[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
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Printed for the use of the Committee on Financial Services
Serial No. 110-110
U.S. GOVERNMENT PRINTING OFFICE
43-696 PDF WASHINGTON DC: 2008
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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
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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
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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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