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




 
                EXAMINING THE ROLES AND RESPONSIBILITIES
                  OF HUD AND FEMA IN RESPONDING TO THE
                 AFFORDABLE HOUSING NEEDS OF GULF COAST
                      STATES FOLLOWING EMERGENCIES
                         AND NATURAL DISASTERS

=======================================================================

                             JOINT HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                                AND THE

                            SUBCOMMITTEE ON
                       EMERGENCY COMMUNICATIONS,
                       PREPAREDNESS, AND RESPONSE

                                 OF THE

                     COMMITTEE ON HOMELAND SECURITY

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 4, 2008

                               __________

  Printed for the use of the Committee on Financial Services and the 
                     Committee on Homeland Security

                           Serial No. 110-116

                   (Committee on Financial Services)

                           Serial No. 110-119

                    (Committee on Homeland Security)



                     U.S. GOVERNMENT PRINTING OFFICE
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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
BILL FOSTER, Illinois                THADDEUS G. McCOTTER, Michigan
ANDRE CARSON, Indiana                KEVIN McCARTHY, California
JACKIE SPEIER, California            DEAN HELLER, Nevada
DON CAZAYOUX, Louisiana
TRAVIS CHILDERS, Mississippi

        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
CHRISTOPHER S. MURPHY, Connecticut   RANDY NEUGEBAUER, Texas
JOE DONNELLY, Indiana                GEOFF DAVIS, Kentucky
MICHAEL E. CAPUANO, Massachusetts    JOHN CAMPBELL, California
CHARLES A. WILSON, Ohio              THADDEUS G. McCOTTER, Michigan
DON CAZAYOUX, Louisiana              KEVIN McCARTHY, California
?

                     COMMITTEE ON HOMELAND SECURITY

               Bennie G. Thompson, Mississippi, Chairman

Loretta Sanchez, California          Peter T. King, New York
Edward J. Markey, Massachusetts      Lamar Smith, Texas
Norman D. Dicks, Washington          Christopher Shays, Connecticut
Jane Harman, California              Mark E. Souder, Indiana
Peter A. DeFazio, Oregon             Tom Davis, Virginia
Nita M. Lowey, New York              Daniel E. Lungren, California
Eleanor Holmes Norton, District of   Mike Rogers, Alabama
Columbia                             David G. Reichert, Washington
Zoe Lofgren, California              Michael T. McCaul, Texas
Sheila Jackson Lee, Texas            Charles W. Dent, Pennsylvania
Donna M. Christensen, U.S. Virgin    Ginny Brown-Waite, Florida
Islands                              Gus M. Bilirakis, Florida
Bob Etheridge, North Carolina        David Davis, Tennessee
James R. Langevin, Rhode Island      Paul C. Broun, Georgia
Henry Cuellar, Texas                 Candice S. Miller, Michigan
Christopher P. Carney, Pennsylvania
Yvette D. Clarke, New York
Al Green, Texas
Ed Perlmutter, Colorado
Bill Pascrell, Jr., New Jersey

       Jessica Herrera-Flanigan, Staff Director & General Counsel

                     Rosaline Cohen, Chief Counsel

                     Michael Twinchek, Chief Clerk

                Robert O'Connor, Minority Staff Director

                                 ______

  SUBCOMMITTEE ON EMERGENCY COMMUNICATIONS, PREPAREDNESS, AND RESPONSE

                     HENRY CUELLAR, Texas, Chairman

Loretta Sanchez, California          Charles W. Dent, Pennsylvania
Norman D. Dicks, Washington          Mark E. Souder, Indiana
Nita M. Lowey, New York              David Davis, Tennessee
Eleanor Holmes Norton, District of   Tom Davis, Virginia
Columbia                             Candice S. Miller, Michigan
Donna M. Christensen, U.S. Virgin    Peter T. King, New York (Ex 
Islands                              Officio)
Bob Etheridge, North Carolina
Bennie G. Thompson, Mississippi (Ex 
Officio)

                        Craig Sharman, Director

                        Nichole Francis, Counsel

                         Brian Turbyfill, Clerk

        Heather Hogg, Minority Senior Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 4, 2008.................................................     1
Appendix:
    June 4, 2008.................................................    53

                               WITNESSES
                        Wednesday, June 4, 2008

Blakely, Dr. Edward, Executive Director, Office of Recovery and 
  Development Administration, City of New Orleans................    39
Castillo, Carlos J., Assistant Administrator, Disaster Assistance 
  Directorate, Federal Emergency Management Agency...............    10
Morse, Reilly, Senior Attorney, Katrina Recovery Office, 
  Mississippi Center for Justice.................................    37
Ramirez, Saul N., Jr., Executive Director, National Association 
  of Housing and Redevelopment Officials.........................    36
Riddel, Jeffrey H., Director, Office of Capital Improvements, 
  Public and Indian Housing, U.S. Department of Housing and Urban 
  Development....................................................    12
Tuggle, Laura, Managing Attorney, Housing Unit, New Orleans Legal 
  Assistance Corporation, Southeast Louisiana Legal Services.....    41

                                APPENDIX

Prepared statements:
    Blakely, Dr. Edward..........................................    54
    Castillo, Carlos J...........................................    62
    Morse, Reilly................................................    73
    Ramirez, Saul................................................   241
    Riddel, Jeffrey H............................................   257
    Tuggle, Laura................................................   260

              Additional Material Submitted for the Record

Frank, Hon. Barney:
    Written responses to questions submitted to Carlos J. 
      Castillo...................................................   276
    Written responses to questions submitted to Jeffrey H. Riddel   288
Cuellar, Hon. Henry:
    Written responses to questions submitted to Jeffrey H. Riddel   306
Dent, Hon. Charles W.:
    Written responses to questions submitted to Jeffrey H. Riddel   309


                        EXAMINING THE ROLES AND
                        RESPONSIBILITIES OF HUD
                         AND FEMA IN RESPONDING
                       TO THE AFFORDABLE HOUSING
                       NEEDS OF GULF COAST STATES
                       FOLLOWING EMERGENCIES AND
                           NATURAL DISASTERS

                              ----------                              


                        Wednesday, June 4, 2008

             U.S. House of Representatives,
                        Subcommittee on Housing and
                             Community Opportunity,
                           Committee on Financial Services,
                                        and
                          Subcommittee on Emergency
                      Communications, Preparedness,
                                      and Response,
                            Committee on Homeland Security,
                                                   Washington, D.C.
    The subcommittees met, pursuant to notice, at 10:13 a.m., 
in room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the Subcommittee on Housing and Community 
Opportunity] presiding.
    Members present from the Subcommittee on Housing and 
Community Opportunity: Representatives Waters, Lynch, Cleaver, 
Green, Maloney; and Capito.
    Members present from the Subcommittee on Emergency 
Communications, Preparedness, and Response: Representatives 
Cuellar, Sanchez, Dicks, Lowey, Holmes Norton, Christensen, 
Etheridge; Dent, and Souder.
    Ex officio: Chairman Frank and Chairman Thompson.
    Also present: Representative Watt.
    Chairwoman Waters. This joint hearing of the Subcommittee 
on Housing and Community Opportunity and the Subcommittee on 
Emergency Communications, Preparedness, and Response will come 
to order.
    Good morning, ladies and gentlemen. Before we begin, I 
would like to thank Mr. Cuellar and Mr. Thompson for requesting 
this joint hearing on ``Examining the Roles and 
Responsibilities of HUD and FEMA in Responding to the 
Affordable Housing Needs of Gulf Coast States Following 
Emergencies and Natural Disasters.''
    As we saw several weeks ago during a hearing of the 
subcommittee on the use of Community Development Block Grant 
(CDBG) funds in the Gulf Coast, the region is far from a full 
recovery. That hearing revealed the challenges facing Gulf 
Coast States in using CDBG funds to replace their affordable 
housing stock. While CDBG funding has historically been used to 
rebuild and repair affordable housing damaged or destroyed as a 
result of natural disasters, it seems that there is no 
corollary funding source for the reconstruction of public 
housing following a disaster. This lack of funding only 
compounds the Nation's divestment in public housing and the 
loss of public housing units.
    The 2005 hurricanes were the deadliest and most expensive 
storms on record. Over 1 million housing units were damaged 
along the Gulf Coast as a result of the hurricanes in 2005, 
with half of the damaged units located in Louisiana, which bore 
the brunt of Hurricane Katrina. Total catastrophic losses from 
Hurricane Katrina are estimated at $40.6 billion with uninsured 
losses much higher.
    Thousands of public housing units were damaged during these 
storms. For example, in Mississippi, 2,695 units were damaged 
or destroyed. In New Orleans, 4,144 public housing units were 
damaged or destroyed. While most of the units in New Orleans 
could have been rehabilitated, HUD embarked upon the path of 
demolishing over 4,500 units. But the redevelopment of the 
public housing units in Mississippi and New Orleans has a 
dedicated funding source. Mississippi is using $105 million in 
CDBG funds to rebuild while HUD has secured over $700 million 
to fund its plan for New Orleans public housing.
    While the funding for these projects is clear cut, in 
general funding resources for public housing units damaged 
through disasters is not. Because any public housing unit 
damaged or destroyed as the result of a disaster should be 
replaced on a one-for-one basis, this lack of funding resources 
directly contributes to the loss of public housing units.
    Section 9(k) of the U.S. Housing Act requires the Secretary 
of HUD to set aside up to 2 percent of the total amount made 
available under the public housing operating fund for the 
repair of public housing units damaged during disasters and 
other emergencies. However, this funding has never been made 
available. The funding year 2000 appropriations act and 
subsequent appropriations acts have contained language 
expressly forbidding the use of funds for this purpose. 
Although Congress has provided annual emergency capital needs 
funding for the repair of damaged public housing units, these 
funds have been subject to recapture. Moreover, the 
Administration's funding year 2009 budget recommended no 
funding for emergency capital needs.
    Unfortunately, the memorandum of understanding entered into 
between HUD and FEMA does not allow housing authorities to 
apply for emergency funds from FEMA's Section 406 program which 
can be used to repair other structures. I am curious to know 
why, given the extremely limited funding resources available 
for the repair of damaged public housing units, the memorandum 
of understanding between HUD and FEMA has not been updated to 
allow housing authorities to use Section 406 funds for repairs. 
I hope that our witnesses can shed some light on this 
situation.
    Also, I am concerned about the current state of affordable 
housing in the Gulf Coast. Specifically, I am looking forward 
to hearing from our FEMA witnesses on the Agency's progress 
with moving families out of trailers that have tested positive 
for formaldehyde, and I am extremely concerned about FEMA's 
draft 2008 hurricane season plan which states that contrary to 
public assertions made by Administrator Paulison, FEMA plans to 
house families in trailers as a last resort in the event of 
hurricanes this year. We all know the dangers of this toxic 
chemical, and we are well aware of FEMA's rush to empty out 
these trailers because of the proven health risk associated 
with formaldehyde exposure. Given these facts, I am eager to 
hear why the Agency is still considering trailers as a viable 
housing option following disasters.
    I am looking forward to hearing from our two panels of 
witnesses on the roles and responsibilities of HUD and FEMA in 
responding to the affordable housing needs of Gulf Coast States 
following emergencies and natural disasters.
    I would now like to recognize Mr. Cuellar, the chairman of 
the for an opening statement, thank you.
    Chairman Cuellar. Good morning, and thank you. I would like 
to thank Chairwoman Waters for joining our subcommittee to have 
this important hearing.
    Chairwoman Waters, you have been a national leader in 
housing issues. We recognize and we appreciate the work that 
you have done and we are glad that we are able to come together 
today to continue to exercise strong congressional oversight 
over emergency housing issues. I would like to take this time 
to recognize both the chairman of the full Financial Services 
Committee and the chairman of the Homeland Security Committee--
Mr. Barney Frank and Mr. Bennie Thompson--for their commitment 
to and leadership on this important issue.
    As I see it, there are two goals we hope to achieve with 
this hearing. First, we need to get a status report on where we 
are in addressing the housing crisis along the Gulf Coast. 
Nearly 3 years after Hurricanes Katrina and Rita struck, the 
people along the Gulf Coast are still coping with their 
aftermath and struggling to recover. There is no doubt that our 
Nation has faced unprecedented challenges in our efforts to 
effectively and safely house the victims of these disasters.
    While some progress has been made, I believe our Federal 
Government can and should move faster. As of May 23, 2008, 
there are 23,412 temporary housing units still occupied by 
disaster victims in the Gulf Coast. We are talking about 3 
years after the disaster hit. Those numbers are just too high.
    Second, I believe this hearing will give the members the 
opportunity to examine whether plans are being developed to 
ensure that our Nation will be better prepared to meet the 
housing needs resulting from future disasters. In order for our 
Nation to truly be resilient, the lessons we have learned from 
that cannot be ignored. We have to learn from the past and we 
have to learn those lessons.
    One of the most striking lessons we learned from Katrina 
and Rita was that this country was ill-prepared to provide 
emergency housing to victims of a major disaster. To house the 
number of individuals who lost their homes during Katrina and 
Rita, FEMA was forced to hastily purchase thousands of 
trailers. As we all know by now, many of those units were 
unsafe, and we will be dealing with the health ramifications of 
this for years to come.
    While we cannot turn back the clock on this particular 
situation, we can make certain that this problem will not be 
encountered during future disasters. The Post-Katrina Emergency 
Management Reform Act required FEMA, along with other Federal 
agencies and nonprofit organizations, to develop a national 
disaster housing strategy. The national disaster housing 
strategy was due to Congress by July of 2007. Here we are 
almost a year later and we are still waiting for that strategy. 
We cannot develop the solutions without having this national 
disaster housing strategy, and we hope we will hear from Mr. 
Castillo and other folks about this strategy.
    While I recognize the fact that the ongoing efforts to 
resolve the temporary housing issues in the Gulf Coast, as of 
late the strategy release, I still feel that a year delay is 
just simply too long. I cannot stress how important plans like 
this are in ensuring that all key players will be ready to act 
when the next emergency housing crisis is upon us.
    I want to thank again all of the witnesses for both panels 
for being here today. I thank them for their testimony, and 
Madam Chairwoman, I yield back the balance of my time.
    Chairwoman Waters. Thank you very much, and I will now 
recognize Ranking Member Dent of the Subcommittee on Emergency 
Communications, Preparedness, and Response for 5 minutes for an 
opening statement.
    Mr. Dent. Thank you, Madam Chairwoman. Today's hearing 
addresses the important issue of how Federal, State, and local 
governments work together to meet the emergency and long-term 
housing needs of disaster victims. FEMA is authorized by law to 
provide temporary housing assistance to disaster victims for a 
period of up to 18 months unless extended. Due to the 
devastation caused along the Gulf Coast after Hurricane Katrina 
in 2005, FEMA continues to provide housing assistance to storm 
victims almost 3 years later.
    While FEMA and the Department of Housing and Urban 
Development, HUD, are working together to find long-term 
solutions to the needs of disaster victims, this task is 
proving extraordinarily difficult. As we will hear from our 
witnesses, one major factor affecting the ability of storm 
victims to pursue long-term housing is a severe shortage of 
rental properties in the hardest-hit areas. Those properties 
that are available are much more expensive than before the 
storm, placing them beyond the financial means of many Katrina 
evacuees.
    In addition to moving people to rental units, hotels, and 
motels, FEMA is testing new types of housing for disaster 
victims through the alternative housing pilot program. The so-
called ``Katrina cottage'' is one such form of housing being 
developed and deployed through this program. While the cottage 
offers a safer, more spacious, and more permanent alternative 
to travel trailers or mobile homes, some local jurisdictions 
are unhappy with their use and are preventing their 
construction. Meeting the housing needs of disaster victims 
requires a coordinated strategy involving not only FEMA and 
HUD, but also the appropriate State and local authorities.
    I look forward to an update from FEMA and HUD on the 
development of the national disaster housing strategy that was 
required by the Post-Katrina Emergency Management Reform Act of 
2006. I also look forward to discussing with our witnesses how 
all levels of government can work together to more effectively 
facilitate the recovery process and ensure disaster victims are 
able to find permanent housing as quickly as possible.
    And with that, Madam Chairwoman, I thank you and I yield 
back.
    Chairwoman Waters. Thank you very much. I will now 
recognize our Housing and Community Opportunity Subcommittee 
Ranking Member Capito for 5 minutes for an opening statement.
    Mrs. Capito. Thank you, Madam Chairwoman, and thank you for 
holding this joint hearing. In the interest of time, and since 
I just walked in, I will just ask that I can submit my 
statement for the record and yield back the balance of my time.
    Chairwoman Waters. Thank you very much. I will now 
recognize Mr. Cleaver for 3 minutes for an opening statement.
    Oh, I am sorry, Mr. Frank is here. Mr. Frank and Mr. 
Thompson, the chairmen of the Financial Services Committee and 
the Homeland Security Committee, are responsible for helping to 
bring these subcommittees together to deal with this important 
subject that we have today, so I would like to recognize Mr. 
Frank at this time for as many minutes as he would like to 
take.
    Chairman Frank. I thank you, Madam Chairwoman, and I 
appreciate that, even though I think technically your first 
sentence was, ``I'm sorry Mr. Frank is here.''
    [Laughter]
    Chairman. Frank But I will overlook that. The chair of this 
subcommittee, the gentlewoman from California, has been 
unequaled in her zeal to right one of the great wrongs in the 
record, I believe, of the American government, and that is the 
failure to come to the aid of hardworking low-income people who 
were the victims of a natural disaster.
    We have arguments back and forth when we deal with issues 
of alleviation of poverty and hardship about whether or not 
certain individuals were culpable or not. I generally believe 
that some on the other side exaggerate the individual fault 
that has resulted in these conditions, but there is no room for 
argument in this case. We are talking about people who are 
living and working in communities in Louisiana and along the 
coast of Mississippi who were devastated by a natural 
phenomenon for which no one, with the possible exception of a 
few nut preachers, could blame them.
    And what we have is the government of the most powerful and 
wealthiest nation in the history of the world doing very little 
to alleviate their plight not only in the immediate aftermath, 
which was well-documented, but today. There are people living 
today in inadequate housing because of the failure of this 
government to respond. There are people living in the city of 
our colleague from Texas, Mr. Green, and the people of Houston 
have been noble in their willingness to open their arms to 
people, but they should not have been asked to do that for this 
long.
    I can think of few comparable failures in our history on 
the part of this government. Now we are here to deal with one 
of the causes. Some of it, I think, has to do with individual 
culpability but that is by no means the whole story, and part 
of it is, I believe, the division of responsibility between the 
two Agencies represented here. I have been critical of the 
performance of each of the agencies, but I also think it is 
fair to note, on their behalf, that part of the problem is a 
division of responsibilities between them that makes no sense, 
and I hope we will get some response to the short-term issue of 
a memorandum of understanding which prevents funds from going 
to public housing.
    We understand that is part of this, that we have a 
memorandum of understanding between two Federal agencies which 
has absolved, apparently in their minds, each of them of the 
responsibility to provide funding to replace public housing for 
the lowest-income residents destroyed by a hurricane. And why 
we haven't been told today that it is going to happen, I do not 
understand. It is inconceivable, the argument that the 
government doesn't have the money.
    But beyond that we have a problem, and Ms. Waters and I 
encountered this, and Mr. Thompson and I, when we began to deal 
with this issue of trailers that were not fit for human 
habitation, of inadequate housing, and FEMA and HUD tended, 
frankly, to blame each other. We had difficulty, I will say, 
and I was appalled at this, at getting FEMA and HUD to come to 
a hearing at the same time. We were told, no, they didn't want 
to come at the same time.
    Well, that has to stop, and I want to express my 
appreciation to our colleagues on the Homeland Security 
Committee because we in Congress are not immune from this 
jurisdictionalism and part of the problem comes when we have 
committee turf wars. I am very proud of the cooperation that 
has existed between the Committee on Financial Services and the 
Committee on Homeland Security on a range of issues involving 
spending to try and alleviate the physical damage and social 
harm that was wreaked by that hurricane, and we have between us 
the jurisdiction over HUD and FEMA.
    I have spoken with the chairman of the Homeland Security 
Committee, the chair of our Housing Subcommittee has been in 
the lead on this, and I think I speak for all of us, and I 
believe the gentleman from Texas as well, the chair of the 
Homeland Security Subcommittee, we are determined to fix this. 
We are determined that by the time we finish this year, much 
clearer responsibility has to exist between FEMA and HUD, and 
this shared responsibility has clearly not worked.
    I don't know how anyone could deny that the record of the 
Federal Government in responding to this hurricane has been 
shameful, and it is not entirely a matter of individual fault, 
it is partly a matter of government structure, but that does 
not make it any less shameful and it doesn't make it any less 
urgent that we repair the situation.
    We can begin and I hope we know by the end of this hearing 
that money is going to be provided for public housing repair. I 
will not find acceptable any explanation of why, nearly 3 years 
after the hurricane, we haven't been able to do that.
    Of course we will also be addressing in the TSE bill our 
effort to provide additional funding for the construction of 
new affordable housing units, and that continues to be a very 
high priority of the gentlewoman from California, the other 
members of our committee, and myself, but we are going to 
insist that there be money provided for public housing 
reconstruction and that we will begin, hopefully with the 
cooperation of the two Agencies, to repair this situation of a 
divided set of responsibilities that has hurt some of the 
neediest people in this country who have a much more legitimate 
claim on our help than has been recognized.
    Chairwoman Waters. Thank you very much, Mr. Chairman. We 
also have with us Chairman Thompson, the chairman of the 
Homeland Security Committee, who hails from Mississippi where 
there were 2,695 units damaged and who has provided leadership 
in trying to deal with the question of CDBG and FEMA, and we 
are very pleased that he has provided leadership for this 
hearing here today. Mr. Thompson, you are recognized for as 
many minutes as you would like to have.
    Chairman Thompson. Thank you very much, Madam Chairwoman. I 
associate myself with all of the statements that have been 
made. Chairman Frank and I have had a number of discussions 
about the challenges that Hurricane Katrina posed for this 
country.
    One of the major conflicts, however, is whether or not the 
Agencies charged with responding to many of those challenges 
really functioned. With respect to housing, we can't really 
pass the buck. Whether those individuals are in owner-occupied 
housing or public housing, we have a responsibility. If we 
accept FEMA's role temporarily to do that, we should do it the 
right way. If HUD is the entity that has responsibility, then 
that relationship needs to go forward.
    But as Mr. Castillo said, we can't stick our heads in the 
sand. We have to do our job. Unfortunately, I was in New 
Orleans the night before last listening to some of the public 
housing challenges that still exist, and I read in this 
morning's paper where we had to call out a SWAT team for 
somebody we were trying to evict out of a Katrina trailer 
because that person had nowhere to go. And so we have now 
started putting burdens on people that we put in many of those 
temporary facilities by trying to evict them with no place to 
go.
    We need a strategy. There is no question about it. I look 
forward to the testimony. I am concerned, Madam Chairwoman, 
that some of the monies that Congress was so gracious to send 
to many of the States impacted by Katrina, but now some of the 
monies are being proposed to expand ports, and to build roads 
to plants that are 300 miles away from the Katrina-impacted 
area, as well as some other issues that we will have hearings 
on later.
    I support our response. If government can't respond to its 
citizens in their time of need, then where can those citizens 
turn? So we accept that proposition. We ought to make sure that 
we put them in something that is safe and sanitary and not 
allow what is happening in many of our areas. The land 
speculation, Madam Chairwoman, is rampant. People are not able 
to afford the prices for land. And there is no real long-term 
commitment to affordable housing being demonstrated.
    So I look forward to the testimony and the questions that 
follow, and I yield back.
    Chairwoman Waters. Thank you very much, Mr. Chairman. Mr. 
Souder?
    Mr. Souder. Thank you, Madam Chairwoman. I hope today we 
can separate and keep separated a couple of major issues. One 
focus is how you do housing and city rehabilitation, 
particularly with devastation this great, and I think excellent 
issues have been raised on land speculation, on how you do 
this. Do the jobs come first, does the housing come first, how 
do you do this by neighborhood? New Orleans has struggled with 
the best ways to do this, and I think they have creatively 
tried to address it, and our Federal response will be critical 
to this because it is, in many cases, low-income housing.
    A second focus is what we do with emergency housing and how 
we are going to handle long-term emergency housing. A third 
focus is, I thought excellent points were made about 
cooperation both here and problems we have in the Executive 
Branch and it is important that both the Executive Branch and 
the Legislative Branch work together.
    I have a particular interest in full disclosure. Most of 
the so-called FEMA trailers came from my district; 58 percent 
of RVs and much of manufactured housing comes from my district. 
I have been very concerned, and it started here again, in this 
hearing, with mischaracterizing what our number one kind of 
emergency housing is, which are the so-called FEMA trailers.
    There has been a misunderstanding that somehow these are 
sprayed with formaldehyde. I hear the term ``formaldehyde-
laced.'' It is in the wood. And that whatever kind of housing 
you do, whether it is in a confined area--it is also in the 
vinyl, it is in the carpet, it is in the furniture; it isn't in 
the trailer. Therefore any type of small confined housing that 
is not ventilated properly will cause the same phenomena. It is 
not the trailer. I don't know where it started that it is the 
trailer.
    But there is another question here--I have asked repeatedly 
and have found the answer to--was there a control group of 
people who weren't in the so-called trailers, and the answer is 
that the control group was the United States. The new 
Mississippi study is showing that kids who weren't in this 
housing had the same effect because the question is, was it in 
the air? So even if you ventilate, you are going to have some 
sort of breathing reaction.
    There were four cases in the entire United States until it 
started down in Katrina, in that now some other people are 
saying, I wonder if my breathing problems were caused by this? 
But we have had millions of these trailers a year out and we 
haven't had these kinds of problems, so I think it is really 
important that we don't cut off our nose to spite our face, so 
to speak. The alternatives to formaldehyde have even more 
characteristics that could cause health problems, and it isn't 
the trailers, it is in the wood, it is in the fiber, it is in 
the fabric. We emit formaldehyde ourselves, so the more people 
you put in something, the more you are going to have.
    So I hope today we stay focused on a huge challenge and 
that is, regardless of how you feel about the emergency 
housing, why are these people still in emergency housing? This 
was supposed to be a short-term phenomena, not a long-term 
phenomena. Whatever we put people into, in confined spaces, is 
going to become problematic. And I hope that we focus on that 
and that we work out better standards.
    By the way, one other thing with the emergency housing, 
because they were trying to get as much as they could, only 
about half of this was new stock. They were buying it off of 
lots, they were buying it off of other places, and that is why 
I start asking about the air, because the studies showed that 
the highest exposure was not in a newly built one.
    The challenge here is not to become emotional about it, but 
to be as dispassionate as we can to both address future 
emergency housing and expedite the transition so that people, 
regardless of what the temporary housing is, have some kind of 
alternative so you don't have to forcibly eject them when they 
don't have another place to go.
    I thank the chairwoman and I yield back.
    Chairwoman Waters. Thank you very much. Mr. Cleaver for 3 
minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman. Thank you for 
doing the heavy lifting to get this joint committee meeting 
together. I am going to defer any comments until the question 
and answer period because I am more interested in trying to 
find out how and why there is this question about legislative 
intent between HUD and FEMA. And so as one of the non-nut 
preachers, I want to dig into what we do when people don't 
understand legislation. I yield back my time.
    Chairwoman Waters. Thank you very much. Mr. Green for 3 
minutes.
    Mr. Green. Thank you, Madam Chairwoman. I want to 
especially compliment the Chair, as has our chairman of the 
full committee, for her outstanding work. I have been to 
Louisiana with her and I know of her commitment to helping 
persons who have been displaced by this force of nature, who 
have been impacted by it. And we still have a disaster that we 
have to deal with; it is a human disaster.
    I have been blessed to serve on both the Homeland Security 
and the Financial Services Committees. I have also been blessed 
to serve the 9th Congressional District in Texas, which 
inherited a good number of persons from Louisiana and some 
other places. Literally, we received the equivalent of a small 
city without all of the infrastructure necessary to support a 
small city. And we were honored to have the opportunity to 
serve our fellow human beings.
    But at the same time, there is a need for some assistance 
to help with the services that have to be provided. We find 
ourselves now in Houston, Texas, still in need of some 
additional assistance, and I am eager to hear about the long-
term plans for persons who are relocating in Houston, and some 
who are still, in their minds, in Houston temporarily.
    Finally, it seems to me that one of these agencies has a 
short-term mission and the other has a long-term mission. 
Short-term help, long-term assistance, and somehow the line 
between the longterm and the short term has to be better 
defined so that we can clearly understand with whom the 
responsibility lies for some of the things that we have talked 
about that one Agency contends the other Agency is responsible 
for, and it becomes difficult to sift the sand and find the 
pearls of wisdom as to whom it is that is entirely responsible.
    So I say to you we have to define this line, find the 
boundaries that are important to us. We also have to, as we do 
this, concern ourselves with this one-for-one replacement that 
the chairwoman mentioned. I am concerned very much about the 
housing in Louisiana, wherein we had an agreement, in my 
opinion, to have one-for-one replacement, but I don't see it 
being honored to the extent that I thought the agreement was to 
be honored.
    That one-for-one replacement is important. If people want 
to return home, there has to be a home to return home to, and 
without the replacement effort, we are not providing the 
opportunity for people to go home. Everybody should have the 
right to go home. People want to go back, and they ought to be 
able to get back.
    Finally, I thank Chairman Frank for what he has done, and 
Chairman Thompson, as well. The two of them are outstanding 
chairmen. I am honored to serve with them and they have both 
made a concerted effort to try to make sure that our persons in 
Houston, Texas, are properly taken care of. For this I am 
grateful, and the ranking member of the Housing Subcommittee, 
Mrs. Capito, was not the chair at the time, but I know of her 
desire to be of assistance and I appreciate what she has done 
as well.
    With that I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. Mr. Etheridge?
    Mr. Etheridge. Thank you, Madam Chairwoman. And to expedite 
this, Madam Chairwoman, I will submit my statement for the 
record, and hopefully you will be a little lenient when we get 
into the Q & A, and I will have an opportunity to speak. Thank 
you and I yield back.
    Chairwoman Waters. Thank you very much. I am now pleased to 
welcome our distinguished first panel. Our first witness will 
be Mr. Carlos Castillo, Assistant Administrator for Disaster 
Assistance, Federal Emergency Management Agency, U.S. 
Department of Homeland Security. Our second witness will be Mr. 
Jeffrey H. Riddel, Director, Office of Capital Improvements, 
U.S. Department of Housing and Urban Development. I thank you 
all for appearing before the subcommittee today, and without 
objection, your written statements will be made a part of the 
record. You will each now be recognized for a 5-minute summary 
of your testimony. Thank you.

   STATEMENT OF CARLOS J. CASTILLO, ASSISTANT ADMINISTRATOR, 
 DISASTER ASSISTANCE DIRECTORATE, FEDERAL EMERGENCY MANAGEMENT 
                             AGENCY

    Mr. Castillo. Good morning Chairwoman Waters, Chairman 
Cuellar, Chairman Frank, Chairman Thompson, and members of the 
subcommittees. I am Carlos Castillo, the Assistant 
Administrator for the Disaster Assistance Directorate in the 
Department of Homeland Security's Federal Emergency Management 
Agency (FEMA). I thank you for the opportunity to be here today 
to represent the Department and FEMA and to discuss our role 
and responsibility in responding to the affordable housing 
needs of Gulf Coast States following emergencies and natural 
disasters. New programs, policies, initiatives, partnerships, 
and collaborations define the improvements that have taken 
place within FEMA since Hurricanes Katrina and Rita. Many of 
the lessons we learned have been institutionalized and are now 
being implemented nationwide. FEMA continues to marshal the 
efforts and expertise of the community of Federal, State, and 
local emergency managers and voluntary organizations to 
aggressively and compassionately address the needs of 
individuals, families, and communities devastated by disasters.
    I have submitted my written testimony for the record and it 
outlines a number of FEMA programs aimed at assisting Gulf 
Coast communities and disaster victims. I will summarize them 
briefly as well as address the memorandum of understanding we 
have with HUD that outlines eligible emergency repair 
assistance.
    Forward progress, our Gulf Coast housing strategy action 
plans: We are committed to providing suitable long-term housing 
solutions to families impacted by Hurricanes Katrina and Rita 
who still reside in temporary housing units. Led by FEMA's Gulf 
Coast Recovery Office, we continue to work with applicants to 
ensure that they have access to any and every available housing 
resource that can help speed their recovery. We are pleased 
that nearly 84 percent of the households that received 
temporary housing units following Hurricanes Katrina and Rita 
have now moved out of those units and back into some form of 
permanent housing. The work of transitioning the remaining 
residents presents many challenges as we try to balance 
available resources with support needs of the families that 
reach beyond basic housing, but are often just as critical to 
the individual's ability to return to self-sufficiency. 
Affordable housing, particularly rental units, is very limited 
in many areas along the Gulf Coast.
    However, FEMA has taken steps to increase the amount of 
available rental units and reduce the other barriers that may 
slow the process for an applicant. We redefined our current 
lodging contract in August of this past year to encourage 
greater landlord participation and expand the universe of 
rental properties and reduce common barriers for the remaining 
disaster population. These incentives and additional actions 
include payment of rental assistance above the current fair 
market rate, payment to landlords for utilities included in the 
rent payment, payment to landlords for repairs to property 
damage made by disaster applicants, payment of security 
deposits and processing fees for background checks required by 
some landlords, and assistance with locating furniture and 
other necessities for basic living needs.
    We previously announced the plan to close all group sites 
and relocate residents by June 1, 2008, and we have continued 
in this activity as part of our ongoing efforts. We have 
already moved over 120,500 households out of temporary housing 
units as residents move into more long-term housing solutions. 
While the majority of group site residents have successfully 
transitioned into functional long-term housing, some of the 
remaining residents are experiencing challenges. FEMA officials 
understand this and we have worked diligently to remove many of 
the barriers they have faced in relocating. As of May 30, 2008, 
there are 22,437 households still occupying temporary housing 
units in the Gulf Coast and 728 households still in group 
sites.
     This year, Administrator Paulison wrote to the Governors 
of Louisiana and Mississippi to establish a joint Federal/State 
Housing Relocation Task Force. Both States, as well as our key 
Federal partners identified representatives for this task 
force, which is intended to share resources, identify solutions 
to barriers, and develop joint policies for messaging for those 
still in need of housing. The task force members will also be 
charged with identifying opportunities for collaboration with 
local governments.
    Disaster housing assistance program: On July 26th of last 
year FEMA and HUD executed an interagency agreement 
establishing the DHAP program, a temporary housing rental 
assistance and case management program for eligible individuals 
and households displaced by Katrina and Rita. The program is 
currently being administered through HUD's existing 
infrastructure of public housing agencies. Ultimately, over 
40,000 eligible residents displaced by the Gulf Coast 
hurricanes will continue to have their rent paid through this 
partnership.
    The memorandum of understanding regarding repair of public 
housing following emergencies and natural disasters: I am also 
aware that Chairman Frank has expressed concern, as others, 
over FEMA's ability to fund repairs to public housing 
authorities damaged as a result of Hurricane Katrina. FEMA has 
this MOU with HUD outlining eligible emergency repair 
assistance, and we have agreed that FEMA will, in its 
discretion, provide for essential assistance authorized under 
Section 403 of the Stafford Act to eligible public housing 
authorities that fall outside of HUD's authorities and FEMA has 
provided $7.4 million to the housing authority of New Orleans 
for emergency protective measures. I understand I am past the--
may I finish the--
    Chairwoman Waters. You may wrap up your statement.
    Mr. Castillo. Yes. We will work together with HUD to 
resolve this. I just wanted to be clear that the memorandum of 
understanding was meant to clarify what our roles, what HUD and 
FEMA's roles are. It wasn't meant to change anything.
    [The prepared statement of Mr. Castillo can be found on 
page 62 of the appendix.]
    Chairwoman Waters. Thank you. We are going to get to that 
in the questioning. You will have time to explain.
    I am going to move right to Mr. Riddel at this point. Thank 
you.

  STATEMENT OF JEFFREY H. RIDDEL, DIRECTOR, OFFICE OF CAPITAL 
  IMPROVEMENTS, PUBLIC AND INDIAN HOUSING, U.S. DEPARTMENT OF 
                 HOUSING AND URBAN DEVELOPMENT

    Mr. Riddel. Good morning. Chairwoman Waters, Chairman 
Cuellar, Chairman Frank, and Chairman Thompson. It is an honor 
and a privilege to be before you this morning, I thank you for 
the opportunity.
    My name is Jeff Riddel, and I am the Director of the Office 
of Capital Improvements, the Office that administers the 
Capital Fund program which gives housing authorities funds to 
repair and maintain their housing stock. The Office of Capital 
Improvements is also the office that administers the emergency 
and natural disaster grant program.
    I am here this morning to discuss with you how best to 
achieve funding to enable housing authorities to respond to 
make the necessary repairs following natural disasters. I would 
like to summarize briefly some of the issues and then propose 
one policy option. As you know, we also provided a written 
statement.
    The Quality Housing and Work Responsibility Act, QHWRA, 
which was enacted in 1998 included a provision, Section 9(k) 
which permits HUD to award natural disaster grants to housing 
authorities. It also authorized HUD to make emergency grants to 
address situations that endanger the health and safety of 
public housing residents. As the chairwoman mentioned in her 
opening remarks, section 9(k) directs HUD to set aside not more 
than 2 percent of the capital and operating funds for 
emergencies and other natural disasters and housing needs 
resulting from any settlement of litigation.
    However in every appropriations bill since 2000, Congress 
has determined that HUD should not use appropriated amounts 
under 9(k) and has separately appropriated a set-aside amount 
for emergencies and natural disasters. The funding has declined 
significantly for emergencies and natural disasters from a high 
of $75 million in 2000-2002 to a low of $16.8 million last 
year.
    In 2004, four hurricanes struck the State of Florida and 
completely depleted the $39.8 million in funding available for 
that year. In 2005, Hurricanes Katrina and Rita struck the Gulf 
Coast and the disaster funding available that year was 
inadequate to restore public housing damaged or destroyed. 
Hurricane Wilma struck Florida during the first month of Fiscal 
Year 2006 and substantially depleted the $16.8 million 
available at that time. The current level of $18.5 million, 
while an increase from 2006 and 2007, would not be sufficient 
to meet the disaster needs such as those that have occurred in 
recent years.
    Public housing authority losses from hurricanes and 
disasters are mitigated to a large extent by HUD's regulatory 
requirements that they maintain specified insurance for 
coverage for property and casualty losses. The size and scale 
of these hurricanes have tested that requirement. HUD found 
that insurance proceeds are insufficient in some cases, such as 
with most of the housing authority of New Orleans, among 
others. Public housing authorities that face funding shortfalls 
due to insufficient insurance proceeds and HUD disaster grant 
funding have sought public housing assistance under FEMA 
pursuant to Section 406 of the Stafford Act.
    In the late 1990's, HUD and FEMA signed a joint 
coordination letter addressing the procedures for public 
housing authorities obtaining essential assistance for items 
such as debris removal and demolition of unsafe structures 
pursuant to Section 403 of the Stafford Act. The joint 
coordination letter did not address the issue of FEMA public 
assistance for reconstruction and long-term repair under 
Section 406 of the Stafford Act.
    In 2007, HUD developed a proposed memorandum of agreement 
between itself and FEMA that would have made it possible for 
FEMA assistance pursuant to Section 406 to be available as a 
last resort for funding when insurance proceeds and disaster 
grants from HUD were inadequate. However, because Section 9(k) 
exists, Section 406 funding has been thought to be not 
available for public housing authorities because it violates 
the appropriations law by augmenting Congress' appropriation 
for natural disasters funded through the capital--
    Chairwoman Waters. Could you speak up please?
    Mr. Riddel. Sure. I would be happy to.
    In recent years, the President's budget has proposed 
eliminating both the portion of 9(k) that provides for disaster 
grant funding and the set-aside for natural disaster grants in 
an attempt to alleviate confusion about disaster assistance and 
make it possible for housing authorities to access Section 406 
Stafford Act funding. If Congress were to follow this course, 
there would be no separate disaster funding provided for public 
housing, and consequently, FEMA would be no longer augmenting 
another appropriation by providing Stafford Act assistance.
    Therefore, one potential solution to disaster funding 
shortfalls for public housing authorities would be the 
permanent repeal or amendment of Section 9(k) with the 
additional stipulation that no funding be appropriated for 
natural disasters.
    Thank you for the opportunity to appear. Again, I would be 
happy to answer any questions at the appropriate time.
    [The prepared statement of Mr. Riddel can be found on page 
257 of the appendix.]
    Chairwoman Waters. Thank you very much. I would like to 
recognize myself for questions at this time. I have a lot of 
questions, but I suppose I can only get answers to a few.
    Let me just, if I may, follow up on something that Chairman 
Thompson referenced in his opening statement. He indicated that 
someone living in a FEMA trailer has been evacuated by a SWAT 
team. Would you please explain to me why someone living in a 
FEMA trailer, temporarily assisted because of a disaster, why 
would they be evacuated?
    Mr. Castillo. I believe you are referring to, there was an 
incident in New Orleans; I believe it started late last night 
or early this morning. The incident is under investigation by 
the New Orleans police department and I know they were coming 
out with a statement, but I have nothing else to add. I just 
don't know much about it.
    Chairwoman Waters. Well, let us continue a little bit on 
this business of FEMA trailers. We will see what we can find 
out about that situation, maybe it was not associated with FEMA 
at all, maybe it was the local police department.
    But why would FEMA use trailers, again, given the health 
risks associated with formaldehyde exposure? I appreciate the 
admonition of my colleague from the Homeland Security 
subcommittee here, but I have referred to them as formaldehyde 
trailers, and I think it upsets some people that I say that, 
but I still see them that way. If in fact we know we have 
problems, whether it comes from the wood or any other material 
in the trailer, why would we use them again if we had a 
disaster and we needed to place people someplace temporarily?
    Mr. Castillo. There is a lot of confusion, I believe, that 
some folks refer to trailers and just look at travel trailers 
and mobile homes, and just to differentiate, the way I 
understand your question, it relates specifically to travel 
trailers, which are meant to be a more temporary use, used 
normally as travel trailers to spend maybe a weekend in and not 
necessarily meant for long-term housing.
    At FEMA, we are looking ahead knowing that if we are faced 
with another catastrophic, very extraordinary event among the 
likes of Katrina or maybe even not to that extent, that we need 
to do something different. We know that the travel trailers, 
the formaldehyde issue that has been raised and we have 
recognized and are dealing with is but one. Travel trailers are 
not the ideal solution. We are looking at, through our joint 
housing solutions group, we are looking at alternatives to 
travel trailers and some of the other typical manufactured 
housing.
    Again, our plan and our philosophy has been and is, first 
we will look to, if there is are quick repairs that can be made 
to a home where people are more comfortable, and their home as 
been affected, where they can move back shortly after an event, 
looking at available rental resources in an area that is 
affected, apartment homes they can move into and it is more 
permanent, then we will go to other manufactured housing like 
mobile homes, which are larger.
    The downside to mobile homes is for people, and the 
majority of people who were in mobile homes and travel trailers 
were on private sites, meaning people who were repairing their 
homes and want to stay where their possessions are, want to 
stay in their neighborhood where their school, their friends 
and relatives are--
    Chairwoman Waters. Let me interrupt you for a moment here. 
Have you done any research since we have been confronted with 
the problem of formaldehyde trailers? Have you done any 
research about what kind of units would be better to be used in 
the event of another disaster? I mean, what kind of real 
information do you have about what is safe and what is not?
    Mr. Castillo. We have worked primarily with HUD and the 
Centers for Disease Control and Prevention to look at the areas 
that their expertise is in and not ours, and we have consulted 
with them and worked with them and continue to do that. One key 
thing we are doing is we have tested, since Administrator 
Paulison advised, we have tested every single unit that is 
offered to the State, and that includes, although we haven't 
offered travel trailers, and again that is just a--
    Chairwoman Waters. But I am really asking about research. I 
want to know, what have you learned that would help you to 
place people in safer surroundings, environments in the future? 
Is there a report that has been done? What real information do 
you have about alternatives to trailers that are contaminated, 
be it from wood or other materials?
    Mr. Castillo. We test the trailers--to answer, there is no 
report that I know of--
    Chairwoman Waters. You have no research and no report? So 
what you are doing is, you are trying to figure it out 
yourself, is that right?
    Mr. Castillo. The CDC, I know, is doing some studies on the 
health effects of formaldehyde. We are testing our units, 
before they are offered, for formaldehyde. We are testing that 
in accordance with standard practices and protocols to make 
sure that there is no--
    Chairwoman Waters. So you have no research that has been 
done and you have no report about that research that would help 
you to determine what would be the safest way to house people 
who are the victims of a disaster, is that correct? You have no 
research? I know you said you are testing, do you have any 
research that would help you to determine how to house people 
safely in the event of a disaster?
    Mr. Castillo. That we have conducted? No ma'am.
    Chairwoman Waters. I don't care who conducted it. Whether 
you conducted it, or whether you contracted it with someone, 
you have no research, is that right?
    Mr. Castillo. We have a joint housing solutions group that 
is looking at alternatives to housing and they have used 
experts from different portions, having to do with specifically 
housing--
    Chairwoman Waters. I understand there was some recent 
testing of children as it relates to perhaps some mental health 
problems. Are you aware of that?
    Mr. Castillo. No, ma'am.
    Chairwoman Waters. Alright, thank you very much. I am going 
to call on my ranking member, Mrs. Capito, at this time.
    Mrs. Capito. Thank you, Madam Chairwoman. I have a question 
for you, Mr. Castillo. Chairman Frank wrote a letter to FEMA 
Administrator David Paulison in June 2007 and asked that FEMA 
revisit--and you began talking about the memorandum of 
understanding with HUD to clarify that public housing 
developments are eligible to Section 406 funding if HUD funds 
are unavailable. In your letter you said that you would be 
considering this, and this was in November of 2007. I am 
wondering if you have completed this study and what conclusions 
you have reached?
    Mr. Castillo. We haven't. We have worked, we have had 
meetings with HUD to look at that and what I would like to 
clarify is that the memorandum of understanding was simply 
something that was written to clarify and spell out, to detail 
what HUD's responsibilities are and what FEMA's 
responsibilities are. It wasn't meant to change legislation or 
even address that.
    Where we have agreed is--and perhaps it is not something 
that we are happy with because the bottom line is that people 
who need the housing perhaps still aren't getting it as quickly 
as they should--that we don't have the authority, and because 
of augmented appropriations, we are not in a position to 
provide disaster relief funding under 406 of the Stafford Act.
    Mrs. Capito. In terms of the remaining individuals, 
families who are still not in some sufficient housing 
situations, what is that number now?
    Mr. Castillo. The number of folks still in--I can give 
you--we have, right now, there are 22,188, as of Monday, 22,188 
households remaining in FEMA-provided temporary housing.
    Mrs. Capito. So they are living, now, still, in, you 
mentioned travel trailers. Are they more permanent homes or 
more permanent structures or--
    Mr. Castillo. Those are primarily mobile homes and travel 
trailers, the majority of which are on private sites.
    Mrs. Capito. Is the issue that, in order to transition them 
from this temporary living situation the fact that we are not 
coordinating with HUD, is there not available housing or rental 
units, or is it because of bureaucratic snafus, which I am 
certainly hopeful that it is not. Could you expound on that?
    Mr. Castillo. We are moving, we are averaging about 1,000 
households a week that we are moving out into more permanent 
housing. We are working closely with HUD, we have had--I will 
give you an example.
    There was, before we started even the joint housing 
solutions group that we started that I mentioned both in 
Mississippi and Louisiana, there were several databases. Every 
agency had a separate database to rental property available. We 
have combined those with HUD, FEMA, and the Gulf Coast to look 
at available rental properties to move people into. As I said, 
we are moving 1,000 families a week into more permanent 
housing, it is just--it is not just one reason for the delay, 
and we have moved out a lot of people.
    Mrs. Capito. Well, that still is a staggering number--I am 
sure you realize that as well--who are left without suitable 
housing.
    Mr. Castillo. Absolutely.
    Mrs. Capito. Last question, and this is sort of a general 
question going back to the news reports post-Katrina. A lot of 
reports of unused housing or temporary housing, travel 
trailers, what is the status of all that and can you clarify 
that for me please?
    Mr. Castillo. Can you repeat the question? Unused--
    Mrs. Capito. Question: Were there hundreds and hundreds of 
travel trailers or housing units available that were unused, 
that were just sort of parked, post-Katrina?
    Mr. Castillo. I don't know about that. I started with the 
Agency less than a year ago, but I haven't heard that was the 
case. I know there were over 140,000 families who were housed 
through FEMA in different temporary housing units, but I hadn't 
heard that, that you are referring--
    Mrs. Capito. But as a point of clarification, to your 
knowledge, since you weren't there obviously you wouldn't know, 
but at the time, any available housing that was there onsite 
was used. Is that correct?
    Mr. Castillo. That is my understanding. Not just there 
onsite, but also in other States who became host States and 
that have sheltered a lot of Katrina/Rita victims outside of 
their own State, yes, ma'am.
    Mrs. Capito. Thank you. I yield back. Thank you, Madam 
Chairwoman.
    Chairwoman Waters. Thank you very much. Mr. Cuellar?
    Chairman Frank. Will you yield me 10 seconds?
    Chairman Cuellar. Yes, sir.
    Chairman Frank. Mr. Castillo says that he has been at the 
Agency less than a year. I would just note--and I appreciate 
the gentlewoman from West Virginia referencing the letter I 
sent--that he has been at the Agency less time than my letter. 
I hope he has gotten a better response than my letter has in 
that time; my letter is a year old.
    Chairman Cuellar. Thank you, Mr. Chairman. Let's see if we 
can kind of look at the big picture here. One, the hurricane 
season just started this Sunday, June 1st, is that correct?
    Mr. Castillo. Yes, sir.
    Chairman Cuellar. Okay, that was number one. Number two, we 
have over 22,000 individuals who are still living in temporary 
housing, is that correct?
    Mr. Castillo. Yes.
    Chairman Cuellar. We have, between Louisiana and 
Mississippi, about 6,000 available housing units, is that 
correct?
    Mr. Castillo. Actually, I believe it is more than that. 
What we know as of this week, and we are using hotel rooms as 
well as part--we need to get people out for different 
priorities, if they have formaldehyde concerns or their health 
issues, but we have identified 5,000 rooms in hotels that are 
willing to cooperate and participate with us, 5,000 in 
Louisiana, over 5,500 in Mississippi, and 4,900 apartments that 
are willing to participate with us, 4,900 in Louisiana and over 
2,000 in Mississippi.
    Chairman Cuellar. And if we take away hotels and motels 
that you are using as alternative housing units, at least our 
number show that there are about 6,000 between both States.
    Mr. Castillo. A little more, yes. Close to that.
    Chairman Cuellar. Alright, if we look at that big picture, 
let me ask this question both to Mr. Riddel and Mr. Castillo, 
same question. Mr. Riddel, if FEMA is a disaster preparedness 
and response agency, we know they are there for a particular 
purpose during a disaster, and your mission under HUD has a 
different mission, that is housing more on a permanent basis, 
should I say. With that in mind, at what point during the 
recovery period do you feel it is appropriate for FEMA to hand 
over the housing mission to an agency that has more experience 
in this area? And then, Mr. Castillo, I will ask you the same 
question.
    Mr. Riddel. Thank you Mr. Chairman. Let me begin to 
respond, I certainly would be happy to amplify it further.
    What I think I hear in your question are issues of timing, 
of longer-term solutions as well as shorter-term solutions. On 
a short-term basis, the funding through FEMA does provide that 
opportunity.
    What we are doing in the Disaster Housing Assistance 
Program is taking over responsibility for that funding, for the 
operation of the program, once tenants are relocated to some 
form of other housing, because HUD has that expertise, that 
mission. On a longer-term basis, certainly HUD's mission is to 
provide safety, some sanitary, affordable housing. That is the 
business that we are in. So we are certainly working throughout 
the country, but especially in the Gulf Coast on redevelopment 
programs and strategies to provide not only public but 
affordable housing in those communities.
    Chairman Cuellar. So here we are 3 years after the 
hurricanes. Is it the appropriate time now to hand this over? 
You know, to an agency that has more the expertise and the 
initiatives--
    Mr. Riddel. Yes. We are working now in that transition 
process with FEMA, taking over responsibility for those 
residents as well as working on their long-term housing needs, 
yes.
    Chairman Cuellar. When do you anticipate this passing of 
the torch to happen?
    Mr. Riddel. We have been working on taking over 
responsibility for former FEMA residents now for the last 
several months. As soon as relocation assistance is available, 
they become part of the DHAP program.
    Chairman Cuellar. Are you ready to handle the situation 
that if FEMA moves some of these folks over to hotels/motels--
my understanding, they were there for 30 days. After 30 days, 
we don't know what is going to happen. I guess if you have 
somebody in a trailer, for example, and there might be some 
issues about health, that is one issue that they look at, but 
then the other issue, the other alternative is, by moving to a 
hotel/motel, I am there for 30 days, and after 30 days I don't 
know what is going to happen, are you ready to handle that in 
the transition?
    Mr. Riddel. Our focus certainly is on longer-term housing 
needs and opportunities, and I think you identify an issue in 
terms of the decision-making process of residents even in 
moving out of trailers, they are concerned about their long-
term housing needs, so our focus is on that longer-term housing 
need rather than their being in a hotel room for a few days.
    Chairman Cuellar. Because my time is almost up, Mr. 
Castillo, could you answer that in 30 seconds? When is the time 
for FEMA to hand over this work? That was important for you all 
during the disaster, I recognize that, but now 3 years later, 
are you ready to pass that on to somebody who has a little bit 
more expertise?
    Mr. Castillo. Yes, and we have been passing that baton, as 
you said, through the DHAP program, the Disaster Housing 
Assistance Program. We have been transitioning folks and it 
will be up to 40,000 families that will be transitioned into 
them. Housing is HUD's mission, they are good at it, and it is 
what they do on a normal basis. We are good in the emergency 
phase. As far as a date, I mean, it is what we transition to, 
but yes, I agree.
    Chairman Cuellar. Well, I have further questions but my 
time is up, so thank you very much.
    Chairwoman Waters. Thank you very much. Mr. Dent?
    Mr. Dent. Mr. Castillo, the Post-Katrina Emergency 
Management Reform Act of 2006 required FEMA to develop a 
national disaster housing strategy, as you know. A draft of 
that housing strategy is being circulated among the stakeholder 
agencies and organizations, as I understand it. Have you been 
receiving feedback on that strategy, and if so, what have been 
the major areas of interest and concern?
    Mr. Castillo. It was first developed along with partner 
agencies. Right now we have a final, FEMA has a final draft 
that is being circulated, as you said, among other agencies, 
including what is required by law and through the national 
advisory council who has it now. We haven't received the 
feedback from them yet, but it is something that is a very 
complex strategy that looks at and incorporates a lot of the 
lessons we have learned along the way.
    Mr. Dent. It is my understanding, too, that FEMA, as I 
think you have stated, expects to deliver that strategy to 
Congress later this month. Is that still the expectation on 
delivery?
    Mr. Castillo. I don't know the exact date. I know it is--I 
can tell you and I can assure you that no one wants to see that 
strategy out more than we do at FEMA and as soon as it does, we 
will circulate it here.
    Mr. Dent. You also referenced earlier that FEMA has 
established the joint housing solutions group to evaluate 
innovative disaster housing options, identify viable 
alternatives to FEMA travel trailers and manufactured homes, 
and recommend improvements to disaster housing operations. 
Could you please describe the efforts of that group, and what 
agencies and offices are currently represented in that group? 
And I would also like to know if you have any recommendations 
that have been developed?
    Mr. Castillo. Yes. It started actually in 2007 when we 
brought a group together. We have opened and communicated 
through a Web site and through a lot of different channels 
opportunities for companies and people to provide units that 
are looking at something different other than travel trailers 
and mobile homes that we have been doing. There is a lot of 
different criteria that we have published for them to use and 
the point is we have identified--
    What we want to do is work to pilot the top four or five 
prospects, the top four or five solutions that come out of 
that. We have a housing assessment tool where people can submit 
this online in sort of a self-evaluation to start out with to 
make sure it meets the criteria of safety, health, formaldehyde 
free or very low in formaldehyde, other things that we have 
learned along the way that will hopefully result in some good 
solutions for the future that we can use and implement and test 
if we need to this season.
    Mr. Dent. And Mr. Riddel, could you please discuss the 
current state of affordable housing and the real estate market 
on the Gulf Coast. How is HUD involved in efforts to ensure 
that there is sufficient availability of affordable housing in 
a given area?
    Mr. Riddel. I would be happy to. Our focus is certainly 
both on public housing as well as affordable housing. The 
housing authorities in the Gulf Coast area have redevelopment 
programs and strategies that typically involve a multitude of 
approaches of housing types, of tenure, homeownership, rental, 
ranges of housing from public housing to affordable housing to 
market rate housing, and a variety of funding sources including 
Federal, State, and local sources, so we work with those groups 
and have provided support in as many different ways as we 
could.
    For example, one of the things that has been done is to 
provide housing authorities with the flexibility to use what is 
now called housing choice voucher funding and what used to be 
called Section 8 funding flexibly so that they can use it for 
development purposes and make that funding available using the 
appropriations that Congress provided then to provide voucher 
assistance for families.
    So we are working a variety of programs and types, 
certainly working with other agencies as well as the chairwoman 
mentioned, in New Orleans we have been able to get, through the 
housing authority there, tax credit assistance through the Gulf 
opportunity zone to get several hundred million dollars worth 
of tax credit investment to develop not only public but 
affordable housing. There has been comparable programs in other 
ways as well.
    Mr. Dent. I see my time has expired. I yield back.
    Chairwoman Waters. Thank you very much. Mr. Cleaver.
    Mr. Cleaver. Thank you, Madam Chairwoman.
    Chairwoman Waters. I am sorry, Mr. Frank is back.
    [Laughter]
    Chairman Frank. I am going to ``leave it to Cleaver.''
    [Laughter]
    Chairwoman Waters. Alright, Mr. Cleaver.
    Mr. Cleaver. Mr. Riddel, you manage the capital fund for 
emergencies?
    Mr. Riddel. That is correct.
    Mr. Cleaver. In 2000, you had $75 million.
    Mr. Riddel. Correct.
    Mr. Cleaver. Today, it is less than $20 million?
    Mr. Riddel. It is $18.5 million, yes.
    Mr. Cleaver. What was the request, what was the budget 
request?
    Mr. Riddel. In the current budget, and it gets to some of 
the substance, I think, of this hearing, in the current 
request, the current budget, we have zeroed out that request. 
We are not seeking funding for disaster grants. The rationale 
for that is, as I mentioned in my opening statement, this 
concern about duplication or augmentation of funding.
    Mr. Cleaver. Yes.
    Mr. Riddel. And that while that confusion exists, the 
families are better able to be served if they know that they 
can get a certain source of funding or housing authorities can 
get certain sources of funding to meet the needs of their 
residents.
    Mr. Cleaver. Okay, thank you. Here is my question for both 
of you: If the HUD Secretary zeroed out this fund, and FEMA did 
not insert it in its budget request, we are essentially leaving 
the people out there. Nobody, then, it seems has the 
responsibility, for whatever reason, to deal with the people 
who have been devastated. Is that right? Is that wrong? Is that 
anything?
    Mr. Castillo. For us, we have a disaster relief fund, but 
that is no year funding. It is basically to provide funding for 
disasters, but because HUD has a specific authority and 
Congress appropriates under that--
    Mr. Cleaver. Except HUD didn't want it. They zeroed it out.
    Mr. Riddel. Let me attempt to address some of those points. 
I think part of the issue is the magnitude of funding required. 
As you referenced, in 2000 the funding was $75 million, it was 
a much larger number than it is now. The magnitude of the need 
also certainly greatly fluctuates based on events that occur 
during that year, disasters such as we have experienced in 
recent years.
    So the funding level is certainly an issue, but beyond 
that, the ability to access funds through Section 406 of the 
Stafford Act as other--
    Mr. Cleaver. I see two issues. One is the funding issue, 
which I am still not clear about where HUD and FEMA are going. 
The second issue, I guess, is legislative intent. When two 
agencies have difficulty interpreting the legislative intent, 
who becomes the referee? Sir?
    Mr. Castillo. Well, the way we understand the legislative 
intent, and I am not sure that there is disagreement between 
HUD and FEMA, is that because HUD has a specific authority, the 
legislative intent was for them to have that authority.
    Mr. Cleaver. Okay, here is the problem that I hope you can 
clear up. HUD zeroed out the capital fund for emergencies. Am I 
right?
    Mr. Riddel. That is in the current budget, yes.
    Mr. Cleaver. And FEMA is saying that is HUD's 
responsibility. HUD is saying we are going to zero this out 
because we think that one agency should handle all of these 
matters and we should not be duplicating what FEMA is doing. 
The truth of the matter is that the people in the Gulf Coast 
were left without anyone stepping up to the plate for capital 
emergencies.
    Mr. Riddel. Congressman, part of the issue, I think, is the 
magnitude of funding. At a level of $18.5 million, that funding 
is inadequate to address any substantial--
    Mr. Cleaver. Okay, we are talking past each other and it is 
my fault. It is my fault, whatever it is, it is my fault, so 
let's talk to each other. You are saying that $18.5 million is 
inadequate. I agree; I think $75 million was inadequate. The 
problem is you zeroed it out because you said that it should 
be--you wanted to avoid duplication. Is that right?
    Mr. Riddel. That is correct.
    Mr. Cleaver. FEMA says they shouldn't handle it because it 
is the responsibility of HUD. Is that right?
    Mr. Castillo. Yes, sir.
    Mr. Cleaver. And so you are saying there is no 
disagreement, there is no confusion over legislative intent 
because HUD should have it. That is what you said, Mr. 
Castillo.
    Mr. Castillo. Yes, because HUD has the specific authority, 
yes sir.
    Mr. Cleaver. Then I said, so the people are left out there 
without anyone wanting to help. Tell me why I am wrong.
    Mr. Castillo. We want to help. I mean we are looking for 
solutions to this. You know, we have the--
    Mr. Cleaver. Well, I will e-mail that to the people in New 
Orleans that you are interested. That ought to probably fix it 
all. I yield back the balance of my time.
    Chairwoman Waters. Thank you. Chairman Frank?
    Chairman Frank. I want to follow up on that. With regard to 
the letter that the gentlewoman from West Virginia mentioned, I 
sent a letter dated June 12, 2007, about this inability to get 
money to public housing, and the answer to you, Mr. Castillo, 
so you said you have been there less than a year, only slightly 
less than a year, this is--oh, I am sorry, you sent the letter 
in November. My letter was in June.
    So many months later in November you wrote to me, and you 
said, ``FEMA is committed to and communicated to HUD that we 
will study the feasibility of this issue for the purpose of 
authoritatively determining whether such a change is both 
appropriate in legal. That study is actively underway.'' That 
was in November. Apparently it is still underway. I think it is 
underwater.
    What is the status of that study that you told me in 
November was underway from a letter I sent you a year ago?
    Mr. Castillo. Sir, the study is, or the status is that FEMA 
cannot augment an appropriate--
    Chairman Frank. You said there is a study. Is there an 
actual study? Can I see it?
    Mr. Castillo. The study is that we met jointly with HUD, we 
met with HUD--
    Chairman Frank. Well, does HUD agree that FEMA legally 
can't do that?
    Mr. Riddel. Our approach, Mr. Chairman, was to--
    Chairman Frank. No, I didn't ask your approach, sir. Does 
HUD agree that FEMA is legally bound not to give that money?
    Mr. Riddel. I don't know if that is the conclusion.
    Chairman Frank. No, it shouldn't be. Well, FEMA said they 
worked it out with you. And my question is, do you agree with 
FEMA that they are legally unable to provide this funding?
    Mr. Riddel. No sir, what we had proposed--
    Chairman Frank. No, I didn't ask what you proposed, sir. I 
want to know whether you agree that FEMA is legally unable to 
provide that funding?
    Mr. Riddel. To my belief, no, I'm not the--
    Chairman Frank. Okay, thank you. Now I want to ask you, Mr. 
Castillo, I am troubled by that.
    First of all, as I understand it, the argument is that you 
can't provide the funding because they can get funding under 
9(k), which has no money. I am not a great mathematician but I 
know that sometimes if I have a zero, a real number, or not a 
real number, apparently to FEMA, zero is a real number. Because 
zero dollars is real enough for you not to help people who need 
help with public housing that was destroyed by the hurricanes.
    So the fact that 9(k) has not been funded, that legally 
prevents you from providing funding because what you are saying 
is that these housing authorities could have gotten money from 
9(k) if it had any money, and therefore you are not going to 
give them any money even though they didn't get any money 
because 9(k) doesn't have any. Is that your position?
    Mr. Castillo. It is that we can't--if we were to give them 
money it would augment an appropriation, sir.
    Chairman Frank. But the appropriation is zero. Is that 
correct? So you are legally bound not to appropriate zero--do 
you consider an augmentation, I mean augmentation to me is to 
give more, but they didn't get anything. It is also this 
Administration's position, apparently it is, because I assume 
the OMB approved the proposal to repeal 9(k).
    But let me ask you this, sir--April 14, 2003, to Mr. 
Castillo from FEMA, this is an amendment to the MOU--
``Background. Although HUD has specific authority under Section 
9(k) as amended to provide funds for the PHA facilities, FEMA 
has generally funded these costs in the past.''
    Was FEMA, when it did that, violating the law? This is in 
the April 14, 2003, amendment, Recovery Division Policy, etc. 
It says that in the past FEMA has generally funded these costs. 
At what point did the new legal interpretation come in and say 
it wasn't legal?
    Mr. Castillo. It is my understanding that in 1999 after 
Hurricane Floyd is when it came--
    Chairman Frank. It is your understanding. Is there a legal 
opinion to that effect by the General Counsel of FEMA?
    Mr. Castillo. Yes, there was sir. At the time--
    Chairman Frank. Can I see that? Have you seen it? Is there 
such a legal opinion?
    Mr. Castillo. If there is one in writing, I can get it.
    Chairman Frank. No, excuse me, if there is one in writing. 
You don't know. Look, I think you acknowledged to Mr. Cleaver 
and others that it is not a good thing that we haven't provided 
this funding, and we know that there is no funding in the 
alternative source that you say keeps us from doing the 
funding.
    So your argument is that you are legally prevented from 
doing it. HUD doesn't agree with you, but you are legally 
prevented. But you don't know that. Based on what? You say if 
there is a legal opinion. On what basis have you concluded that 
you are legally barred from providing this funding given the 
existence of a zero appropriation. What is the legal basis? Is 
it in the statute?
    Mr. Castillo. Appropriations law, sir. If we were--
    Chairman Frank. No, show me the language, what language. I 
assume that you knew you were coming to testify, so what 
language in what law prohibits you from testifying? Let him 
tell you. What language?
    Mr. Castillo. I know it is in the written testimony that I 
submitted, sir.
    Chairman Frank. Well, I would ask for unanimous consent to 
wait a couple of minutes while they help him find that wording. 
Will you find me the legal wording that says you can't do it?
    Chairwoman Waters. Without objection, we will wait.
    Chairman Frank. While we are waiting, my colleagues in 
North Carolina tell me that after the hurricane in North 
Carolina in 1999, there was funding made available under this 
provision, so this reference to a 1999 decision does not appear 
to have substance.
    Mr. Etheridge. If the gentleman would yield for just a 
second?
    Chairman Frank. Yes.
    Mr. Etheridge. In 1999, FEMA did the right thing, because 
Hurricane Floyd was in North Carolina, which I happen to know a 
good deal about. We had a horrible situation. They came in and 
did the right thing. We provided housing, and it worked. And 
that is the kind of model that we ought to use and I, for one, 
thought that was the kind of model we were going to use. And 
Madam Chairwoman, in New Orleans at the--
    Chairman Frank. Let me get an answer. What legal language 
prevents you from providing this funding?
    Mr. Castillo. Sir, I can get back to the committee; I don't 
have that with me.
    Chairman Frank. I am appalled by that Mr. Castillo. Like I 
said to you earlier, I understand part of this is a problem 
between HUD and FEMA, but here we have an admitted need, public 
housing destroyed by a natural disaster.
    Public housing authorities needing money to fix it, people 
living in inadequate housing, people living away from home, and 
you come and tell me two things: One, you wish you could 
provide them the money; and two, you legally can't do it; but 
then three, you have no basis for telling me that. You say, oh, 
legally we can't do it, but you don't know what law it is. 
Maybe it is this statute, maybe it is that statute, you can't 
prove the language, you will get back to me. Your agency has 
been promising to get back to me for a year.
    Mr. Castillo, give that money to building the housing. In 
the absence of any legal authority, and let me ask now, Madam 
Chairwoman, and if necessary, I will ask our committee to 
subpoena it, I want any existing legal opinion that tells you 
you can't do that, because I don't think there is one. I think 
this is just an excuse.
    Chairwoman Waters. Mr. Chairman, if you would yield for a 
moment. What is appalling about what you are revealing is that 
even if there are questions, you have one Agency zeroing it out 
and one Agency saying you can't use their money, and no attempt 
to fix it. No attempt to resolve it. That is what is so 
appalling, when we have--
    Chairman Frank. I want to thank the gentlewoman.
    Chairwoman Waters. Yes. Thank you, I yield back.
    Chairman Frank. One last question--yes, Mr. Castillo?
    Mr. Castillo. If I may, I will read from what I have: 
``Generally appropriations may be spent only on the purposes 
specified,'' that is from 31 USC, 1301(a), ``and may not be 
transferred to other accounts without statutory approval,'' 31 
USC--
    Chairman Frank. And that law was passed when?
    [No response]
    Chairman Frank. Let me put it this way, long before 2003, 
because in your 2003 memorandum, you acknowledged, the Agency 
does, that language was never considered to prevent providing 
funding, particularly when there was no appropriation.
    Let me just ask one last question of both of you: Are you, 
as representatives of your agencies, and representatives of our 
Executive Branch of this great Federal Government, do you think 
we have done a good job in responding to the housing needs of 
the people in that area after the hurricane? I want to ask both 
of you.
    Mr. Castillo. I think absolutely we could have done better 
and we continue to work--
    Chairman Frank. No, do you think we did a good job?
    Mr. Castillo. I think the Agency did a good job in that, 
from what I have seen, and what we were faced with was a very 
difficult, unprecedented situation. And could it have been 
improved? Absolutely.
    Mr. Riddel. Yes, sir. Given the magnitude, obviously we 
could have done more and would want to do more, but I think a 
major effort was made by many people to do the best job 
possible.
    Chairman Frank. Well, I didn't think ``heck of a job'' was 
a good argument then, and I don't think it is now. Thank you.
    Chairwoman Waters. Thank you very much. Chairman Thompson?
    Chairman Thompson. Thank you very much, Madam Chairwoman. I 
would like to take up from where Chairman Frank left off. Mr. 
Castillo, can you tell me whether or not we have incorporated 
into the national disaster housing strategy a provision that 
would prevent a Katrina-type snafu from occurring with respect 
to housing?
    Mr. Castillo. We are definitely much better prepared. We 
have taken what we have learned from Katrina, from the response 
to Katrina and Rita, to make the necessary improvements.
    As I said, this was an unprecedented event, not just for 
the Gulf Coast and the Gulf Coast States, but for FEMA and the 
Federal Government as well. So I think yes, we have 
incorporated what we have learned, both things in the Post-
Katrina Emergency Management Reform Act, and what we have 
learned since then.
    Chairman Thompson. Well, with respect to that, are you 
aware of any pre-negotiated contracts for housing that are in 
place as we speak?
    Mr. Castillo. Housing, temporary housing?
    Chairman Thompson. Yes.
    Mr. Castillo. Yes, well we determined a level for us of 
temporary housing units, there are some contracts in place. As 
a matter of fact some will be awarded shortly within the next 
couple of weeks for additional--
    Chairman Thompson. Were these competitively bid or sole 
source?
    Mr. Castillo. Yes, sir, competitively bid and also had a 
stringent, much more stringent formaldehyde level that they 
have to meet.
    Chairman Thompson. Thank you. And I would say, Madam 
Chairwoman, for the record, there are some things that 
concerned me relative to how my State has utilized the funds 
with respect to Congress' support. Do you know offhand, Mr. 
Castillo, how much money Mississippi actually received for 
affordable housing?
    Mr. Castillo. For affordable--I'm not sure I understand--
    Chairwoman Waters. CDBG.
    Mr. Castillo. No I don't, sir.
    Chairman Thompson. You don't know. Alright. If I told you 
$615 million as a number, does that sound reasonable?
    Mr. Castillo. If you said that, yes.
    Chairman Thompson. Alright. Any idea how many units we have 
produced since Katrina?
    Mr. Castillo. No, sir. I know, as far as the alternative 
housing pilot program, Mississippi has done an excellent job in 
getting the units out and I believe there are 3,000 of those 
that are out there and in place and people actually placed in 
the units.
    Chairman Thompson. What if I told you there are 6,000 
people who are still in temporary units. Would you think that 
is an unacceptable number?
    Mr. Castillo. Sir, I think having anyone in temporary units 
is unacceptable and I think we work and work with them to place 
them. Mississippi perhaps has an even tougher challenge than 
Louisiana does based on the number of available housing units.
    Chairman Thompson. What if I told you that some of the 
money that we sent down was proposed to raise judicial salaries 
in the State of Mississippi? How would you respond to that?
    Mr. Castillo. I am not aware of that, but it doesn't sound 
like that was something it was designed to do. I am not 
familiar with what you are referring to.
    Chairman Thompson. What I will do is provide the committee 
with information as to what have been proposed uses of some of 
these monies over and above what we have seen. What if I told 
you that some monies were proposed to be used to pave a road to 
a Toyota plant some 300 miles away from the Katrina-impacted 
area? Would you think that would be a reasonable use of the 
money?
    Mr. Castillo. No sir. I am not--the source of the funding, 
I am not sure if I understood if you said, but if it is--
    Chairman Thompson. They are monies that Congress provided 
to the State of Mississippi and the State of Mississippi 
decided that the highest and best use of some of these funds 
would go for some of those things I have shared with you this 
morning.
    And I am saying that in the wake of this housing crisis, in 
the wake of what clearly was an inadequate response, my State 
has decided to do things with the money totally unrelated to 
housing for which HUD provided a waiver for some of these 
activities to go forward. More specifically, the proposal with 
the $600 million investment in the Port of Gulfport, which 
comes out of Block Grant monies, which clearly does not, in my 
estimation, address the affordable housing issue along the 
Mississippi Gulf Coast.
    So it is out of that concern that I raise it, Madam 
Chairwoman, that in the event of future disasters, I think we 
have an obligation to put some constraints on the money, given 
the demonstrated poor use of the funds that have gone into the 
area.
    I guess the last question is for Mr. Riddel. Have any of 
the companies attended FEMA's industry day to offer alternative 
type of housing solutions?
    Mr. Riddel. Mr. Chairman, based on your question I am not 
sure I can answer that, but attending FEMA programs--
    Chairman Thompson. Well, you have industry days, I am told, 
for vendors to come and demonstrate their affordable housing 
possibilities, and that was one way that you scoured the 
landscape to see whether or not opportunities existed for 
people to come in and build affordable housing were available.
    Mr. Riddel. Again, that perhaps is more for FEMA to 
address. I am not familiar with their programs.
    Chairman Thompson. Well, I will yield back, Madam 
Chairwoman.
    Chairwoman Waters. Thank you. If the gentleman will yield 
for a moment, I would like to know, do you have boarded-up 
public housing in the State or in the area that you know about?
    Chairman Thompson. Do I have boarded-up housing?
    Chairwoman Waters. Yes, do we have public housing that is 
not being used, that is boarded-up and has been sitting there?
    Chairman Thompson. Oh absolutely, along the Gulf Coast.
    Chairwoman Waters. In the State of Mississippi?
    Chairman Thompson. Yes.
    Chairwoman Waters. Thank you. Mr. Souder?
    Mr. Souder. Thank you, Madam Chairwoman. First, I would 
just like to say for the record, having been a subcommittee 
chair and on many committees, it has baffled me why, whether it 
was the Clinton Administration or the Bush Administration, why 
witnesses don't come prepared to handle logical questions. It 
was obvious that Chairman Frank had a letter in, obviously the 
chairman of the Homeland Security committee is from 
Mississippi, he is going to ask you Mississippi questions, 
sometimes we don't, but obviously there are disagreements 
between the two Agencies.
    This is a perpetual problem that makes congressional 
oversight very difficult and often leads to further legislation 
that isn't helpful because stonewalling out of the Executive 
Branch does not advance any type of cooperation. And it just 
seemed to me that some of those questions were pretty logical 
questions that were going to be raised, and there should have 
been a more direct answer. It is not uncommon, but it is just 
more of a general expression of frustration that we have all 
had.
    This is the 4th hearing that I have been part of regarding 
the FEMA portion, too, over in the Oversight and Government 
Reform Committee under Chairman Waxman, as well as others under 
the Homeland Security Committee, and I have some general 
housing questions, but I first want to revisit the emergency 
question and the so-called FEMA trailers.
    It is important to understand that formaldehyde is an 
adhesive and a repellant, and you can ingest it or you can 
inhale it. Even pills have formaldehyde in them. So we are not 
going to get to a zero tolerance of formaldehyde, and I think 
you are correct to move to what is an acceptable level of 
formaldehyde, because this room has formaldehyde in it, in the 
chairs, in the table, in the carpet, in the door.
    The challenge is, what is a manageable level that doesn't 
have adverse reactions, and some people are going to react 
differently than other people. If we have an emergency, if we 
get too restrictive here, it won't be affordable, we won't be 
able to produce it rapidly, and we will have nowhere, even a 
tent. Arguably a tent has more formaldehyde in it than a 
trailers, so if you pitch tents--because it is inside the 
fabric in a tent.
    What isn't intended to happen is for people to stay in 
small, confined areas for long periods of time. Whether it is a 
parked trailer, and you noted correctly in your testimony and 
your answers, Mr. Castillo, the different types of trailers. 
Obviously, people live in the mobile homes for extended periods 
of time. People in the summer, in all the park service, border 
patrol, all our agencies, can for a period of months live in a 
smaller-sized unit without health problems. We haven't had 
health problems across the country.
    What is a challenge, however, when it starts to move to 
years in a confined area, you may find problems. Furthermore, 
all of, I can assure you the whole industry is rushing to find 
something other than formaldehyde. Thus far, the major 
alternative has greater health risks than formaldehyde. 
Furthermore, we have one company that has come up with one that 
looks like it is free, it hasn't been formaldehyde-free, it 
hasn't been tested, we don't know the cost, and we don't know 
whether the materials can be found in large scale like you 
would need. And this is a difficult subject to work through, 
but I think it is important for the record to show that.
    I am going to come back again, Chairwoman Waters raised a 
question about a study. On April 24th, a new study was released 
in Mississippi. The only study, by CDC, of kids who were in the 
emergency housing and in other housing, and a couple of the 
highlights from that study illustrate very critical questions 
to this debate. One is, there wasn't a difference between the 
people in the trailers from people, kids, not in the trailers.
    Furthermore, the level of allergic reaction was actually 
lower after Katrina than it was before, which leads to a 
fundamental question when you look at emergency housing. 
Depending on the area, New Orleans was a massive event, as well 
as if you go over to Biloxi, and you had lots of facilities 
there, that when the dikes overflow, and when the flood comes 
in, are going to release chemicals and things in the air, that 
the more you have somebody in a confined area, whatever that 
confined area is, is going to be more at risk. And certainly 
the longer they are there.
    And that when these disasters occur, somebody needs to have 
a control group so we don't overreact and made all kinds of 
statements in the general public that aren't accurate because 
we didn't do a control group at the time. Mississippi is trying 
to track it over a period of time, but their size sample isn't 
really large enough and it isn't over in New Orleans.
    But if we are going to have a responsible emergency 
response mechanism here, it is cost, it is speed, it is safety, 
it is length of time, and you have to have a method to be able 
to transfer people quicker, and we also have to be looking as 
we build more urban areas in these hurricane zones and 
potential zones with higher percentages of low-income people in 
them, who don't necessarily have the resources to do it, there 
has to be a supplemental plan of not only the emergency 
housing, but the transfer to get them out with enough money to 
move. Congress bears some of this responsibility, but I don't 
think it serves the general public well--
    Look, your Agencies worked hard, that isn't the answer. We 
failed in Katrina. No matter how hard you worked, we failed. We 
need to do better in the future and we need to acknowledge that 
we failed and we are going to do better in the future. I yield 
back.
    Chairwoman Waters. Thank you very much. Congresswoman 
Christensen.
    Mrs. Christensen. Thank you, Madam Chairwoman, and Mr. 
Chairman, ranking members, thank you for having this hearing.
    As a Representative from an area that is in the path of 
hurricanes, although we have been spared the last couple of 
years, this is a very important hearing for us as well. And 
even though I am not convinced by some of the answers, I was 
glad to hear Mr. Castillo say that there is a desire and an 
intent on the part of HUD to provide housing because we are 
where we are because this Administration, based on my 
experience in trying to deal with health care, did nothing to 
help people stay in New Orleans, and once they were out, did 
everything to make sure that there were barriers to their 
returning, so I hope that the statements that we have heard 
today represent a new posture on the part of the 
Administration, because there has to be a will at the very top 
to provide this housing to people and to bring the people back. 
Otherwise, we are spinning wheels here this morning.
    I don't want to go over the questioning of Mr. Cleaver and 
Chairman Frank again, but on that potential solution of 
permanent repeal of 9(k), I don't see that as a solution at all 
because the intent is to provide the funding to make sure that 
people who lose their housing in a disaster are rehoused. I 
just don't understand that as a solution.
    Let me ask a question that particularly relates to my 
experience with both FEMA and HUD. When we talk about replacing 
housing, are you required to take into account the cost of 
replacing that housing in the different localities, building 
costs in the territories and some other remote areas I am sure 
are much higher because we have to ship in materials. And I 
remember after two very major disasters, Hurricane Hugo and 
Hurricane Marilyn, meeting with FEMA and HUD over and over and 
over again to try to get the funds to restore our public 
housing.
    So what is the policy? Do you take into account the cost of 
the rebuilding when you provide the funding? In many instances, 
we were not able to fully restore our housing.
    Mr. Riddel. Congresswoman, at least with respect to HUD, 
the funding levels are appropriated or set aside from Congress 
with respect to emergencies and disasters, so those are the 
funds that are appropriated for our use. With respect to the 
rebuilding of housing, HUD does have development cost limits, 
guidelines that control the costs of replacement housing in 
each jurisdiction, and those are locally-based numbers.
    Mrs. Christensen. Well, we have been very fortunate that we 
didn't have to go through this recently. But I hope it is 
addressed if we find ourselves in that unfortunate situation 
again.
    One of the issues with individuals who want to return, for 
example to New Orleans, or to anywhere in the Gulf region is 
that the cost of housing is higher, and becoming unaffordable 
to many. What is being done to address this so that families 
can return? And there are other barriers such as utility costs 
and unpaid utility balances. What is being done to assist these 
families to meet some of these barriers so that they can return 
home?
    Mr. Riddel. At least with respect to the HUD programs, 
certainly including in New Orleans, the commitment has been 
that every family who wants to return will have that right and 
that opportunity. There has been a variety of forms of 
assistance made available, including the payment of 
transportation and other costs to relocate families--
    Mrs. Christensen. What about if they have utility balances 
and they are unable under these circumstances to pay those 
balances?
    Mr. Riddel. It depends on the nature of the program. In 
most cases, those families, as opposed to paying 30 percent of 
their income for rent, they were paying zero for rent during 
the time that they were relocated, so there was available 
funding to pay for the total cost of their housing, including 
utilities.
    Mrs. Christensen. Well, I guess I will be able to clarify 
that in the next panel. Because of the failure to keep good 
records on displaced individuals and families, we don't have 
good addresses for many who are eligible for DHAP. So what is 
being done to find those people that we have not been able to 
locate who are eligible for this program so that they can avail 
themselves of it? The DHAP program?
    Mr. Castillo. People who are clients of ours who had 
applied for FEMA assistance, we have worked to identify all 
those, and continue to work to identify all those, including 
correspondence and actual visits to where we have as an 
address--
    Mrs. Christensen. Do you have a national campaign out 
saying, if you think you are eligible, because if you don't 
know where the people are, if we have lost some of those 
people, how do you reach them?
    Mr. Castillo. It is targeted to the folks who have been 
part of our program. In order to be eligible for DHAP, it is 
folks who were applicants of our program, of FEMA, and then are 
being transitioned into DHAP. In other words, other housing 
that is under HUD. So we--
    Mrs. Christensen. Do you know where to find everyone who is 
eligible?
    Mr. Castillo. We hope to. I mean, if people, and if we hear 
that people who are perhaps, that we haven't been in touch 
with, we work to find them, but we know, again, if they are 
being provided direct housing by FEMA, or in the transition a 
hotel or motel, we know we can find them, yes.
    Mrs. Christensen. I think my time is up. Thank you, Madam 
Chairwoman.
    Chairwoman Waters. You are certainly welcome. Mr. Green.
    Mr. Green. Thank you, Madam Chairwoman, and I thank the 
witnesses. And because time is of the essence, I will move as 
quickly as possible.
    I need to start by coming back to Ms. Capito. She posed a 
question to Mr. Castillo that I think is important and does 
merit some response. For edification purposes, Mr. Castillo, 
FEMA spent about $2.7 billion to purchase 145,000 mobile homes 
and trailers; this was after Rita and Katrina. About 60,000 
trailers have been stored nationwide.
    We are talking about, in Hope, Arkansas, $25,000 a month 
paid as rent on 453 acres. Literally, according to some 
accounts, we had more trailers in Hope, Arkansas, than we had 
people, probably about 20,000 trailers. I believe these are the 
trailers of which the ranking member speaks, but if I am 
incorrect, I beg to be corrected.
    Madam Ranking Member, are these the trailers we are talking 
about?
    Mrs. Capito. Yes.
    Mr. Green. Okay. With that said, Mr. Castillo, do you have 
some insight that you can share with us with reference to these 
trailers that we paid some inordinate amount of money for over 
some long period of time?
    Mr. Castillo. Well sir, we, and the way I understood 
Congresswoman Capito's question had to do with if there were 
other units out there that weren't being used. The ones that we 
have in Hope and Selma are units that we have in reserve should 
we need to move out quickly, and those are being tested around 
the clock, basically, for formaldehyde, all the units that we 
would have out, all the mobile home units that are being stored 
there.
    Mr. Green. Since you brought up the formaldehyde, let us go 
to this quickly. Let us assume for our purposes right now that 
we have trailers that are toxic, that are a hazard to human 
habitation. The human habitation is not feasible with the 
trailers. For our purposes, let's assume that this is the case.
    If this is the case, which Agency is responsible for 
dealing with the question, because having had this come before 
us in Homeland Security as well as Financial Services, I have 
seen both sides of the argument. Which Agency is responsible 
for dealing with it if this is the case?
    Mr. Castillo. If it is an unoccupied trailer?
    Mr. Green. If it is occupied with a person and it is not 
fit for habitation?
    Mr. Castillo. Then we have made and we have units that came 
back as, we tested occupied--
    Mr. Green. Excuse me, if I may, let me just intercede, 
because there are often occasions when persons finish and I 
don't know exactly what the answer was, so I have to beg that 
you do this. Could you just simply say FEMA or HUD? This would 
help me, and then you may elaborate.
    Mr. Castillo. If they are in a FEMA-sponsored trailer, FEMA 
is responsible for relocating them.
    Mr. Green. Alright, let's take these trailers that we are 
talking about right now. Let's assume, just for our purposes 
today, that these trailers are not fit for human habitation. 
Who is responsible for dealing with the problem of these 
trailers?
    Mr. Castillo. Occupied trailers?
    Mr. Green. Occupied trailers.
    Mr. Castillo. FEMA.
    Mr. Green. And if this is the case, does FEMA have a plan 
to extricate people from these trailers given that you are not 
sure about the studies, but at some point we will get a study. 
If we get one that is adverse to the interests of the people 
who are living in the trailers, does FEMA have some plan in 
place to extricate persons?
    Mr. Castillo. To extricate? We relocate people, and yes, we 
do have a plan in place and have been moving out, like I said, 
an average of 1,000 families a week out of trailers.
    Mr. Green. How many do we have in the trailers currently?
    Mr. Castillo. In mobile homes and trailers, a little over 
22,000.
    Mr. Green. Okay, if we are moving 1,000 a week, then we are 
looking at 22 additional weeks, or thereabouts. I am very much 
concerned about the people who will be in the trailers for that 
additional 22-week period. I was at Homeland Security when we 
had a witness who indicated there is no acceptable level of 
formaldehyde that the government recognizes, and that causes me 
some consternation.
    So I would beg that you please give additional thought as 
to how we will extricate, that is my terminology, relocate 
persons from these trailers given that the people that we 
talked to, who come before us, indicate that there is concern. 
I have heard the witnesses say it myself.
    Mr. Castillo. Yes.
    Mr. Green. Moving quickly to one other question with 
reference to the DHAP program. We started March of about a year 
ago maybe, maybe March of this year, $50 increments, this is 
increase in rent, and at some point we are finding that we have 
persons who are not elderly, who are not seniors, who are not 
handicapped, who cannot afford to pay the $50. Now to most of 
us that doesn't seem like a lot, $50 a month. But to some 
people it is a lot of money and we are going to have people 
evicted because of their inability to pay this $50 per month, 
people who are in the DHAP program. How is FEMA going to manage 
this, or HUD?
    Mr. Riddel. Congressman, there are emergent studies of the 
clients that we have that are within the DHAP program. Each one 
of those families has a case manager who works with them, and 
the conclusions that we are getting from the research to date 
is that 80 percent of those families have income either from 
wages or other benefits. So there is a strong percentage of the 
families who do have income--
    Mr. Green. Could you quickly tell us what we will do about 
the 20 percent who won't?
    Mr. Riddel. Well the 20 percent, we have in the 2009 
budget, we are requesting $39 million to provide funding for 
those. Those are the longer-term families who are elderly or 
disabled that are perhaps going to be requiring permanent 
assistance or assistance on a long-term basis.
    Mr. Green. I know I have to yield back, but could you 
please tell me about the person who is not elderly, not 
disabled, who still cannot afford the rent. We do have such 
people.
    Mr. Riddel. We are working with them, those are hardship 
type cases, we are working with them with case managers to try 
to provide whatever resources they need through individual 
development plans to transition them.
    Mr. Green. Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. You are welcome. Mr. Etheridge.
    Mr. Etheridge. Thank you. Madam Chairwoman, I would like to 
thank you for holding this hearing. Let me follow up on one 
point Mr. Frank made earlier.
    Before I came to Congress, I served in the State 
legislature at the county level, and I served 8 years as State 
Superintendent of Schools in North Carolina, with thousands of 
people working for us and with us. And I learned one thing: 
When I called an attorney and I asked him for an opinion, I had 
two choices. I could ask him, how do I get this done? That 
would give him a direction to go. Or I could say, give me an 
opinion, I don't have the money, I would rather not do this. 
That might not have been that way, but just by asking for an 
opinion without a direction, you would get another opinion.
    And I remember 1999 when North Carolina had the terrible 
flood, the worst flood we had ever had, a 500-year flood. I 
don't know how you measure a 500-year flood, but FEMA did the 
right thing with appropriations, and we relocated people, put 
them in temporary and impermanent housing. It was on a much 
smaller scale than what you are dealing with now.
    But I, like a number of my colleagues, am concerned. I 
think the reaction has been inadequate and the response today 
has not been as forthcoming I think as it should be from two 
Agencies, so let me ask a couple of questions.
    My first one is, 3 years after Hurricane Katrina we still 
have, you said about 23,000 displaced persons. How many of 
those people are in travel trailers and how many of them are in 
what I call a mobile home or a trailer that has much more 
space, because there is a huge difference in those two in terms 
of living space and ability, and I know others are in rentals. 
What is the difference between those numbers?
    Mr. Castillo. About 84 percent are in travel trailers that 
are on private sites, primarily people who are--
    Mr. Etheridge. Whether they are private or public, it 
doesn't matter. And the rest are in what, mobile homes?
    Mr. Castillo. Yes.
    Mr. Etheridge. Which would be more than one room?
    Mr. Castillo. Yes.
    Mr. Etheridge. Or rental apartments?
    Mr. Castillo. No, in mobile homes.
    Mr. Etheridge. Where are the rest of them? Wait a minute 
now, if we have 84 percent in travel trailers, and the balance 
of them, are any of them in rental property? Permanent housing 
anywhere?
    Mr. Castillo. The 22,000 are those who are in temporary 
housing units, which means mobile homes, parked models, 
travel--
    Mr. Etheridge. How many do you have in rental property in 
different places?
    Mr. Castillo. Those numbers, we have transitioned more than 
30,000 who are in rental properties that are part of the DHAP 
program.
    Mr. Etheridge. This gets deeper and deeper. That means you 
have 22,000 who are in rental permanent property?
    Mr. Castillo. 22,000 in temporary units and around 30,000 
in--
    Mr. Etheridge. 30,000 in rental/permanent?
    Mr. Castillo. Yes, but you know a lot of folks who are 
transitioned into rental property or rental that are out of the 
FEMA program.
    Mr. Etheridge. Let me go a little bit further because in my 
district, we are sort of in the eye of the hurricane when it 
comes and we are now in hurricane season. Can you tell this 
committee and tell me that we are better able to handle it and 
we will be able to do something if a hurricane should hit 
public housing and the people in North Carolina?
    Mr. Castillo. Yes.
    Mr. Etheridge. Are you prepared to handle it?
    Mr. Castillo. Yes, and we are better prepared, as you 
started to say--
    Mr. Etheridge. What does ``better prepared'' mean?
    Mr. Castillo. Well, we have taken lessons learned from 
Hurricane Katrina and incidents since. We have identified and 
targeted the--
    Mr. Etheridge. Do you have the money?
    Mr. Castillo. The money? I'm sorry, for?
    Mr. Etheridge. Well, if you are going to do something, you 
have to have money. The last time I checked, you can't do 
anything without money in this country.
    Mr. Castillo. Through the disaster relief fund to fund our 
operations, yes, sir.
    Mr. Etheridge. Mr. Riddel, how does the memorandum of 
understanding improve HUD's ability to apply its expertise in 
disaster, after the answer I just got was ``yes,'' and you have 
zero funding you say in the account that you asked for? Now 
tell us how you can handle that?
    Mr. Riddel. Well, Congressman, what we have worked on is a 
modification of the memorandum of agreement--
    Mr. Etheridge. No, no, do you have it in place, yes or no?
    Mr. Riddel. The memorandum exists only in draft.
    Mr. Etheridge. I beg your pardon?
    Mr. Riddel. The memorandum has been prepared in draft form. 
It is not an executed document.
    Mr. Etheridge. Well, you know when hurricanes come, they 
don't come in draft form.
    [Laughter]
    Mr. Etheridge. Okay?
    Mr. Riddel. Yes.
    Mr. Etheridge. If I am in a house, and I am gone, I am not 
in a draft form, it is a reality. So I will ask my question 
again, do you have it done?
    Mr. Riddel. No sir, that is what we are--
    Mr. Etheridge. When will you have it done, completed, and 
signed off, where if something happens, I can call you and get 
help?
    Mr. Riddel. We are trying to work with--
    Mr. Etheridge. When will it be completed? Is there a date? 
You know, in this country, we sort of work on timelines. I was 
in business for 19 years, and if I asked somebody for a 
timeline, I expected to have a date. Can you give us a date?
    Mr. Riddel. No, sir. We may--
    Mr. Etheridge. When will you be able to give a date?
    Mr. Riddel. We may need to get congressional support for 
the changes we are proposing.
    Mr. Etheridge. Do you think we can dial the hurricane 
center and ask them to hold them until we get this done? I 
mean, this is serious business. This is life and death.
    Mr. Riddel. Absolutely.
    Mr. Etheridge. How soon will you be over asking for 
congressional help if you need it, because we want to help. 
When will that be over?
    Mr. Riddel. We are following it up for sure, sir.
    Mr. Etheridge. Can you give us a timeline on that?
    Mr. Riddel. I cannot give you a specific date, but 
certainly it gets immediate attention.
    Mr. Etheridge. This is embarrassing. I yield back.
    Chairwoman Waters. Thank you very much, Mr. Etheridge. We 
have been joined by Mr. Watt. I understand that you have no 
questions at this time, but without objection, Representative 
Watt will be considered a member of the subcommittee for the 
duration of this hearing so that he can participate in the next 
panel.
    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. This 
panel is now dismissed and I would like to welcome our second 
panel. Thank you very much.
    I am pleased to welcome our distinguished second panel: Mr. 
Saul Ramirez, executive director, National Association of 
Housing and Redevelopment Officials; Mr. Reilly Morse, senior 
staff attorney, Mississippi Center for Justice; Dr. Edward J. 
Blakely, recovery chief, City of New Orleans, Office of 
Recovery and Development Administration; and Ms. Laura Tuggle, 
staff attorney, New Orleans Legal Assistance Corporation, 
Southeast Louisiana Legal Services.
    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. We will start with you, Mr. Ramirez.

STATEMENT OF SAUL N. RAMIREZ, JR., EXECUTIVE DIRECTOR, NATIONAL 
       ASSOCIATION OF HOUSING AND REDEVELOPMENT OFFICIALS

    Mr. Ramirez. Thank you, Chairwoman Waters. I appreciate it, 
and I thank you for your leadership on this issue as well as 
Chairman Cuellar for the great work that he is doing in the 
subcommittee, as well as Chairman Frank and Chairman Thompson 
for their work in this regard.
    For nearly 3 years, NAHRO has been focused on the issue of 
the memorandum of understanding. We have worked with HUD and 
FEMA to bring clarity to what has truly stalled and in many 
ways kept at a complete halt the repair and reconstruction of 
the region's public housing assets, and a truly essential piece 
of our public infrastructure in the housing arena. The MOU was 
issued in 2001 that led FEMA and HUD to conclude that FEMA's 
assistance authorized under Section 406 of the Stafford Act for 
permanent repairs was not an eligible pot of dollars for 
housing agencies to tap into for reconstruction and renovation, 
and that it was in direct conflict of Section 9(k) of the 
Housing Act of 1937, as has been talked about recently.
    Let me also add as an aside that there was mention of 403 
monies for immediate relief that were supposedly made available 
to agencies at that time to be able to deal with boarding-up or 
tarping or preventing additional mold damage or decay to set in 
to these properties. FEMA notified agencies after spending tens 
of thousands of dollars that they were not eligible for 403 
monies because those activities were classified, in their 
opinion, as 406 activities. So housing agencies got hit from 
both sides in regards to that effort.
    The dollars that were put into the 9(k) pot of resources 
were grossly inadequate for the need to reconstruct the housing 
and as such we have been having this wrestling match with HUD 
and FEMA in regard to that, and because of the inconsistencies 
that they have cited, the people that are most vulnerable in 
those housing units, in particular seniors, the disabled, and 
the working poor have yet to relocate back to their communities 
and worse yet, have been forced to either maintain their 
residence in temporary housing or now under the DHAP program.
    Let me also state that since the DHAP program was put into 
effect by HUD, it has worked effectively in serving those 
people who have been displaced from their communities, but it 
should be our intent as a Nation to always work to provide the 
opportunity for people to relocate back to their communities, 
especially those who depended on their livelihood from those 
communities and have now been forced to move to other areas.
    Further, let me state that the MOU is in direct conflict 
with what we believe is the intent of Congress and agree 
wholeheartedly with Chairman Frank's comments that there are no 
inconsistencies in being able to tap into these dollars to 
rebuild, again as I mentioned, a key public asset within our 
infrastructure, which is public housing.
    Let me further state that in addition to the changes that 
are being proposed, which we do not agree that 9(k) needs to be 
repealed in order to deal with the excess, last resort funding 
that can be provided out of Section 406 through FEMA, that in 
fact what we have here is just a failure to communicate and an 
unwillingness to take a proactive approach to resolving these 
issues.
    We further bring to the attention of the committee that 
there has been ample opportunity over 3 years to deal with the 
relocation of those in temporary housing. And to Chairman 
Cuellar's point, what is temporary and what is permanent? Any 
time someone has been displaced for more than 6 months from 
their principal residence and their livelihood, and has been 
forced to move into another facility, it turns into permanent 
for many of these folks, so we think that there is a lot of 
room that can be addressed in this regard, but specifically the 
nuances that are being put out there as the reason for denying 
funding for housing agencies to rebuild a housing stock. In 
this case, more than 6,000 units--many of which remain out of 
use--within the inventory have not been rebuilt because the 
dollars are not there.
    I would like to thank the committee for the hard work in 
regards to this issue. We will be glad to address this 
particular issue or any other issues in regards to this matter. 
Thank you for the time Chairwoman Waters.
    [The prepared statement of Mr. Ramirez can be found on page 
241 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Mr. Morse?

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

    Mr. Morse. To the Chairs, ranking members, and members of 
these committees and subcommittees, thank you.
    As we enter our third hurricane season since Katrina, we 
welcome your shining a light into the widening cracks in this 
recovery. On behalf of my organization, the Mississippi Center 
for Justice and the tens of thousands of people left out by my 
State's recovery program, I urge you to step into the breach 
and ensure that FEMA will fulfill its temporary housing duties 
and that HUD moves CDBG funds for lower-income families up from 
the back of the Federal assistance line.
    In Mississippi, more than 6,300 households reside in FEMA 
trailers and another 1,200 occupy hotel rooms. These include 
the most vulnerable storm victims, like Joe Stevens, 52, whom 
FEMA housing representatives told he had until June 1, 2008, to 
find an apartment. Mr. Stevens used to be a commercial 
fisherman until diabetes took his legs. He used to have a 
daughter until her suicide left him caring for two of her three 
children. He used to have a house in the Lima community until a 
tornado spun from Hurricane Katrina took that too, reports the 
Jackson Clarion Ledger.
    Two bedroom rentals, Madam Chairwoman, in Harrison County, 
start at $800. Mr. Stevens receives $637 a month in disability 
plus $500 a month in survivor benefits for his granddaughters 
and about $60 a month in food stamps. He has barely enough to 
buy groceries and pay his utilities much less save money for an 
apartment. Mr. Stevens said, ``They have threatened to bodily 
move us out of here and put us in a motel. That would be 
worse.''
    FEMA spokesmen dispute that its workers are pressuring 
people to leave by June 1st. Last month, however, news reports 
across south Mississippi and MCJ surveys revealed that FEMA 
housing workers had pressured trailer park residents to move 
immediately, warning that they could be locked out and their 
belongings bagged and tagged. With $5.4 million in emergency 
CDBG funds handed to Mississippi, how could this happen?
    First, Mississippi chose to deny homeowner grant assistance 
to storm victims like Joe Stevens who suffered hurricane wind 
damage. Our Governor asserts that this was part of the bargain 
for receiving this disaster aid, but it appears nowhere in the 
legislation or regulations. If Joe lived in Louisiana, he would 
be covered. So why should recovery from this Nation's largest 
natural and housing disaster turn on which State you live in?
    Second, Mississippi delayed for 18 months or more the 
creation of any affordable rental housing programs with CDBG 
funds, and today not one CDBG dollar has yet been spent from 
these programs to actually construct a single rental housing 
unit. As a result, FEMA has to put Joe Stevens' family and 
thousands more like him into a hotel without any food storage 
or preparation resources.
    Third, Mississippi, the State with the highest per capita 
poverty and disability rates has obtained HUD waivers from the 
requirement to target at least 50 percent of relief funds to 
primarily benefit lower-income storm victims for $4 billion out 
of $5.4 billion in emergency CDBG funds. As of December 2007, 
Mississippi actually has spent only 13 percent of its funds on 
lower-income persons.
    Fourth, Mississippi has diverted $600 million in recovery 
funds to realize a 20-year port expansion master plan conceived 
prior to Hurricane Katrina. The State Port of Gulfport has $108 
million in insurance, up to $55 million more in FEMA funds, and 
$82 million in unencumbered cash, far more than adequate to 
cover the estimated $50 million in damages to a port with an 
asset value of $127 million. Governor Barbour claims the $600 
million originally was intended for the port. This is false. 
After the first appropriation, he came back here to Congress in 
the spring of 2006 seeking funds for the port expansion, but 
was turned down.
    June 14, 2008, is the second anniversary of the HUD waiver 
for the first program from which Mississippi now diverts $600 
million. Madam Chairwoman, we urge Congress to do the 
following:
    First, reexamine this waiver and future waivers as required 
by the statute and require Mississippi to put the $600 million 
back into affordable housing recovery in the area. Second, to 
require FEMA and HUD to ensure that housing-challenged storm 
victims do not fall through the cracks during this DHAP 
transition, with clear and accountable handover processes, a 
tracking mechanism for each household, and a single reporting 
yardstick to assess overall progress from across these 
different temporary housing programs. Third, require 
Mississippi to eliminate discriminatory distinctions in its 
programs that have dropped into an abyss families like Joe 
Stevens', thousands of then, plus tens of thousands more who 
are now seeking charitable assistance through local charitable 
groups. Thank you.
    [The prepared statement of Mr. Morse can be found on page 
73 of the appendix.]
    Chairwoman Waters. Thank you.
    We will now move to Dr. Edward Blakely, recovery chief, 
City of New Orleans.

STATEMENT OF DR. EDWARD BLAKELY, EXECUTIVE DIRECTOR, OFFICE OF 
 RECOVERY AND DEVELOPMENT ADMINISTRATION, CITY OF NEW ORLEANS,

    Mr. Blakely. Good morning, Madam Chairwoman, the other 
Chairs here--Mr. Cuellar, Mr. Frank, and Mr. Thompson--and the 
other members. We are delighted to be here. This is the 34th 
time that New Orleans has appeared before the House of 
Representatives and the Congress.
    We have been here many times with the same mission, that is 
restoring one of America's great cities. This has been a 
difficult mission because we have been entwined with several 
different agencies, all with different missions, different 
rules, and different regulations, and with a small staff, it 
has been very difficult for us to navigate these waters.
    I want to look at the larger issues that you are addressing 
here today because they all affect us. There are three issues. 
First, after an emergency like this, a catastrophe as we call 
it, we need shelter. Second, we need temporary housing, and 
that temporary housing should be formaldehyde free, and ensure 
that it is temporary and does not lead to any permanency. And 
third, permanent housing.
    A full program in the National Disaster Housing Strategy 
that the Congress is asking for should address all three. 
First, as to survival housing, it is necessary we think for the 
United States to prepare for disasters of scale. And in 
preparing for disasters of scale, we should have regional 
shelter areas, areas that we already have in place and could be 
made available in case of an emergency.
    The Federal Government should examine all of its property 
and all of its assets, some of these BRAC assets that might be 
utilized in the case of an emergency like this. States have 
large facilities, fair grounds, and many other things where 
temporary housing might be put almost immediately if the 
watering systems and other things were made appropriately. The 
United States Army should look at all of its facilities to 
ensure that secure facilities might be places where you could 
house people in such an event, and we should develop 
resettlement plans so that people can come back in the 
communities. Simply evacuating them and putting them outside 
their jurisdiction does not ensure that they can come back.
    As to temporary housing, we lost over 70 percent of all of 
our housing in our City. Many of our people are still being 
sheltered, as I described, in situations that are dangerous. It 
is necessary, we think, for a temporary housing plan to provide 
for the use of the physical inventory within the jurisdiction.
    For example, we had, in our jurisdiction, other housing 
such as public housing assets. We had housing that the City had 
taken advantage of with its blight removal program. We could 
have put temporary structures on that housing. We could have 
used manufactured housing, panelized construction to put 
housing on those premises. We could have leased other premises 
from other individuals to put housing on those premises and 
brought our citizens back much faster and much quicker even if 
they moved to permanent housing elsewhere. So we think it is 
important that we have that as part of our repertoire.
    Third, the vouchers. Vouchers are very important. But the 
vouchers have to be organized in such a way that they can be 
used locally. There should be an enhancement to those vouchers 
so you can use them locally, and that would stimulate the 
rebuilding of the rental housing stock if the vouchers were 
substantial and if people knew the vouchers would be longer 
term. We know that it takes at least 2 years to build housing. 
Even if you are building your own home, it takes a year to get 
it organized, and another year to build it. So we knew this in 
advance. To think that this would be really temporary was not 
very good thinking on our part.
    We have to have situations--increase the rental supply. We 
can use other devices for this. For example, the GO Zone bonds 
could have been diverted in portion to provide for people to 
build temporary housing. Lastly, permanent housing. We think it 
is very important that we have a real permanent housing 
solution. That is, people should receive replacement housing 
funds rather than appraised housing funds at the time of a 
disaster. We think it is important to be able to use the 
disaster relief fund to build housing in our community for 
community residents who might use that as a transitional 
property. That legislation is already in place. We think a 
small rental program is absolutely necessary.
    We also feel that affordable housing pilot programs should 
be developed. We have developed housing opportunity zones where 
we could put these programs in, utilizing the assets that we 
have, from the sale of homes to our Louisiana Recovery Agency. 
Those affordable housing pilot programs would include for us 
the possibility of having mixed-income neighborhoods with AMIs 
up to 140 percent. We do not believe that the AMIs should be 
willy nilly granted across-the-board, but we do think to have 
mixed-income neighborhoods, we have to have 30 to 40 percent of 
people who are above the median income, up to 140 percent. That 
has been New Orleans tradition, and we would like to maintain 
it.
    I would like to close by thanking Chairman Frank for his 
proposal that the GSE reform and profits be allocated to 
housing in the Gulf. We think this is necessary, it would be 
good for citizens of all of the Nation, and we think this is an 
astute proposal. I want to thank you all for putting together 
this committee, and we think this is a watershed moment, that 
if we do this right, it can save us from future Katrinas. Thank 
you very much.
    [The prepared statement of Dr. Blakely can be found on page 
54 of the appendix.]
    Chairwoman Waters. Thank you.
    Laura Tuggle.

STATEMENT OF LAURA TUGGLE, MANAGING ATTORNEY, HOUSING UNIT, NEW 
ORLEANS LEGAL ASSISTANCE CORPORATION, SOUTHEAST LOUISIANA LEGAL 
                            SERVICES

    Ms. Tuggle. Good morning. My name is Laura Tuggle, and I am 
a managing attorney of the housing law unit at New Orleans 
Legal Assistance. We are the local legal services office for 
the greater New Orleans area, and all of the parishes that we 
serve were severely impacted by Hurricane Katrina. We just want 
to thank you for having brought us here this morning, and for 
all of your past support and your ongoing support and your 
future support.
    Unfortunately, from what I see when I read the newspaper or 
if I go online on a blog, a lot of folks out there in this 
country, and some not too far from home, can't quite understand 
why after almost 3 years we don't have it together, and a lot 
of folks are tired of hearing about the difficulties that are 
still facing our families and are still facing the kind of 
clients that we serve at the legal aid office day in and day 
out.
    I think there is a conception out there that people should 
have pulled theirselves up by their own bootstraps at this 
point, but frankly I would tell those folks three things: One, 
we don't have any boots; two, whenever we go this boot store to 
try to get the boots, they are way, way up on the high shelf 
and we can't reach them; and three, whenever we try to get help 
from somebody to get in those boots so that we can have some 
straps to pull ourselves up by, we are told that nobody is 
going to be back to help us for maybe 3 years, if then.
    And what I mean by that is, Hurricane Katrina came and 
destroyed about 82,000 units of the affordable rental housing 
stock in the greater New Orleans area. Of that amount, about 
52,000 were affordable to low-income families. Even with all 
the billions of dollars that are coming down in our community, 
and hopefully are making their way to the folks who need it, it 
is projected that only about 23,000 affordable rental units are 
going to be developed in our community. That is going to 
replace less than 25 percent of the stock. So this idea that 
things are going to be hunky dory with what we have is not 
going to cut it for the tremendous needs that folks have in our 
community.
    Additionally, even some of the Road Home rental programs 
that are being developed, even if they all come forward, which 
is highly doubtful given the credit crisis and tax credit deals 
not being able to close, a lot of those programs simply are not 
going to reach people at 30 percent of area median income and 
people at 50 percent of area median income.
    I want to give you an example of Miss Madeline S, one of 
our clients. She works in a local hotel downtown. She makes 
about $1,750 a month. She is raising a household of five and 
she needs a three bedroom apartment. The going rate for the HUD 
three bedroom fair market rent right now is $1,271 in New 
Orleans. The going rate for the low-income housing tax credit 
rent in Orleans Parish is $933 a month. The going rate for the 
proposed lowest rung of the small rental repair program is $680 
a month. 30 percent of Ms. Madeline's income is only $525 a 
month. So you can see that she can't make it. Hardworking folks 
like her, who, the numerous times you guys have come down to 
see us, maybe she made your bed or, I don't even know if they 
give any mints, but maybe she put a mint on your pillow.
    It is very difficult out there for folks to make it, and I 
have grave concerns in particular about two areas that I don't 
think have received much attention, and one of those is, what 
is going to happen with this DHAP program that we heard earlier 
witnesses talk about, when it ends next year and we don't have 
affordable stock ready.
    And what is going to happen with the folks and the families 
who were residents of not public housing, but were residents of 
subsidized housing through the HUD multi-family stock. I don't 
hear anybody talking about them, and I can tell you that as 
recently as last fall, the office of HUD multi-family advised 
me that there were 5,861 units of the HUD multi-family stock 
that were still not open.
    That is separate and apart from the thousands of public 
housing units that are still not open. And frankly, we have had 
a very difficult time getting any information out of the HUD 
multi-family side, whereas I can honestly say that, to say a 
nice thing about somebody, the Office of Public and Indian 
Housing has been very receptive to working with our office and 
providing us information and taking some of our suggestions 
about what should happen.
    I want to go back just, I know I'm going over my time, but 
I want to mention something about the DHAP program briefly. My 
secretary, Pam B. is on that program. Our paralegal is still in 
a FEMA trailer. So we are talking about not just your elderly, 
your disabled people who don't have it together, we are talking 
about hardworking folks. Pam's three bedroom apartment is about 
$1,398 under DHAP, or is projected to be around that amount.
    Under the DHAP program, if you are a phase one person, 
there are different phases, phase one people have to do the $50 
a month, then $100 and so on until next March gets here, and 
that program is going to cap out at $600, and the idea is that 
everybody is going to be self-sufficient at that point. Well, 
the problem is we have a rent differential of $798; 30 percent 
of Pam's income is $700. Before the hurricane, she had a $550 
apartment. She didn't need any help from the government or 
anybody else. All she needed was her paycheck. And she asks me 
every day, ``What is going to happen to me? What is going to 
happen to us?''
    And that is the question I would like to know, is what is 
going to happen to these families, thousands of them in our 
area alone, between 8,000 to 13,000, the numbers change every 
day, are going to be on DHAP, and what is going to become of 
them? That program is going to have to be extended in our area, 
at least until such time as more affordable rental units come 
online.
    Thank you for your time and for allowing me to go over.
    [The prepared statement of Ms. Tuggle can be found on page 
260 of the appendix.]
    Chairwoman Waters. Thank you very much. I recognize myself 
for 5 minutes to ask questions. I really don't have a lot of 
questions.
    Unfortunately, I know more about New Orleans and 
Mississippi and Hurricane Katrina than I have been able to 
digest, really, and I understand some of what we need to do 
here. I am particularly focused on the fact that we should 
never have allowed CDBG funds to have gone to the State without 
having stricter rules about what that money could and could not 
be used for. I am not happy in Mississippi with the diversion 
of funds to the port and some other issues dealing with the 
Road Home program.
    I am not happy in the City of New Orleans where the city 
council voted to go along with HUD to tear down all of the 
public housing units. What is absolutely amazing to me is that 
despite the fact that there are those who want to get rid of 
public housing because they feel that it should be upgraded or 
it is too much of a concentration of poor people, to have it 
boarded-up for 3 years while you have homelessness that grows, 
and to have it boarded-up when you don't have places for people 
to live, rather than having rehabbed some of that, even if it 
was only done for a year or two, is just absolutely mind-
boggling to me.
    So much of what we need to do here, we have to take the 
lessons that have been learned from these natural disasters and 
make public policy that will help to facilitate rehabilitation 
and restoration. And some of the other stuff at the local level 
just requires that cities and communities have plans and city 
councils who are responsible for land use get their act 
together too, so I guess when you look at this great 
catastrophe that we were faced with, I guess there is a lot of 
blame to go around and certainly, Federal agencies have been 
less than stellar.
    But let me thank all of you for coming here. Again, on our 
many visits to the Gulf Coast we have learned an awful lot, and 
we will be able to do some corrections here and hopefully at 
the local level, the same thing will happen, so let me just 
move to Ms. Capito for questions.
    Mrs. Capito. Thank you, Madam Chairwoman, and I want to 
thank the panel. I have a question, and please correct me if 
this is incorrect.
    I am from West Virginia and live in Charleston, and some of 
the public housing units that are older, have been around for a 
long time, the occupancy rate in some of these are probably 
around 70 percent because 30 percent of the units are basically 
uninhabitable, or they can't service the type of client, maybe 
somebody with a disability or a young family, it is not large 
enough. To me this is troubling. If we are going to have a unit 
that has 100 units, we need to be using all 100 units.
    And I guess my first question would be, my understanding is 
that pre-Katrina, this was the case in New Orleans, that a lot 
of the public housing units were either: (a) uninhabitable; or 
(b) were not being used. Is that a correct assumption?
    Ms. Tuggle. He can go first.
    Mr. Blakely. That is correct. Some of the units in some 
buildings were down to 50 percent and some were 60 and 70 
percent. So there are various reasons for that. Some of them 
were not habitable. That just means you have to make them 
habitable. In other cases, there weren't people who were 
qualified to go into them. What I was speaking to, in an 
emergency, a unit is a unit.
    Mrs. Capito. Excuse me, what?
    Mr. Blakely. A unit is a unit.
    Mrs. Capito. Right.
    Mr. Blakely. And that unit might be used by a worker, and 
so forth, so you have to use the stock in a different way than 
it might have been used previously. So we did have, and I don't 
think that is the national situation, but we did have vacant 
units.
    Chairwoman Waters. If the gentlelady--
    Mrs. Capito. Yes.
    Chairwoman Waters. Yes, you did have units that were 
uninhabitable that had not been attended to by the housing 
authority.
    Mr. Blakely. Right.
    Chairwoman Waters. They had not invested any capital in the 
upkeep and rehab, but they had a long waiting list in New 
Orleans.
    Mrs. Capito. Right, plenty of need.
    Chairwoman Waters. Plenty of need.
    Mrs. Capito. Right, and I don't dispute that. That is the 
troubling thing. I mean I think across the Nation we find this. 
And so now we are where we are right now and I think, lessons 
learned, we want to make sure that we have our units when we 
rebuild and new construction or rehabilitation are being used 
and are being inhabited and are being--performing the mission 
which goes forward.
    So that is just an issue that to me and I think the 
American taxpayer would say to themselves, we need to take 
better care of what we have to make sure that this situation 
doesn't continue in the future.
    Mr. Ramirez. May I?
    Mrs. Capito. Yes sir.
    Mr. Ramirez. May I just bring up a more global perspective? 
Charleston actually is a satisfactory performer, and its 
occupancy runs in the 90s, at least to the best of my 
knowledge, which comes from representing over 26,000 to 27,000 
housing agencies and professionals around the country, them 
being one them that we do represent.
    Another point of clarification is that the New Orleans 
housing authority has been run by HUD for over 12 years, and so 
it really should have been a shining example of how to do it 
right.
    And finally, the consistent underinvestment and capital 
funds under the covenant that was made with the Federal 
Government with housing authorities that has been breached for 
the better part of 8 to 9 years now and continues to decline 
further stretches the ability to maintain full occupancy in 
these units at a safe and decent standard.
    So I applaud your highlighting that issue and hopefully we 
can work with Congress to reverse that trend nationwide.
    Mrs. Capito. Well, we certainly want to work with you on 
that. I am really not finger pointing that it is anybody's 
fault so much as that some of it is just a function of the age 
of the units and the concept with which they were built.
    The other question I would like to ask you, Dr. Blakely, in 
New Orleans, what kind of leveraging have you been doing with 
your funds from private entities and volunteer organizations, 
maybe some faith-based organizations? If you could enlighten me 
on that.
    Mr. Blakely. I can't give you all the numbers. I know that 
we will have about, let's see, 24,000 units available--that's 
not the right number. 2,400 units available, I'm sorry, at the 
end of the year. Most of this has been leveraged using low-
income tax credits, utilizing faith-based organizations, gifts 
and charitable organizations and the like. So that has been 
leveraged.
    Our big problem has been securing the land, securing the 
people who do the development, and finding the right locations. 
We do want to make certain that we have the right locations so 
rehabilitation of existing facilities, or the demolition of a 
facility and putting another facility on-site has been the 
issue. And we were one of the few places in the Nation that had 
more renters than we had homeowners.
    Mrs. Capito. Thank you. I yield back my time.
    Chairwoman Waters. Thank you very much. Next, we have the 
chairman of the Subcommittee on Emergency Communications, 
Preparedness, and Response, Mr. Cuellar.
    Chairman Cuellar. Thank you, Madam Chairwoman. I want to 
thank the witnesses for being here this morning.
    Particularly, I have to emphasize a friend of mine. Mr. 
Ramirez was the former Mayor of my hometown in Laredo. He was 
also Assistant Secretary there at HUD, so we grew up--when I 
was a lifeguard, he used to give me a hard time when I was a 
lifeguard there at Lake Casablanca, but it is good seeing him.
    A point of personal privilege also. Today is our 
subcommittee director Craig Sharman's last day, so he will be 
leaving and going off to another place to work, and we really 
appreciate the work that he has done.
    I don't see Mr. Castillo and Mr. Riddel. I assume they left 
after the first panel. I was hoping they would have stayed here 
to listen to the four individuals that we have. Do we have 
anybody here from HUD or FEMA still around or did everybody 
leave?
    [No response]
    Chairman Cuellar. Everybody left, okay. Why don't I do 
this? Instead of asking the questions, I am going to ask each 
of you to pose a question to which you would want me to get the 
information on your behalf. This will give you an opportunity 
to, and you pick whomever you want to, Mr. Castillo or Mr. 
Riddel, and then I am going to pose that question to them.
    Chairwoman Waters. That is fine.
    Chairman Cuellar. Mr. Ramirez, what question would you like 
us to follow up on, and I would ask them to get the answers 
within 10 working days. None of this 7 or 10 months, or 
whatever they usually work on, Mr. Chairman. Mr. Ramirez?
    Mr. Ramirez. Well, it is like asking me which child do I 
want to sacrifice. We have several questions that need to get 
posed.
    Chairman Cuellar. Give me one and then submit the other 
ones.
    Mr. Ramirez. I think the most important one is to bring 
clarity in the memorandum of understanding to help accelerate 
the reconstruction and rebuilding of a public asset that has 
been destroyed as the result of a disaster, and in particular, 
public housing, and their ability to tap into those resources 
under Section 406 to be able to accelerate the rehabilitation 
or the rebuilding of those properties because they are 
essential to serving our most vulnerable in these communities.
    Chairman Cuellar. Okay, we will submit that. If you have 
anything else, please get ahold of us. Mr. Morse?
    Mr. Morse. Well, I would ask that you ask each of those two 
agencies to submit a single unified yardstick so that we can 
have a complete, comprehensive understanding of how many people 
are in transitional housing. What is being seen down on the 
Mississippi coast is a heavy push to eliminate the very visible 
icon of the Katrina trailer and to shove people into a variety 
of different programs that are dispersed and which are 
thereafter impossible to quantify.
    So I would ask that you require them to put together a 
single consolidated count of people who are in some form of 
FEMA assistance or DHAP assistance or something else so that we 
have a total number.
    My suspicion is that number will stun you, that it is much, 
much higher than you imagine and that we have been lulled into 
a sense of relative calm about the gradually dropping number of 
FEMA trailers, when in reality what is going on is that as 
these folks are pushed into the DHAP market, that is going to 
end too, and our Gulf Coast region cannot absorb the demand for 
deeply affordable housing that those folks will place, and we 
are going to find another wave, another season of drastic 
homelessness facing us on the 4th hurricane season coming up in 
2009. So please get them to come together and provide you with 
a single unified yardstick.
    Chairman Cuellar. Thank you. Dr. Blakely?
    Mr. Blakely. I would like you to ask the agencies who is 
going to provide the free health care for people who have been 
in trailers so they can determine their health status, and if 
their health status need warrants continuing care, how is that 
going to be provided?
    Chairman Cuellar. Thank you, doctor. Ms. Tuggle?
    Ms. Tuggle. I have a lot of questions I would like to ask, 
so instead I will ask one with a lot of subparts.
    I would like to know from the Office of Multi-Family, that 
side of HUD, what is the status of each and every closed HUD-
assisted property, I think there are currently about 30, and 
they represent about 4,000 units. A lot of them have submitted 
Section 8 contracts that are just kind of sitting around 
somewhere, waiting to see what is going to happen with that 
property.
    And I would also like to know what happened to our people 
who used to live in those properties because I have looked at 
the numbers of families who are in the disaster voucher program 
that are from the HUD-assisted stock and it is only 1,147 
families. Well if we had 5,800 units out of commission, where 
are those people? That is a lot of people. So if you can get 
them to tell you that, I would be amazed.
    Chairman Cuellar. Alright. Well first of all, I want to 
thank all of you. Those are excellent questions. Again, please 
work with the committee staff and I will again ask if they 
could get that to us within 10 working days from today. Thank 
you very much. Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. Chairman Frank.
    Chairman Frank. Let me say, first, and I appreciate having 
former Deputy Secretary Ramirez's validation of the argument, I 
don't believe there is a legal argument for withholding those 
funds, but we are in a position where we can stop bad things 
from happening. It is harder to force good things happening.
    But as near as I can make sense out of the testimony today, 
the argument from FEMA is that somehow generalized 
appropriations language keeps them from doing this. I will, and 
I have spoken to Chairman Thompson, Chairwoman Waters, and 
others, what I think we will do is to send a memorandum to 
Chairman Obey of the Appropriations Committee asking him to 
include in the next appropriations vehicle the simple statement 
that nothing in existing law prevents FEMA from dispensing 
those funds. It won't be an appropriation, and it won't even be 
a mandate, but it will take away their excuse. I don't think 
they'll be happy to lose their excuse but I don't think they 
will be able to avoid doing that. So I think that would be the 
appropriate action and we plan to take it.
    Let me ask, and I apologize now, here in the testimony, and 
I have read it, and this HUD/FEMA thing was the ideal, the 
classic example. And by the way, the reason for having it done 
by FEMA instead of HUD and I sympathize with the HUD 
representative when he talked about this, it is hard enough 
getting appropriations for public housing in HUD. If you need 
it to be done outside of the regular HUD appropriation, that 
means every time there is a disaster, public housing which is 
traditionally underfunded in the capital area, will be even 
more grievously underfunded, and emergency funding ought to be 
emergency funding, so we will I think hope to clarify that in 
permanent language, that there is no bar to doing that.
    But on the broader question, what should we do to change 
the allocation of responsibility between HUD and FEMA? Clearly 
there is a problem with the best will in the world because of 
this complication. There is no reason that I can think of why 
an emergency management agency should be in charge of housing 
nearly 3 years after the phase. One of my colleagues said and I 
understood that, we asked a question about long-term emergency 
housing. Well, we are in a situation where we have to deal with 
long-term emergency housing, but that is kind of an oxymoron. I 
mean, if it is long term, it is not emergency.
    I would urge you to join us. And I think you have seen a 
good example here of cooperation. I wish we could get HUD and 
FEMA to cooperate as well as our two committees have 
cooperated, the two subcommittee chairs sitting next to each 
other, and working closely together, Chairman Thompson and 
myself.
    What should we do statutorily to sort out the housing 
responsibility of FEMA and HUD? My first response is, maybe it 
should be FEMA's responsibility up to ``X'' days, and then it 
becomes HUD's responsibility. Clearly the shared responsibility 
isn't working, but I think this will, and I have talked to 
Chairman Thompson, I would hope that before the end of this 
session, maybe we can't make it all the way, but we could take 
steps so that we have a policy in place so that going forward, 
we will have FEMA's responsibility in the emergency phase, 
HUD's responsibility going forward, with appropriate allocation 
of budgetary responsibility.
    So if anybody has any initial response, I would be glad to 
hear it, and then you will follow up. Yes, doctor.
    Mr. Blakely. I think the--in my testimony, I talked about 
shelter, emergency shelter. That should be FEMA's 
responsibility. Temporary housing and permanent housing should 
be HUD's responsibility. There are big, good reasons for that. 
One is that HUD knows housing, and FEMA knows how to move 
people and evacuate people. Housing people on a temporary 
basis, or on a permanent basis is very different. HUD has the 
toolkit. For example, HUD could help us use our underutilized 
sites so that we could put panelized housing on it. That is not 
FEMA's job or responsibility. So I think it should stop with 
the temporary shelter. Shelter should be short term, under 1 
year.
    Chairman Frank. That is a good term. I appreciate that; it 
is a good distinction. The only thing I would add to that is 
our responsibility; we do want to make sure that the financing 
doesn't go entirely to HUD. That is, to the extent that there 
are emergency financial funds, they shouldn't compete with 
regular funds. But that distinction you make between shelter 
and housing is a very good one, and I think we will be able to 
operate on that. Thank you very much, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. Mr. Cleaver.
    Mr. Cleaver. Thank you, Madam Chairwoman. Thank you for 
coming here today Mr. Ramirez. I had the pleasure of working 
with Mr. Ramirez when I was mayor, and it was refreshing to 
hear your comments.
    Dr. Blakely, you might be able to help me. I don't know the 
current mayor of New Orleans as well. Mark Morreal and I were 
mayors at the same time and I got to know him. If there is some 
kind of confusion between your department and city development, 
who is the arbitrator?
    Mr. Blakely. City development, what do you--
    Mr. Cleaver. Or any department. Any department.
    Mr. Blakely. Well, I am in charge of all recovery, which 
includes permitting everything under me, except the ordinary 
day-to-day operations of the City. I have the responsibility of 
all those aspects of the City, so if there is a conflict in my 
department--
    Mr. Cleaver. Then who settles it?
    Mr. Blakely. Me.
    Mr. Cleaver. And that is what I would expect, and that is 
what I don't understand. We have this ongoing conflict between 
FEMA and HUD and I asked a question as you may recall, who does 
the refereeing, who is the decider, and as a consequence, it is 
continuing, and it is very, very frustrating.
    Mr. Blakely. Well, sir, clearly the mayor, if there is a 
conflict between my agency and the CAO, the operating agency, 
the mayor is the referee. We meet every Tuesday and sometimes 
these are not charming meetings.
    Mr. Cleaver. Yes, I can imagine. You know, I was a little 
embarrassed as we were, the United States is sending rough 
messages to Myanmar because they won't let us come in to help 
and I thought for a while, they are smart.
    Madam Chairwoman, thank you very much for calling this 
hearing, and Mr. Cuellar, thank you.
    Chairwoman Waters. You are very welcome. Thank you. Mr. 
Green.
    Mr. Green. Thank you, Madam Chairwoman, and while we are 
thanking people, let me thank the staff for the outstanding 
work that they do in assisting us. Much of the information that 
I recounted earlier with reference to numbers, dollars, and 
statistics came from staff persons who were readily available 
and helpful.
    I would like to talk for just a moment about the $600 
million for the port authority. We have had witnesses who came 
before us and we have talked about this $600 million and the 
indication that we have received is that this is necessary and 
that it will help low-income persons in some way. I think the 
allegation is that if you put people to work, you help 
everybody. But this was supposed to be for housing as I 
understand it, so let me ask someone to respond. I believe one 
person had addressed this directly. That was Mr. Morse?
    Mr. Morse. That is correct.
    Mr. Green. Okay. Would you kindly address the $600 million, 
please?
    Mr. Morse. Well the low- and moderate-income benefit is 
nebulous at best with this diversion of $600 million. 
Representative Green, the forecast is that over 10 years, some 
few thousand jobs would be created and that those would be 
offered first to persons of low and moderate income.
    That is the sum and substance of the rationale for doing 
it, and I want to suggest to you that it is patently inadequate 
and that this body ought to step in and challenge it, and that 
the mechanism by which that can be done is that the 
appropriation from which this $600 million has been plucked out 
was the December 2005 appropriation, and the use of those funds 
was subject to waivers, and this one was awarded a waiver, and 
those waivers are required to be reviewed, reexamined to 
determine their validity 2 years from the anniversary of the 
publication of the waiver.
    In this instance, that is less than 2 weeks away. And that 
is to be examined not only by HUD, if I recall correctly the 
statute, Representative Green, but by you, and I strongly urge 
this body to do so. Because it is just fundamentally unsound, 
and it is fundamentally unjustifiable.
    And the most basic part about that waiver is that it said 
we are going to grant this waiver provided that in the future, 
and this would be June 2006, future uses of Mississippi CDBG 
money would place reasonable priority on persons of low and 
moderate income, particularly housing needs, and I suggest to 
you today 34 months after this hurricane, when we are putting 
people into hotels, we haven't gotten the job done.
    If you look in my testimony, Representative Green, there is 
an extensive examination of all of the available statistics, 
and it doesn't matter which set you use, the State of 
Mississippi has not met its obligations to provide affordable 
housing, particularly rental housing. So I welcome your care, 
thorough, and strong scrutiny of this issue.
    Mr. Green. Thank you. One additional follow up. The witness 
that we had indicated that he was not sure as to the status of 
the port in terms of its economic standing, its ability to do 
this with its own funds. You mentioned earlier that the port 
seems to be doing quite well and has the funds necessary to 
make these modifications without the $600 million.
    Mr. Morse. Well, Representative Green, there is an exhibit 
to my testimony, Exhibit Q, and that is a paper prepared by the 
Mississippi Center for Justice about the status, the economic 
status of the State Port of Gulfport and it has a detailed look 
at this issue.
    This port, since the hurricane, has come back to 
approximately 60 to 75 percent of its pre-Katrina levels in 
terms of overall throughput. It has damage that has to get 
repaired, but what we are talking about with the $600 million 
has relatively little, if anything, to do with restoring the 
status quo in this hurricane. Because there is insurance, there 
is FEMA money, there is other bonding capability, it is 
operating in the black, and there is another exhibit which I 
believe you asked Mr. Norris about at the preceding hearing in 
May 2008.
    You asked for a copy or an audit showing what is that 
status of the economic status of this port, and if you look at 
Exhibit P to my testimony today, you will find the budget 
request for the fiscal year ending June 30, 2009, that shows it 
is operating in the black and that it has $82 million in 
unencumbered cash.
    Now the last thing to say about it is that the use of this 
money is to not restore it, it is to do a vast and very 
controversial expansion. So this is not about restoring my 
hometown's State port, the town I grew up in and my father grew 
up in. I want to see that port restored. But you don't need the 
$600 million to do it.
    Mr. Blakely. May I make a comment here? And this is not 
about ports. It is about CDBG funds and disasters.
    Chairwoman Waters. Yes, you may.
    Mr. Blakely. I think we are trying to fit the wrong animal 
in the wrong place. Perhaps we should have disaster funds with 
clearer specifications of what they should be used for, and the 
HUD officials who are giving these waivers may not be prepared 
to understand a disaster versus a housing program.
    And sometimes, you know, you are subject to--okay, I will 
go along with this because this is not your field of expertise. 
Had this been money coming from the EDA for the restoration of 
an economy, that is a different thing.
    But I think we should have a disaster fund that is clearly 
aimed at disasters, and a disaster plan should be prepared for 
our community, that should indicate what they are going to do 
for that disaster, much as we did in New Orleans, how much is 
going to economic development, how much is going to housing, 
and the locals should be held accountable for implementing it.
    Chairwoman Waters. Thank you. Mr. Green?
    Mr. Green. Thank you, Madam Chairwoman, I yield back.
    Chairwoman Waters. Well you are certainly welcome. I would 
like to thank all of our witnesses who have participated today. 
I want to thank Chairman Frank, Chairman Thompson, Subcommittee 
Chair Cuellar, Ranking Members Dent and Capito, and all of the 
members and staff for their participation here today.
    I believe that the Chair knows that some members may have 
additional questions for this panel which they may wish to 
submit in writing, and 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 panel, you are now dismissed, and we certainly 
appreciate your presence here today. The subcommittees are 
adjourned.
    [Whereupon, at 1:03 p.m., the joint subcommittee hearing 
was adjourned.]


                            A P P E N D I X



                              June 4, 2008


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