Gulf Coast do not
qualify if they do not have the additional amount to go with
the voucher.
In addition to that, there are very few incentives to
rebuild affordable rental units on the coast. While significant
levels of low-income housing tax credits have been made
available, there are limited efforts to create units that are
affordable for a family of four with annual incomes below
$37,500.
In closing, many of the situations that are highlighted in
the four panels that have come up today exist in Mississippi.
And we are asking this body that there needs to be a real
investigation into how CDBG funds were used, who received those
private contracts and the price gouging that the insurance
industries are able to have, to charge victims of the
hurricane.
Thank you.
[The prepared statement of Mr. Johnson can be found on page
306 of the appendix.]
The Chairman. Thank you. Next is Mr. James Kelly, who is
the chief executive officer of the Catholic Charities
Archdiocese of New Orleans.
STATEMENT OF JAMES R. KELLY, CHIEF EXECUTIVE OFFICER, CATHOLIC
CHARITIES ARCHDIOCESE OF NEW ORLEANS
Mr. Kelly. Thank you, Chairman Frank, Subcommittee
Chairwoman Waters, Ranking Member Biggert, and all of the other
members of the committee. I am Jim Kelly from New Orleans, CEO
of Catholic Charities, and CEO of the new Independent Catholic
housing initiative, Providence Community Housing.
In the past 17 months Catholic Charities has reached out
and served over 700,000 people. We have delivered 70 million
pounds of food and water, provided counseling and information
to over 500,000 people and, through our emergency service
centers, distributed millions of dollars in direct assistance
to families in need.
Shortly after the storm, I attended the first trailer
planning meeting with FEMA. It became very clear to me that
these FEMA trailers were not going to be the answer to our
housing crisis. A group of Catholic organizations, charities,
and CDC's therefore came together to see how we might bring
people of all races, cultures, faiths, incomes, and backgrounds
home. Providence Community Housing was formed with the mission
of bringing home 20,000 victims of Katrina by repairing,
rebuilding, or developing 7,000 homes and apartments.
In partnership with Catholic Charities, and with the
assistance of 9,000 volunteers, we have since gutted over 800
homes and 800 apartments. Now we are assisting these low-income
seniors to navigate the Road Home Program. The system is
painfully slow and filled with legalese. Providence has taken
to repairing the homes and fronting the money to some of our
elderly friends.
Whether you are staying in an overcrowded home with family
or in a trailer or in an apartment 80 miles from the job, the
stress and strain cannot be imagined. My friend Connie's house
flooded on Banks Street in mid-city. She and her husband
bounced around until they moved in with her sister, sleeping on
the two couches in the living room. Finally, they got a
trailer. These trailers are unbelievably small and unbelievably
cramped. Three months ago, Connie's husband had a heart attack.
He recovered on his sister-in-law's couches. He won't go back
in the trailer.
In partnership with UJAMAA CDC, Mary Queen of Vietnam CDC,
Tulane/Canal CDC and a new Hispanic CDC, we have recently
launched a host of housing initiatives for families like
Connie's in need of real housing. We are constantly exploring
any and all options to rebuild our homes and our neighborhoods.
With a recent award of GO Zone housing tax credits, we hope to
soon begin rebuilding 902 apartments for low-income seniors who
desperately want to come home.
Insurance quotes are coming in at 400 to 600 percent over
pre-Katrina rates. We are hoping a special insurance fund can
be established. We are also hoping that HUD will award
supplemental income to project-based Section 8 contracts for
properties like these. If not, we will lack ample operating
funds to open.
I thank you for your commitment to extend the placed-in-
service date of the tax credits. It will make the market less
skittish, increasing the possibility that many of our seniors
and their children and their grandchildren can come home.
Providence, with our partner Enterprise, is working on a plan
that would phase the redevelopment of the Lafitte Public
Housing Complex. We are anxious to have residents return as
soon as possible.
Last Thursday night, I attended a public meeting on the
historical value of these buildings. Miss Johnson, a member of
the Lafitte Resident Council, asked if I would call her the
next day, and so I did. She asked me who all the people were at
the meeting. She had never seen many of them. I explained that
many of them were preservationists, and she said that they did
not represent her. She wanted to come home as soon as possible,
but she also wanted new homes and apartments for her family and
friends like the ones voted on in September at our week-long
home planning charette with 200 of her fellow residents. She
did not want old obsolete apartment buildings, but instead new
singles and shotgun doubles that were both apartments and
homes. She wanted new apartments that were larger and had more
bedrooms and space for the children.
I was shocked when a leading local preservationist told me
recently that a resident's view or a resident's vote should not
matter since they were only renters.
I further explained to Miss Johnson that we were advocating
for a phased redevelopment where a large number of apartments
would be open immediately for those who wanted to come home
right now. Redevelopment of the new homes would then begin on
the other unoccupied blocks. I reminded her that when complete,
there would be a one-to-one replacement of all 900 subsidized
units plus 600 new homes for first-time homeowners on the site
and in the surrounding neighborhood.
I asked Miss Johnson, based on her knowledge, how many
families wanted to come home today. She thought between 300 and
400--``It is probably closer to 300.'' This is the same number
that our resident outreach staff has estimated. The Times
Picayune, our local paper, has said it is a question of
building it right or building it fast. I do not believe that it
is an either/or proposition. I believe a phased redevelopment
with full replacement is not the middle ground but rather the
right ground. It allows residents to come home today while also
allowing the building of healthy, diverse, vibrant communities
where families and children are safe to dream dreams that can
come true.
Since my early days in the Superdome, we have been blessed
by so many across the country who have reached out to assist
us. We are most grateful for the support and funding received
from Congress. Sadly, the clear majority of these billions have
not gone to the rebuilding of our homes. A Gulf Coast Housing
Trust Fund, additional low-income housing tax credits,
increased CDBG moneys, a large supply of project-based Section
8, permanent supportive housing vouchers and more funds for
public housing will all be needed if we are going to truly
provide the opportunity, the right for all our citizens to
return.
Katrina has taught us that to be successful, we will need a
spirit of humility and collaboration. If we focus on the
suffering victims of Katrina whom we have been called to serve,
then God, who loves these families infinitely more than we do,
will bless our efforts together. My gratitude to this committee
for all you have done, and will do, for the good and brave
people of Louisiana.
Thank you.
[The prepared statement of Mr. Kelly can be found on page
316 of the appendix.]
The Chairman. Next, we have someone whose voice does count
here no matter what your preservationist friend thinks because
she is a resident, and had been a resident of public housing,
and we are grateful to her for sharing her views with us. Ms.
Julie Andrews, who is a spokesperson for Residents United, and
a public housing resident. Ms. Andrews.
STATEMENT OF JULIE M. ANDREWS, SPOKESPERSON FOR RESIDENTS
UNITED AND A PUBLIC HOUSING RESIDENT
Ms. Andrews. Thank you, Chairman Frank, Subcommittee
Chairwoman Waters, and everyone who is here today to hear our
testimony. We are Residents United--the residents of New
Orleans public housing. We need to come home in order to
rebuild our cities, to embrace our communities, and to raise
our children who are being victimized in other cities.
As displaced people, other poor and oppressed communities
feel we are taking something away from them. Their actions
toward us show this daily. We need to come home. When Mayor Ray
Nagin said, ``Citizens, come home'', we thought we were
citizens also. Many people who were shipped across the country
came from far away with what little they had when they heard
the Mayor's message, and we are again displaced.
Over 60 percent of the city properties remain damaged from
Hurricane Katrina. However, the majority of the livable units
are in public housing, and yet these units remain fenced off
and boarded up by the Housing Authority of New Orleans and HUD.
While other citizens were allowed to salvage their personal
belongings, our possessions were stolen and vandalized because
we were not allowed back.
Citizenship is not based, and should not be based, on
homeownership. We are citizens, too. Employment opportunities
right now are very great in New Orleans. It is very hard to
work in a city where you don't have a home to live. While
billions of dollars are given to contractors to pay employees
who come from other States and to house them in hotels, the
Sheraton, the Marriott, all over New Orleans, we, the working
poor of New Orleans, are unable to come home, yet we are
willing, we are ready, and we are able to come home so we can
rebuild our cities and our lives just as our ancestors did
years ago.
When opportunists come to New Orleans to exploit our
livelihoods with their visions of what the new post-Katrina
city should be like, and should look like, they ``sour the
gumbo.'' We make New Orleans what it is. The housing
developments--the B.W. Coopers, the C.J. Peetes, the Guste, the
Iberville, the St. Thomas, the Florida, Fischer, Saint Bernard,
the Lafitte, the Desire, and the scattered sites all across New
Orleans--we make New Orleans what it is. We house over 5,100
families, and that is after the continued failure of the
Housing Authority of New Orleans. Today, many of these units
are livable, yet we are still locked out.
We would like to work with you to bring our residents home.
We are organized and we are asking that you join us to open all
public housing units. At this time the rich are getting richer
and the poor are becoming more oppressed and victimized by the
vicious plot to eliminate low-income people in New Orleans.
Most of us are people of color and we don't appreciate this at
all. It is discrimination, it is an abomination, it is a sin
for this to be happening to people in this country that most
people call great.
It is also an abomination to attempt to replace one race of
people with another for the sake of economic gain. The housing
developments have been a safety net, protecting us against
hurricanes, and providing us with a community when no one else
wanted us in theirs. When they say, ``We don't want those
project people here, don't give them Section 8; we don't want
them to live next to us'', that means they don't want our
little Pontiac next to their Cadillac. We know the hurt of that
because we lived it there. Our people want to come back to our
communities, and we need this now more than ever.
As displaced victims, our seniors are being denied a full
range of medical services, our children are being denied a safe
haven for education, and we are being denied jobs. We want to
come home. Without this population of people, our communities
remain desolate, our schools remain closed, and our businesses
suffer, as so many people have testified here today before you.
The cause and the cries of our people are deafening. We
need to come home. To be displaced in this wealthy country is
an embarrassment to our government. The message that we are
getting is that America does not care about us. While the war
in Iraq is going on and billions of dollars are being spent
there to restore the damage that this country caused, how can
we not take care of what is going on right here in our home in
this country?
We, as citizens of the United States of America, deserve
the right to return to our homes in New Orleans, to our
culture, to our heritage, to our communities, to our families,
and to our jobs. We want to come home. We have been working
diligently to stay in contact with our residents and to contact
even more residents on a daily basis. As I must reiterate,
their cries are--it is just--it is hard to bear; every day
people are calling and talking about the discrimination and the
rejection and the things that are happening to them in these
other cities. It is just really--it is really hard. We pray
that you will work with us to provide a venue for our people to
return to their homes. Our people have a dream that one day
they will say, ``Home at last, home at last, thank God
almighty, we are home at last.''
HUD testified that they want to make things better for us.
This is not the time. We have people who are suffering, and
this is not the time. Help us bring our people home. Thank you.
[The prepared statement of Ms. Andrews can be found on page
160 of the appendix.]
The Chairman. Thank you, Ms. Andrews.
And next Ms. Margery Austin Turner, who is director of
metropolitan housing and communities for the Urban Institute.
STATEMENT OF MARGERY AUSTIN TURNER, DIRECTOR, METROPOLITAN
HOUSING AND COMMUNITIES, THE URBAN INSTITUTE
Ms. Austin Turner. Thank you for the opportunity to be
here. New Orleans urgently needs to rebuild affordable rental
housing or its redevelopment as a city will be stunted and it
will be inequitable. However, neither low-income families nor
the communities in which they live will be well served if
affordable housing is rebuilt exactly according to the patterns
of the past.
Before Katrina, New Orleans exemplified some of the worst
failures of Federal housing policy, isolating too many low-
income families in big projects that were earmarked exclusively
for the poor and were mismanaged by a dysfunctional housing
authority. These projects exacerbated racial segregation and
isolation, they helped create concentrations of minority
poverty and distress and they polarized communities along lines
of race and class. Going forward, housing policies for the
greater New Orleans region need to incorporate affordable
housing in healthy mixed income neighborhoods and redevelop the
distressed neighborhoods into opportunity-rich communities that
welcome a mix of incomes, including families at the lowest
income levels. These income mixing strategies cannot be an
excuse simply to displace low-income residents or to discard
the communities that they have built.
In that context, I would like to highlight five broad
recommendations that are specific to Federal programs and
policy. My written testimony also includes some recommendations
for State and local action.
First, the Low Income Housing Tax Credit Program should be
used to expand affordable housing in healthy, opportunity-rich
neighborhoods, not concentrated in poor or distressed
communities, and as others have said, to ensure that a
substantial share of the LIHTC units are affordable to
households with very low incomes, the Housing Authority of New
Orleans and other housing agencies in the region should project
base a portion of their vouchers in these new developments.
Second, additional block grant funds and public housing
resources should be used to start acquiring and rehabbing small
rental properties and vacant single-family homes, bringing them
back into active use, and making them available for occupancy
by lower income households. This kind of scattered site
approach has worked in other cities. It has the potential to
spur neighborhood renewal while making homes available for low-
income families who so desperately want to come back.
Third, the Housing Choice Voucher Program should be
substantially expanded, potentially with higher payment
standards to reflect current rent levels. Clearly New Orleans
needs more rental housing production, but at the same time,
even in the short term, vouchers can help. They can provide the
resources many low-income families need to pay for housing that
is at least closer to where they want to be than they are now,
bringing them back into the greater New Orleans area to begin
rebuilding their lives. From this perspective, a new
administrator of the voucher program, independent of the
housing authority, could substantially strengthen its impact,
especially if it is ready to fight those fair housing
violations that we heard about in the previous panel and
convince more landlords about the need to participate in the
program.
Fourth, public housing can and should be playing a much
more constructive role in the city's recovery than it has been.
We have heard what a troubled reputation public housing has in
New Orleans, and residents are understandably distrustful of
both the housing authority and HUD. Alternative receivership
models offer the promise of bringing in an administrator for
the Public Housing Program that is trustworthy, independent,
and can be relied on to start bringing the salvageable public
housing units back online quickly while also pursuing longer-
term redevelopment strategies.
In that framework, HOPE VI and other public housing
development funds could ultimately be used according to the
best practices that are emerging in other places across the
country. HOPE VI is very controversial. It has not always been
implemented well and it hasn't always been implemented in a way
that protects the interests of the original residents, but it
can do better. We are getting experience from other places
around the country about how effective leadership and
respectful genuine resident involvement can produce mixed
income communities that really provide choices for low-income
families and protect their interests.
Rebuilding New Orleans is the housing and urban development
challenge of a generation. No city operating on its own could
tackle this kind of challenge that New Orleans faces today. In
his September 2005 address from Jackson Square, President Bush
promised that we would do what it takes to help citizens
rebuild their communities and their lives. If this pledge is to
be any more than empty rhetoric, the Federal Government must
show much greater ingenuity and leadership than it has to date.
Thank you.
[The prepared statement of Ms. Austin Turner can be found
on page 385 of the appendix.]
The Chairman. Thank you. Next Ms. Judith Browne-Dianis, who
is the co-director of the Advancement Project.
STATEMENT OF JUDITH A. BROWNE-DIANIS, CO-DIRECTOR, ADVANCEMENT
PROJECT
Ms. Browne-Dianis. Thank you, Chairman Frank, for the
opportunity to speak, and I would also like to specially
acknowledge Ms. Waters for all of the wonderful work she has
done to try to reach a resolution around the public housing
issue. My name is Judith Browne-Dianis, and I am co-director of
the Advancement Project, as well as counsel for the public
housing residents in New Orleans in their lawsuit against HUD
and HANO.
I am here on behalf of my clients, the more than 4,000
African American families who remain displaced from New Orleans
more than 17 months after the storm because of the Federal
housing response which was to lock them out of their homes and
prevent their return to New Orleans. Today joining me are
residents of New Orleans's public housing who are wearing
orange shirts that represent the bricks that are sturdy and
strong and still standing in New Orleans. They traveled here as
representatives of their families, neighbors, and friends, in
urging you to support their immediate right to return.
Prior to Katrina, there were 5,100 families living in
public housing. On August 29, 2005, these families were ordered
to evacuate. Like thousands of other evacuees, they expected to
return when the mandatory evacuation was lifted. Their
expectation was reasonable; most of their homes sustained
little damage. Today most of these families are still waiting
to come home and they want to return.
Congress recognized that this is a crisis, not an
opportunity. Congress directed HUD to preserve to the extent
possible all public housing in areas affected by Hurricanes
Katrina and Rita. Moreover, Congress appropriated funds for
this mandate, permitting fungibility between public housing and
voucher funds through Section 901 of the December 2005
supplemental bill. HUD has, for the most part, ignored Congress
and, in fact, has done the exact opposite.
In its initial assessment after Hurricane Katrina, HANO
determined that Iberville, C.J. Peete, Lafitte, and B.W. Cooper
experienced minor to moderate damage. Saint Bernard, Florida,
and Desire sustained some severe damage. HANO announced that
they intended to clean, repair, and open Iberville, C.J. Peete,
B.W. Cooper, and Lafitte. That was their first assessment, but
it has been a moving target. As the one-year anniversary of
Katrina approached, the promises remained unfulfilled and
appeared to be retracted. During the following months, HANO
boarded up and fenced off several developments. These were
developments that they had no plan to redevelop prior to
Hurricane Katrina.
Then, HUD made known its objective. On June 14, 2006,
Secretary Jackson announced a plan to demolish four of New
Orleans' largest developments with more than 5,000 units among
them. The plan would constitute the largest demolition in the
City's history, destroying 70 percent of New Orleans public
housing stock, which totaled 7,100 units.
HUD said now that, in fact, the damage was moderate to
severe, despite the prior acknowledgment that there was only
minor water damage and many could have been habitable again
once repaired. Today, I heard them say that they are beyond
repair, again a moving target of excuses.
Further, HUD and HANO moved forward with plans of
redevelopment, despite the fact it is much cheaper to repair
units than demolish and rebuild them. The justification
proffered for the demolition is questionable. Documents
obtained from HANO indicate that HUD and HANO misled the public
to justify their plans.
Officials drafting talking points for their plan about
Lafitte, William Thorson, who is the receiver of HANO, a HUD
employee, recommended that the staff take photos of the worst
of the worst, pictures are worth a thousand words, and to check
the presence of lead, apparently not to evaluate safety but to
justify its demolition plans, even though they knew that the
per unit cost of repairs is relatively low. This is in their
documents.
Thorson also directed staff to use scare tactics by using
news articles about murders at another development, with the
idea that reopening Lafitte as before would create another
Arborville.
In another instance, HUD admits that the interior damage to
C.J. Peete was minimal, and overall it was moderate to the
building, but makes note that the vacant property has become a
prime location for retail and residential development.
HUD's plan is clearly not about the habitability and the
cost of repairs, nor is HUD concerned about the immediate
affordable housing crisis or the despair of displaced survivors
of Hurricane Katrina. Many observers believe this is about
race, class, and prime land.
At the anniversary of Hurricane Katrina, they announced
that they would open 2,000 units. They moved that--by August,
they moved that date back to September. They moved that date
back to December. Here we are in February, 2007, and only 1,100
units have been opened.
By law, they are required to consult with residents of
public housing. To date, they did not do what they were
required. What they did was hold one public meeting with all
residents of public housing, and, in fact, the documents show
that they didn't want to do that.
Our experts say these buildings are habitable. Our experts
say that replacement with contemporary construction would yield
buildings of lower quality and shorter lifetime duration. The
original construction methods and materials of these projects
are far superior in their resistance to hurricane conditions
than typical new construction.
We ask that you help us to return our clients to their
homes. Right now is not a time for redeveloping. There is no
housing available, the vouchers can't be used, there are no
vacancies, the rents are sky high, and the people want to
return.
[The prepared statement of Ms. Browne-Dianis can be found
on page 180 of the appendix.]
The Chairman. Mr. Baker, who had been very diligent, did
have a 5:30 appointment he had to go to.
Next, the final witness is Martha Kegel, the executive
director of UNITY of Greater New Orleans.
STATEMENT OF MARTHA J. KEGEL, EXECUTIVE DIRECTOR, UNITY OF
GREATER ORLEANS
Ms. Kegel. Thank you very much, Chairman Frank, and members
of the committee. Thank you for inviting me to testify today on
behalf of the most vulnerable victims of these disaster.
I represent a collaborative of 60 nonprofit and
governmental agencies that provide housing and services to
people experiencing homelessness in New Orleans and neighboring
Jefferson Parish.
Almost 18 months after the catastrophic levee failures, the
housing situation for the most vulnerable, poorest people in
New Orleans is bleak and indeed desperate. We estimate, based
on accounts from our agencies as well as outreach workers, that
there are a minimum of 12,000 people who are literally homeless
on any given night in New Orleans. Those people are living in
abandoned housing, on the street, in cars, and in housing
designated for the homeless. Many of them are elderly, and many
of them are people with severe mental and physical
disabilities.
Before Katrina, we did not see people over the age of 65
living literally on the streets or in abandoned housing. Now it
is a very common instance for our outreach workers to find
people in their 70's and 80's living in abandoned housing in
New Orleans because of the extreme lack of affordable housing.
There has been a crisis of mental illness overtaking the
city as people are struggling with depression. There has been a
crisis of substance abuse taking over the city as people cope
with the very uncertain, anxiety-producing conditions, and
those conditions are affecting the homeless population in
particular.
So you are dealing with a very vulnerable population of
homeless, and I am not even counting the untold thousands of
people who are at great risk of homelessness because they are
paying unaffordable rents. Rents have skyrocketed in the tight
housing market since Katrina.
We have families now not just doubled up, but tripled and
quadrupled up, because of the scarce housing. We have people
who are living in housing that has no utilities, no kitchen,
and no bathroom.
So I am not even counting those people in the 12,000, nor
am I counting the people living in FEMA trailers, and I am not
counting the people who are calling our agencies on a daily
basis begging to come home, but that cannot find affordable
housing.
We decided very early on that the most vulnerable people
must not be left behind in the recovery of New Orleans, and we
have dedicated ourselves to that cause. And so for that reason
we joined together with the National Alliance to End
Homelessness and many partner local, State, and national
organizations to create the Louisiana Supportive Housing
Initiative, specifically for the most vulnerable victims of
this disaster.
To the State's credit, they have included a 3,000-unit goal
for permanent supportive housing in the Louisiana Road Home
plan. That is one of the most progressive policies embodied in
that program, and we are very proud of that and proud that it
is a central feature of that program.
As you know, permanent supportive housing is an evidence-
based practice for people with disabilities who are homeless or
at risk of homelessness. It combines affordable apartments with
supportive services right onsite so that people can become
stable tenants and productive members of the community again.
But in order to make this initiative a reality, we are going to
need Congress's additional help.
First of all--I am going to be very specific--we need 3,000
tenant--I am sorry, 3,000 project-based rental vouchers.
Because without those rental vouchers we have no permanent
supportive housing. Without those rental subsidies the very
people for whom this initiative was intended will not be able
to get access to these units.
Secondly, we need more GO-Zone low-income housing tax
credits. As you have heard, the number of affordable apartments
that are going to be created by the GO-Zone low-income housing
tax credits in Louisiana is only half of what was anticipated,
and that is because HUD has taken a lot of those units for
redevelopment of their own projects. It is also because the
construction and insurance costs have skyrocketed far beyond
anyone's anticipation.
We also are going to need additional acquisition funds
earmarked for nonprofits and additional gap financing earmark
for nonprofits so that nonprofits can develop some of this
permanent supportive housing. If we want the most vulnerable
people, particularly the chronically homeless and people with
severe mental illness, substance addiction, other severe
problems, to be able to have access to these units, we need the
nonprofit organizations that are most dedicated to these
populations to be able to build the housing.
So I thank you so much as a New Orleanian for your
commitment to rebuilding our city and to make it a more
inclusive place that provides a home for everyone.
Thank you.
[The prepared statement of Ms. Kegel can be found on page
312 of the appendix.]
The Chairman. I thank the panel. This again has continued
to be of great use, and I guarantee you that we are writing a
bill as we listen to you.
I am going to turn now to the gentlewoman from California.
I am going to waive my 5 minutes and turn to the gentlewoman,
who is correctly identified by Ms. Browne for the leadership
role she has been playing.
Ms. Waters. I have so many questions, but let me start with
that first witness from Enterprise, who testified about
Lafitte.
You have been advancing the idea that you could do phased
redevelopment at Lafitte and that you have acquired some 200
properties in the area and that you can provide the kind of
social services of a model type program that will assist
residents in getting jobs, job training, health care, and all
of that. Some people are asking why you chose Lafitte. That is
the best of the housing project properties and with the least
damage and that is the one where we could return the most
people at this time. Why did you choose Lafitte?
Ms. Koo. Thank you, Chairwoman Waters.
Development is place-based and you have in this situation a
very important first experiment, where the success will show
that it is workable, restore hope and people will continue to
invest in New Orleans, and if you fail, will forever doom the
development community and investor confidence.
We chose Treme as the community to put our attention to
partly because it is the historic neighborhood of African
Americans. It is located outside of the French Quarter, with
easy access to employment opportunities, and it is on
relatively high ground. It took water, but it didn't take 12
feet of water.
Ms. Waters. How many units would you lose in this phased
redevelopment in the actual housing project boundaries as we
know it, not counting the 200 units that you are talking about
outside of the project area?
Ms. Koo. We are proposing to reduce the density so that
there will be about 600 units, 5- or 600 units back on site;
and then we would have about--
Mr. Waters. How many are there now?
Ms. Koo. 856.
Ms. Waters. How many would--
Ms. Koo. Then the offsite will take on all the one-for-one
replacement plus 600 new additional first-time homebuyers'
homes using a lot of the blighted lots currently existing in
the neighborhood of Treme.
Ms. Waters. You stated that you had talked with residents.
You went to Dallas? Houston? Where did you talk to these
residents?
Ms. Koo. I will defer to Jim, but we held week-long trips
back in September, I believe, and then subsequently took a trip
to Houston.
Mr. Kelly. That is correct. We have reached by phone, by
survey, and by direct contact, approximately 700 of the
residents.
Ms. Waters. You are saying that these are predominantly
African American residents--
Mr. Kelly. Absolutely.
Ms. Waters. --who have--in what is a historical area where
they are saying they are willing to support a project like
Enterprise is proposing?
Ms. Koo. Yes.
Mr. Kelly. As I mentioned in my remarks, in a phased
development where people can come home first and then you can
do development after that. So it is a both/and, it is not an
either/or. Let the residents come home--if there is 3-, 400,
let them come home and then do phased development on the other
properties.
Ms. Waters. Let me ask our resident who testified, Julie
Andrews, about the development that is being described by
Enterprise where they are representing that they have talked to
residents, that they will make it a better community with all
the services to go along with it, etc., what is wrong with
that?
Ms. Andrews. This company came in by night. If they have a
real interest in bringing the residents home, not just 2-, 3-
or 400, let all of them come home and let them continue to work
with each other to plan their own communities.
Ms. Waters. So what you are saying is that you don't
support phased development. You would allow everybody at
Lafitte who wanted to return--even if it was beyond 3- or 400,
500, 600, everybody who wants to come home should be able to
come home and return. And what do you say about development,
period? Are you saying that there should be no development on
the Lafitte site?
Ms. Andrews. There should be no demolition. Development, we
need our people home now before they die. After the residents
come home and we have exhausted the lengthy waiting list with
the Housing Authority who have been there for over 10 years,
then we can talk about de-densifying the developments. But
there is an urgent need for housing in New Orleans, and until
you open up the housing developments, you are going to
constantly hear the cries of just renters who cannot afford
housing because the vouchers are demanding high rents in New
Orleans. We need the developments open.
Ms. Waters. Let me ask our representative Ms. Browne from
the Advancement Project, has HUD cooperated with you in helping
you to know where all of the residents are so that you can talk
with them? They claim that they are contacting them and that
they are coming up with the numbers who want to return, who
don't want to return. You have no way of verifying that. What
do you need from HUD in order to do that?
Ms. Browne-Dianis. In order for us to speak with our
clients, we need the information about where our clients are to
get their current contact information.
We also would like to do a survey that would be a survey by
a third party that would be agreed upon, that would be trusted
by residents so that they could be contacted to find out
whether or not people want to come home and when they would
come home. But we have not received any cooperation from them
in providing information about the clients' whereabouts.
Ms. Waters. Finally, do you agree that bringing everybody
home who wants to come home, and not moving forward with any
phased development until you have an opportunity to talk with
the residents, to get them involved and see what their ideas
are about the future of these public housing developments, is
that what you are recommending?
Ms. Browne-Dianis. That is what we are recommending. That
is how it is done in other cities. They don't use a disaster as
an excuse, but the residents have to be at the table so they
can figure out what their future is going to look like.
Ms. Waters. Would you include in the definition of the
residents not only those people who are returning but those
people who are on the waiting list, who have been waiting to
get into public housing that has been boarded up and not in
use? Would you consider that it would make good sense to open
up--repair those units, open it up, reduce that waiting list,
and then let's talk?
Ms. Brown-Dianis. Yes. There are, I think, about 6,900
families who were on the waiting list for public housing units,
another about 11,000 that were on the list for Section 8
vouchers, and they should be given places, in addition to which
we can't ignore the fact there may be more families who are in
need of affordable housing than there were pre-Katrina.
Ms. Waters. Thank you very much.
The Chairman. The gentleman from North Carolina.
Mr. Watt. Thank you, Mr. Chairman.
Ms. Browne-Dianis--
Ms. Browne-Dianis. Browne is fine, Mr. Watt.
Mr. Watt. I am looking at page 4 of your testimony and just
want to get the source of the information. Actually, I guess
you indicate that the source is HUD.
Ms. Browne-Dianis. HUD, yes.
Mr. Watt. HUD has estimated that the cost to repair Lafitte
is $20 million. The cost to completely overhaul the development
is $85 million. The estimated cost for demolishing and
rebuilding Lafitte is $100 million.
Ms. Browne-Dianis. Yes. Those are all HUD's numbers.
Mr. Watt. That is their numbers.
Ms. Koo.
Ms. Koo. Yes, sir.
Mr. Watt. What is the projected cost of your development?
Ms. Koo. Our development includes more than replacing one-
for-one but introducing--
Mr. Watt. I didn't ask that. I just asked you what the cost
of whatever it is you are proposing.
Ms. Koo. It would be around $180 million in all.
Mr. Watt. The minimum cost to HUD would be $20 million, and
if they did--your plan would be $180 million.
Ms. Koo. HUD would only contribute about $15 million into
the development because of the leveraging factor.
Mr. Watt. What would be the development timeframe for your
development?
Ms. Koo. With phased development, our proposal is to bring
residents home to a section of the site and then leave some
room for staging and immediately begin building on half of the
site. The infrastructure underground is--
Mr. Watt. Ms. Koo, you are following the HUD theory of
answering now.
Ms. Koo. Okay.
Mr. Watt. Please just answer the question that I ask you,
if you don't mind, because I don't have time, understand?
Ms. Koo. Yes, sir, I understand.
Mr. Watt. What would be the timeframe for your development?
Ms. Koo. Within 9 months, there will be off-site
replacement housing available; within 12 to 15 months, we would
see the first beginnings of the permanent new units onsite.
Mr. Watt. Ms. Browne, how long would it take to do the $20
million repair?
Ms. Browne-Dianis. Although I am not a developer or an
architect, our architect has said that basically what needs to
be done in Lafitte, especially, since the first floor units
were the only ones that received flooding, is to get the
baseboards done, and get new flooring, paint jobs, and mold
removal. They say that for each unit--I can't give you the
estimate, but it probably would take them 3 months to do it.
Mr. Watt. Ms. Koo, have you included in your development
cost, the cost, $180 million, the cost of continuing to pay for
all of these residents wherever they are scattered throughout,
or is this development cost that you are talking about?
Ms. Koo. No, that would be HUD's responsibility.
Mr. Watt. So that is not included in the $180 million that
is your development cost. That cost of continuing to pay for
hotel rooms or other things would be in addition to the $180
million.
Ms. Koo. That is correct.
Mr. Watt. All right. I am just trying to get a better feel
for--so we have 3 months rehab time versus--well, I don't know,
what would it take? You have a phased development. What is
the--over what period is the entire phasing going to take place
to get the 400-some residents back, as opposed to 600-some
residents back?
Ms. Koo. The entire phase will include 1,600 units that
would cost $180 million, and we project completion by 2010
and--
Mr. Watt. So 2\1/2\ more years.
Ms. Koo. For the whole 1,600 units. But because the phased
development--
Mr. Watt. When you have done all of that, how many of the
public housing residents are back in this facility if they
choose to do that?
Ms. Koo. There will be one-for-one replacement. Up to 900
public housing units will be rebuilt as part of the 1,600.
Mr. Watt. Some off-site.
Ms. Koo. Some off-site on single family lots.
Mr. Watt. How many off-site and how many on the Lafitte
site?
Ms. Koo. Perhaps half-and-half.
The Chairman. I thank the gentleman.
I am just going to ask a question but also make a plea to
all my friends who are developers--I work with them--but when
we talk about replacement housing and phasing, can we see a
project in which Phase I is new housing and then start moving
people? I am waiting for where the first phase is the creation
of additional units. Because we can talk about minimizing the
displacement, but I will give a prize, within the ethics rules,
which will make it pretty cheesy, to anybody who will come up
with a plan for phased development in which Phase I is
additional housing for low-income people and then we can start
doing the other staff.
Yes, Ms. Andrews.
Ms. Andrews. Chairman, currently, we have several housing
developments that have space already leveled to build that
additional housing. We need additional public housing units on
Desire, on Peete, and on Guste, which is under construction,
Imperial Drive. Of course, some of the others, because of
Housing Authority neglect, are gone.
But what I hear today, when you talk about leveraging
moneys to build developments, you start getting into private
management. It does not work. It is not effective for the
people. It only makes the rich richer and the poor more
dependent.
The Chairman. I think we need a mix. I do want to--
One of the things that ought to come out of this is that
public housing is a good thing. People live there voluntarily
because it is better than anything else they can get, and we
should reverse the tendency that we have seen, including the
President's current budget, which makes severe cuts in public
housing.
We build these units--society built units that were too
dense in the first place, and then it didn't provide any
services for people who live there, and then they gave too
little money to the people running the place. So--big
surprise--they became run down. Then we blame people for living
in rundown places that we built and helped run down. Let me get
in the spirit of New Orleans: Quelle surprise.
What we have to do now is to recognize that we can do
public housing well. I think it would be a mistake to rule out
some private housing. We have the people at NHP here. Mr.
Mehreteab and his organization maintain some very good units in
my area. There is a mix.
When we talk about leverage, we talk about finding ways
that we can make the public money go further by combining it
with some private money; and I think that can be--if it is done
right--be beneficial.
Yes.
Ms. Andrews. I am sorry to hog the microphone, but the
Guste highrise in New Orleans is a perfect example of how
resident management works. We have worked hard over decades of
time to have this happen, only to have these people take it
away.
The Chairman. Ms. Andrews, first of all, I may be older
than I look, but the first resident management public housing,
I believe, in the United States was Bromley Heath in the City
of Boston in 1969. I was the assistant to the mayor of Boston,
and I continue to be in touch with the people where we did
that.
I agree with that, but I think you can go along with it
with other factors. But I just--you say that there is vacant
land now to build some housing. I agree with that, and we
should build some housing, and I want to tell everybody, let's
build the additional units we need as the first phase of this
before we start moving everybody else out.
I will now go to the gentleman from Missouri.
Mr. Clay. Ms. Koo, I am familiar with Enterprise's good
work in my district to build strong, healthy communities. How
will you bring this expertise there in rebuilding the Gulf
Coast community and can you give me some examples of what a new
development would look like? And please explain why you would
use phased development.
Ms. Koo. Thank you, Congressman Clay.
Our approach is very simple. We look for local partners who
could be on the ground caring for those units, perhaps working
with residents to develop alternative management efforts
involving residents, as well bringing investors into supporting
those developments.
I think Chairman Frank is right. If you want to build
everything on Federal dollars, there is not ever going to be
enough money to do it. Our success has been the leveraging
factor, and the leveraging factor does not need to mean giving
up mission. We have done it in many communities, in St. Louis,
for example, where the very-low-income get to return and live
in a better community than ever before because of support
services.
The phased development approach is forced by the issue of
not having enough money to do everything that we feel is the
right thing to do. It will take a lot more resources, Chairman
Frank, to build new units on the vacant land, to fix up
existing units and to replace everything, and that can be done
with your help, with resources, with leverage fund legislation,
but in the spirit of doing the best with what we have using
low-income tax credit, using foundation funding, which we
raised $5 million from the get-go to increase the capacity of
low-income housing providers and helping housing authorities
like in Biloxi, Mississippi, and elsewhere to buy land and plan
affordable housing.
We have a pipeline now of about 2,500 units that will come
into service within the next 9 to 12 months. So we are
encouraged by that kind of response and want to get your
support to do more.
Mr. Clay. You are actually talking about programs that you
have tried, that have worked, that have been a collaboration of
different interest groups that have come together.
Ms. Koo. Absolutely.
Mr. Clay. Thank you for that response.
Let me ask, Ms. Andrews, Ms. Dianis, and Ms. Kegel, what
has been the cooperation of local and State elected officials
in New Orleans with your groups? Real quickly, if you could
give me a description of what has happened.
Ms. Andrews. The Housing Authority of New Orleans is being,
in their words, nonresponsive. The other agencies are being--
they are ghosts. They are not there.
The Chairman. Ms. Andrews, am I correct that the Housing
Authority of New Orleans is not a locally elected body? It is
run by HUD, am I correct?
Ms. Andrews. Yes, it is.
The Chairman. The Housing Authority is a HUD agency.
Ms. Andrews. They are being also non-responsive.
The Chairman. Once again, quelle surprise.
Mr. Clay. Ms. Turner, you may answer if you have an
experience and go down the line.
Ms. Turner. Clearly, the Housing Authority is HUD, and they
are completely lacking in credibility among residents and other
low-income households.
In addition, I think, the discriminatory responses of some
of the parishes in the greater New Orleans area is another
serious issue raised in the last panel that is undermining the
ability of the region to recover and low-income families to
return.
Ms. Browne-Dianis. Locally, I think the thing that is
happening is that this is a political hot potato. No one is
talking about it. The mayor doesn't want to talk about it. The
city council doesn't want to talk about it. Local elected
officials at the State level do not want to talk about this.
Because this is a battle between their constituents and their
money. So no one is addressing the issue. The silence has been
deafening.
Mr. Clay. Thank you for that response.
Ms. Kegel.
Ms. Kegel. We were created as a public-private partnership
so we have a good working relationship with Neighborhood One,
which is the city government housing agency; and, also, in
recent years, we have had a very good relationship with HANO,
and we have enjoyed support from the LRA. But, having said all
that, I can say that the population that I represent never
seems to rise to the top of anyone's priorities. There are
always competing interests and it is hard to get the resources
that we need for the most vulnerable people.
Mr. Clay. I thank you all for your responses, and I yield
back my time.
The Chairman. The gentleman from Texas.
Mr. Green. Thank you, Mr. Chairman.
Let's talk for just a moment, if we may, about the 66,000
Asian Americans who are impacted by Katrina and Rita, 17,000 of
whom are limited English proficient. My assumption is that
there are some unique problems associated with trying to
service this constituency, and I would like for some of you, if
you would, to please comment on the problems that you have
encountered.
I mention this because I am proud to see that the NAACP is
here. I am a former branch president. But I now serve as a
Chair of the Congressional Asian Pacific American Caucus
Katrina Committee Task Force, if you will, and one of the
things that we have noticed is that we have to really make it
clear to people that Asian Americans have been adversely
impacted by these devastating hurricanes.
So let's start, if we can, with Ms. Koo.
Ms. Koo. Thank you, Congressman Green, and we really
appreciate your sensitivity on that question.
Asian Americans represent a largely immigrant community
where language is a hardship. What is on their side is
motivation and a determination to succeed. When I talked to
some of the displaced members, they said, a hurricane is
nothing new; we ran away from war and we rebuilt. In a sense,
they were the least dependent on government and the least
expecting government to help them.
In the instance of the Vietnamese American community in
east New Orleans, within 6 months of the hurricane the entire
community was back because they gutted their own homes and each
others' homes. Through the work of Providence Community Housing
and Enterprise we assisted them in filing an application for
low-income housing tax credits to plan the first retirement
community to serve the elderly in their communities.
But they do need a lot of help. They do not understand tax
laws. They do not understand funding complexities. And in
Biloxi, Mississippi, east Biloxi, displaced Vietnamese
fishermen continue to search for a means of livelihood.
I personally understand, because there is a big Vietnamese
community based in Houston, Texas, who are opening their homes
and their hearts to displaced residents.
So, very quickly, it would be incumbent on all of us and
government officials to make sure that language does not become
yet another burden to the recovery efforts of these
communities. We need to be very sensitive to small business
loans and to help the small venture capitalists to start up,
whether it is growing vegetables in the market, or opening
their restaurants back up, and housing is fundamental and key.
So our effort in New Orleans will include working with that
community. Thank you for your inquiry.
Mr. Green. Thank you.
Mr. Kelly, would you like to respond.
Mr. Kelly. I would add that we provided a tremendous amount
of case management support services to and with the Vietnamese
community, and we have also helped them form their own CDC as
they try to ratchet up and do more housing in the future.
Mr. Green. One final question, and this one will be for Mr.
Johnson. Mr. Johnson, you referenced a city that has an
ordinance that requires persons to lease only to relatives. Is
this correct? Who is it--
The Chairman. Mr. Perry in the previous panel. That was Mr.
Perry in the town of Saint Bernard Parish.
Mr. Green. As he is not here, I will yield back my time.
The Chairman. Next is the gentleman from Missouri, Mr.
Cleaver.
Mr. Cleaver. Mr. Johnson, one of the requirements of
Federal statutes with regard to community development block
grant is that HUD is to hold public hearings in areas prior to
spending of CDBG dollars, and I am curious, based on some of
the comments I have heard from some of the activists, whether
or not those hearings have in fact taken place.
Mr. Johnson. The requirement to hold public hearings was
relaxed when the 2005 supplemental bill was passed. It allowed
the State officials to create a public comment period to
determine and allow the community to have input.
During the first public comment period, we were able to
organize individuals, sending over 3,000 letters objecting to
Phase I of the use of the CDBG funds, which completely excluded
home renters, senior citizens on fixed incomes, and the
disabled community. That was completely ignored.
We followed that up with a meeting with HUD and also
providing them with those same letters suggesting that they
should not waive the requirement that funds be used for low- to
moderate-income individuals, and that was also ignored.
It was not until the anniversary of Katrina and with the
media frenzy that came to the State that it was recognized that
only 75 checks had been issued from the State of Mississippi
and contracts had gone to lawmakers, a particular State
Senator, that they began to expedite the process and increase
the amount of money awarded to homeowners and they finally
began to get checks out of the door. And it wasn't until after
the election that they created a Phase II.
Mr. Cleaver. So there were no public hearings.
Mr. Johnson. There were no public hearings.
Mr. Cleaver. I don't recall--I will check when I get back
to the office--that when we approved the money for Katrina that
there was--I don't remember anything related to a relaxation of
the requirements for a public hearing, which I will check, and
in cities there has to be a major public hearing before the
annual community development dollars are voted on by any city
council. I remember specifically asking the question of the
Secretary of HUD, sitting in the exact chair where you are
sitting, whether or not we were going to have a public hearing.
I was assured that we were.
When Chairwoman Maxine Waters took her committee to New
Orleans and Louisiana, I asked the question of the HUD
representative at the meeting whether or not there were going
to be public hearings. He told me yes. And, as I suspected, you
are saying that didn't happen.
Mr. Johnson. Only a public comment period, not a hearing.
Mr. Cleaver. Thank you.
My other concern--the gentleman isn't here. He raised a
question today about public housing, and he didn't live in it,
and he didn't understand why people wanted to go back to the
way it was, and he failed--and I am talking to myself now--he
didn't understand that people don't trust HUD, and it has
nothing to do with going back to things the way they were.
People don't trust HUD, and I don't think they should trust--I
mean, the Federal Government is not trusted.
In 1991, there was a decision made to build a Capitol
Visitors Center, and the cost was $79 million, and there was a
$200,000 initial allocation to study the project. That was in
1991. In 2000, the construction started. At that time, it was
about $300 million, and today it is still not finished, and the
cost is $560 million.
So when somebody tells me, as I was told by the gentleman
today from HUD, that we will have the new development in 2
years, I don't put my tooth under the pillow anymore, because I
don't think the tooth fairy will deliver, and I don't think
that HUD is going to deliver, either.
I am speaking out of frustration. The gentleman is gone who
raised the issue, but I understand your frustration as well.
And it seems to me, Ms. Browne-Dianis--anybody can answer
this question--the problem with HUD running the Housing
Authority has to be addressed, because you can't expect the
agency that has failed, to unfail. And it seems to me that if
we are going to try to really address this problem that one of
the things that must be fixed quickly is either a receivership
or the Housing Authority--and you probably won't like this
part--will have to be turned over, as it is in most cities, to
the mayor. Because--
Listen, I am just telling you the way it happens. But the
problem is, if you are saying that HUD--that you don't trust
HUD, which I don't either, especially under the current
arrangements, then we have almost an insolvable problem
expecting somebody to fix the problem who helped break it.
I am finished.
The Chairman. As we move on, the gentleman from Minnesota,
one of our new members has been patient.
I will just make two comments. His analogy to the Capitol
Visitors Center is not complete to what we are talking about
here because, for that to be complete, the people building the
Capitol Visitors Center would have had to first move Congress
to another location and promise us that we could move back when
it was finished. We were smart enough not to subject ourselves
to the promise that you will be able to come back when it is
finished, that we think it is okay for poor people, but we
don't buy that ourselves. That is one thing.
The other thing I would say is that when people cast doubt
on why people would want to live in public housing--and we know
we have waiting lists. I have always thought the greatest
political wisdom, given the world of limited choices, was
expressed by a philosopher named Henny Youngman in his very
famous line, ``How is your wife?'' ``Compared to what?'' People
are living in public housing and other people don't like it,
well, compared to what?
I will say, to update that in recognition of my State of
Massachusetts, I now personally say, ``How is your husband?''
``Compared to what?''
With that, I will now turn to my colleague, the gentleman
from Minnesota. I do want to say we appreciate you staying.
Frankly, it is somewhat unusual, 8\1/2\ hours after we started
this, you still have a large number of Members of Congress
here, and that is a promise to you that you have reached the
top of our agenda. And this subcommittee, before the spring is
over, will be bringing forward legislation responsive to what
we have heard today. The gentlewoman from California will be
chairing that in our subcommittee, so this is time that you
will find is well spent.
The gentlemen from Minnesota.
Mr. Ellison. Mr. Chairman, today my mission was to listen
much more than talk. I really don't have any questions. I just
want to express my appreciation to you and the gentlelady from
California for your leadership in this area, but mostly I want
to express my admiration and respect for all of you who have
come here today to tell us what we really need to be thinking
about in terms of addressing this situation involving Katrina.
I have said consistently that what started out at as a
national disaster has ripened into a political disaster, and it
shouldn't be that way. So stick to it.
I was in and out a lot today, but I was listening to every
word, even when I was back in the other room, and I look
forward to working constructively with you.
But I guess the one question I would have is, Ms. Andrews,
I mean, I heard you say that HUD has been non-responsive. We
have seen testimony today from HUD and other agencies. Do you
have any suggestion as to--this might be a bizarre question,
but you have been eloquent and thoughtful, and I thought I
would ask you your opinion. Do you have any ideas as to what
you might recommend to us to help break the logjam?
Ms. Andrews. Thank you, sir. I most certainly do. We need
to again--well, I don't think it has ever happened, but we need
to put in place a majority resident board of commissioners to
run the Housing Authority of New Orleans. We need to put in
place resident management across that City. We need to put in
place other CDC's and other venues where residents can do what
they need to do without having other people come in and tell us
what they want to do. We need that, and we needed that before
Hurricane Katrina. And also now is not the time to tear down
public housing. It is not the time. Let us go home, and then we
will talk.
Mr. Ellison. Mr. Chairman, I guess that raises another
question for me. What would it take in order to achieve that
which you propose, Ms. Andrews, in order to have that
grassroots residence control over the matter? I suppose that
would be a statutory change or could that be done--
The Chairman. That would be--the way it works, I believe,
would be in the State law of Louisiana. There is a Federal law
that creates public housing, but the composition of the various
housing authorities is left to State law, with some Federal
sort of overall guidelines. But, essentially, it a State law
question.
Ms. Andrews. We have undergone many resident management
trainings. I personally have two certifications for resident
management. We have other people who are doing this as we
speak. We didn't dedicate all our years to take these trainings
to become dormant, to be managed by private management. Our
people need, and our people need now. I know you heard my
testimony. The peoples' cries are deafening. We can't survive
like this. We need to come home. New Orleans can't survive.
There will be no schools and no businesses if we don't go home.
Ms. Waters. Mr. Chairman, if I may, I would like to make a
comment here. We are going to come to New Orleans--we are going
to be in the Gulf Coast region, and we are going to do
Mississippi, also, but we are going to be in New Orleans, and
we are going to visit public housing developments, and what I
would like to have you participate in is the identification of
units in the public housing developments that you consider the
least costly to renovate.
I am asking you this because, normally, we would rely on
HANO to take us around to the units. They are going to show us
the worst ones. So I would like to have my colleagues, when
they come, take a look at a fair representation of what is
there. We know some are worse than others, and we know some are
in better condition than others, and I just want to make sure
that we are looking at it.
Also, I would like you to work with my staff to make sure
we are looking at everything.
The Chairman. The staff of both the subcommittee and the
committee will be in touch, and I just want to reiterate to all
of you that you have our commitment that we plan now to act
legislatively. Sometimes, you are not sure what can be done. A
number of very important specifics have come in. Not everything
is under our control. But a number of specifics are, and there
are other areas where we can exercise influence, and I want to
assure you that I think you can count on legislation coming out
of this committee that will be responsive to many, although
certainly not all, of your concerns, and we hope--we are pretty
optimistic we will be able to get it through the House and work
on it.
So we thank you all very much for giving us all of this
time. It has been, I believe, to our mutual benefit.
And this hearing is, at long last, adjourned.
[Whereupon, at 6:30 p.m., the hearing was adjourned.]
A P P E N D I X
February 6, 2007
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