[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                      EMERGENCY CDBG FUNDS IN THE

                     GULF COAST: USES, CHALLENGES,

                       AND LESSONS FOR THE FUTURE
=======================================================================


                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY


                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               ----------                              

                              MAY 8, 2008

                               ----------                              

       Printed for the use of the Committee on Financial Services

                           Serial No. 110-110




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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
MAXINE WATERS, California            DEBORAH PRYCE, Ohio
CAROLYN B. MALONEY, New York         MICHAEL N. CASTLE, Delaware
LUIS V. GUTIERREZ, Illinois          PETER T. KING, New York
NYDIA M. VELAZQUEZ, New York         EDWARD R. ROYCE, California
MELVIN L. WATT, North Carolina       FRANK D. LUCAS, Oklahoma
GARY L. ACKERMAN, New York           RON PAUL, Texas
BRAD SHERMAN, California             STEVEN C. LaTOURETTE, Ohio
GREGORY W. MEEKS, New York           DONALD A. MANZULLO, Illinois
DENNIS MOORE, Kansas                 WALTER B. JONES, Jr., North 
MICHAEL E. CAPUANO, Massachusetts        Carolina
RUBEN HINOJOSA, Texas                JUDY BIGGERT, Illinois
WM. LACY CLAY, Missouri              CHRISTOPHER SHAYS, Connecticut
CAROLYN McCARTHY, New York           GARY G. MILLER, California
JOE BACA, California                 SHELLEY MOORE CAPITO, West 
STEPHEN F. LYNCH, Massachusetts          Virginia
BRAD MILLER, North Carolina          TOM FEENEY, Florida
DAVID SCOTT, Georgia                 JEB HENSARLING, Texas
AL GREEN, Texas                      SCOTT GARRETT, New Jersey
EMANUEL CLEAVER, Missouri            GINNY BROWN-WAITE, Florida
MELISSA L. BEAN, Illinois            J. GRESHAM BARRETT, South Carolina
GWEN MOORE, Wisconsin,               JIM GERLACH, Pennsylvania
LINCOLN DAVIS, Tennessee             STEVAN PEARCE, New Mexico
PAUL W. HODES, New Hampshire         RANDY NEUGEBAUER, Texas
KEITH ELLISON, Minnesota             TOM PRICE, Georgia
RON KLEIN, Florida                   GEOFF DAVIS, Kentucky
TIM MAHONEY, Florida                 PATRICK T. McHENRY, North Carolina
CHARLES A. WILSON, Ohio              JOHN CAMPBELL, California
ED PERLMUTTER, Colorado              ADAM PUTNAM, Florida
CHRISTOPHER S. MURPHY, Connecticut   MICHELE BACHMANN, Minnesota
JOE DONNELLY, Indiana                PETER J. ROSKAM, Illinois
ROBERT WEXLER, Florida               THADDEUS G. McCOTTER, Michigan
JIM MARSHALL, Georgia                KEVIN McCARTHY, California
DAN BOREN, Oklahoma                  DEAN HELLER, Nevada
BILL FOSTER, Illinois
ANDRE CARSON, Indiana

        Jeanne M. Roslanowick, Staff Director and Chief Counsel
           Subcommittee on Housing and Community Opportunity

                 MAXINE WATERS, California, Chairwoman

NYDIA M. VELAZQUEZ, New York         SHELLEY MOORE CAPITO, West 
STEPHEN F. LYNCH, Massachusetts          Virginia
EMANUEL CLEAVER, Missouri            STEVAN PEARCE, New Mexico
AL GREEN, Texas                      PETER T. KING, New York
WM. LACY CLAY, Missouri              JUDY BIGGERT, Illinois
CAROLYN B. MALONEY, New York         CHRISTOPHER SHAYS, Connecticut
GWEN MOORE, Wisconsin,               GARY G. MILLER, California
KEITH ELLISON, Minnesota             SCOTT GARRETT, New Jersey
CHARLES A. WILSON, Ohio              RANDY NEUGEBAUER, Texas
CHRISTOPHER S. MURPHY, Connecticut   GEOFF DAVIS, Kentucky
JOE DONNELLY, Indiana                JOHN CAMPBELL, California
                                     THADDEUS G. McCOTTER, Michigan
                                     KEVIN McCARTHY, California
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    May 8, 2008..................................................     1
Appendix:
    May 8, 2008..................................................    49

                               WITNESSES
                         Thursday, May 8, 2008

Baab, Craig H., Katrina Advocacy Fellow, Alabama Appleseed Center 
  for Law & Justice, Inc.........................................    32
Bowman, David J., Director, Research and Special Projects, 
  Louisiana Recovery Authority...................................     9
Dally, William C., Deputy Executive Director, Texas Department of 
  Housing and Community Affairs (TDHCA)..........................    13
Gimont, Stanley, Acting Director, Office of Block Grant 
  Assistance, U.S. Department of Housing and Urban Development...     4
Henneberger, John, Co-Director, Texas Low Income Housing 
  Information Service............................................    41
Johnson, Bill, Director, Alabama Department of Economic and 
  Community Affairs..............................................     6
Johnson, Derrick, President, Mississippi State NAACP.............    37
Morse, Reilly, Senior Attorney, Katrina Recovery Office, 
  Mississippi Center for Justice.................................    39
Norris, Jack, Executive Director, Governor's Office of Recovery 
  and Renewal, State of Mississippi..............................    11
Perry, James, Executive Director, Greater New Orleans Fair 
  Housing Action Center, and President, Louisiana Housing 
  Alliance.......................................................    36
Powell, Leslie L., Senior Attorney, Legal Services of North 
  Florida, Inc...................................................    34
Stafford, Gail D., Administrator, Community Development Block 
  Grant Funds, Florida Department of Community Affairs...........     7

                                APPENDIX

Prepared statements:
    Waters, Hon. Maxine..........................................    50
    Baab, Craig H................................................    56
    Bowman, David J..............................................    64
    Dally, William C.............................................    72
    Gimont, Stanley..............................................    83
    Henneberger, John............................................    92
    Johnson, Bill................................................   138
    Johnson, Derrick.............................................   148
    Morse, Reilly................................................   153
    Norris, Jack.................................................   218
    Perry, James.................................................   235
    Powell, Leslie N.............................................   244
    Stafford, Gail D.............................................   250

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Statement of the Equity & Inclusion Campaign.................   257
    Responses to questions submitted to David J. Bowman..........   262
    Responses to questions and supplemental information from Jack 
      Norris regarding the Port of Gulfport......................   269
    Additional responses to questions submitted to Jack Norris...   318
Green, Hon. Al:
    Responses to questions submitted to Jack Norris..............   326


                      EMERGENCY CDBG FUNDS IN THE



                     GULF COAST: USES, CHALLENGES,



                       AND LESSONS FOR THE FUTURE

                              ----------                              


                         Thursday, May 08, 2008

             U.S. House of Representatives,
                        Subcommittee on Housing and
                             Community Opportunity,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 12:30 p.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the subcommittee] presiding.
    Members present: Representatives Waters, Cleaver, Green; 
Capito and Bachus.
    Chairwoman Waters. This hearing of the Subcommittee on 
Housing and Community Opportunity will come to order.
    Before we go any further, I would like to thank you all for 
the long wait. Unfortunately, we were on the Floor finishing up 
legislation from last night--very important legislation--that 
will send about $15 billion to our cities and our counties to 
stabilize neighborhoods, to be used to buy up foreclosed 
property causing so much devastation in so many parts of our 
country; housing that has been vandalized, copper being 
stripped out, the weeds growing up and causing the value of 
other homes where people are trying to remain in those 
neighborhoods to go down. So we have been struggling with 
trying to come up with a package of legislation, and this is 
kind of the first of the direct aid to the cities and the 
counties and the States.
    We will have some more on the Floor today, but we had to 
finish it and we had to wrestle with friends from the opposite 
side of the aisle on a few of the issues. So, I know you have 
waited for a long time. I appreciate it and we will get 
started, even though the other members have not arrived. We 
won't wait for them. I want to get started so that we can allow 
you to be released and go about your business.
    As a national advocate for the Gulf Coast, I was quick to 
push for emergency appropriations to help the States affected 
by Hurricanes Katrina, Rita, and Wilma to recover from the 
devastation caused by those storms. The 2005 hurricanes were 
the deadliest and most expensive storms on record. Over one 
million housing units were damaged along the Gulf Coast as a 
result of the hurricanes in 2005. But half of the damaged units 
in Louisiana, which bore the brunt of Hurricane Katrina--total 
catastrophic losses from Hurricane Katrina were estimated at 
$40.6 billion with uninsured losses much higher.
    Although the Federal Government has provided $123 billion 
for hurricane relief, $19.7 billion of this amount was provided 
through the Community Development Block Grant, or CDBG, 
program. Congress has historically appropriated supplemental 
CDBG funds to respond to natural disasters such as hurricanes, 
earthquakes, and tornados.
    In addition, CDBG funds supported recovery efforts in New 
York City following the terrorist attacks of September 11, 
2001, in Oklahoma City following the bombing of the Alfred 
Murrah Building in 1995, and in the City and County of Los 
Angeles following the riots of 1992. However, the severity of 
the damage inflicted by the 2005 hurricanes and the slow 
responses of some of the States to get these funds out of the 
door has put the program into question.
    I have several concerns about how the CDBG programs have 
been administered and implemented. First, I'm concerned about 
how States in the Gulf Coast has used CDBG funds to replace or 
repair damaged rental properties. Many of the programs 
implemented to-date focus heavily on assistance to homeowners. 
While I agree that homeowners who have felt the impact of these 
storms should receive compensation, I do not agree that these 
funds should be used to help homeowners solely, at the expense 
of renters.
    Furthermore, in areas where States have tried to rebuild 
rental housing, I am alarmed by the reaction of some 
communities to having this much-needed housing resource in 
their communities. I am eager to hear from our witnesses about 
the extent to which the ``Not in my Backyard'' (NIMBY) effect 
is hampering their ability to provide affordable rental housing 
through the CDBG funds.
    Second, adherence to fair housing laws and the requirement 
that States affirmatively further fair housing is of vital 
importance. We will hear a lot about CDBG waivers today and 
there may be some discussion about what Congress's intent was 
in allowing HUD to grant waivers of some CDBG program 
requirements; however, there can be no doubt that Congress 
never intended for HUD to waive fair housing laws. Although no 
State has requested such a waiver, and HUD is prohibited from 
issuing such a waiver, I remain concerned about how some of the 
programs being implemented are affirmatively furthering fair 
housing.
    Given the focus of these programs on owner-occupied 
housing, and the fact that most rental housing is occupied by 
people of color, I have questions about whether or not these 
programs do affirmatively further fair housing.
    Third, I am concerned about complaints that States have 
been slow in getting the money out and in constructing or 
repairing housing. I am interested to know what is causing 
these delays, such as the environmental review process or 
NIMBYism, and what we can do to make sure that almost 3 years 
after Katrina, we are giving the States the tools that they 
need to make sure they are getting funds out the door quickly 
and efficiently.
    Fourth, as I mentioned earlier, I am concerned about HUD's 
process for providing waivers, including waivers as a 
requirement that at least 50 percent of grant funds benefit 
low- and moderate-income households. So far, HUD has granted 
four such waivers.
    Although I must commend the Department for repeatedly 
denying Mississippi's request to receive a blanket waiver of 
the low- to moderate-income requirement in its entirety, I am 
concerned that as a result of these waivers, some of the State 
CDBG programs are not as targeted to low-income families as 
they should be. After all, the CDBG program is at its root a 
program designed to help alleviate poverty.
    Finally, I am concerned about the diversion of CDBG housing 
funds for other purposes. The State of Mississippi has made 
headlines for its plans to divert $600 million from its Phase I 
Homeowner Grant Assistance Program to the restoration and 
expansion of the Port of Gulfport. Frankly, I am not convinced 
that the State has met all of its unmet housing needs. I am 
very interested in hearing from my witnesses from Mississippi 
on this issue.
    On another note, I am also interested in hearing the views 
of these witnesses on the difficulty of Mississippi homeowners 
who have received Phase I assistance and are encountering 
problems in obtaining flood assistance.
    I am looking forward to hearing from our two panels of 
witnesses on the uses and challenges of CDBG funds in the Gulf 
Coast, and I would now like to recognize my ranking member, but 
my ranking member has not come in yet, so we are going to 
proceed with Mr. Green, who is here for his opening statement.
    Mr. Green?
    Mr. Green. Thank you, Madam Chairwoman. And thank you for 
your leadership. Having gone to Louisiana with you 2 times, I 
am well aware of what you have done in the Gulf Coast area, and 
I know that you have been there on occasions when I did not 
have the privilege of being with you. I am also very much aware 
that when you were there, you took the time to listen to many 
of the residents and acquire intelligence as to what their 
concerns are, and I see this as a continuation of the 
leadership that you have shown. Again, I thank you very much 
for what you have done to help the people of Louisiana.
    I have several reasons for saying this. One is that as a 
Member of Congress representing the 9th Congressional District 
in Houston, Texas, many of the persons who were survivors of 
Katrina have moved into my District into Houston, Texas, and 
they still have needs that have to be met. Aside from that, I 
was born in New Orleans, Louisiana, in Cherokee Hospital, which 
does not exist currently.
    Hopefully, that circumstance won't always be the case. So I 
have many reasons for being concerned and I am honored to be 
apart of this hearing. I do have another hearing that is taking 
place as I am speaking to you now. I try not to miss any 
hearings, so I have a whole security hearing and I will be 
moving back and forth between the two. But before I make an 
exit, I do want to talk about what the chairwoman has 
mentioned--this notion of taking the funds to be used for 
people who were victims of the hurricane and using these funds 
with the Port.
    That does cause me a great deal of consternation, 
especially when we have persons who are still in need. And I am 
looking for empirical evidence of what I say, but I am told 
there are persons who are still in need, and it would cause me 
even greater consternation to know that when people needed this 
money, it went to the Port. I believe ports ought to be 
supported, and I would work to help the Port, but I would not 
want to divert money from needy people to the Port when the 
Port has its own means by which it can receive the proper 
attention that it merits.
    I think that they can both merit a certain amount of 
attention, the people, as well as the Port, but I don't want to 
put the Port above the people. I want the people to have what 
is due to them, and I want to assist with the Port, so I am 
anxious to hear from witnesses who will hopefully give us some 
additional intelligence on what actually occurred. Madam 
Chairwoman, I thank you for the time, and I yield back.
    Chairwoman Waters. Thank you, Mr. Green. I know that you 
and other members are between committees, so I appreciate your 
giving us some time here.
    I am going to move right into introducing our witnesses: 
Mr. Stanley Gimont, Acting Director, Block Grant Programs, U.S. 
Department of Housing and Urban Development; Mr. Bill Johnson, 
director of the Alabama Department of Economic and Community 
Affairs; Ms. Gail Stafford, administrator of Community 
Development Block Grant Funds, Florida Department of Community 
Affairs; Mr. David Bowman, director of research and special 
projects at the Louisiana Recovery Authority; Mr. Jack Norris, 
director, Governor's Office of Recovery and Renewal, State of 
Mississippi; and Mr. William Dally, deputy executive director, 
Texas Department of Housing and Community Affairs.
    I thank all of you for appearing before the subcommittee 
today, and without objection, your written statements will be 
made a part of the record.
    You will now be recognized for a 5-minute summary in the 
order that I have introduced you.
    Thank you very much. We will start with you, Mr. Gimont.

 STATEMENT OF STANLEY GIMONT, ACTING DIRECTOR, OFFICE OF BLOCK 
    GRANT ASSISTANCE, U.S. DEPARTMENT OF HOUSING AND URBAN 
                          DEVELOPMENT

    Mr. Gimont. Thank you.
    On behalf of Deputy Secretary Roy Bernardi, thank you, 
Chairwoman Waters, for the invitation to appear before the 
subcommittee today.
    I am Stanley Gimont, Acting Director of the Office of Block 
Grant Assistance at HUD, and I appreciate the opportunity to 
discuss disaster recovery through the Community Development 
Block Grant Program.
    Three supplemental appropriations providing $19.7 billion 
in CDBG funding for the Gulf Coast disaster recovery purposes 
have been enacted since Hurricane Katrina made landfall on 
August 29, 2005. These funds have been granted to the States of 
Alabama, Florida, Louisiana, Mississippi, and Texas. The first 
supplemental provided $11.5 billion in CDBG disaster recovery 
funding and was signed into law on December 30, 2005. The 
Department promptly allocated these funds based on the areas of 
highest need, and with the greatest concentration of 
destruction.
    In June 2006, the second supplemental provided an 
additional $5.2 billion, while the third supplemental was 
signed in November of 2007 and appropriated $3 billion to close 
the funding gap. The States have proposed to dedicate $13.8 
million to various housing programs; this allocation represents 
70 percent of the amounts appropriated.
    In the 28 months since the first supplemental 
appropriation, the States have expended over $9.2 billion in 
CDBG funds for recovery activities with $8.2 billion of this 
amount disbursed for housing assistance activities. Thus, 
approximately 90 percent of all funds expended to-date have 
been for housing activities. The first two supplemental 
appropriations were clear in their intent and extraordinary in 
the flexibility they conferred on the States.
    Traditionally, such supplemental funding requires 
substantial oversight by the Department on program issues, but 
Congress clearly intended that HUD should not dictate uses of 
funds or the amounts to be set aside for each activity unless 
otherwise specified by Congress. The first supplemental stated 
that HUD must waive all regulations or statutes which could 
hinder implementation of the States' plans. Only four areas 
were exempt from this mandate: fair housing; environmental 
review; civil rights; and labor standards.
    The second supplemental bill modified the direction on 
waivers to state that HUD may approve waivers. As Congress 
intended, the eligible States have had substantial flexibility 
in designing their programs, establishing funding levels, and 
carrying out activities to achieve their goals within the 
overall purposes of the legislation. This approach has allowed 
each State to tailor its recovery programs to best address the 
needs of its citizens. HUD's primary role has been to provide 
technical assistance on Federal program requirements and to 
monitor the State's use of funds.
    HUD has implemented the grants with waivers and alternative 
requirements that balance flexibility, accountability, and 
performance. Quarterly performance reports are submitted not 
only to HUD but also to Congress, and they must post them on 
the Internet. The largest activities in CDBG history, the 
Louisiana and Mississippi Homeowner Compensation Programs, have 
had collectively more than 45 compliance or financial 
monitoring reviews from HUD, its Office of Inspector General, 
State auditors, internal auditors, independent auditors, and 
multiple anti-fraud investigators. So far, the news is 
encouraging as documented non-compliance appears to total less 
than one percent of funds expended to date, while fraud and 
abuse has been minimized thanks to the collective effort of 
Federal, State, and local officials.
    The mutual goal of HUD and the States has been to assist 
victims of the storms and to act efficiently to get funding 
into the hands of those who deserve it as quickly as possible. 
A continuous improvement process regularly evaluates obstacles 
and seeks both long- and short-term solutions. The States have 
the authority and the ability to revise funding levels in 
response to changes in need and opportunity. While not everyone 
agrees with every program choice, HUD has found overall 
compliance with program and financial rules to be very good.
    Again, I appreciate the opportunity to appear before the 
subcommittee today, and I look forward to your questions.
    Thank you.
    [The prepared statement of Mr. Gimont can be found on page 
83 of the appendix.]
    Chairwoman Waters. Thank you very much, Mr. Gimont.
    Now, we will hear from Mr. Johnson.

  STATEMENT OF BILL JOHNSON, DIRECTOR, ALABAMA DEPARTMENT OF 
                 ECONOMIC AND COMMUNITY AFFAIRS

    Mr. Johnson. Thank you, Chairwoman Waters, and members of 
the committee.
    I appreciate the opportunity to come before you today. I am 
Bill Johnson, the director for the Alabama Department of 
Economic and Community Affairs. We are a main State grant-
making managing agency in the State of Alabama and oversee the 
supplemental Katrina CDBG funds, plus the regular block grant 
programs not going to entitlement communities.
    Before I get into what I am going to say, I would like to 
give you a little background on me that is not in my brief bio. 
Actually, unfortunately or fortunately, I have a lot of 
experience with hurricanes. My family was living in New Orleans 
on Laurel Street when Hurricane Betsy hit in 1965. I was 6 
years old; and, as you can imagine, that is something that has 
a big impression on a young child.
    My dad, who was in the military at the time, was in 
Vietnam. When he came back, we were then stationed at Kiessler 
Air Force Base in Biloxi, and we were living there when 
Hurricane Camille hit. Then I was a student at Spring Hill 
College in Mobile, Alabama, in 1979 when Hurricane Frederick 
hit. So, I was trying to do my part for awhile by committing 
never to live on the Gulf Coast again and I moved my family to 
Prattville, Alabama, where we just had a tornado within a 
quarter mile of our house.
    So, I say that because I want the folks here and I want the 
folks in Alabama to know that I really do have compassion for 
the suffering and the devastation that these kinds of natural 
disasters can bring. And I have done everything with my office 
to try to accelerate the distribution of aid or to try to be 
creative where we could with the strings that the Federal 
Government has attached with the funding that we have to help 
folks.
    A little bit of a background on what we did after Katrina 
in anticipation of some help from the Federal Government with 
the disaster assistance; we partnered early on with FEMA who 
has a long-term recovery program. I thought it was such a great 
program that we actually housed their personnel at our agency 
and we set up a series of long-term recovery planning meetings 
with all the communities in Mobile County, which is our primary 
affected county.
    Over a series of about 4 months, we had planning meetings. 
We had meetings with engineers and each community formulated a 
long-term recovery plan and a lot of what we were trying to do 
with that planning was basically lower expectations, really 
drilled down to what is it that was damaged, what do you hope 
to do, what can you build better? But keep it where it was 
within a reason for what they could expect help-wise.
    That process culminated in nine public hearings in the 
Mobile County area. Each entity that participated had their 
public hearing. We invited public input. At the end of that, 
within a week of the end of that, we had the announcement that 
help was going to be available. This planning, this prior 
planning, even without knowing funds for sure were coming, 
helped us accelerate our program to the point that when we knew 
funds were available, we had an application workshop, and an 
application deadline 6 weeks after that.
    We basically awarded all our funds for Katrina, the Katrina 
supplemental funds in the first round, by mid-June of 2006. Now 
I know that there are other States testifying here, and we had 
some challenges. I mean, we had a little bit of a different 
scenario in that our main city and county were entitlement 
areas who had been managing their own CBDG programs for decades 
and so we weren't going to step in and say, ``Oh, the State 
knows better.'' So we distributed the funds out to the local 
areas, and they have been the primary ones on housing.
    I see I have about a minute left, and I would like to leave 
you all with this: In every disaster that I have experienced, I 
have seen the tremendous outpouring of support from the faith- 
and community-based organizations. They have been the primary 
redevelopment team in our area and I would say that as a 
recommendation for what we could do with block grant funds, if 
we could somehow support what the faith-based organizations are 
doing and rebuilding efforts, then that would go a long way 
towards applying a lot more resources that we have and also 
more efficiently use some limited resources from the Federal 
Government.
    [The prepared statement of Mr. Johnson can be found on page 
138 of the appendix.]
    Chairwoman Waters. Thank you. Thank you very much.
    Ms. Stafford?

    STATEMENT OF GAIL D. STAFFORD, ADMINISTRATOR, COMMUNITY 
DEVELOPMENT BLOCK GRANT FUNDS, FLORIDA DEPARTMENT OF COMMUNITY 
                            AFFAIRS

    Ms. Stafford. Good afternoon. Thank you, Madam Chairwoman, 
for allowing the State of Florida to be represented.
    My name is Gail Stafford and I am administrator of the 
Florida Small Cities CDBG Disaster Recovery Programs. Although 
our Agency head, Secretary Thomas Pelham, could not be here 
this morning, Florida CDBG's Disaster Program's success is due 
largely to the support of State government and local government 
input. The Secretary's office and the Director of the Division 
of Housing Community Development, which oversees the CDBG State 
program, have been directly involved in all the disaster 
recovery efforts.
    Likewise, local governments are at the table when CDBG 
recovery plans are developed. Local governments, as well as 16 
public housing authorities, were the recipients of Florida's 
CDBG Supplemental Disaster Recovery funding. In 2004, the State 
of Florida was battered by Tropical Storm Bonnie, as well as 
Hurricanes Charley, Frances, Jeanne, and Ivan. All 67 counties 
were impacted within a 2-month period, including the Gulf 
counties.
    Homes and infrastructure were damaged. Mobile home owners, 
especially those living in homes manufactured before 1994, 
suffered the most devastation; 55,670 pieces of plastic 
sheeting, along with 481,513 tarps were immediately necessary, 
and thousands lost their homes completely. Governor Jeb Bush 
immediately appointed a hurricane housing work group. The 
housing data provided by the work group indicated that 708,361 
housing units were actually destroyed and at least 10 hospitals 
sustained damage.
    Schools, nursing homes, and government buildings across the 
State were damaged. Other infrastructure damage was also very 
significant. A portion of the U.S. Interstate Highway 10 bridge 
collapsed, and numerous streets and roadways were damaged and 
destroyed. Our water and sewer systems failed and utility 
systems, both publicly and privately owned, were also damaged.
    At that time, the State targeted about $250 million in 
general revenue funds to address housing needs. However, those 
funds alone were not sufficient. Thankfully, Congress allocated 
just over $100 million in supplemental CDBG funds for disaster 
recovery efforts. Those funds were used for both housing and 
infrastructure recovery. Since infrastructure damage does 
directly affect people, we also made sure that infrastructure 
was a part of that process. Local governments determined the 
priority needs to be addressed in their community and then 
during 2005, we were hit by four more hurricanes in the State.
    In July, Hurricane Dennis struck the Panhandle, which was 
still recovering from the devastation that was caused by Ivan 
less than a year before. In August, Katrina hit just north of 
Miami, causing tornados and wind damage in Southeast Florida. 
In September, Rita passed just south of the Florida Keys, 
causing flooding damage and storm surge on that chain of 
islands.
    In October, Wilma struck the Southern peninsula of Florida, 
causing major damage in southwest Florida, the Florida Keys, 
and heavily populated counties in Southeast Florida. Hurricane 
Wilma caused the largest disruption in electrical service ever 
experienced in Florida, with as much as 98 percent of South 
Florida without power after landfall. By the end of the 2005 
hurricane season, 39 of the 67 counties had been declared a 
Federal disaster area. Housing-related damages from Hurricanes 
Katrina and Wilma were estimated at $1.5 billion, with more 
than 4,710 units impacted.
    More than 40,000 roofs were temporarily repaired during the 
storm by the Army Corps of Engineers from their Blue Roof 
Program, and more than 625,000 Floridians registered for FEMA 
assistance. Due to the quick action by Congress, Florida 
received $82.9 million in CDBG disaster recovery funds. Our 
State required that grant recipients utilize 70 percent of the 
funding for restoration of affordable housing. The remaining 30 
percent would be used to address damage, infrastructure, or 
provide assistance for displaced, economically-impacted 
businesses.
    The State's allocation methodology was based on FEMA 
housing damage estimates and targeted funding to the hardest 
hit areas. The scoring mechanism took four indicators. The 
first was the percentage of housing units damaged in each 
county that was based on FEMA inspections. The second was a 
percentage of the State's total of destroyed units in each 
county, also again taken from FEMA data, a percentage of 
counties' damaged units attributed to households with incomes 
up to $30,000 to measure the level of low-income need, and we 
also used the percentage of the State's total of temporary 
units that were placed in each county.
    A supplemental CDBG disaster recovery allocation of $100 
million to address Katrina and Wilma damage was received in 
2006. Because Wilma damage was not sufficiently addressed with 
these funds, we targeted Wilma recovery with this money. The 
Wilma alone impacted about $275,437 units, HUD-subsidized 
rental units that were hit by the disaster. Of the 17,804 HUD-
subsidized units in Wilma counties: 2 development units 
reported damage with relocations; 67 households were 
temporarily relocated; and 134 developments reported damage. Of 
the public housing units in the area, 4,974 units were damaged 
and remain uninhabitable.
    Chairwoman Waters. I'm sorry. Your 5 minutes have passed. I 
am going to have to move on.
    [The prepared statement of Ms. Stafford can be found on 
page 250 of the appendix.]
    Chairwoman Waters. Next, Mr. David Bowman, director of 
research and special projects, Louisiana Recovery Authority.

 STATEMENT OF DAVID J. BOWMAN, DIRECTOR, RESEARCH AND SPECIAL 
             PROJECTS, LOUISIANA RECOVERY AUTHORITY

    Mr. Bowman. Chairwoman Waters, Ranking Member Capito, and 
members of the subcommittee, thank you for inviting me to 
testify today on behalf of the State of Louisiana.
    My name is David Bowman of the Louisiana Recovery 
Authority. Our executive director, Paul Rainwater, deeply 
regrets that he was unable to attend today. On behalf of the 
citizens of Louisiana, I thank this committee, the U.S. 
Congress, and each American taxpayer for the generous support 
to our State following the unprecedented disasters caused by 
Hurricanes Katrina and Rita.
    These hurricanes were two of the most costly storms in U.S. 
history and they hit Louisiana just 26 days apart. Our State 
has suffered immensely in terms of lost lives, livelihoods, and 
personal assets. The State of Louisiana is grateful for the 
$13.4 billion in Community Development Block Grant funds in 
which $11.6 billion, over 87 percent, has been dedicated 
directly to repairing and replacing the massive loss to our 
housing stock.
    We are making strides with these Federal funds, but even 
with these resources, a number of practical challenges remain 
to the rebuilding efforts. These include increased cost of 
labor materials, increased cost of utilities and insurance, and 
a decrease in available infrastructure and services. These 
challenges impact the single family housing market as well as 
the rental market and drive individual decisions every day 
regarding their ability to return home.
    In addition, the sheer magnitude and concentrate of losses 
dictates that this will be a long-term rebuilding process. The 
Louisiana Recovery Authority is dedicated to the recovery of 
our most devastated areas through the effective use of Federal 
and State resources in a manner that provides accountability 
and transparency. As such, we welcome the opportunity to answer 
your questions.
    Your first question on how many units were destroyed as a 
result of Hurricane Katrina: The State of Louisiana had over 
204,000 housing units with major, severe damage, and over 
106,000 of these were classified as severe or destroyed. 
Approximately 60 percent of those were owner-occupied; 204,000 
homes amounts to approximately 1 in every 8 homes in the State. 
I ask you to contemplate the scale of that number for a moment.
    Due to the levee failures, New Orleans Parish alone had 
more damage than the four Gulf States combined. In neighboring 
St. Bernard Parish, three out of every four houses had major or 
severe damage.
    Current unmet housing needs: Assessing the true demand for 
housing in the wake of this unprecedented disaster is nearly 
impossible. We still have tens of thousands of citizens 
displaced throughout the country, engaging their intent or 
ability to return home as a guest at best. The LHFA recently 
commissioned a housing needs assessment, which is currently 
available on their Web site. The study indicates the need for 
120,000 to 160,000 affordable rental and purchase properties 
throughout the State.
    When you consider the estimated number still displaced--
there were 20,000 still residing in FEMA trailers and receiving 
rental assistance--the 34,000 in HUD's DHAP program, an 
estimated 12,000 homeless residing in New Orleans, these seem 
like conservative numbers.
    Number two is to describe the State's plan for rebuilding 
and repair of lost or damaged housing units. The State's plan 
for rebuilding and repairing lost or damaged units comes 
primarily through the use of CDBG and the utilization of Gulf 
Opportunity Tax Zone credits in addition to traditional 
programs to create market incentives. These are spelled out in 
our action plans to HUD.
    How will this plan address all the State's unmet housing 
needs? The short answer is that while these programs will have 
a dramatic on the housing market, they will not address all of 
the needs. The combination of a supply shortage and increased 
cost of inputs have driven rent prices up considerably higher 
than pre-Katrina.
    Many workers, particularly those supporting the service 
sector, will continue having a difficult time finding 
affordable rent for the foreseeable future. With the State's 
recovery programs, we expect to construct approximately 33,000 
units, in addition to an additional 7,500 units across the 
State through GO Zone and HOME programs. Compare this to the 
82,000 rental units that were destroyed by the storms.
    In what ways does the State ensure that its housing plans 
affirmatively further fair housing? Louisiana prides itself on 
the design of its programs in these terms. The Affordable 
Compensation Grant portion of the homeowner program provides 
additional funding for low- and moderate-income persons to meet 
the cost due to damage. The rental program is a model of best 
practices, including the creation of mixed income units and 
permanent supportive housing. On this note, we critically need 
your support for a current request of 3,000 permanent 
supportive housing vouchers. Without these supports, we will 
have invested in these units, but we will be unable to connect 
our most vulnerable population to these resources.
    What difficulties has the State encountered in meeting the 
CDBG program's low- and moderate-income requirements?
    Mr. Green. [presiding] You may take an additional 30 
seconds to wrap up, please.
    Mr. Bowman. Louisiana will meet its requirements for low- 
and moderate-income; we do not consider these an owner's 
requirement. We consider them necessary to rebuilding our 
State. Within my written comments, you also have some 
additional challenges we faced including meeting environmental 
requirements, implication of benefit, and complications with 
the process of actually getting the CDBG money on the street. 
Specific recommendations are within the written testimony.
    [The prepared statement of Mr. Bowman can be found on page 
64 of the appendix.]
    Mr. Green. Thank you.
    We will now hear from Mr. Norris, the director of the 
Governor's Office of Recovery and Renewal for the State of 
Mississippi.

STATEMENT OF JACK NORRIS, EXECUTIVE DIRECTOR, GOVERNOR'S OFFICE 
         OF RECOVERY AND RENEWAL, STATE OF MISSISSIPPI

    Mr. Norris. Thank you. Madam Chairwoman, Congressman Green, 
and other members of the subcommittee, thank you for the 
opportunity to testify before you today.
    We have a recovery story in Mississippi that we are very 
proud of, but we still face a number of challenges and we have 
a long road ahead of us. And there are some issues that we 
would like to request your assistance on to remove some 
barriers to help us deploy some affordable housing.
    Our State and our citizens bore the brunt of a hurricane 
more devastating than anything this Nation has ever seen 
before. The hurricane completely devastated our entire 
coastline. On November 1, 2005, Governor Barbour submitted a 
comprehensive recovery plan to Congress. This request included 
items to facilitate housing, community, and economic recovery. 
Congress graciously provided Mississippi with the necessary 
resources to fulfill all three objectives.
    The State of Mississippi is pursuing a balanced, long-term 
recovery. This is evident in the distribution of the $5.4 
billion in CDBG funds: $3.8 billion, over 70 percent, will 
directly and indirectly go towards housing recovery. Another 
$1.45 billion will go towards the community and economic 
recovery. Using CDBG moneys, Mississippi created the first of 
their kind of programs to rebuild the lost housing stock. We 
are proud to say that through Governor Barbour's housing 
program, more affordable housing will be developed and 
rehabilitated than existed pre-Katrina in coastal Mississippi.
    For example, 61,386 housing units suffered major damage or 
were destroyed. The State will facilitate the rebuilding of 
over 58,000 affordable housing units. This is in addition to 
the thousands of units that will be rebuilt using private 
insurance proceeds. Private insurance payments in the lower six 
counties alone totaled more than $8.7 billion.
    To give you an example, using CDBG moneys, the State will 
rebuild more than double the number of public housing units 
that existed pre-Katrina; 2,361 public housing units existed 
pre-Katrina, and we will build-back 4,781. To date, 
approximately $1.5 billion in direct compensation has been paid 
to over 20,000 homeowners through the Homeowners Assistance 
Program.
    The State projects that by program close-out, roughly $2 
billion in grants will be disbursed to about 25,000 homeowners. 
To ensure we are meeting our full, housing recovery mission, 
Mississippi has commissioned an independent, third-party 
housing assessment study, which will analyze any unmet needs 
that our housing programs are not meeting.
    We have the resources available to us, so that if any unmet 
needs are identified, we can tailor those policies to meet that 
unmet need. We are not just assuming that our projects are 
correct; we are going to confirm them through a third-party 
independent study. We were disappointed with the pace of 
affordable housing deployment, however, this is primarily due 
to the environmental requirements in disbursing CDBG dollars. 
With this hurdle removed or streamlined, housing would come on-
line at a rapid pace.
    The environmental review required for each applicant's site 
entails the coordination of more than eight Federal agencies 
approving nine different categories, making this process 
extremely time- and labor-intensive. Depending on the site, 
reviews take up to 3 months to complete. Multiply this process 
by thousands of units and the time and expense multiply 
exponentially.
    For example, in our Round I Rental Assistance Grant 
Program, 3,372 units are ready to go pending completion of site 
and environmental reviews. We expect that these environmental 
reviews which began in January of 2008 could take up to 11 
months from beginning to end to complete. There were currently 
4,667 coastal Mississippians living in FEMA travel trailers who 
could move into these units.
    Mississippi is requesting relief from these cumbersome 
regulations for housing specific projects, while HUD has been a 
great partner, providing technical expertise to expedite 
funding. The Agency lacks the administrative authority to waive 
or streamline the environmental process. Mississippi 
respectfully suggests that Congress take steps to streamline or 
waive certain environmental requirements for this disaster and 
future CDBG emergency appropriations.
    Environmental regulations are the number one impediment to 
the deployment of affordable housing in Mississippi. We are 
extremely grateful for the continued support of our friends and 
neighbors and for the resources that Congress has entrusted to 
us. We humbly ask for your continued assistance and support as 
we move forward.
    Thank you.
    [The prepared statement of Mr. Norris can be found on page 
218 of the appendix.]
    Mr. Green. Thank you, sir.
    And we will now hear from Mr. William Dally; I trust that I 
am pronouncing that correctly?
    Mr. Dally. That is quite correct.
    Mr. Green. Thank you, sir. You are the deputy executive 
director for the Texas Department of Housing and Community 
Affairs?
    Mr. Dally. That is correct.
    Mr. Green. Thank you.

STATEMENT OF WILLIAM C. DALLY, DEPUTY EXECUTIVE DIRECTOR, TEXAS 
      DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS (TDHCA)

    Mr. Dally. Thank you for inviting us today.
    TDHCA is the lead agency in Texas responsible for Hurricane 
Rita recovery. Thank you for inviting us to update you on our 
progress to-date.
    On September 25, 2005, Hurricane Rita devastated Southeast 
Texas: 113 people lost their lives; 40,000 uninsured or 
underinsured homes were damaged or destroyed; and the region's 
electrical grid was down for weeks. Infrastructure throughout 
the region was left in ruin.
    Texas has received today a total of $503 million in 
Community Development Block Grant funds, far less than was 
needed for a full recovery, which has meant that we have had to 
make some very tough choices.
    Texas was able to draw down on its first allocation of CDBG 
funds from HUD in June 2006, 9 months after the storm. Given 
the very limited funds and the uncertainty that we would 
receive additional dollars, we worked closely with elected 
local officials, community leaders, and advocates for low-
income Texas faith-based organizations.
    Texas has endeavored to use every dollar to actually 
rebuild or restore the region's housing infrastructure and tax 
base. To rebuild and repair housing, TDHCA has partnered with 
three Council's of Government known as COGs. These local 
organizations are responsible for the distribution of $40.3 
million in housing funds on the first round of funding. The 
balance is going to infrastructure in that same region.
    To date, the COGs have built, repaired, and replaced more 
than 150 homes in Southeast Texas. The process to rebuild and 
repair another 350 homes is well underway. All homes using the 
first round of CDBG funds should be completed by the end of 
this year. In all instances, the intended beneficiaries of 
these funds are the lowest-income Texans, those well below 80 
percent area median family income.
    We have also given priority to seniors, persons with 
disabilities, and other vulnerable populations. This process 
has taken time to get up and running because of the 
complexities of the CDBG program. There are extensive 
environmental requirements, historic preservation clearances, 
duplication of benefit requirements, and other issues, all of 
which slow the process down.
    There is also the reality that many of the poor lack 
critical eligibility documentation and often require intensive 
casework. And that is where our faith-based community has 
really stepped up, and in the interim, been the ones who have 
gone out and done outreach and brought people in for 
applications and made them aware of our benefits long before 
the State had our program set up.
    Again, our overriding desire in Texas is to rebuild homes 
and communities for those most vulnerable citizens. In April 
2007, just a little over a year ago, Texas received permission 
to draw from HUD the second allocation of $428 million. After 
much public discussion again with local officials, community 
groups, and faith-based organizations, Texas chose to continue 
on a path of assisting individuals and communities by focusing 
on actual housing and infrastructure construction and assigning 
priorities to our most vulnerable, low-income citizens.
    The largest amount of the $428 million is reserved for 
housing; $222 million for owner-occupied assistance. There is 
another $81 million that is being used for the rehabilitation 
and reconstruction of more than 800 multi-family rental units 
that were destroyed by Hurricane Rita.
    TDHCA has contracted with a team of professionals to assist 
with the rebuilding of single family homes in Southeast Texas. 
This team is qualifying eligible homeowners but the hard work 
of building and repairing homes or replacing a manufactured 
home is being left to qualified home builders and contractors. 
TDHCA and our contractors, however, will take the lead and 
ensuring that Texans receiving benefits from these programs get 
a safe and decent quality home.
    So owner-occupied construction from the second round of 
funds will commence early this fall. It is important to note 
that with the $222 million we expect to help only 3,500 
homeowners, out of again 40,000 low-income Texans who had 
significant repair and building needs. On a final note, we also 
know that starting over in a new community is difficult. That 
is why the State of Texas dedicated $60 million of the $428 
million in Round 2 to the City of Houston in Harris County to 
assist and provide services for evacuees from Hurricane 
Katrina.
    We believe that we have turned the corner from the planning 
stage and are now fully into the building and reconstruction in 
the region. We welcome the committee exploring the role and 
capacity of the CDBG program when a major disaster strikes. In 
Texas, we believe that we have done some things very well. You 
will find strong accountability and controls intended to 
prevent fraud, waste, and abuse, and you will also find that 
our program is actually building homes and repairing 
infrastructure for whom the program was intended. We are doing 
all of this in compliance with the Nation's Fair Housing laws.
    Still, Texas believes that the process could have been 
significantly streamlined. If the award of CDBG funds had come 
in one lump sum rather than two, we would have enjoyed more 
efficiencies and saved a tremendous amount of money and time. 
If the funds had been available to the State sooner, we would 
have had less costly rehabs. Instead, after all this time, and 
with the rain that has occurred, we are now in the process of 
doing full rebuilds.
    Finally, had HUD and the State had more flexibility to 
account for duplication of benefits and some environmental 
factors, we would be spending far more time building homes than 
going through the qualification and eligibility process.
    [The prepared statement of Mr. Dally can be found on page 
72 of the appendix.]
    Mr. Green. I would like to thank the witnesses for their 
testimony, and I would like to begin with Mr. Johnson with some 
questions, if I may.
    Mr. Johnson, sir, you have indicated that you have lived in 
a number of places that were impacted by hurricanes. Is that 
correct?
    Mr. Johnson. That is true.
    Mr. Green. You are not moving to the Washington, D.C., 
area, are you?
    Mr. Johnson. No, sir. I am really trying to avoid that.
    Mr. Green. All right, sir, thank you.
    Let's move now to Mr. Norris with the Governor's Recovery 
Office, State of Mississippi.
    Mr. Norris, sir, the economic development plans that you 
have with reference to CDBG, you are supposed to, and my 
assumption is that you have, received input from the public. Is 
this true?
    Mr. Norris. Yes, we have.
    Mr. Green. More specifically, as it relates to the $600 
million that we have been discussing from Phase I, did you have 
input from the public on that $600 million and how it was to be 
used?
    Mr. Norris. Through the CDBG program, there is a statutory 
public comment period, and we did receive comments and public 
input through that process. Yes, sir.
    Mr. Green. What process was that? How did you receive the 
public comments, please?
    Mr. Norris. We followed HUD's regulatory requirements for 
public comment periods.
    Mr. Green. Well, did you hold hearings? Did you solicit 
comments by way of e-mail? How did you actually receive the 
comments?
    Mr. Norris. Congressman Green, I will have to get back with 
you on those details. But we did follow HUD's normal CDBG 
public comment period process.
    Mr. Green. My belief is that you are saying this because 
you understand that the process is to be followed, but that you 
did not have a hands-on experience with it. Is this correct?
    Mr. Norris. I personally did not have a hands-on experience 
with it.
    Mr. Green. So your knowledge of it would be based upon 
hearsay from some source, but because you know that the people 
you work with are capable, competent, and qualified, your 
assumption is that they have followed the rules.
    Mr. Norris. Yes, sir. That is correct.
    Mr. Green. Let's move on. I am interested in knowing more 
about this. And if you can provide the information, I would 
greatly appreciate it, because the public comments are 
exceedingly important in the CDBG process. Let's talk for just 
a moment about if we made now the three national objectives, 
one of which must be met for CDBG funds to be used. Would this 
request with the Port, will this principally benefit low-income 
people?
    Mr. Norris. Congressman, we expect to meet the low- to 
moderate-income requirement on the Port redevelopment project. 
We did not specifically ask for a waiver of that requirement on 
the Port. The jobs that would be created as a result and 
returned to the Port of Gulfport through its rebuilding efforts 
will be presented to low- and moderate-income individuals.
    Mr. Green. My intelligence indicates that, well, I'll go 
through the entirety of the three: principally benefit low- and 
moderate-income persons--principally benefit low- and moderate-
income persons is the first; and, while my suspicion is that 
some low- and moderate-income persons may benefit, I am not 
entirely convinced right now that they will be the principal 
beneficiaries.
    Is it your contention that they will be the principal 
beneficiaries?
    Mr. Norris. Congressman, it's an issue of overall recovery 
of the Mississippi Gulf Coast. We have, basically, I'll borrow 
an analogy from my predecessor. The philosophy that we approach 
this recovery from is a balanced, comprehensive recovery. It is 
basically three legs of a stool that we have to completely and 
fully address: housing needs; economic recovery needs; and 
community recovery needs. And, through our programs, we expect 
the Port redevelopment is a crucial part of the economic 
recovery of the Mississippi Gulf Coast.
    Mr. Green. And I want to make sure that we help Mississippi 
recover, but if you have need for port money, and if we can get 
that money to you through some other means and let the CDBG 
money go to people who need CDBG money, that might be an 
equally beneficial way for us to approach this. I am concerned 
about the requirement that it principally benefit low- and 
moderate-income persons. I believe some will benefit, but I 
have not heard enough evidence from you to give me reason to 
believe that low- and moderate-income persons will principally 
benefit. That is my concern.
    Let's move to the next requirement: that it will aid in 
eliminating or preventing slums or blight. Is this going to 
eliminate or prevent slums or blight?
    Mr. Norris. Congressman, it is my understanding that the 
project would have to meet one of the national objectives of 
the city.
    Mr. Green. Exactly, and I am trying to give you the benefit 
of all three. So this one would not be one of the three, then.
    Mr. Norris. I would say of the overall philosophy of our 
recovery, we actually borrow a philosophy from President 
Kennedy: ``A rising tide lifts all boats.'' If we fully recover 
the Port, it will help for the overall recovery of the economy 
of the Mississippi Gulf Coast, therefore providing good, 
quality paying jobs to all individuals on the coast, including 
low- to moderate-income individuals.
    Mr. Green. I understand. Let me just suggest this to you; 
and, I completely agree that a rising tide does lift all boats 
if you have a boat. Unfortunately, we have many persons who are 
boatless. But let's move to the third now. The third 
requirement is that you meet an urgent community development 
need because existing conditions pose a serious and immediate 
threat to the public.
    Was there a serious and immediate threat to the public?
    Mr. Norris. I would say that the immediate need was that 
our Port employment numbers are down 30 percent. Those are AFL-
CIO longshoreman who are currently unemployed, that we have an 
opportunity through the investment of these funds to provide 
jobs back to those individuals, sir.
    Mr. Green. Well, under this theory, all CDBG moneys should 
go to some entity that will provide jobs, because my suspicion 
is in just about every State, there is a need to create job 
opportunities. But CDBG, generally speaking, is supposed to 
help with the revitalization, housing rehabilitation, and 
economic development activities.
    But, it seems that the intent was to help in areas where 
you have people who will immediately benefit as opposed to 
indirectly benefit. Because, indirectly, I benefit from what is 
happening at the port, but I am many times removed. And the 
question becomes, will this $600 million benefit the people 
whom it was intended to benefit? Low- and moderate-income 
persons?
    Will it prevent slums or blight or will it deal with an 
immediate, serious threat to the public?
    $600 million of CDBG, you see. You have your friend from 
Texas seated right next to you, and he is asking for more CDBG 
money as well. Let me just move to him quickly. Sir, are you 
building a port with this money in Texas?
    Mr. Dally. No; we are not. We did not receive enough in 
funds to even consider a port project.
    Mr. Green. I see.
    Mr. Norris. Congressman?
    Mr. Green. Yes, sir?
    Mr. Norris. I would say that there is a clear misconception 
that Mississippi is taking money and investing it into the Port 
at the expense of housing. That is simply not the case.
    Mr. Green. Well, before you go on, I am going to give you a 
chance to respond. But, in your response, do this, if you 
would. Move to another level and take it from just within the 
purview of Mississippi to Texas, to Louisiana, to other States 
that need CDBG dollars and ask yourself, am I preventing other 
States that may need this money from getting it as opposed to 
just Mississippi? You see, we here are perched such that we see 
all 50 States as opposed to just one State. If you would?
    Mr. Norris. Yes, sir. I would again reiterate that this is 
an amount of money that the Governor submitted a plan to 
Congress on November 1st of 2005 for a comprehensive recovery 
plan to the appropriations, House and Senate leadership, and 
this is the amount of money that Congress basically looked at 
the recovery plan that was needed for Mississippi holistic 
recovery; and Congress provided us the necessary resources.
    We were building back more affordable housing units than 
existed pre-Katrina. We were directly giving homeowner's grants 
for $1.5 billion to over $25,000 individuals and we are 
overcompensating for housing recovery if you look at the pure 
numbers of damaged units and the numbers that we are 
subsidizing to be rebuilt. We were fully meeting our housing 
recovery.
    Mr. Green. I understand. And for purposes of this 
discussion, let's assume that everything that you have 
indicated about what you are doing in terms of reconstruction 
is correct for our purposes. Then the question becomes, do you 
really need the $600 million for Mississippi for the port or 
can we take that money and send it over to maybe Texas or 
Louisiana to help with some other housing projects as opposed 
to port projects?
    Mr. Norris. Congressman, I would respectfully say to you 
that we cannot address the overall economic and overall Katrina 
recovery efforts of the Mississippi Gulf Coast without 
addressing one of its crucial economic engines. So I would say 
it is direly necessary that Mississippi had these resources to 
invest in the rebuilding of the port.
    Mr. Green. All right. Let's go again to Mr. Dally. Is that 
correct, sir?
    Mr. Dally. That's correct.
    Mr. Green. Mr. Dally, you indicated that Texas is in need 
of some CDBG funds. Would you tell me quickly please, before I 
yield to another member who has arrived, about the Texas need, 
if you can summarize that need, and in doing so, tell me about 
the economic development activities in the Texas need, if there 
are such needs.
    Mr. Dally. We do not have any in the way of economic 
development in our particular program, because as we went out 
to the local officials in Southeast Texas, it was clear that 
with the amount of money that we had that what we needed to do 
was to rebuild housing and get those people back up where they 
could remain in their communities and be part of that tax base 
and part of that community.
    Mr. Green. Let me move on. Let's go now to Florida, the 
representative from Florida.
    Do you have economic development dollars in your program?
    Ms. Stafford. Yes, we do. We just have a very small 
portion. The majority of our funds are going for infrastructure 
and housing-related activities.
    Mr. Green. When you say a small portion, quickly, what 
percentage would you say?
    Ms. Stafford. This is a rough guesstimate. I would say less 
than 20 percent.
    Mr. Green. And will you be constructing or rehabilitating a 
port?
    Ms. Stafford. No. No, our economic development funds 
actually go to assist businesses that have been impacted and to 
create jobs. So we are not rebuilding any ports or anything 
like that.
    Mr. Green. And are these businesses near areas where we 
have low-income persons residing?
    Ms. Stafford. Yes, they are. Yes, and actually one of the 
requirements under our economic development funds is that they 
actually, 50 percent of the jobs that they create, are for low- 
to moderate-income persons in the community.
    Mr. Green. Let's move to Louisiana, please.
    Do you have within your plan an economic development 
component?
    Mr. Bowman. Yes, sir. We have about 2 percent.
    Mr. Green. Two percent?
    Mr. Bowman. Two percent.
    Mr. Green. And what type of businesses will you impact, 
please?
    Mr. Bowman. Primarily small businesses in the impact area. 
We have a small business grant and loan program.
    Mr. Green. And in the impact area, do you have low-income 
persons?
    Mr. Bowman. Yes, sir.
    Mr. Green. In that immediate area?
    Mr. Bowman. Yes, sir.
    Mr. Green. All right, Mr. Norris, just one more word or 
question.
    In the area immediately around the port, what we will call 
the impact area, do we have low-income persons living in that 
area?
    Mr. Norris. Sir, I would say that the broad income that the 
port has on the entire Gulf Coast clearly, we had roughly pre-
Katrina, about 47 percent low to moderate income.
    Mr. Green. I see, so by helping with the port, we will help 
the entire Gulf Coast?
    Mr. Norris. Absolutely. Sir, I would want to point out that 
I notice other States get percentages of their CDBG funds that 
are being used for economic development purposes.
    Mr. Green. Yes, sir.
    Mr. Norris. Well, say, of our $5.4 billion allocation, over 
70 percent is going directly to support housing development; 
only 30 percent, or $1.4 billion of the $5.4 billion, is going 
toward job recovery. We cannot have full recovery without 
economic recovery. We are rebuilding communities, not just 
houses.
    Mr. Green. Now, before I close, and I will be yielding to 
Mr. Cleaver in just a moment, but let me ask this: In 2007, did 
you have $81,756,822 as unencumbered funds for your port? Or, 
maybe my dollars are a little bit off; I would say about $81 
million.
    Mr. Norris. I am not sure I understand the question.
    Who would have had those resources available to them?
    Mr. Green. Your port; the port that we are talking about 
that you are asking to get the $600 million?
    Mr. Norris. I am not familiar with that number.
    Mr. Green. I have information indicating that at the 
beginning of 2008, you had $82,353,592 as unencumbered.
    Mr. Norris. I can't comment on that number, because I am 
not sure what the source of it is. Congressman, it may be that 
the port does qualify for some sort of public assistance 
funding and obviously had some insured losses.
    Mr. Green. Is your port in the red or in the black?
    Mr. Norris. Congressman, they are in the process of 
settling with FEMA for public assistance funding and with their 
insurance for insured losses that they fall far short of the 
necessary resources to fully build back.
    Mr. Green. Can you provide the committee with an audit 
statement in terms of where the port is with its actual funds 
of financing. I would like to know whether it is in the red. If 
it is in the red, to what extent. If it is in the black, to 
what extent. It may be the actual dollar amount, so I can see 
if it coincides with the numbers that I have. That would be for 
2008 and for 2007.
    Mr. Norris. Yes, sir, we would be happy to follow up with 
you.
    Mr. Green. And how long would you contemplate that this 
action would take you to consummate?
    Mr. Norris. We will follow-up immediately after this 
hearing and get that information to you as quickly as possible.
    Mr. Green. May I define ``immediately'' for you, since you 
have said ``immediately?''
    Mr. Norris. Sure.
    Mr. Green. Can it be done within a week?
    Mr. Norris. Yes, I'm not sure what all it entails as far as 
going back, but, yes, sir. We will make the commitment to you 
that if that $81 million, I will find the source of that number 
for you within a week and provide that in writing to the 
committee.
    Mr. Green. If that is too soon for you, would you like 10 
days?
    Mr. Norris. Yes, we will take as much time as you are 
willing to give us, because I am not sure what all is entailed 
in identifying it.
    Mr. Green. With the advice and consent of the Chair, Madam 
Chairwoman?
    Chairwoman Waters. Will you continue with this panel?
    Mr. Green. I am about to yield, especially to you Madam 
Chairwoman, but I was asking this witness to submit some 
information. I have information indicating this port had 
$81,756,822 of unencumbered funds in 2007; and $882,353,592 in 
2008, and I have asked him to give me some information on these 
numbers.
    Is that acceptable to you, Madam Chairwoman?
    Chairwoman Waters. Yes, that is fine, without objection.
    Mr. Green. Without objection, thank you.
    I will now yield to the Chair and relocate from the chair.
    Chairwoman Waters. Thank you. Thank you very much.
    I would like to thank Mr. Green for filling in for me while 
I had to go out for a moment. As I understand it, we are in the 
questioning period at this point, and I do have a number of 
questions that I would like to ask.
    First, let me just say to our representative here from 
Alabama, Mr. Bill Johnson, that I am pleased that my staff made 
sure that you were here today, because we have not given a lot 
of attention to Alabama. Most of our attention has been focused 
on Louisiana and Mississippi and Florida, and even Texas and 
Alabama have not gotten a lot of attention.
    But for you, in your testimony, you said that you had been 
able to manage your CDBG funds despite some of the requirements 
of the Federal Government. Were you implying that there were so 
many strings attached that you felt that you had to work a 
little bit harder in order to get the money out? Or, because as 
I heard from our first witness today, Mr. Gimont, that it had 
been designed and we supposedly passed the legislation so there 
would be enough flexibility in it so that each area could 
tailor the money to its needs.
    So, would you let me know, Mr. Johnson, whether you were 
able to do that in Alabama?
    Mr. Johnson. Well, yes, ma'am. We fortunately were, and I 
have to say that HUD was great at granting the waivers. We 
asked for every waiver that we could get and we were granted 
every waiver.
    Still, I think everybody here appreciates the other strings 
that are attached, the environmental regulations and reviews 
that are sort of necessary with the Block Grant program. So 
those are still the challenges that we have to oversee. But we 
have just really appreciated the cooperation that HUD has given 
us in this program.
    Chairwoman Waters. Now, we know a little bit more about the 
Road Home program in Louisiana and how it works. How did you 
design the expenditure of your CDBG funds?
    Mr. Johnson. Well, as I mentioned at the beginning, the 
area that was primarily affected, Mobile County and Mobile 
City, both of those entities are entitlement communities, and, 
as such, they had been managing their programs for decades. 
And, so, the State elected to basically make Block Grants for 
different categories of activities to these local entities who 
were eligible entitlement community to basically craft and 
design their own programs.
    Now, we did work hand-in-glove with them. As I said, we had 
our long-term recovery planning committees that met jointly 
with them. I have a person stationed on the ground down there. 
We have been, as I say, it is a joint partnership between the 
State and the local entities, but they take the lead, because 
they are the entitlement.
    Chairwoman Waters. So we made you talk directly to those 
entitlement communities about how they spent the money both for 
homeowners and for renters.
    Mr. Johnson. Yes, ma'am. I can only relate to you what they 
have related to me.
    Chairwoman Waters. All right. Let me quickly go to 
Mississippi, because one of the concerns that we have that 
triggered this hearing today has to do with the port. All 
right. I am sure you have heard a lot about it from the other 
members.
    As I recall, when we were in Mississippi, we learned that 
your first allocation of assistance was to those who already 
had insurance, your homeowners and your kind of road home 
program, or whatever it was called. It went to those who 
already had insurance and that you allocated `X' number of 
dollars. They were eligible for `X' number of dollars, and you 
had money left over. And then you went to a second level of 
funding in some way to those who maybe did not have insurance.
    Will you explain to us how you did that?
    Mr. Norris. Congresswoman, the State of Mississippi's 
housing assistance grant program was designed and funded for 
Congress. The argument that was made that Congress should 
provide direct grant assistance to individuals was on the basis 
that individuals living outside the federally-drawn flood maps, 
who were told by the Federal Government that they did not need 
flood insurance, and the Federal Government was simply wrong, 
their homes were destroyed by flood damage.
    So it was the argument in the State of Mississippi, since 
those individuals were allowed on the Federal Government to 
their detriment that they did not need flood insurance that the 
Federal Government should compensate those individuals. And 
that is the basis for Round I of the Homeowner Assistance Grant 
Program.
    We then expanded it to be directed specifically to low- to 
moderate-income individuals, uninsured individuals in and 
outside the flood plane, but still, specifically, to address 
the unprecedented event. In Mississippi, the unprecedented 
event of Katrina was a 30-foot wind-driven storm surge, and our 
housing assistance grant programs as funded by Congress were 
intended to help those individuals and to compensate them for 
their losses due to the wind-driven storm surge. And then that 
was the basis for the Mississippi Homeowners Assistance Grant 
Program.
    Chairwoman Waters. What was the average amount of the grant 
that you gave in the first round to those who had insurance?
    Mr. Norris. The first round was specifically designed to 
cover those individuals who had homeowner's insurance but did 
not have flood insurance.
    Chairwoman Waters. Yes, I understand that. How much average 
and total amount was spent in that category?
    Mr. Norris. The total amount spent to date? Hold on. I want 
to give you an accurate number, ma'am, so if you would give me 
a second.
    Chairwoman Waters. Okay, all right.
    Mr. Norris. For Round I of the Homeowners Assistance Grant 
Program, to-date, $1.2 billion in grants have been distributed.
    Chairwoman Waters. Okay, now. Describe who received money 
in the second round.
    Mr. Norris. The second round was expanded to cover those 
individuals at 120 percent of the average median income and 
below who were either insured or uninsured inside the flood 
plain or outside the flood plain.
    Chairwoman Waters. Now, give me the average amount of the 
grant in Round I to those homeowners. What was the average 
amount of the individual grant?
    Mr. Norris. Madam Chairwoman, we budgeted overall for the 
program that we would receive, Round I and II, 30,000 qualified 
applications and an average grant of $120,000.
    Chairwoman Waters. $120,000 is the average amount that was 
given to the homeowners who qualified?
    Mr. Norris. I would say our original budget estimate is 
that they could qualify for up to $150,000. We budgeted for 
grants to come in around that level. The average grant that we 
have received and that we have awarded is about a $70,000 
grant; and that is driven by the individual applications and 
what they qualify for.
    Chairwoman Waters. Okay, about $70,000 is the average, but 
it could go up to $150,000?
    Mr. Norris. It could go up to $150,000 for Round I, and up 
to $100,000 for Round II.
    Chairwoman Waters. Okay, for Round II, what was the average 
grant that was given in Round II?
    Mr. Norris. The average grant for both, the number that I 
have, Madam Chairwoman, is that the average grant for both 
homeowners programs was $70,000.
    Chairwoman Waters. No. No. No, I want the average just like 
you just gave me the $70,000 average in Round I. In Round II, 
that was a different group of qualifiers as you have described. 
They did not have the insurance and they came in Round II.
    What was the average amount of that grant?
    Mr. Norris. Madam Chairwoman, respectfully, I don't have 
that number with me. I am happy to follow up in writing, 
specifically, to that point. But, overall, if you take it 
holistically, the average grant for Round I and II was $70,000.
    Chairwoman Waters. No, that's not what I want. What I want 
is I want to know how much was given in Round I to those 
homeowners who had insurance; and, then, in the second 
category, I would like to know the average grant and the total 
amount of money spent in the second round. How much was spent 
on the second round?
    Mr. Norris. Well, we're still processing applications, so 
the number changes daily.
    Chairwoman Waters. Just as of today.
    Mr. Norris. Well, as of May 2nd, $278 million.
    Chairwoman Waters. $278 million in the second Round?
    Mr. Norris. Yes, ma'am. And it's important to note that 
this grant program is driven by demand.
    Chairwoman Waters. $278 million in the second Round. What 
was the total bottom line in the first round?
    Mr. Norris. To-date, it is roughly $1.2 billion. That exact 
number is $1.71 billion.
    Chairwoman Waters. $1.2 billion, and how many homeowners 
were the beneficiaries of the $1.2 billion?
    Mr. Norris. Well, to date, the number of grant awards paid 
is roughly 16,000. But, to date, we have awarded program-wide 
Round I and II, just about 25,000 grants.
    Chairwoman Waters. So, about 16,000 of those were in Round 
I where you spent about $1.2 billion at an average of about 
$70,000, which could go up to $150,000. And in Round II, how 
many were covered? How many homeowners were covered in Round 
II, the ones who didn't have any insurance?
    Mr. Norris. Congresswoman, it's a moving target daily. But 
at the end of the day--
    Chairwoman Waters. Just as of today, as of last month.
    Mr. Norris. Well, Congresswoman, we will follow-up with you 
in writing to the specific numbers of Round II of the 
percentage.
    Chairwoman Waters. You don't have that today? You don't 
have those numbers today?
    Mr. Norris. I have overall program forecasts for Round 2, 
what we expect.
    Chairwoman Waters. No. I don't want the forecast. I want 
the actual.
    Okay. How would you describe your unmet needs at this 
point?
    Mr. Norris. Madam Chairwoman, I would describe our unmet 
needs at this point as clearly, we have 4,667 coastal 
Mississippians living in FEMA travel trailers. That is our 
immediate unmet need that keeps us up at night, frankly, 
because we have deployed the necessary resources for full 
housing recovery on the Mississippi Gulf Coast to build more 
units than were damaged and existed pre-Katrina.
    And, specifically, in our small rental assistance grant 
program, we have just over 3,300 homes that are ready for 
construction tomorrow, but they are mired in the environmental 
requirements that are placed on CDBG dollars. But we have an 
immediate need of a population of over 4,000 coastal 
Mississippians living in travel trailers. We have the resources 
ready to deploy tomorrow, but we can't deploy those resources 
because of the environmental requirements placed on those 
resources.
    Chairwoman Waters. I don't understand what you are saying. 
You can't build housing because of environmental problems?
    Mr. Norris. We were directly subsidizing the construction 
of affordable rental units using CDBG dollars. You cannot 
deploy CDBG dollars without going through all the environmental 
requirements that are attached to the expenditure of the 
dollar.
    Chairwoman Waters. Yes, I mean, they are requirements. To 
spend money, usually, you are saying that they are too onerous, 
that you can't spend the money because you can't be in 
compliance?
    Mr. Norris. I would say to you, Madam Chairwoman, that our 
environmental engineering company that we have contracted with 
has estimated that for each individual home site, say, if you 
take Round I of the population, we have over 3,300 units. For 
each individual site, it requires a full environmental review.
    Each environmental review for each site could take over 3 
months. If you multiply that over 3,000 units, the time is 
inordinate. I mean, if you look specifically for Round I of our 
Small Rental Assistance Grant Program, it will take 11 months 
from beginning to end in that process.
    Chairwoman Waters. How much CDBG money have you used to 
build any housing?
    Mr. Norris. We have given to date $1.5 billion in direct 
compensation to homeowners. Phase II of our housing property 
project--
    Chairwoman Waters. No, I'm really asking quite another 
question. I am not going back to what we were talking about 
before. I am asking a question that is more related to what you 
are describing now.
    You are talking about having the ability to use CDBG to 
actually assist with construction of housing. Is that right?
    Mr. Norris. Madam Chairwoman, that is correct.
    Chairwoman Waters. Okay, so I want to know, have you done 
any of this at all?
    Have you built or constructed or assisted in constructing 
any housing other than those two categories we talked about?
    Mr. Norris. We are at different stages through our 
different phases of employment.
    Chairwoman Waters. Have any been completed?
    Mr. Norris. There are some public housing projects that are 
currently through the environmental process.
    Chairwoman Waters. Have you completed any housing that you 
have been involved in direct construction of?
    Mr. Norris. Madam Chairwoman, I respectfully say that due 
to some of these projects--
    Chairwoman Waters. Okay. I know the reasons. You have told 
me that, and I have to just rush a little bit, but I get it.
    You are saying that because of the onerous environmental 
requirements, you have not been able to construct any housing, 
but you have people who are living in the trailers now.
    How much money are you giving to the port? I know you have 
answered this before, but let's hear it again.
    Mr. Norris. There is $600 million obligated to the port 
redevelopment.
    Chairwoman Waters. $600 million that is obligated already 
to port?
    Mr. Norris. It depends on the definition of ``obligated.''
    Chairwoman Waters. I know what the traditional definition 
is. I guess what I am trying to look at is whether or not you 
have done several things. Number one, in addition to the first 
category of assistance to homeowners, have you completed 
assisting those homeowners who did not have insurance?
    Most of them fall into lower-income areas. These are the 
ones who basically say they could not afford the insurance. I 
want to know what is going on there. How many people are left 
to be assisted? I want to know what the housing needs are, and 
have you completed any housing, because when, of course, we get 
the news that you are putting money into the port, we want to 
know what has been done with housing.
    Finally, I am going to wrap up because this member has been 
waiting. Those people whom you have assisted, say in Round I, 
who lived in flood areas or maybe didn't live in flood areas 
and they were flooded, as I understand it, they were told that 
if they rebuild in those areas again, that they would not be 
eligible for any kind of assistance.
    Is that correct?
    Mr. Norris. Madam Chairwoman, that is not correct.
    Chairwoman Waters. Would you correct me?
    Mr. Norris. We did place requirements for those individuals 
who received those grants that they mitigate against future 
storm damage, but they can use those resources to build back in 
that location but would required to meet the new flood 
elevation levels, new building standards, and so forth.
    Chairwoman Waters. Okay, and they have been able to do 
that?
    Mr. Norris. Yes. And we are also providing another 
supplemental program on top of Round I and II that homeowners 
who qualify under Rounds I and II also qualify for an 
additional $30,000 to pay for the elevation costs, the 
additional cost of elevating due to the flood level.
    Chairwoman Waters. How much have you spent on supplemental?
    Mr. Norris. Pardon me, ma'am. I'm sorry?
    Chairwoman Waters. How much money have you spent in your 
supplemental program? And where did that money come from?
    Is that CDBG?
    Mr. Norris. That money came--it is CDBG money, and it also 
comes out of the Homeowners Assistance Grant Program.
    Chairwoman Waters. The CDBG that funded the Homeowner 
Assistance Program--how many folks in Round I received 
supplemental money?
    Mr. Norris. Congresswoman, I do not have that specific 
number.
    Chairwoman Waters. Okay, I would like to ask you to submit 
to us the number of people who received supplemental money in 
Round I and in Round II. We are going to ask also for how many 
applications you received in both of these areas.
    How many people in Round II have been waiting; and, also, 
we are going to ask some additional questions about housing. We 
can't do it all today, but we are going to ask you to submit 
this in writing; and, we will formulate exactly how and frame 
these questions for you. But I get a sense of it right now, and 
I don't have any more time.
    My time has long been up. So, thank you very much and I 
call on the gentleman from Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you, Madam Chairwoman. Let me go back to 
Mr. Norris, because I think that this could be a key. What is 
your definition of the word ``obligated?''
    Mr. Norris. Well, the definition according to HUD of 
``obligated'' from my understanding is that a grant agreement 
has been signed with the receiving entity. A grant agreement 
has not been signed in the case of the port.
    Mr. Cleaver. So there is no obligation?
    Mr. Norris. A grant agreement has not been signed. No, sir.
    Mr. Cleaver. Okay, so there has been no obligation.
    Mr. Norris. Again, my definition of obligation--
    Mr. Cleaver. No. No, sir.
    Mr. Norris. The money is dedicated to the port recovery 
under the State's comprehensive recovery plan. I would point 
out the State of Mississippi is building back more affordable 
housing than existed pre-Katrina. So, overall recovery, 
Congress provided us with the necessary resources to fully fund 
housing and to fully fund economic recovery, including the 
port. But the money is not technically obligated, no, sir.
    Mr. Cleaver. So, there are no contracts?
    Mr. Norris. There are no contracts signed. We are in the 
process.
    Mr. Cleaver. Are the contracts written?
    Mr. Norris. The first contract that we have is we are in 
the process of signing a contract for a program manager but no 
contracts have been signed.
    Mr. Cleaver. So, if you sign that contract for project 
manager, does that wait on an obligation? Does that mean we are 
not obligated once you sign the contract or can you sign that 
contract without the obligation?
    Mr. Norris. Congressman Cleaver, I would need to follow up 
with you in writing on the specific definition of ``obligated'' 
and ``contract.'' But we expect to sign a contract for program 
managers this week.
    Mr. Cleaver. Is this similar to what ``is'' is?
    [Laughter]
    Mr. Norris. Congressman, the money is not obligated until a 
contract is signed. And I am telling you that we have not 
signed a contract on the port.
    Mr. Cleaver. What needs to happen before you can sign a 
contract?
    Mr. Norris. From my understanding, before a contract can be 
signed, and I will need to follow up with details in writing, 
but an environmental assessment needs to be done. And the other 
steps that are required statutorily by the CDBG program before 
a contract can be signed and a grant can be officially 
obligated.
    Chairwoman Waters. Will the gentleman yield for one point?
    Mr. Cleaver. Yes.
    Chairwoman Waters. Yes, because I thought I just heard you 
say that you discussed the definition of ``obligate,'' and I 
kind of get where you are going with this, but, you said 
something about the CBDG money that would be used for this. You 
are able to meet all the requirements of CDBG in order to move 
forward on the port. Is that correct?
    Mr. Norris. Are you referring to the low- to moderate-
income requirements?
    Chairwoman Waters. I am not requiring doing anything in 
specific. What I am really asking is whether or not you have 
the same kind of impediment to building a port that you have to 
building houses.
    Mr. Norris. We absolutely have the environmental 
impediments to the rebuilding of them.
    Chairwoman Waters. So you probably can't get this done very 
easily? You have the same problems you had with building 
houses?
    Mr. Norris. Absolutely. We were mired in the same 
regulatory burdens of environmental that we are with our other 
programs.
    Chairwoman Waters. Would it be wise to fight through the 
building of the housing before you commit to the port? I 
imagine that will be even more difficult and more complicated 
to be in compliance.
    Mr. Norris. Well, there are different circumstances. The 
housing program is difficult because of the thousands of 
different sites that are involved with the processing of the 
environmental. The port is more or less one holistic 
environmental assessment. Our housing programs are individual, 
environmental reviews for each individual site; so, I would say 
as far as it complicates things, exponentially.
    Chairwoman Waters. I don't know why it would. It seems to 
me that there would be any number of locations where you could 
get negative declarations in order to go ahead and build 
housing. I don't think all of the land that you are thinking 
about using somehow or the sites are environmentally 
problematic to the point where you can't build a house.
    I mean, you know, if I was a city, I could not overcome 
environmental impediments to building a house. I would feel 
very, very strange. So I could not help but raise a question in 
relationship to the ports.
    Thank you very much. I yield back.
    Mr. Cleaver. I surrender. Thank you. I was going to get a 
headache, so I just quit.
    Let's move on to--I have been a mayor, so I am very 
familiar with CDBG, very familiar. And one of the requirements, 
an extricable requirement, has always been that a public 
hearing must take place before any allocation of CDBG Block 
Grants. Is that right, Mr. Gimont?
    Mr. Gimont. In the regular program that is correct; 
however, for the purposes of the Supplemental Disaster Recovery 
Funds, we waive the requirement with regard to a public 
hearing, preferring to utilize an alternative approach as 
permitted under the supplemental appropriation language. If you 
can turn the clock back to the days following the impact of the 
hurricanes, an awful lot of people had to leave their homes and 
their communities. They were not there physically to be able to 
attend a public hearing.
    So we established alternative requirements for the grantees 
to utilize for the purpose of obtaining citizen comments, such 
as posting the information on the Internet, publicizing it in 
papers for general circulation, and various approaches to 
ensure that the word got out with regard to the activities that 
are being proposed--
    Mr. Cleaver. Yes--
    Mr. Gimont. And that the grantees wished to carry out.
    Mr. Cleaver. Yes. We held a hearing in Mississippi. I know, 
I'm familiar with what happened early on. And, of course, in 
our conversations with citizens in Mississippi, they believed 
that there was a great deal of intentionality in soliciting 
information from the public the way you did because obviously 
if your home is being washed away, you didn't run back in to 
get your computer, if you had a computer. Which means that 
essentially there was no contact with the public with regard to 
the issues.
    And then, would you agree that we issued more waivers in 
Mississippi than we have in all of the other southern States?
    Mr. Gimont. I don't know that we have issued more for 
Mississippi. We have generally tended to waive things across-
the-board with regard to the various States, although some 
States have asked for particular waivers. I would be happy to 
supply that information to you with regard to particular 
waivers granted to the State of Mississippi.
    Mr. Cleaver. My concern is that now in the aftermath of 
Katrina, we do have time to have public hearings, and I am 
wondering why we have not.
    Mr. Gimont. One of the requirements of the supplemental 
appropriation language is that we reconsider waivers on the 2-
year anniversary of their issuance, and we are now just 
beginning to come into those 2-year review periods. So we will 
be looking at each one of the waivers that's been issued in 
making the decision as to whether or not it should be extended.
    Mr. Cleaver. There is a belief in Mississippi--and this 
won't be new to you--that the waivers and the dollars have been 
badly skewed toward wealthy homeowners. Is that a result of 
mass hysteria or people who just don't understand the 
complexity of Community Development Block Grant, and all of the 
implications thereof?
    Mr. Gimont. From where we sit, and the data that we are 
seeing submitted by the States, we feel that they are doing an 
adequate job in meeting the low- and moderate-income benefits 
requirements that are imposed upon them through the program.
    Mr. Cleaver. Now, where did this research come from?
    Mr. Gimont. We receive, as is noted in my statement 
earlier, quarterly reports from our grantees with regard to--
    Mr. Cleaver. HUD grantees?
    Mr. Gimont. From the States. So we--
    Mr. Cleaver. I'm sorry, Mr. Gimont. The report came from--
    Mr. Gimont. Again, we are getting a continual stream of 
information from our grantees, the States, with regard to the 
activities that they are implementing.
    Mr. Cleaver. So do you really think that the State would 
send you a report saying, ``We have responded to the low-income 
people of Mississippi poorly?''
    Mr. Gimont. No. What they are required to do is to keep 
information with regard to the income levels of the 
beneficiaries of the activities that they are assisting. So as 
they are going out and their contractors in the case of 
Louisiana and Mississippi are concerned, they are tracking the 
income eligibility of the various people who are being assisted 
through these programs.
    Mr. Cleaver. Mr. Johnson, is that a public document?
    Mr. Johnson. The reports?
    Mr. Cleaver. Yes.
    Mr. Johnson. Yes, sir. As far as I know.
    Mr. Cleaver. And the report is based on some sampling of 
the people?
    Mr. Johnson. Yes. From the information that we get, and who 
is receiving funds, we know exactly what their circumstances 
are, and in Alabama, we are anticipating that we might get a 
100 percent low- to moderate-income benefit, based on we're 
doing.
    Mr. Cleaver. Yes. Alabama has, I think, performed at a much 
higher level than Mississippi, and that is where my concern is 
that the people in Mississippi, the lowest, the most decimated 
parts of this community, the most devastated individuals, are 
the ones who have not received the assistance. And I don't know 
what we can do with HUD to get that across, that receiving a 
report from the Mississippi State government may not be 
sufficient.
    I mean if there is widespread dissatisfaction--look, let me 
ask you: Do you believe, Mr. Gimont, that there is widespread 
dissatisfaction and disillusionment with the recovery program 
in Mississippi?
    Mr. Gimont. Again, from what we are observing, the States 
are doing a good job of delivering this money to the homeowners 
who were impacted by the storm. When we look at the State of 
Louisiana, I believe there were around 105,000 homeowners 
assisted at this point. When we look at the State of 
Mississippi, it is 20,000 homeowners assisted to this point. We 
think these are good results, good outcomes.
    Mr. Cleaver. But are there--
    Mr. Gimont. Are there people who don't feel that they have 
gotten what they deserved or should have received? Certainly. 
And we see a stream of mail to that effect and we work with the 
States to address these issues.
    Mr. Cleaver. How?
    Mr. Gimont. We return it to them, and say, ``Please look at 
this again, and then report back to us with regard to your 
reevaluation of the claim being made by this individual.'' So 
we are watching this. I mean we also monitoring the States on a 
very regular basis. We will probably have 20 different 
monitoring trips to these five States in the course of this 
fiscal year, where we are sending out teams of 5 to 7 people to 
spend a week in their offices and review their files and talk 
to their contractors about what they are doing and how they are 
implementing the programs, and who is benefitting.
    We are going back, as we do in the regular CDBG program to 
check that they are doing what they said they would do.
    Mr. Cleaver. One final question. Well, actually I have 36 
more questions, but I will just ask one: Are you satisfied that 
everything that can possibly be done in Mississippi is being 
done to provide the swiftest aid to the victims of Katrina and 
Rita?
    Mr. Gimont. Would we like to see more progress on some 
fronts? Certainly. Is it realistic to expect that? That is a 
hard judgment to make at this particular point in time. I think 
that these homeowner compensation programs have probably been 
the easiest things to stand up for the States, that setting up 
the process, evaluating the applications, and cutting checks to 
this point, relatively speaking.
    We are now beginning to get into the ground game of 
recovery on the Gulf Coast, the hard construction work. Doing 
things such as rebuilding housing, rebuilding the public 
housing, doing the infrastructure work. These things are just 
coming on-line now. And we would expect to see significant 
progress on those program components over the next several 
years. This is going to be a long-term effort on the Gulf 
Coast.
    Mr. Cleaver. Just a second. I thought I would catch the 
Chair talking, and I could slip in another question.
    If you were a Member of Congress and people all over this 
Nation are angry because they believe that our response on the 
Gulf Coast is pathetic and if all of the people around the 
country are angry and it generates anger towards the United 
States Congress, which is what's happening--people are angry.
    I mean the percentage of Americans dissatisfied is at an 
all-time historic high, 80 percent. And the rise began--if you 
go the Gallop & Harris people, it began with the response to 
Katrina; 80 percent of the American public says that the Nation 
is moving in the wrong direction.
    Katrina and Rita started it. And when people look at 
television and see that much of the devastation has not been 
addressed, they become angry. They think we live in the world's 
only superpower, the most industrialized nation on the planet. 
There is a catastrophe now in Burma and it looks like Katrina, 
in the aftermath of Katrina, what has happened in Burma, and 
they are thinking, you know, we're not going be able to fix our 
own country. People are angry.
    And so when they get angry, I have no other recourse but to 
express the anger coming from the district I serve. And I think 
they believe that the money--and particularly when they read--
I'm through, Madam Chairwoman--when they read articles which 
suggest Mississippi's use of waivers to redirect funds 
designated for low-income Katrina victims, and the article goes 
on to talk about how helping people of low- to moderate-income 
seems to be on the back burner in Mississippi.
    And so, well, I mean, you know, you are shaking your head, 
but there is nothing that has been said here today that 
convinces me otherwise.
    Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you very much.
    I would like to thank all of the members of this panel who 
have participated today, and I'm sorry we didn't have the 
opportunity to talk more with Texas and Florida. We know that 
Florida has been, as you described so well, the victim of these 
natural disasters for a long time. You can't get out from under 
one before you get another one. And what we need to do is just 
keep trying to get as much assistance to you as possible. We 
don't have any real questions about how you have utilized 
these. Unfortunately, our questions fall to those who have been 
responsible for the expenditures that we sent to them in 
Louisiana, and Mississippi in particular.
    We didn't talk a lot about Louisiana today. But the 
complaints continue to be what they were early on: Number one, 
that there is every opportunity to squeeze the homeowners under 
the Road Home Program, and instead of them ever being able to 
get the maximum or near maximum, people are walking out with, 
you know, $20,000 or $40,000, way below the claims are that 
they're putting in. That is an ongoing complaint.
    And you have a backlog of people who have been in process 
for well over a year to a year-and-a-half, and are still 
waiting to hear. So before you leave, Mr. David Bowman, when 
are you going to clean up the backlog in Louisiana? And why are 
people complaining about being squeezed and not getting 
reimbursed adequate amounts that they think they are eligible 
for?
    Mr. Bowman. Well, I think on your first point, I would like 
to point out that the State is streamlining and taking over the 
entire appeals process.
    Chairwoman Waters. I can't hear you.
    Mr. Bowman. The State is in the process of completely 
redesigning and taking over the appeals process from the 
contractor. So we acknowledge that has been problematic, and we 
cannot make excuses for it, however, moving forward, we are 
streamlining and taking that process over, so that we do not 
continue to have these problems.
    To address some of the questions from earlier, though, as 
far as serving low- to moderate-income versus wealthier 
clients, most of our complaints actually come from those who 
are not LMI; and in fact the average award for LMI, because of 
our affordable compensation grant program, is actually higher 
than the average grant for the wealthier clients. Part of that 
is because of the insurance capacity that the wealthier clients 
tend to have as well. But the additional affordable 
compensation grant has boosted those LMI persons with more 
resources to rebuild, so they actually have higher average 
grant awards.
    Chairwoman Waters. We have more questions, and we will send 
them to you in writing. As a matter of fact, we are going to 
ask for a report. You must have something available to talk 
about what has been done today. But we will send a letter to 
you to request that information.
    If there are no more questions of this panel, we are going 
to dismiss the panel. I thank all of you for your testimony 
today.
    The Chair notes that some of our members may have 
additional questions for this panel, which they may wish to 
submit in writing. Without objection, the hearing record will 
remain open for 30 days for members to submit written questions 
to these witnesses and to place their responses in the record.
    Thank you very much. The panel is now dismissed, and I 
would like to welcome our second panel. Thank you.
    Hello, Mr. Craig, is it ``Bab'' or ``Baab?'' What is the 
correct pronunciation?
    Mr. Baab. ``Baab.''
    Chairwoman Waters. ``Baab?'' Thank you very much. Please 
come forward. Mr. Baab is a Katrina advocacy fellow at Alabama 
Appleseed Center for Law and Justice, Inc.
    Our second witness will be Ms. Leslie Powell, senior 
attorney, Legal Services of North Florida.
    Our third witness will be Mr. James Perry, Louisiana 
Housing Alliance, Greater New Orleans Fair Housing Action 
Center.
    Our fourth witness will be Mr. Derrick Johnson, president, 
Mississippi State NAACP.
    Our fifth witness will be Mr. Reilly Morse, Equal Justice 
Works Fellow, Mississippi Center for Justice.
    And our sixth witness will be Mr. John Henneberger, co-
director, Texas Low-Income Housing Information Service.
    Without objection, your written statements will be made a 
part of the record. You will now be recognized for a 5-minute 
summary of your testimony.
    Thank you very much.
    Mr. Baab?

 STATEMENT OF CRAIG H. BAAB, KATRINA ADVOCACY FELLOW, ALABAMA 
            APPLESEED CENTER FOR LAW & JUSTICE, INC.

    Mr. Baab. Thank you very much for convening this hearing. 
Mr. Cleaver, thank you for joining us, also. You are one of the 
few people on the Hill who has not allowed Katrina fatigue to 
get in the way of saying and doing the right things and keeping 
your colleagues and the rest of us in the public sector working 
on this, and we are forever grateful for that.
    The National Office of Appleseed and the centers in 
Alabama, Georgia, Texas, and Louisiana published a sweeping 
study a year ago, a continuing story on the ongoing struggles 
of Hurricane Katrina evacuees, and we are using that as 
instructive in helping us wade through the CDBG problems we are 
facing right now.
    I join my colleagues on this panel in commending you for 
convening this hearing, not as focused on one or two States, 
but on the entire region, which is to say that Katrina didn't 
take a State-by-State look; it took a regional look. And as Mr. 
Green pointed out earlier, if we don't respond regionally, then 
we are going to waste a lot of time and money.
    It is important also at this point, I think, to relive the 
detrimental practice witnessed since the storms of one State 
pitted against another State, and one county pitted against 
another county. I don't really care, and I don't think any of 
us here really cares if Mississippi got more or less than some 
other State. Nobody even knows Alabama is around.
    The issue is that none of us got all that we needed, and if 
we all don't work together to try to get more that we need 
across the coast, as the chairwoman pointed out a minute ago, 
dealing with Mississippi, then we are not doing our jobs.
    Perhaps the time has arrived for local, State, and national 
officials to focus closer attention on the regional rebuilding 
needs of post-Katrina, and less on what they bring home to 
their people.
    Katrina and Rita paid scant attention to State or local 
political borders, and for us to continue to do so simply 
perpetuates the storm's impact on all of the survivors.
    Senator Shelby, our Ranking Member in the Senate, I think 
summarized both what we're doing here, and the problem, very 
well last September 25th, when he said that the way to honor 
the memories of nearly 2,000 souls who perished in Katrina's 
wrath was by ensuring that the Gulf Coast was rebuilt not as it 
was, but as it should be.
    He had it just right, and Senator Sessions and others have 
helped us also. But the reality in Alabama, and I want to begin 
with this right now, is that Mobile County has received $18 
million in CDBG money specifically targeted for house 
rebuilding. Not a single nickel has gone into building a house 
that somebody has moved into yet, and it is almost 3 years 
later.
    Procedures are chaotic, the process by which everybody is 
working is not open, and it is very difficult for anybody to 
know what is going on. And because, as more time goes on and 
little happens, there is less willingness to come forward 
because everybody, of course, is reluctant to talk about what 
has not worked.
    The only thing I would like to point out in the context of 
my predecessor who is here--and we are just very grateful for 
Mr. Johnson of ADECA to be here, and in particular I want to 
get it on the record, because he didn't say so, that he is 
asking for over $100 million in additional money. It is 
essential that we have it. And I am going to ask for a 
realistic number of $237 million. These are unmet needs.
    And these go to the following--and I'll try to do this very 
quickly, because the chairwoman wields a heavy hammer up there.
    [Laughter]
    Mr. Baab. The points that I want to make, and we can get 
back to if you wish, are the following: Number one, that the 
absence of and the need for serious in-place plans outlined by 
Congress and implemented by HUD to change how emergency CDGB 
funding is budgeted and allocated, and to do so transparently 
with all interested parties in advance, you can set the 
guidelines. Because what is going on in the past with CDBG 
frankly has little relevance to emergency CDBG functioning, and 
that ought to be in place. Failure to do this in Washington 
ensures that comparable poor planning and waste at the State 
and local level will be guaranteed.
    Number two, Congress should direct, and HUD should 
implement, that clear comprehensive needs assessments in 
emergency situations be undertaken. Not the usual thing, but it 
has to be very explicit, and HUD has to oversee that.
    Number three, we have urged that you give serious 
consideration into looking into the benefit of maintaining 
emergency CDBG implementation at the State level and not at the 
local level. Frankly, entitlement communities who receive CDBG 
funds may do well on that. They have no competence to deal with 
this problem. I think we have seen it in Mississippi, or in 
Texas anyway, and I must tell you that we see it very clearly 
Alabama. It is not that State governments necessarily are going 
to be better, but in this situation, they are going to be far 
better.
    Congress and HUD should look into the practice in Alabama, 
and I want to stress this as much as I can, that is not the 
case in other States. And that is that in reviewing people who 
apply for grants, prior condition of their home--and these are 
low-income people--49, 39 percent of the people who applied for 
money in Alabama have $15,000 annual incomes, and they are 
being denied money because they have prior repairs on their 
houses that they didn't do, and CDBG folks say, ``Well, if it 
was before the storm, we're not going to touch it.'' It is 
outrageous and it is primarily focused on lower-income people.
    Finally, I would like to say that, as you know in a lot of 
States and particularly in the coastal areas, heir property is 
a serious problem among lower-income people. There are 25,000 
families New Orleans with heir property problems. We have many 
throughout all other States. They are all lower-income folks, 
and with heir property, they cannot qualify to receive these 
grants.
    We would urge that in the future that there would be 
standby authority either in HUD or in the Legal Services 
Corporation to make supplemental appropriations to Legal 
Services lawyers to assist with this process.
    And I need a breath. Thank you.
    [The prepared statement of Mr. Baab can be found on page 56 
of the appendix.]
    Chairwoman Waters. Thank you very much.
    Ms. Powell?

STATEMENT OF LESLIE N. POWELL, SENIOR ATTORNEY, LEGAL SERVICES 
                     OF NORTH FLORIDA, INC.

    Ms. Powell. Yes. Thank you, Chairwoman Waters, for 
convening this hearing and for inviting me to participate.
    As a Legal Services attorney, I work directly with low-
income, extremely-low-income individuals who are directly 
affected. Specifically, in 2004, Hurricane Ivan hit Pensacola 
directly, and that is where my office is located. I have also 
practiced in Miami and worked with colleagues there. We have a 
statewide effort of Legal Services that we collaborate and work 
together to try and solve problems statewide.
    And based on that, I feel like I have a relatively strong 
perspective as to how the recovery efforts have been handled in 
Florida as well as the CDBG monies, and I would like to say 
that overall, it has been a success. And as the prior panelist 
from Florida suggested, there was a Hurricane Housing Workgroup 
that was convened by then-Governor Bush. And he pulled together 
a group, a very diverse group, a very broad-based group of 
individuals. He didn't simply rely on government officials and 
local entities. Consumer advocates were brought in, housing 
advocates, legal service advocates, and business owners were 
all brought in to study the statistics.
    And to hit on one in particular, in 2004, 74 percent of 
those people who were deemed to have inadequate insurance had 
incomes of less than $30,000 a year, 74 percent. So it was very 
clear, based on the statistics that were compiled by that 
workgroup, that low-income people, extremely-low-income people 
needed to be assisted with these funds, and in the wisdom of 
Lt. Governor Jennings, who was the chair of that workgroup, 
that was the focus.
    While not all the recommendations of that workgroup were 
taken on, by coming to that conclusion that low-income people 
needed to be the focus, that is where the money has gone. And 
they have benefitted extremely from this.
    That lesson was applied again in 2005, when those 
hurricanes hit Florida, and hopefully those lessons will 
continue to be applied in years to come. In fact, the State has 
mandated that each municipality have a community plan, a 
developmental plan of to how these resources will be used in 
the future, including land use plans as to future land use.
    So those are very important components, not just thinking 
about what do we need to do now to fix the immediate problem, 
but planning ahead. A lot of these funds have gone to 
mitigation, not simply to rehabbing the homes that were 
damaged, but to strengthening the homes that were not damaged.
    The issue that was brought up by my fellow panelist from 
Alabama regarding heir property is a significant one, as 
suggested. Those who do not have clear title cannot get FEMA 
assistance, cannot get rehab assistance, and cannot get 
insurance, for the most part. This is a significant issue. 
Substandard housing is a significant problem.
    And we are working to try to resolve those. Quiet title 
issues are very time consuming. Those cases can take a long 
time and a good bit of money. And I echo that funding for that, 
and to try to plan ahead so that they can get their own 
insurance and mitigate on their own would be beneficial.
    Community preparedness is a large and significant focus. To 
again echo what has been stated already, community and faith-
based groups working together have formed coalitions. This was 
mandated by the State government that these coalitions be 
formed, and they are focusing on, right now, disaster 
preparedness. Hurricane season is right around the corner. 
Let's talk about it now, let's figure it out. And as that 
happens year 'round, this has helped these communities to be 
better prepared. In fact, I think the 2004 efforts made us more 
prepared for 2005. And funding should continue to be provided 
to allow for those efforts to continue.
    In essence, while these funds were emergency funds, there 
will always be a disaster somewhere, and to have this money 
available and to know that it is available is essential towards 
community planning. We don't know where the next hurricane is 
going to hit. We don't know where the next disaster is going to 
hit. But encouraging communities to start with this sort of 
development in advance has certainly aided our clients since 
2004, to some degree, I wish it had happened sooner, but it is 
benefiting the communities now, and I hope if there is a lesson 
to take from it, it is that while we can talk about more money 
when the emergency actually hits, preparing for it is certainly 
something that needs to happen, including ensuring that there 
is money for Legal Services and other advocates to be able to 
provide these services; and fortunately, we were able to 
receive that.
    Thank you.
    [The prepared statement of Ms. Powell can be found on page 
244 of the appendix.]
    Chairwoman Waters. Thank you very much.
    I am going to ask Mr. Cleaver if he will take the chair 
while I go to the Floor on our housing bill and speak for a few 
minutes. I will return as quickly as I possibly can.
    Mr. James Perry from that Louisiana Housing Alliance is 
next. Thank you very much.

   STATEMENT OF JAMES PERRY, EXECUTIVE DIRECTOR, GREATER NEW 
 ORLEANS FAIR HOUSING ACTION CENTER, AND PRESIDENT, LOUISIANA 
                        HOUSING ALLIANCE

    Mr. Perry. Thank you, Congresswoman Waters and Congressman 
Cleaver, for the opportunity to testify, and also thank you for 
being great champions for the victims of the 2005 hurricanes.
    There are a few things that I want to talk about. The first 
is regarding the three most important aspects, I think, of the 
CDBG program: First, to assist low-income Americans; second, to 
cause community development in poor communities; and finally, 
to affirmatively further fair housing.
    I regret to inform you that the CDBG allocations into the 
Gulf Coast have failed, really, on all three of these fronts.
    The first issue in the failing is about the lack of 
oversight. Members of Congress will recall that CDBG funding 
was allocated to the Gulf Coast communities, and many of the 
program requirements were stripped. Particularly instead of 70 
percent of funding being required to go to low-income 
residents, only 50 percent of funding was required to assist 
low-income families. The result is that the majority of the 
CDBG funding that has been used to assist people in Louisiana 
has gone to assist middle- and upper-income families rather 
than low-income citizens.
    For example, the State of Louisiana through its Road Home 
Program and its allocation in CDBG money has used 86.2 percent 
of the money to help people in homeownership programs 
regardless of the income of the citizens. Only 13.1 percent of 
the money that they allocated went to affordable rental 
housing. But even when it comes to that 13.1 percent, they use 
it in the small rental program. They tried and got applicants 
for 12,800 units, but to date, they have only actually repaired 
13 units with that funding. And that is particularly 
troublesome when you consider that the State estimates a need 
for 60,000 to 80,000 additional units to be constructed in 
Louisiana.
    It is also troublesome because Unity for the Homeless, a 
New Orleans nonprofit, estimates that our homeless population 
in the City of New Orleans has doubled from 6,000 to 12,000 
citizens, which clearly indicates a need to use Community 
Development Block Grant funds for low-income citizens. The 
fact, however, is that they are not being used to benefit low-
income citizens.
    I would also argue that Community Development Block Grant 
funds are not being used to affirmatively further fair housing. 
I will give an example in the Road Home Program, and it has 
everything to do with how the program values properties. 
Members know that there has been a pattern of historic 
segregation in communities of color. The result is that 
properties have been valued at lower amounts.
    So what happens is that Road Home grants are paid out for 
the most part based on the property values of properties, which 
means that communities of color are going to get lower and 
smaller grant amounts. Instead, these grant amounts should be 
paid in value based on replacement and repair costs. Not doing 
this fails to affirmatively further fair housing and of course 
doesn't meet the requirements of community development block 
grant money.
    I would also note that there has been significant 
discrimination by municipalities that receive CDBG funding in 
the New Orleans and Louisiana area. Specifically, a lot of the 
issue comes up when CDBG money is paired with the low-income 
tax credit financing tool.
    In Kenner, the City passed a moratorium on the construction 
of any multi-family housing. And they did so after residents 
raised concern about the redevelopment of a complex that was 
occupied mostly by Latino residents in the community. And so 
they forbid construction of any multi-family housing. Of 
course, this makes it impossible to provide low-income rental 
opportunities for families using CDBG funding.
    In Jefferson Parish, the Parish passed an ordinance that 
asked that the tax credit not be used in their community, and 
then they used zoning tactics to kill a development by the 
Volunteers of America. And as a result, again, low-income 
residents missed out on an opportunity for housing.
    The examples are numerous, and I could go on for literally 
hours about the different examples of discrimination that has 
limited the opportunity to create affordable housing 
opportunities, both through CDBG funds and the low-income tax 
credit.
    The fundamental issue for Congress is this: I think that we 
need more oversight in terms of how the funding is used. We 
have to make sure that Congress can ensure that grantees who 
get CDBG funding have to use it to affirmatively further fair 
housing and that they have to use it to assist low-income 
residents. I think the trend that we have seen today from the 
earlier panel and that you hear in this panel is that 
consistently CDBG money post-storm has not been used for low-
income residents; instead it has been used to assist middle- 
and upper-income residents. And I think that does not embody 
the intent of the program. I would ask that Members of Congress 
do everything possible in order to make sure that these funds 
go to assist low-income residents.
    Thank you.
    [The prepared statement of Mr. Perry can be found on page 
235 of the appendix.]
    Mr. Cleaver. Thank you, Mr. Perry.
    Mr. Johnson?

  STATEMENT OF DERRICK JOHNSON, PRESIDENT, MISSISSIPPI STATE 
                             NAACP

    Mr. Johnson. Thank you for allowing me to speak here today.
    After surveying the Mississippi Gulf Coast and rural areas 
affected by Hurricane Katrina, and relief following the storm, 
we identified a pattern where African Americans in low-income 
communities were not receiving support from the various 
agencies charged with that responsibility. As a result, the 
Mississippi NAACP began to actively monitor State and Federal 
recovery programs, advocating to ensure that the recovery 
process is equal for all communities affected by the hurricane. 
All communities affected by the storm have a right to a full 
recovery, in our opinion, but in reality, discriminatory and 
inequitable governmental policies are impeding full recovery 
for many Katrina survivors.
    Mississippi, for example, has received $5.4 billion in 
Federal CDBG funds for disaster recovery. Congress required 
Mississippi to spend at least 50 percent of the CDBG funds 
received on persons of low and moderate income. However, 
Mississippi requested $4 billion in waivers from this 
requirement. We are the only State in the country to have 
requested and received such extraordinary waivers.
    It is outrageous that the Federal Government allows the 
poorest State in the country to abdicate its responsible to 
assist the citizens most affected by Hurricane Katrina. These 
waivers have had a very real impact on Mississippi's poor 
communities.
    For example, to date, the Governor's office has not 
implemented a single plan to assist home renters. To date, 
almost 10,000 families representing 27,000 Mississippians still 
live in FEMA housing, of which 56 percent of them were renters 
before the storm. Unfortunately, for many of these families, 
there are no affordable rental units currently available.
    Two-and-a-half years after the storm, affordable rental 
units that were damaged or destroyed have not been rebuilt, and 
the rent costs for the rental units that were not damaged have 
doubled or tripled.
    For example, the fair market value for rent increase for an 
apartment on the Mississippi Gulf Coast went from $592 before 
Hurricane Katrina to $811 after the storm. When comparing home 
owner and rental under Mississippi's plan, Mississippi has paid 
out over $1.2 billion to homeowners, but has not opened a 
single CDBG-funded financed rental unit.
    Several factors contribute to Mississippi's failure to 
address affordable housing needs. First, the amount of CDBG 
funds provided was greater than Mississippi's total State 
budget. These funds are completely administered by the 
executive branch, with no provision under State or Federal law 
for State legislative input or oversight. Without meaningful 
checks and balances, contracts were awarded to private 
companies to administer CDBG funds, including questions about 
lucrative contracts awarded to sitting State's legislators.
    Accountability includes ensuring that decisions are made 
fairly about who receives CDBG funds on a level playing field. 
Many of the waivers requested and received were for private 
industries or economic development.
    For example, the Mississippi Development Authority, MDA, 
which is charged with the responsibility of overseeing CDBG 
funds, requested and received a waiver to transfer $600 million 
to the State Port of Gulfport. This waiver is highly 
questionable, particularly because MDA itself has the ownership 
and operational role with the State Port at Gulfport. MDA also 
requested and received a waiver to award to a private south 
Mississippi utility company in the amount of $300 million. What 
is most troubling about MDA's decision to request waivers for 
the State Port of Gulfport and the power company is the fact 
that all three entities, MDA, the State port of Gulfport, and 
the power company, are all represented by the same law firm.
    Even if the members of that firm act in full compliance 
with legal ethical standards without any legislative oversight, 
input, or the necessary checks and balances in place, the needs 
of low- and moderate-income families were never fully 
considered.
    Second, the general public is left in the dark regarding 
the State's recovery process. In the first legislative session 
following the landfall of Hurricane Katrina, the legislature 
passed a bill to require State reporting of key information 
regarding the implementation of CDBG funds received. In 
response, the Governor vetoed the bill, stating that MDA will 
exceed the level of disclosure, publishing on the Internet the 
average grant award by income range and geographic area. We 
have not seen such publishing of information on the Internet. 
However, the Governor has failed to release any significant 
disclosures regarding how funds are spent. As a result, the 
public has been denied access to accurate timely information on 
how Federal funds are being spent to benefit low- and moderate-
income families.
    In closing, in response to the questions raised in the 
invitation for this hearing, this State's affordable housing 
needs have not been a priority as evidenced by the fact that 
there have not been any funds available to assist renters or to 
repair and rebuild rental units to pre-Katrina levels. 
Recipients are at a greater disadvantage than any other State 
because we have not enacted a State fair housing act. This 
reality makes it difficult to comprehensively evaluate the 
needs of low-income communities of color, the barriers to 
housing, and how to overcome them.
    Two recommendations I want to leave with the committee 
today are: First, Federal CDBG allocations should require 
States to have legislative input and oversight to ensure the 
proper checks and balances; second, all States should be 
required to track expenditures of CDBG funds by zip code, and 
data collection should be made public so the success of CDBG 
funds can be properly measured and timely evaluated.
    On March 15th of this year, the State cut-off Phase II of 
its program, the only phase of its program that supported low- 
and moderate-income families. Despite the fact that they were 
still receiving 30 to 40 applications weekly, they cut off the 
time for the program. We respectfully ask this committee to 
seek an extension of that program to ensure additional 
individuals who were impacted by the storm, who fall in the 
category of low- and moderate-income individuals, be properly 
supported in that recovery effort.
    Thank you.
    [The prepared statement of Mr. Johnson can be found on page 
148 of the appendix.]
    Mr. Cleaver. Thank you.
    Mr. Morse?

 STATEMENT OF REILLY MORSE, SENIOR ATTORNEY, KATRINA RECOVERY 
             OFFICE, MISSISSIPPI CENTER FOR JUSTICE

    Mr. Morse. Representative Cleaver and Chairwoman Waters, 
thank you for the opportunity to address you.
    I will summarize my written responses to the questions you 
posed in the invitation.
    First, the affordable housing needs of Mississippi have not 
been adequately addressed with emergency CDBG funding. All of 
the State's CDBG and tax credit programs taken together, Mr. 
Chairman, ultimately will restore little more than half, or 
about 48,000, of all housing, not just affordable housing, with 
major-to-severe damage. That's about 90,000 units, contrary to 
what Mr. Norris from--State testified. This is not adequate, 
sir. As of December 2007, Mississippi had reported to HUD that 
it had spent $1.8 billion out of its first $5.05 billion 
allocation; but only 13.2 percent of that has benefitted low- 
and moderate-income persons; 13.2 percent is not adequate.
    Congress expected Mississippi to spend at least 50 percent. 
Not a single affordable rental unit has been opened using CDBG 
funds earmarked for public housing, small rentals, or workforce 
housing. There will not be a doubling of public housing, and as 
the representative from Mississippi said, there will barely be 
a one-for-one replacement under the current plans. And that's 
according to other State writings, which are cited in my 
written testimony.
    Second, Mississippi's use of emergency CDBG funds has not 
affirmatively furthered fair housing. Lower-income Mississippi 
renters include especially high numbers of persons protected 
under the Fair Housing Act, due to their race, sex, disability, 
or household status. Mississippi's rental program delay is 
protracted. We are into our 33rd month post-Katrina, and none 
of the CDBG-funded rental housing programs has produced 
results.
    There are 8,000 residents in FEMA trailers, probably 
another 8,000 pending in long-term recovery groups--16,000 
households right now awaiting a solution.
    This inaction does not affirmatively further fair housing. 
South Mississippi civic structures and public works are rebuilt 
better and bigger than before. But Mississippi's use of CDBG 
funds so far has not affirmatively addressed a decades-long 
pattern of inequitable development in historically segregated 
communities. Mississippi's extensive demands for waivers for 
low- and moderate-income requirements by definition does not 
affirmatively further fair housing. It does precisely the 
opposite.
    Third, Mississippi's transfer of $600 million from housing 
to the expansion--this is not the restoration--the expansion of 
the State port at Gulfport--will make it even more difficult to 
provide affordable housing.
    Mississippi's existing affordable housing programs will not 
have enough money to fill in the gaps in the current programs. 
This is described in my written responses.
    Instead, these funds will be diverted to a record-breaking 
investment in a State enterprise agency to realize a 20-year 
master plan conceived 2 years prior to Hurricane Katrina. This 
$600 million does not buy mere channel improvements; it creates 
a controversial new land form in the Mississippi sound, an 
inland terminal and causeway that will import traffic, 
pollution, and hazards to north Gulfport, an African-American 
community.
    And finally, it will open up 60 waterfront acres in the 
center of the port for a luxury hotel and casino complex known 
as the Village at Gulfport. Mr. Chairman, the port has $108 
million in insurance, tens of millions in FEMA funds pending 
settlement of the insurance claim.
    And if you will look at Exhibit J, on page 4 of my 
testimony, you will find the cite for $82 million in 
unincumbered cash, far more than adequate to cover the 
estimated $50 million in damages to a port with an asset value 
of $127 million at the time Hurricane Katrina struck. This is 
an unacceptable use of emergency CDBG funds.
    Fourth, a summary of recommendations: Make rebuilding 
rental housing as high a priority as assisting homeowners; 
require some recovery funds to be used specifically to correct 
persistent disinvestment in minority neighborhoods; require 
States early in the process to publish housing damage estimates 
with sufficient information to plan adequate recovery for 
protected classes under the Fair Housing Act--Mississippi 
announces today 33 months into the storm that they are doing a 
request for a proposal to do such a thing. This comes terribly 
late--eliminate, or more severely restrict the use of waivers; 
require the State to present a comprehensive plan instead of a 
succession of partial plans; require Federal uniformity in 
multi-State disasters, including per-capita funding, common 
eligibility standards, and common rules on deductions; 
condition local disaster relief upon commitments by localities 
to prevent NIMBYism; pursue unfair housing practices 
aggressively, using HUD and the Department of Justice; and 
finally, urge the incoming HUD Secretary to reconsider the 
approval of the port diversion, and put that money back into 
the housing recovery where it is so badly needed.
    Thank you.
    [The prepared statement of Mr. Morse can be found on page 
153 of the appendix.]
    Mr. Cleaver. Thank you, Mr. Morse.
    Mr. Henneberger?

 STATEMENT OF JOHN HENNEBERGER, CO-DIRECTOR, TEXAS LOW INCOME 
                  HOUSING INFORMATION SERVICE

    Mr. Henneberger. Thank you, Representative Cleaver, and 
thanks to Chairwoman Waters and the members of the subcommittee 
for inviting me to testify today about the status of the 
disaster recovery program in Texas.
    I am John Henneberger, the co-director of the Texas Low 
Income Housing Information Service. We are a policy research 
advocacy organization that supports low-income Texans' efforts 
to achieve the American dream of a safe, decent, and affordable 
home. My organization doesn't represent any one sector of the 
housing industry, but rather we work on the behalf of and in 
the interests of low-income people who need affordable housing. 
I have detailed eight specific recommendations in my written 
testimony, and I know that I do not have time to summarize 
those here. But I will talk about a few of them.
    Texas has the highest population of Hurricane Katrina 
evacuees of any State other than Louisiana. An estimated 
100,000 poor Katrina evacuees remain in Houston alone, and 
there are 14,000 families in Texas being assisted through the 
HUD Disaster Housing Assistance Program. Already, these 
families are responsible for a portion of their rent, and as 
months pass, they will be responsible for an increasing amount 
of that rent, and there is no other assistance available for 
this population, a population so poor that 7 in 10 of them, 
when they arrived in Texas as evacuees, did not have a savings 
account or a checking account.
    Given the severely inadequate levels of CDBG funds that 
have been appropriated to Texas, the State has committed a mere 
$60 million in funding to house the entire Katrina evacuee 
population in our State. This amounts to about $400 per 
evacuee.
    We estimate that Federal hurricane relief has fallen about 
$700 million short of what we need in Texas to house on a long-
term basis the Katrina evacuees, many of whom were renters and 
will be receiving no assistance through the homeowner programs 
in Louisiana and Mississippi.
    As a long-term solution, Texas cities with large evacuee 
populations desperately need additional Section 8 housing 
choice vouchers. In Houston alone, 42,000 households are on the 
Section 8 waiting list, and the need for assistance among 
evacuees has greatly enhanced this demand.
    Without substantial additional Section 8 housing vouchers, 
cities in Texas, especially Houston, are facing being crippled 
with homelessness, and with families living in grossly 
substandard and overcrowded housing, as their disaster housing 
assistance program increases to the point where they can no 
longer afford to pay the rent.
    Congress needs also specifically to provide Texas with a 
supplemental appropriation of low-income housing tax credits 
and a temporary waiver for those tax credits, so that the State 
government will be allowed to deeper target the subsidies in 
order to house families who need very low rents, such as the 
Katrina evacuees.
    The situation we face with Katrina evacuees is dire, and in 
a similar manner, we have a dire situation from those in our 
State who suffered from Hurricane Rita.
    There are 75,000 homes that were damaged or destroyed by 
Hurricane Rita. Those are homes suffering what the Texas 
Governor's office estimates to be significant damage or total 
destruction.
    With the funds that HUD has made available, of those 75,000 
households, most of whom are low-income, at most 4,000 
households will be assisted: 4,000 of 75,000 households 
assisted in Texas. This amounts to 6 percent of the owner-
occupied households in Texas that the Governor's office 
estimated suffered major-to-severe damage.
    I have documented in detail in my testimony the many 
problems that Texas has had with its disaster housing program. 
But I have to say this: I think we are in a little better 
situation today than our colleagues in Louisiana and 
Mississippi in terms of our State's administration. The State's 
program to provide Rita evacuees as now designated is probably 
the most effective and efficient program that can be operated. 
Within the context of the severe funding constraints that we 
have, we understand we are only going to help a very small 
fraction of the households who lost their homes to the 
hurricane. But within that context, the program that the State 
has designed, I believe, is reasonable.
    We will provide a maximum of $40,000 in rehabilitation and 
the State will oversee the rehabilitation, and we will provide 
between $60,000 and $75,000 for housing construction for 
replacement housing.
    Now, this is a far cry from the benefit levels that our 
colleagues in Louisiana and Mississippi are theoretically, at 
least, eligible to be able to receive for their low-income 
evacuees.
    We estimate that in order to substantially impact the Rita 
population, we need $500 million of additional assistance. And 
further, we have a severe problem, because our State has chosen 
to provide assistance directly to the evacuees, with this 
problem of duplication of benefits under the definitions of the 
Stafford Act. We desperately need a waiver of the duplication 
of benefits clause in the current act. And if we cannot get 
that, we are going to be facing a situation where we are going 
to pass over most of our low-income population, and end up only 
being able to assist the higher-income populations who suffered 
damage from Rita.
    Mr. Chairman, I see that my time is up, so I will conclude 
by basically saying that I think it's incumbent upon those of 
us who have lived through this--and it has been tremendously 
wrenching for the people who lost their homes--that we make 
sure that this never happens again. We have to make sure that 
the status quo programs that FEMA puts in place and that HUD 
has put in place, which rely on temporary trailers and which 
rely on short-term solutions is not the program that we apply 
in the future. We have to learn from this terrible catastrophe 
that we have been through, and we have to begin immediately to 
construct an alternative and a better system, which recognizes 
that the housing needs of low-income people impacted by 
disaster are substantially different than what the FEMA 
regulations intend to provide.
    Thank you very much.
    [The prepared statement of Mr. Henneberger can be found on 
page 92 of the appendix.]
    Mr. Cleaver. Thank you, Mr. Henneberger. Let me just say 
that the chairwoman is handling housing legislation on the 
Floor at this time, and she probably is the toughest proponent 
on this Hill for housing for low- to moderate-income Americans, 
so I just wanted to make sure you understood that is what she 
is doing, even as we continue this hearing.
    Mr. Henneberger, do you happen to know what part of Houston 
received the largest number of evacuees from the Gulf Coast?
    Mr. Henneberger. Yes, sir. It was the southwestern section 
of the City of Houston, and there is a tremendous problem with 
the hyper-concentration of the evacuees in those areas, and in 
my testimony I provided our deep fair housing concerns about 
the decisions of the City of Houston on how to expend its very 
limited amount of money for Katrina evacuees, because we 
believe that the City's programs are designed basically to 
institutionalize and continue to exacerbate that 
overconcentration.
    Mr. Cleaver. Third and fifth wards?
    Mr. Henneberger. It is the Fondren and Southwest section. 
It is Congressman Greene's district, and surrounding areas.
    Mr. Cleaver. So that is a portion of the fifth ward. Are 
you familiar with--
    Mr. Henneberger. Yes, sir. I believe--I would describe it 
as an area generally around and outside of the loop and in the 
Southwest section.
    Mr. Cleaver. Okay. All right.
    In certain parts, that is already one of the poorest parts 
of Houston.
    Mr. Henneberger. Those were where the vacant apartments 
were at the time the evacuees came. And so that is where they 
were referred. And unfortunately, you know, we believe it is 
really incumbent upon HUD to provide a moving-to-opportunity 
style program to help those evacuees be able to move to areas 
of higher opportunity, closer to jobs, better schools, where 
they choose to live, rather than sort of trying to provide 
limited assistance at improving the quality of apartments and 
basically locking those families into that area, where there's 
frankly far too many concentrated multi-family units that are 
in far too great a need of rehabilitation.
    Mr. Cleaver. Yes, I am very familiar with the area.
    Let me find out, Mr. Johnson, the fair housing issues you 
raised, is there a State Fair Housing Act?
    Mr. Johnson. No.
    Mr. Cleaver. Okay. I thought you said that, and those were 
in your comments. But then I thought he made an error that in 
2008, there was just an oversight, and that you were looking at 
a lot of other acts, and you just were confused.
    Mr. Johnson. No. Mississippi is one of the few, if not the 
only, State without a fair housing act, and Mississippi is the 
only State without a Department of Labor, and there are a whole 
bunch of things we don't have, which probably contributes to 
why we are the poorest State in the country.
    Mr. Cleaver. It was my understanding until this hearing 
that HUD required fair housing components when it distributes 
Community Development Block Grant funds. I don't know if 
anybody--I mean the HUD people have abandoned this.
    Mr. Perry. Congressman, the language in the Community 
Development Block Program simply says that grantees must 
affirmatively further fair housing, but there are no teeth, 
there are no enforcement mechanisms, and there aren't 
significant regulations, so HUD has not been very stringent 
about making sure that grantees follow these regulations. And 
so the result are the numbers of fair housing problems that we 
have seen testified to in this panel.
    Entities that actually get CDBG funding have engaged in 
actual discrimination, and I think it's because of the lack of 
detail in the Community Development Block Grant funding 
mechanism.
    I would note that Alabama also does not have a State fair 
housing law. And so to the extent that Congress can urge these 
States to get fair housing laws, I think it's a very important 
step.
    Mr. Cleaver. Did they forget?
    [Laughter]
    Mr. Perry. In the case of Mississippi, there is a Fair 
Housing Act bill during every legislative session. As the 
political winds blow, the House is primarily dominated by the 
Democrats; they will pass an act out of that body, which 
inevitably is killed in the Senate. And that is the give-and-
take every legislative session for at least the past 9 or 10 
sessions.
    Mr. Cleaver. And Mr. Perry, you're saying that all that 
State has to do is say, ``We believe in fair housing.''
    Mr. Perry. Unfortunately, that's the case. It is 
unfortunately very easy to prove that you've affirmatively 
furthered fair housing. And one thing that advocates like 
myself have said for a long time is that we really need 
Congress to tighten the language, so that there are actual 
penalties for failing to affirmatively further fair housing. 
And that's so crucial. Without it, they simply write up a 
statement saying, you know, we sponsored a poster context, and 
therefore we have affirmatively furthered fair housing. 
Meanwhile, they have, you know, for instance, not done anything 
to help any low-income citizens find rental housing in the 
State.
    Mr. Baab. Well, Mr. Cleaver, I wanted to also add for 
Alabama that--and this really highlights the importance of 
HUD's responsibilities--in the two action plans, the initial 
and supplemental action plans submitted by Alabama to HUD for 
approval prior to receipt of CDBG funds, the words, ``fair 
housing'' do not appear.
    Mr. Cleaver. I was the mayor of Kansas City. When we enter 
into our annual CDBG contract with HUD, we certify that the--
because we had a fair housing department--but we certified that 
the City will adhere to all of the requirements of the law. And 
I'm not sure that my colleagues have a good understanding of 
what is going on with both States.
    But the other problem we have is that in the middle of this 
program, it's difficult for us to then start tightening the 
screws, because if that happens, that becomes the excuse for 
not, you know, speeding up the program. You know, if we say, 
for example, we're going to cut off funds if you don't conform 
to our expectations of fair housing, that works to the 
detriment of the people that all of you on the panel are 
advocating for.
    Mr. Baab?
    Mr. Baab. You're exactly right, sir, and I might say, just 
to be fair, that the contract that the State entered into, or I 
should say Mobile County entered into with the contractor to 
actually exercise his program, that contract does contain all 
of that usual fair housing obligations and commitments that the 
contractor agrees to. But without the State including something 
in there in their project plan to HUD and without HUD saying 
anything back, it gives it worse than no teeth; there's nothing 
in there to do. And furthermore, in these applications there is 
no information retained about the racial background of any of 
the applicants. The question is, I think, racial minority? Yes 
or no. Whatever that means.
    And so the information isn't even gathered in such a way 
that we could test on whether compliance is existing.
    Mr. Cleaver. Mr. Morse?
    Mr. Morse. Representative Cleaver, I wanted to mention that 
Mississippi, like all the other States, is under a regulation 
to compile and maintain records to assure compliance with fair 
housing laws.
    Mr. Cleaver. Do that again, do that one more time, please.
    Mr. Baab. The emergency CDBG regulations require each State 
to maintain records and keep records of the pertinent 
demographics to assure that the Fair Housing Law is being 
complied with. If you look on pages 11 and 12 of my written 
statement, you'll find the cite to the regulation and the 
language itself.
    But here's the point. The point is that Mississippi has not 
kept those statistics, that they have treated that as a 
voluntary option for people coming in for the homeowner's 
grant. And Representative Cleaver, that's the one that over a 
billion dollars has been paid out to, that overwhelmingly from 
our understanding of the facts, is skewed towards moderate- to 
upper-income households, and not to lower-income households.
    So there's no way at this point, with the money already out 
the door, for you or HUD or anybody else to determine whether 
or not there was compliance with the Fair Housing Law, because 
the front-end data gathering was not kept, and so there is 
going to be no accountability. That ought not be allowed to 
occur without consequences.
    Our understanding, Mr. Cleaver, is that HUD is in 
discussions with Mississippi about the shortcomings of its 
record-keeping requirements. We would encourage greater 
oversight and investigation from your end on that, because we 
believe it's critical to seeing some kind of fairness come out 
of this process.
    Mr. Cleaver. Well, I am frankly flabbergasted and just 
stunned. That solves the hearing for me. I mean I understand 
now why we haven't made any progress.
    Madam Chairwoman and Mr. Johnson's testimony mentioned that 
there was no fair housing law in Mississippi. Well, it turns 
out there is no fair housing law in Mississippi or Alabama on 
the books. And so it skews any kind of certificate that low- to 
moderate-income people are being helped, because there is, you 
know, the State is not obligated legally--am I correct, Mr. 
Morse?
    Mr. Morse. Actually, I think the State is obligated under a 
Federal HUD regulation to record the race and other pertinent 
fair housing demographics. My statement to you, sir, though, is 
that the State has not done so.
    Mr. Cleaver. Yes, I understand that.
    Mr. Morse. And that's the dilemma. From the Federal 
obligation side. It's our information this is in writing from a 
State representative that they treated that as a voluntary 
piece of information, did not record it mandatorily as the 
regulation required, and therefore there is no possible way to 
assure that the fair housing obligation has been met. One 
cannot determine the racial demographics of those who received 
the homeowner's grants because they didn't record it at the 
front end. If you allow that to go unanswered, you know there 
is no point in any accountability.
    Mr. Cleaver. Yes.
    Mr. Baab. Mr. Cleaver, if I can--
    Mr. Cleaver. Let's turn this over, back to--
    Mr. Baab. If I could make a quick comment, because I want 
to get this on the record in the context of what you're 
discussing here, if I may, Madam Chairwoman. In a little town 
or little area of north Mobile County called Trinity Gardens, 
it is about 94 percent African American, one of the community 
leaders there, Lavonis DuBose, had meetings with two of the 
three Mobile County commissioners last year, and in those 
meetings they were told by the commissioners, two separate 
meetings, that this little community did not qualify for 
Community Development Block Grants, so they shouldn't even 
bother applying. They were simply mistaken, they were just 
wrong. But among other reasons, these folks then didn't. And 
so, Ms. DuBose went about raising $250,000 in private money, 
and helped about 160 families just get a roof on their house. 
Sixty folks are going to apply again if we ever open up the 
process again. But even if it was out of stupidity or 
ignorance, the fact remains that virtually an all-black 
community in Mobile county fully qualified to apply for CDBG 
funds was told by two of the commissioners of the county that 
they couldn't do it.
    Chairwoman Waters. Yes. Thank you very much. That is on the 
record. And again, I'm sorry I had to leave, but some of the 
information that you have shared with Mr. Cleaver here today--
well, all of it is on the record. Some of it I am pretty much 
aware of.
    Our challenge now is to really do some follow-up, and to 
see what we can do. I just talked with my staff about the money 
that is being directed towards the port and I am absolutely 
going to see what we can do to avert that over the next few 
days. We are going to have to move on it very quickly to see 
what we can do to stop that from moving forward.
    Also, I will get the information about Phase I and Phase II 
in Mississippi.
    Yes, sir?
    Mr. Morse. Madam Chairwoman, I wanted to mention that 
actually the representative from the State of Mississippi and 
you and anybody else in this room can go online at the 
Mississippi Development Authority, and go to the right location 
and see the information current as of each Wednesday. I am 
fairly familiar with that, and I can answer a couple of the 
questions you were trying to put to Mr. Norris, which he was 
unable to answer. Would you like me to do so?
    Chairwoman Waters. Yes. You heard the questions.
    Mr. Morse. Your first question to Mr. Norris was: What was 
the average grant amount for Phase I? The answer to that is: 
About $70,000. He has given you a fairly accurate answer. The 
number of grantees is probably in the range of 15,000 to 
16,000. What is distinctive about Phase I, Madam Chairwoman, is 
that those people already will have received some insurance, so 
$70,000 is not the sum total of funds that they will have 
received in order to restore their dwellings.
    In contrast, Phase II, a significant percentage of those 
folks will have not had insurance. They will be lower-income 
households. They will probably have had only actual cash value 
as opposed to replacement cost coverage, because of persistent 
problems with the insurance industry in writing in minority 
neighborhoods. And so the gap between any insurance money, if 
any, they receive and the cost to repair is going be higher.
    And Madam Chairwoman, in Phase II, the average grant amount 
was also about $70,000. But because of the insurance problems I 
just described, the aggregate amounts of households receiving 
home grants in the lower-income side will be smaller, and we 
are seeing at the Mississippi Center for Justice and in all of 
the other service organizations across the coast persistent 
gaps of people who have received grants, but can't finish the 
job. So the total number of households that have received the 
grants, Madam Chairwoman, I think is in the range of 4,000. But 
as I say, if you were to go to Mississippi.org and then go to 
their disaster relief section, there is a weekly report that 
gives you a breakout on that, and those numbers actually add up 
to a smaller number than the one Mr. Norris quoted to you about 
the total number of people receiving grants.
    Chairwoman Waters. What was the total number of people in 
Phase II?
    Mr. Morse. I think he indicated that in total, it was close 
to 25,000 currently, and I think currently the actual number is 
closer to 19,000 to 20,000, of which 4,000 are in Phase II.
    Chairwoman Waters. Thank you very much. We are going to 
look a lot closer at that. It is something that has been on my 
mind ever since Mr. Norris, I think you first brought it to 
our--who was it that first brought it to our attention? The 
NAACP. Mr. Derrick Johnson first brought it to our attention, I 
think when we were in Mississippi, and this is information that 
needs to be followed up on.
    I want to thank all of the panelists for being here today. 
I will review the testimony of each one of you who have 
appeared here today. It is being recorded. This committee is 
going to do some follow-up. We are coming back; we are going to 
look at the numbers; and we are going to look at what we need 
to do legislatively. We are going to look at what we need to 
do, working with a combination of HUD and the Governors of 
these States, particularly Louisiana and Alabama. We are going 
to try not to be categorized as having came, looked, did a 
look-a-loo, and didn't come back, didn't do anything. I know a 
lot of people are feeling that way now, and we feel a real 
sense of responsibility to that.
    So we will follow up, and we will be back. Okay?
    I thank all of you for being here today.
    The Chair notes that some members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 30 days for members to submit written questions to these 
witnesses and to place their responses in the record.
    The panel is now dismissed. Before we adjourn, without 
objection, the written statement of the Equity & Inclusion 
Campaign will be made a part of the record of this hearing.
    The hearing is now adjourned. And thank you so much for 
your patience here today.
    [Whereupon, at 3:09 p.m., the hearing was adjourned.]


                            A P P E N D I X



                              May 8, 2008

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