[Senate Hearing 110-249]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-249
 
                  THE ROAD HOME? AN EXAMINATION OF THE
                     GOALS, COSTS, MANAGEMENT, AND
                     IMPEDIMENTS FACING LOUISIANA'S
                           ROAD HOME PROGRAM

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


                                HEARING

                               before the

                AD HOC SUBCOMMITTEE ON DISASTER RECOVERY

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 24, 2007

                               __________

        Available via http://www.access.gpo.gov/congress/senate

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs



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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


                AD HOC SUBCOMMITTEE ON DISASTER RECOVERY

                 MARY L. LANDRIEU, Louisiana, Chairman
THOMAS R. CARPER, Delaware           TED STEVENS, Alaska
MARK L. PRYOR, Arkansas              PETE V. DOMENICI, New Mexico

                     Donny Williams, Staff Director
                 Aprille Raabe, Minority Staff Director
                        Amanda Fox, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Landrieu.............................................     1
    Senator Coburn...............................................    14
    Senator Stevens..............................................    16
    Senator Pryor................................................    20

                               WITNESSES
                         Thursday, May 24, 2007

Donald E. Powell, Federal Coordinator for Gulf Coast Rebuilding, 
  U.S. Department of Homeland Security...........................     5
Andrew D. Kopplin, Executive Director, Louisiana Recovery 
  Authority......................................................     8
Walter Thomas, Resident, Lower 9th Ward, New Orleans, Louisiana..    22
Connie Uddo, Director, St. Paul's Homecoming Center/Beacon of 
  Hope Resource Center, New Orleans, Louisiana...................    23
Debbie Gordon, President, Chimney Wood Homeowners' Association, 
  New Orleans, Louisiana.........................................    25
Frank A. Silvestri, Co-Chairman, Citizens' Road Home Action Team 
  (CHAT), New Orleans, Louisiana.................................    26
Frank A. Trapani, President, New Orleans Metropolitan Association 
  of Realtors, New Orleans, Louisiana............................    27
Nelson R. Bregon, Assistant Deputy Secretary for Disaster Policy 
  and Response, U.S. Department of Housing and Urban Development.    33
David I. Maurstad, Assistant Administrator, Mitigation 
  Directorate, Federal Emergency Management Agency, U.S. 
  Department of Homeland Security................................    34
Susan Elkins, Executive Director, Office of Community 
  Development, State of Louisiana................................    35
Isabel Reiff, Senior Vice President, ICF International, Inc., and 
  Chief Program Executive, Louisiana Road Home Program...........    37

                     Alphabetical List of Witnesses

Bregon, Nelson R.:
    Testimony....................................................    33
    Prepared statement...........................................   113
Elkins, Susan:
    Testimony....................................................    35
    Prepared statement with an attachment........................   123
Gordon, Debbie:
    Testimony....................................................    25
    Prepared statement...........................................    93
Kopplin, Andrew D.:
    Testimony....................................................     8
    Prepared statement with attachments..........................    54
Maurstad, David I.:
    Testimony....................................................    34
    Prepared statement...........................................   116
Powell, Donald E.:
    Testimony....................................................     5
    Prepared statement with an attachment........................    45
Reiff, Isabel:
    Testimony....................................................    37
    Prepared statement with attachments..........................   135
Silvestri, Frank A.:
    Testimony....................................................    26
    Prepared statement with an attachment........................    96
Thomas, Walter:
    Testimony....................................................    22
    Prepared statement...........................................    86
Trapani, Frank A.:
    Testimony....................................................    27
    Prepared statement...........................................   111
Uddo, Connie:
    Testimony....................................................    23
    Prepared statement...........................................    88

                                APPENDIX

``Current Housing Unit Damage Estimates, Hurricanes Katrina, 
  Rita, and Wilma,'' February 12, 2006, submitted for the Record 
  from Mr. Powell................................................   151
Dr. Dominique Duval-Diop, Senior Associate, PolicyLink, prepared 
  statement......................................................   196
Peg Case, Director, TRAC, letter dated June 8, 2007..............   201
Questions and responses for the Record from:
    Mr. Powell...................................................   204
    Mr. Bregon...................................................   219
Letters dated December 13, 2006 and February 6, 2007, submitted 
  for the Record by Mr. Maurstad.................................   227


  THE ROAD HOME? AN EXAMINATION OF THE GOALS, COSTS, MANAGEMENT, AND 
            IMPEDIMENTS FACING LOUISIANA'S ROAD HOME PROGRAM

                              ----------                              


                         THURSDAY, MAY 24, 2007

                                   U.S. Senate,    
             Ad Hoc Subcommittee on Disaster Recovery      
                  of the Committee on Homeland Security    
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 3 p.m., in 
Room SD-342, Dirksen Senate Office Building, Hon. Mary 
Landrieu, Chairman of the Subcommittee, presiding.
    Present: Senators Landrieu, Pryor, and Stevens.
    Also Present: Senator Coburn.

             OPENING STATEMENT OF CHAIRMAN LANDRIEU

    Chairman Landrieu. The hearing of the Subcommittee on 
Disaster Recovery will now begin. The Subcommittee will come to 
order.
    Let me welcome all of you here this afternoon. There has 
been a great deal of interest in this particular hearing, and I 
am going to begin with my opening statement. It will be a 
little bit longer than usual, but I think the circumstances 
warrant it. Senator Stevens, my Ranking Member, will be joining 
me shortly, and Members will be coming in and out throughout 
the afternoon as we are on the floor voting throughout the 
afternoon. We will take those votes as they come.
    Let me begin by saying that this hearing is not an 
investigation. It is an oversight hearing about the Road Home 
Program. We say a lot of things about our homes. We say, ``Home 
is where the heart is.'' We say, ``You can travel the world to 
search for what you need, but when you return home, you will 
find it.'' We say, ``There is no place like home.''
    The Road Home Program was designed to help the people of 
South Louisiana build and return to their homes, to rebuild 
their neighborhoods and re-establish a sense of community. 
Unfortunately, to date, this program has not lived up to its 
billing. Louisianans have moved beyond frustration to cynicism 
and hopelessness. Headlines appear in the press on a daily 
basis with tag lines like ``Road to Nowhere,'' ``Potholes in 
the Road Home,'' ``Road Blocks to the Road Home.''
    One might disagree with how the program was developed, 
designed, and funded, but it is all we have to work with at 
this point, and I intend to see that it begins to work better. 
We need to look into the funding levels to see if they are 
sufficient and, if not, find a way to make it sufficient.
    No single hearing, of course, will remedy this problem. 
However, I do intend to get the answers we need to make much 
needed improvements. I intend to get answers from the people 
responsible for the program. On the first panel we will have 
Don Powell representing the Federal Government, primarily 
responsible for the design and development of the Gulf Coast 
Recovery Plan; and Andy Kopplin, who is representing the State. 
And I will introduce them in just a moment.
    But here are some questions that I hope our panels today 
will be responding to: Why is it that almost 21 months after 
the storm and the massive flood, only a little over 13,000 
checks have been cut? At this rate, which I will generously 
call a thousand closings a month, it will take us another 10 
years to get this money to people. Is it the State? Was it the 
design? Was it the lateness of the funding?
    What was the Federal role in determining the level of 
funding for Louisiana's program? What was the State's role in 
determining the level of funding for Louisiana's program? What 
is the cause of the projected program shortfall? What are the 
most pressing concerns facing program participants? Have 
contractors, like ICF, contributed to the program's delays? 
Have they put in procedures to eliminate some of those delays? 
What steps should be taken, either by Louisiana or the Federal 
Government, to fix the funding shortfall if we determine there 
is one? How has the agreement to use hazard mitigation funding 
affected the process of Road Home grants? How can the State and 
Federal Government collaborate to resolve the dispute over the 
hazard mitigation funding, which is a substantial portion--I 
think $1.2 billion--in question?
    What role, if any, are the local governments playing in the 
management of the hazard mitigation funds which are 
traditionally used to help mitigate against future disaster and 
help with local funding infrastructure? What is the projected 
timeline for all Road Home grants to be disbursed? How is the 
duplication of benefits preventing people from getting their 
full promises of funding to get their homes and lives underway?
    As this Subcommittee probes for answers to these questions, 
we also need to establish a bit of context, which I hope we can 
do today. The Road Home Program was developed by Governor 
Blanco's Administration. The chief architect of the program was 
Executive Director Andy Kopplin, who is with us here today. It 
was developed through the LRA. It initially asked for $14.9 
billion, according to some records I have seen. However, the 
Administration said this was too costly. In reaction, the 
Administration reduced the amount of the program.
    Congress appropriated $10.4 billion in community 
development block grants to the State through the third and 
fourth Hurricane Katrina supplemental. Then in December 2005, 
the State received the first $6.2 billion, and in June, 
Louisiana received an additional $4.2 billion.
    The reason for this funding source, Congress thought this 
funding source was the most flexible and it would be the most 
effective tool for both Louisiana and Mississippi to engineer 
its own recovery. That flexibility is in question today. The 
CDBG funds are administered by the Department of Housing and 
Urban Development. My office has heard time and time again that 
the use of these funds has been anything but flexible. 
Conversations about the plan occur on a daily basis, and change 
upon change has been required.
    We have the Assistant Secretary of HUD, Nelson Bregon with 
us today, along with Susan Elkins, who is responsible for 
administering these dollars at the State level. They are what I 
call the ``fixit people.'' If it can be fixed, it is going to 
be HUD, FEMA, and the CDBG administration at the Federal level 
that can fix it, and then Congress or the State can fund it if 
it is short.
    The LRA decided to use $8.8 billion of CDBG money for the 
Road Home Program. The remaining was spent on economic 
development, infrastructure, and hazard mitigation. The State 
also hoped to use $1.2 billion from FEMA's Hazard Mitigation 
Grant Program as part of the budget for the Road Home Program, 
and I continue to run into all sorts of explanations as to who 
mandated that and why, and we hope to get to the bottom of it.
    One of the most immediate problems that the program faces 
today is a projected shortfall in funds. This challenge to the 
future of Road Home was first aired publicly recently. The 
Louisiana congressional delegation has fought very hard to get 
full funding, but I have suspected for a long time that our 
community development awards were not given out in proportion 
to the damage that Louisiana sustained. We will get some facts 
in the record on that.
    If this was a program that was receiving high marks from 
the people it serves, maybe these kinds of errors in 
assumptions could be forgiven. But this program is in many 
measures not living up to the promises that were made. I hear 
stories of unreturned phone calls, a labyrinth of bureaucracies 
that make filing appeals and getting simple explanations an 
arduous process, and we will hear from our citizens today.
    While I understand that the original dollar figures for 
Road Home may have been based on uncertain estimates, the State 
has a number of questions to answer. Why was the program 
designed this way? I hope some of those designs can be 
justified. Individuals who opt to leave Louisiana are 
penalized. Although there have been some changes made for the 
elderly, there are many citizens in the bracket of disabled 
citizens that are complaining that they are not exempt from 
this penalty and feel like that is unfair. We hope to get some 
answers to that.
    There are enough challenges within Road Home to hold a 
hearing on this every week. I am obviously not going to be able 
to do that. But I do hope that the panel will present their 
remarks today, beginning with the two people primarily 
responsible for the design and funding levels. Of course, that 
is not to take away the responsibility of Congress for funding 
the overall program. But we relied in large measure on 
information given by the Coordinator's office and by your 
office, Mr. Kopplin, as to how to appropriate at what level of 
funding to help the design of the program.
    There has been a slight change to the original outline of 
today's hearing, and I wanted to say that I took the liberty of 
Chairman earlier this morning to make this change, because one 
of the things that I am hoping to get through today is 
discussing that moves us away from talking points and closer to 
getting to the bottom of the numbers, figures, amounts, and 
details in question. And so I asked Mr. Kopplin and he was 
willing to join Mr. Powell on the first panel to hear about the 
design. Then we will have our homeowners, which I thought was 
appropriate, to tell about their personal experiences. The last 
panel, which, unfortunately, Mr. Powell is not going to be able 
to stay for--and I understood that initially because he is 
traveling later today--will be from HUD and FEMA and the 
community development program at the State level as to how it 
could potentially be fixed. Now, perhaps it is working as the 
designers intended. But I would like to believe that we could 
get help to people sooner. I would like to believe that the 
program will be fully funded and promises fully met. And that 
is what the hearing is about today.
    So, Mr. Powell, if you do not mind, we will start with you. 
As I said, Senator Stevens will be joining us in just a moment. 
Let me briefly introduce our first two panelists. We have 
received their testimony in good order, and I appreciate it 
because, unfortunately, we did not receive the FEMA testimony 
until 2 hours ago. There is a requirement that testimony be 
turned in to this Subcommittee 24 hours in advance, and I want 
it noted we did not receive the testimony from FEMA until about 
2 hours ago.
    We did receive both of your testimonies on time. They have 
been thoroughly read and reviewed, and I would like to 
introduce Mr. Powell at this time for his opening remarks. He 
was named Federal Coordinator for Gulf Coast Rebuilding on 
November 1, 2005, by President Bush. He has been tasked with 
the job of developing of a long-term plan for the region in the 
aftermath, with development a long-term rebuilding plan for the 
regions affected by Hurricanes Katrina, Rita, and Wilma. He 
also works to coordinate the Federal efforts and help State and 
local officials reach consensus on their vision for the region. 
Prior to serving as the Coordinator, Mr. Powell served as the 
18th Chairman of the Federal Deposit Insurance Corporation, a 
position he held since August 2001.
    The next witness will be Andy Kopplin, Executive Director, 
Louisiana Recovery Authority (LRA), an agency which was 
developed a few weeks after Hurricanes Katrina and Rita struck 
Louisiana, Texas, and Mississippi coasts and the massive flood 
that ensued by a collapse of the Federal levee system, which 
flooded a great deal of southeast Louisiana. To act as the 
leadership on the massive recovery effort has basically been 
his position. He is represented by the State entity, which is 
the LRA, which was designed to basically represent the State in 
this recovery. Prior to that, he served as Chief of Staff to 
Governor Blanco and before that to Governor Foster.
    So, with that, Mr. Powell, if you will begin, I think we 
are going to provide 5 minutes for opening statements, and then 
we will have a series of questions, and the same to you, Mr. 
Kopplin.

TESTIMONY OF DONALD E. POWELL,\1\ FEDERAL COORDINATOR FOR GULF 
     COAST REBUILDING, U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Powell. Thank you, Senator. Good afternoon, 
Subcommittee Chairman Landrieu, Ranking Member Stevens, and 
distinguished Members of the Senate Homeland Security and 
Governmental Affairs Subcommittee on Disaster Recovery. My name 
is Don Powell, and I am pleased to appear here before you today 
as the Federal Coordinator of the Gulf Coast Recovery. I am 
here today to discuss the Blanco Road Home Program, 
specifically its current financial status.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Powell appears in the Appendix on 
page 45.
---------------------------------------------------------------------------
    By way of history, just after I took the post as Federal 
Coordinator, my staff and representatives from the State of 
Louisiana began exhaustive talks to determine possible 
additional need beyond the $6.2 billion allocated to 
Louisiana--the maximum amount as allowed by statute in December 
2005. My charge was clear: Gather the best available data, put 
all the information on the table for review. After many weeks 
of discussion and by using scientific methods like National 
Oceanic and Atmospheric Administration estimates on flood depth 
levels, FEMA and U.S. Geological Survey on areas of maximum 
flood and storm surge inundation, FEMA remote sensing data, SBA 
loss verification information, FEMA inspections, and HUD data, 
all parties involved in the discussions--Federal, State, and 
the State's own independent demographer--reached a consensus on 
the total number of houses destroyed by flood damage and an 
approximate cost per household.
    I would like to emphasize that at no point did I receive 
guidance from the White House, Congress, or other Federal 
agencies or impart to my staff that we had a ``go'' amount of 
funding that we should find a way to reach. This truly was a 
good-faith and fully open negotiation with the State, the LRA, 
and their consultant, McKinsey and Company, to meet the needs 
of the people of Louisiana.
    After intense but open negotiation with all the State 
representatives, we all agreed that $4.2 billion would be the 
appropriate amount of additional funding to meet the 
outstanding needs, and soon thereafter the President requested 
$4.2 billion in February 2006 as part of the fourth 
supplemental. In fact, at the time of the President's 
announcement to seek the additional $4.2 billion, Governor 
Blanco stated, ``Now, I want to say that these numbers didn't 
just come from the sky. They were carefully crafted legitimate 
numbers, analysis after analysis, evidence after evidence. We 
took it seriously. We didn't just make up a number. We know 
that that doesn't fly here in Washington.''
    ``Today I know that he''--the President--``is fully 
committed to helping our people. And so on behalf of the people 
of Louisiana, I have to say a very special thank you.''
    Further questions have been raised as to whether or not the 
State understood or agreed to focus on flood damage. I would 
like to address those questions.
    The focus of the Administration after the 2005 hurricane 
season was and remains flood-damaged homes from either levee 
failures, like in New Orleans, or storm surge, as experienced 
by some in southwest Louisiana and Mississippi. We were always 
very clear that the Federal Government would not fund State 
housing programs to cover wind damage. To that end, if a 
State's program were to include wind, there would not be 
Federal funding for that purpose.
    In February 2006, we mutually agreed with the State to fund 
106,000 homes that experienced major and severe flood damage at 
an average grant of $72,000, thereby creating a $7.6 billion 
program. This funding outline was a result of intensive due 
diligence in Baton Rouge for which I deployed staff to work 
with all the State and Federal partners to reach consensus. The 
flood-damaged housing program was a key component of the 
President's $4.2 billion supplemental request as described in 
his submission to the Congress and which other White House 
communications documented as directed specifically to New 
Orleans because of its unique needs related to flood 
mitigation.
    Shortly thereafter, in March 2006, the LRA itself published 
their own defense of the supplemental request entitled 
``Louisiana's Case for an Additional $4.2 Billion in CDBG,'' 
which demonstrated a program that only compensated for flood 
damage. Their breakout outlines 102,000 flood-damaged homes at 
$69,000 per house to establish a $7.1 billion program with an 
extra $400 million left over for the State to use for 
administrative costs. All told, a $7.5 billion program.
    This program, which prioritized the most flooded, 
devastated areas, was our consensus, and the way it was 
described to you, the Members of Congress, who approved this 
funding. The Federal Government did not fund State programs to 
cover all wind damage in Texas, Mississippi, Alabama, or 
Florida, despite numerous requests by many of these States to 
do so after the 2005 hurricane season. In fact, if Texas were 
to run the same program as Louisiana based upon the same data 
that the current Louisiana estimates are based, the Federal 
Government would need to increase its allocation to that State 
by almost 14 times, or another $645 million to Texas alone.
    The truly unique nature of the storms of 2005 and the 
driver of the Federal Government to get involved was the flood 
damage caused by the storm surge and levee breaches. This is 
damage for which there is no private insurance market, damage 
that in many cases was experienced by those who lived outside 
of the federally identified floodplains and/or those who lived 
inside Federal levees. Therefore, despite the original intent 
and purpose of the CDBG funding, the State utilized the 
autonomy available to them to push through their own program 
design to compensate damaged homes, whether by wind or flood, 
unlike any other Gulf Coast State.
    In the LRA final Road Home plan sent to HUD for its review 
in August 2006, the State had unilaterally, independently, and 
fundamentally made changes. They projected 114,532 homes 
destroyed by either wind or flood. In a nutshell, the action 
plan ultimately submitted to HUD by the LRA Road Home Program 
outlined a budget that significantly reduced the average payout 
per home from $72,000 to $60,000 while significantly increasing 
the number of eligible applicants from 106,500 to almost 
115,000. This was possible because, despite Administration 
attempts to allow the HUD Secretary the authority to deny or 
approve any action plan submitted by the State, Congress 
instead gave the Secretary only the authority to review the 
plan for CDBG program compliance, not opine on the plan being 
right or wrong.
    Unfortunately, these estimates have proven inaccurate. 
After media reports provided my first indication that the Road 
Home Program was running out of funds, I asked Governor Blanco 
to send me all relevant Road Home data after a meeting on May 
9, 2007. We have worked with HUD to evaluate this data and 
better understand the causes of the perceived shortfall.
    I am here today to tell you our findings. We have verified 
the State's midpoint estimates that indicate there may be 
132,000 eligible applicants and the average grant is 
approximately $74,000. This has caused the program's potential 
overall costs to rise to nearly $10 billion--far greater than 
the taxpayer dollars given by Congress to compensate flood-
damaged homes. From HUD's midpoint projection using the State's 
data, it seems that there are 88,702 flood-damaged homes and 
43,298 applicants that have suffered wind damage. The midpoint 
projections are that approximately $2.7 billion of the $9.6 
billion midpoint estimate will be paid to those who did not 
experience any form of flood damage. In fact, midpoint 
estimates have fewer grantees projected from the slower 
recovering flood-damaged areas.
    As elected officials have said many times, the Federal 
Government is responsible for this hurricane damage because of 
the failure of the levee system and now nearly half of the 
Federal funding is going to homeowners that experienced no 
levee-related damage. I am sure this is disheartening news for 
people like Walter Thomas from the 9th Ward, who also will be 
here to testify today. Postal Service data also confirms that 
while those in levee-protected areas only make up 60 percent of 
the total Road Home estimated applicants, they are 
overwhelmingly less like to have returned home.
    I need to reiterate that these figures are midpoint 
estimates. Until the State closes the application process, we 
will not be able to definitely determine the total cost of the 
program. Our evaluation has also uncovered other concerns. For 
instance, the Elevation Grant Program, designed and 
administered by the State, has cost $2 billion. The maximum 
amount a homeowner can receive is $30,000, and the average 
grant is $24,000. It appears that less than a quarter of the 
people who are receiving the grant are actually legally 
required to elevate. This is because the State has not limited 
the program to those whose parish-determined damage level 
requires them to rebuild in compliance with elevation standards 
to receive coverage from the National Flood Insurance Program.
    I am not here to suggest that elevating your home is not a 
safer way to rebuild, but I do not see a mechanism by which the 
State can ensure the elevation grant monies will actually be 
used for elevation.
    Chairman Landrieu. Could you please wrap up in the next 30 
seconds?
    Mr. Powell. I will. Like you, I am concerned for the people 
of Louisiana. Unfortunately, although our office conducts a 
weekly call with representatives of the LRA, State ICF, and all 
the Federal partners involved in housing, this issue of 
perceived shortfall was never raised. Given the amount of 
spending which is targeted for administrative cost, I am at a 
loss as to why this was not made clear to either the governor 
or the LRA earlier.
    I am committed to working with the State in an examination 
of all resources priorities for the people of Louisiana. 
Through this process all resources must be taken into account, 
and I will not let up until we have determined the best path 
forward for the State's Road Home Program.
    Thank you.
    Chairman Landrieu. Thank you. Mr. Kopplin.

    TESTIMONY OF ANDREW D. KOPPLIN,\1\ EXECUTIVE DIRECTOR, 
                  LOUISIANA RECOVERY AUTHORITY

    Mr. Kopplin. Madam Chairman, Senator Coburn----
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Kopplin appears in the Appendix 
on page 54.
---------------------------------------------------------------------------
    Chairman Landrieu. Let me please stop you. Let me recognize 
my colleague, Senator Coburn from Oklahoma. He is not a Member 
of this Subcommittee, but he is most certainly welcome, and I 
look forward to turning to him at the appropriate time for 
questions. Thank you, Mr. Kopplin.
    Mr. Kopplin. My name is Andy Kopplin, and it has been my 
privilege to serve as the Executive Director of the Louisiana 
Recovery Authority, representing our Chairman Dr. Norman 
Francis, our Vice Chairman Walter Isaacson, and the other 
volunteers on our bipartisan board of directors.
    Since our appointment by Governor Blanco in October 2005, 
we have focused on developing strategies for recovery, securing 
resources, and providing transparency and oversight on the 
expenditure of recovery dollars. We do not run the Road Home or 
any programs at the LRA. Our job is to make expenditure 
recommendations of Federal grant funds to the governor and the 
Louisiana Legislature and to set broad policies for the 
programs they approve.
    As I address specifics about the Road Home Program, let me 
put them in the context of some major themes that illustrate 
the challenges we have faced with our recovery.
    First, Federal investments in our recovery have been 
generous and unprecedented, but they have been late in coming, 
inequitable based on damages, and insufficient.
    Second, program implementation responsibilities have been 
delegated to State-level agencies, largely because the Bush 
Administration opposed the Baker-Landrieu proposal for a robust 
Federal agency with the mandate and resources commensurate to 
dealing with the first and third most expensive disasters in 
American history.
    Third, the red tape associated with FEMA- and HUD-funded 
programs is choking our ability to access Federal dollars 
appropriated by Congress.
    And, fourth, the constant haggling required by State and 
local officials to secure resources and cut red tape has 
undermined public confidence and slowed the recovery.
    On Federal investments after Hurricanes Katrina and Rita, 
the 109th Congress waited until Christmas to fund a recovery 
package, then capped Louisiana's allocation at 54 percent of 
the total CDBG appropriation, even though we had 77 percent of 
the housing damage. With leadership from Governor Blanco and 
our delegation, we fought for fair and equitable funding. LRA 
board members personally took the case to Capitol Hill and the 
White House. Our request during these negotiations had been for 
a total of $14.9 billion in CDBG funds, including $9.4 billion 
for single-family homeowners. After vigorous negotiations, Mr. 
Powell announced the President's support for an additional $4.2 
billion in CDBG funds to bring Louisiana's total to $10.4 
billion. This included $7.5 billion for homeowners based on 
FEMA's estimate that Louisiana had 123,000 homeowners who had 
suffered major or severe damage. Mr. Powell also asked us to 
rely on the $1.7 billion in hazard mitigation funds to pay for 
elevations, buyouts, and smaller home safety investments in 
meeting the needs we identified in the negotiations. We knew 
the HMGP funding came with considerable administrative burdens, 
but as Governor Blanco often says, when you are negotiating 
with the folks holding the checkbook, you tend to agree with 
their numbers. Mr. Powell also committed to helping us 
streamline the FEMA process.
    It was not until 10 months after Hurricane Katrina that 
this bill to fund our program with an additional $4.2 billion 
was signed by President Bush. And so for homeowners like the 
ones behind us, waiting for grants 21 months after the storm, 
it provides little solace for them to hear that half of their 
wait was on the 109th Congress to fully fund the program. But 
any fair review of progress needs to consider June 2006 as the 
start date--a date that for most homeowners was already too 
late.
    The program has finally begun hitting its stride. By the 
end of today 20,000 homeowners will have closed on their 
grants--double the number who had closed just 4 weeks ago. Yet 
just as this news of improvement arrives, the program has been 
covered by a cloud of uncertainty again due to anticipated 
budgetary shortfalls. ICF International, the Division of 
Administration Office of Community Development's contractor for 
the Road Home Program, has developed a budget projection that 
estimates the total program costs of approximately $10.4 
billion--or $2.9 billion beyond what was budgeted. If the $1.2 
billion in hazard mitigation funds are not approved by FEMA, 
this shortfall grows to $4.1 billion.
    ICF's projection shows this deficit results largely from 
two factors: First, nearly 20,000 more homeowners than FEMA 
estimated are eligible for grants; and second, average awards 
are higher than had been initially projected. ICF's inspectors 
are finding many homes FEMA labeled with ``major'' damage 
should have been categorized as ``severe,'' warranting a 
complete demolition and rebuild.
    Governor Blanco has asked the LRA to consider temporarily 
reallocating other CDBG funds to shore up the Road Home 
Program. As homeownership has been our highest priority, we 
will do what is necessary. But even a temporary reallocation of 
other funds will not be sufficient to cover the projected 
shortfall. Because the $1.2 billion of HMGP funds have not been 
approved either, elevations and other mitigation measures must 
be paid for by CDBG funds or discontinued.
    Given that this budget shortfall is due to our good-faith 
reliance on FEMA data and that Louisiana's total CDBG 
allocation was never based proportionally on damages with other 
States, we believe that additional Federal CDBG funding to 
support the Road Home Program is clearly warranted, and we ask 
for your thoughtful consideration and support of this request.
    Remember, Louisiana suffered an estimated $100 billion in 
physical damages. After Federal investments and insurance are 
counted, we are still left with an estimated $34 billion in 
unrecovered losses. So, in President Bush's words, to do what 
it takes to rebuild Louisiana after such devastating losses 
will require short-term investments to shore up the Road Home 
Programand long-term investments in our community's 
infrastructure. When the President said he would do what it 
takes and stay as long as it takes, he didn't say ``except if 
you had wind damage.'' And I will point out that in this 
document, our Road Home application, which was sent to FEMA and 
approved--not sent to FEMA--sent to HUD and approved in June 
2006, it very clearly stated it is the State policy that 
participants in the Homeowner Assistance Program deserve a fair 
and independent estimate of projected damages from the storm, 
regardless of the cause of damage. That has been our policy 
since the beginning. We did not want to discriminate between 
the type of damage homeowners who were hit by Hurricanes 
Katrina or Rita suffered after the storm.
    Chairman Landrieu. Thirty seconds.
    Mr. Kopplin. We have been working to make sure that the 
Road Home Program speeds up. I want to compliment Walter Leger, 
who is behind me, who has been LRA's volunteer Housing Task 
Force Chairman, who spent hours of volunteer hours working on 
solutions. I want to compliment the folks running the program 
who have sped up the number of closings, again, doubled the 
number of closings in the last 4 weeks.
    As I have noted, with the Federal match waiver that this 
Congress is moving forward, that will provide a significant 
infusion of assistance to Louisiana as we move forward in 
solving the Road Home shortfall, and I look forward to working, 
Madam Chairman, with you and the Members of Congress to make 
sure that every single homeowner who is eligible for our 
approved program gets their grant and gets it as quickly as 
possible.
    Thank you very much.
    Chairman Landrieu. Thank you. We will begin, if we can, a 
round of questions, and I will take the first few, and we have 
been joined by Senator Stevens, the Ranking Member, who is no 
stranger to disaster recoveries and has helped to lead many 
efforts here in Congress over his long and distinguished 
tenure.
    There were many numbers thrown out about homes with wind 
damage and flood damage, and I checked these numbers just 2 
hours before I came in through CRS, which is our Congressional 
Research Service, and I want to make sure that I have these 
numbers correct, because I think beginning with the right 
numbers and building back might help us to figure out what the 
entities were thinking as we began to figure out where we need 
to go. So these are simple, but they are accurate based on my 
checking this morning.
    Mr. Powell, this is mostly directed to you, if I could.
    If you take the 63,000 homes severely damaged or destroyed 
by Hurricane Katrina in Mississippi and multiply it by $150,000 
per household, that number would come to around $9 billion. 
Subtracting insurance payments and other Federal assistance, 
FEMA disaster assistance, the $5.5 billion that Mississippi 
received seems close to sort of what they got to begin to put a 
program of this magnitude together.
    However, if you take the same 205,000 severely damaged or 
destroyed homes in Louisiana, multiply it by $150,000, which is 
sort of the general promise, you come up with a need for $30.7 
billion.
    Now, these are big numbers, but in my mind, I am trying to 
find a way to communicate this as simply as I can to get past 
all the mumbo-jumbo about flood or wind or who was in the 
floodplain or who was not. The way this program has been talked 
about by many is a basic grant program to homeowners--not 
renters but homeowners--who experienced severe damage. The 
testimony this morning is, well, now we are talking about flood 
only, not wind. But that has never come directly to my 
attention until today.
    But set that aside for a moment. Do both of you agree or 
what is the disagreement about these numbers? And if you made 
these calculations initially, as you were designing this 
program, how could you possibly think that the $10 to $12 
billion allocated in community development block grant 
initially, even if half of it was 6 months past the date of the 
Mississippi final numbers, would even be adequate to begin to 
cover a program that both of you have sort of outlined, but in 
different ways?
    Mr. Powell, will you take that question?
    Mr. Powell. I am happy to, Senator.
    Chairman Landrieu. And then Mr. Kopplin.
    Mr. Powell. Our office was birthed about the time Congress 
allocated the $11.5 billion CDBG money to the States along the 
Gulf Coast that were damaged by Hurricanes Katrina and Rita. So 
those negotiations were really done in Congress, and as someone 
pointed out, they were limited where no one State could receive 
more than 54 percent. That was a decision made by Congress. 
And, incidentally, they did not limit that to Louisiana. They 
gave the Secretary of HUD the discretion where he could not 
exceed more than 50 percent. He quickly went and gave Louisiana 
54 percent. It could have been 30 percent, it could have been 
40 percent.
    Chairman Landrieu. But let us be clear, and if you do not 
mind, I think this is a very important point of trying to get 
these numbers. You just testified that you did not come on 
board until after a figure of $11 billion was determined.
    Mr. Powell. Eleven-and-a-half billion dollars.
    Chairman Landrieu. Approximately the same time.
    Mr. Powell. I am getting to it.
    Chairman Landrieu. OK.
    Mr. Powell. After that, and clearly people in Louisiana 
contacted our office, as well as other Members of Congress and 
the Administration, that they felt like they needed more money. 
That is when the discussions started in December in our office 
with the people of the LRA: How much more money do you need? So 
we focused on what we focused on from the very beginning and 
historically what CDBG money has been used for, a catastrophic 
event like this, and we focused on those homes that had major 
and severe damage by flood--breach of the levee system and the 
storm surge. And, incidentally, Mississippi did not receive any 
money for wind damage. So we focused on what was caused by the 
breach and what was caused by the storm surge.
    With consensus, and with using the best available data, 
science--I am an old banker. I want to see the numbers. I do 
not want to guess. And as Governor Blanco said, these numbers 
did not come from the sky. It was after a lot of deliberation, 
a lot of investigation, independent and consensus with our 
friends from Louisiana, we came to the 106,000 number. We then 
said what is going to be the average payout, and we did not use 
$150,000 because that was the cap, as you know, Senator. So we 
used the best available data we had from SBA, from FEMA, from 
private insurance companies, from other people, and we 
determined how many folks would take the buyout, what would it 
cost to repair the damage. Came up with a consensus number of 
$72,000, thus the $7.6 billion, and, therefore----
    Chairman Landrieu. But you thought at the time----
    Mr. Powell [continuing]. This President then immediately, 
after we told him this, asked Congress for an additional $4.2 
billion based upon a consensus of the data between our office 
and the people in Louisiana.
    Chairman Landrieu. OK. But let me just get clear about one 
thing. When you said a consensus, I can see you are speaking, 
and Mr. Kopplin's head going this way, so I do not--I think 
anybody observing this, there is no consensus, it seems, which 
is what we are trying to get to here. But when you just 
outlined those numbers, you are now testifying that--what did 
you say?--123? What was the number you gave?
    Mr. Powell. I said 106,000.
    Chairman Landrieu. The 106,000 was for flood only, not 
wind.
    Mr. Powell. Flood only, major and severe.
    Chairman Landrieu. Flood only. Was it your understanding 
that it was flood only, Mr. Kopplin?
    Mr. Kopplin. In negotiating, we had a lot of things that we 
requested. They had their reasons for knocking certain things 
off those negotiations. When the money was being negotiated, it 
was based on the FEMA data that Mr. Powell's office provided to 
us with FEMA and HUD input. That was 123,000 homeowners, 
106,000 flooded and the remainder with wind damage. We chose to 
design a program to cover all 123,000. What we have today is 
that FEMA number was low in terms of the number of major and 
severe damaged households in Louisiana and low in terms of the 
level of damage per household, which has led to the problems. 
We relied on that FEMA 123,000 estimate, which turned out to be 
low in terms of the number and amount of damage Louisiana 
homeowners suffered.
    Chairman Landrieu. And what is the real estimate from your 
vantage point now? Or what do you think the accurate updated 
estimate is?
    Mr. Kopplin. The estimate provided by ICF in their analysis 
has a midpoint of about 132,000 potentially eligible applicants 
for the Road Home Program, but as Mr. Powell indicated, because 
we have not chosen to tell people who are located all over the 
country there is a deadline by which you have to have applied 
by last summer or something like that, we are still accepting 
applications, because our goal has been to make sure every 
homeowner who is eligible, wherever they may be, gets to apply 
and gets their accurate grant.
    Mr. Powell. Senator, I would just----
    Chairman Landrieu. Go ahead.
    Mr. Powell [continuing]. Emphasize that these numbers are 
not low for flood damage. In fact, they are lower than what we 
originally estimated. And I would also add that we did not just 
use FEMA and HUD. We used satellite imaging. We looked at SBA 
loss totals. We did a lot of cross-checking. And their own 
demographer, the State's, agreed with our consensus that we 
came up with.
    Chairman Landrieu. But getting back to the statement, Mr. 
Powell, that you made about stepping in sort of after the money 
had been allocated, and then we kind of pushed past this 54-
percent cap, I understand, because I am an appropriator, that 
cap was placed by the Appropriations Committee. I objected to 
it then and continue to object to it today, but it was 
something that we could not fix at the time. But did that 54-
percent cap have anything to do with the estimates that we are 
talking about today? Or do you know how that 54 percent----
    Mr. Powell. No.
    Chairman Landrieu. Was it based on anything?
    Mr. Powell. We looked at what were the needs of the people 
of Louisiana as it related to----
    Chairman Landrieu. Did you recommend that cap, the 54 
percent?
    Mr. Powell. No, ma'am. And after that cap was done, then we 
began to look, what are the needs of the people in Louisiana, 
with a priority toward those that experienced flood damage as a 
result of the levee breach and the storm surge. We did not look 
at that--we had a clean sheet of paper and said what additional 
monies does Louisiana need. We knew, because of the 54 percent, 
what Louisiana was going to receive, and so we said--I said, 
``Give me the facts.'' As my testimony indicated, give me the 
facts, and I was not governed by anyone telling me what or what 
not to do.
    Chairman Landrieu. And I appreciate that you have tried to 
be an honest broker, and I have said publicly and privately it 
has been good to work with you. And I think the governors of 
both States have been very complimentary of your efforts. But 
our job here is to get to the bottom of how this program seems 
to be billions of dollars short. Are we covering wind or flood? 
If not, are we doing that for Louisiana and Mississippi on an 
equal basis? And if not, how are we going to find the funding 
that this program seems to be lacking? And there are many other 
issues, as I said in my opening statement, accelerating it, 
moving through the red tape.
    Now, I want to honor my colleagues that are here. I am 
going to stop my questions. I will have another round and go to 
Senator Coburn, who will have some questions for you, and then 
Senator Stevens.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. I would be happy to yield to the Ranking 
Member.
    Chairman Landrieu. No, he is----
    Senator Coburn. A couple of questions. On the revised 
132,000, what percentage of that is flood and what percentage 
of it is wind, Mr. Kopplin?
    Mr. Kopplin. We have not had the chance to evaluate Mr. 
Powell's analysis, which we just received this morning. Our 
assumption is that the distribution of households is consistent 
with what it was when there was 123,000 severe and major 
damaged households, of which 106,000 were flood.
    Senator Coburn. But you think it would be about the same 
percentage?
    Mr. Kopplin. That has been our assumption. Again, this was 
data that was constructed by FEMA, as Mr. Powell said, 
satellite imagery. What we have now is inspections by actual 
inspectors who have gone and looked at every one of these 
houses. So we have a lot greater detail house by house than we 
even did with that data during those negotiations.
    Senator Coburn. Are there any houses outside of what the 
satellite imagery showed that there was no flood, any of those 
receiving these funds for flood damage that are not wind 
damage?
    Mr. Kopplin. Our program covers hurricane damage, whether 
from flood or from wind. If you had uninsured damage----
    Senator Coburn. I am saying other than wind damage. If 
there are homes that were outside a satellite photo that shows 
there is no flood damage, are there any homes receiving funds 
for flood damage?
    Mr. Kopplin. I think the answer to your question is yes, 
sir, that there are homes that got damaged by the hurricane, 
whether they were in a floodplain, out of a floodplain----
    Senator Coburn. Yes, but that is not the question I am 
asking you.
    Mr. Kopplin. I am not sure I understand.
    Senator Coburn. I am asking you if there is data that says 
there was no flood here by satellite imagery, are there homes 
outside of the flood damage area, which is proven, what you can 
see on satellite, where the water went, are there homes that 
are receiving money for flood damage, not wind damage?
    Mr. Kopplin. I do not know the answer, but I do know that 
homes are being covered whether they had flood or wind damage, 
or both, from the hurricane. And wherever they are in 
Louisiana, it is our commitment to try to help those homeowners 
cover that uninsured gap through this program.
    Mr. Powell. Senator, I know that there are checks going to 
Bossier and Caddo, the farthest northwest----
    Senator Coburn. Why is it that not just in those counties--
in Franklin, Washington, Caddo, Concordia--why are funds going 
to those parishes out of this money that were not involved in 
this at all?
    Mr. Kopplin. If there are homeowners who suffered major or 
severe hurricane damage--and my guess is they are in the single 
digits, if there are, in some of those parishes. If they had 
hurricane damage, our policy was, whether you happen to be 
unlucky in Caddo Parish or you happen to be unlucky in Cameron 
Parish and you had hurricane damage, we want to cover your 
uninsured damages. It is our choice to make that policy 
decision. It was avidly----
    Senator Coburn. I agree.
    Mr. Kopplin [continuing]. Sought by the members of our 
congressional delegation and our legislature to make sure that 
we were equitable between wind and flood, Hurricanes Katrina 
and Rita, which hit our State 3\1/2\ weeks apart.
    Senator Coburn. But you do understand Mr. Powell's point 
that he made is that, in terms of equitable treatment of all 
the other States, we in the past have not covered wind damage. 
So I have two other questions----
    Mr. Kopplin. But, Senator, if I might, Mississippi, with 
$5.4 billion of CDBG grants, has enough money to cover wind and 
flood, should they choose to do so.
    Senator Coburn. All right. One of my problems is the real 
Federal priority here, besides helping Louisiana recover, is--
what we should really be responsible for is the failure of the 
levees. There were errors.
    Mr. Kopplin. Yes, sir.
    Senator Coburn. They caused tremendous heartache, 
tremendous human loss, and tremendous material cost. Other than 
that, what about private insurance in this thing? Where does it 
fit in for damage, wind damage, etc., off the coast? I am just 
saying, Where is the private insurance money in this program?
    Mr. Kopplin. Private insurance is, both by our State policy 
and by Federal requirements, required to be deducted from the 
level of grants that we calculate. So the contractor calculates 
the level of damage, takes the private insurance money or the 
FEMA payments, deducts that, and so it is a net of what you got 
in private insurance, which is another reason why I would be 
surprised--I was surprised by this number that Mr. Powell has 
brought forward, that there is $2.6 billion worth of uncovered 
wind damage in terms of that uninsured gap.
    Senator Coburn. OK. Just to clarify things, in Louisiana's 
original calculations, did you all include wind damage?
    Mr. Kopplin. Yes, sir.
    Senator Coburn. In your original submissions, wind damage 
was included.
    Mr. Kopplin. In our initial submissions to HUD, in our 
initial negotiations with Mr. Powell, we proposed the coverage 
of wind damage.
    Senator Coburn. And I just have one last question. 
Louisiana has a surplus of $2 billion. They also have $400 
million that was set aside for special industrial development. 
Why shouldn't the rest of the taxpayers in America say use some 
of that, especially--or maybe even use it on an interim basis 
while we are disputing this here? Why shouldn't that go on and 
be used in anticipation that maybe something in the future will 
come from Congress? What is happening on that front in the 
State of Louisiana?
    Mr. Kopplin. As part of my testimony--and there is a letter 
from Governor Blanco--$4.6 billion of Louisiana taxpayer funds 
have been invested in or are proposed during this current 
budget cycle for investment in hurricane recovery and a variety 
of issues, from health care to education to insurance coverage, 
to make homeownership insurance more affordable. So there is a 
significant State investment being placed already.
    Senator Coburn. I agree, but Louisiana has surplus and our 
grandchildren have a $350 billion deficit this year. So, again, 
the question should be that the average American is going to 
say is we have sent a lot of money to Louisiana and we are 
going to send more. There is no question we are going to help. 
But Louisiana should not be running a surplus and asking 
Washington to fill in the difference.
    Mr. Kopplin. I would suggest, because we have been fiscally 
responsible with our budget in Louisiana and are running a 
surplus, we ought to be complimented for that. We ought to note 
the $4.6 billion that has been invested or proposed for 
investment. It is a significant contribution when a State of 
Louisiana's size has about an $8 billion State general fund 
budget. So $4.6 billion being invested in hurricane recovery, I 
think, is a substantial investment. I would remind you we are 
107,000 jobs down in the New Orleans area; $11.5 billion was 
lost from Louisiana's economy the year after the storm; and we 
have $34 billion in unrecovered losses against that $2 billion 
surplus. There are----
    Senator Coburn. I understand all that.
    Mr. Kopplin [continuing]. Significant needs----
    Senator Coburn. I still think you are going to have a 
difficult time selling the average taxpayer in this country to 
say that you are running a surplus and you cannot do the things 
there and we need to come do it and we are going to borrow it 
from everybody's grandkids to do it. I think that is a 
debatable point. I think it is admirable you all run a surplus. 
I think that is great. But if that surplus is there, it ought 
to be going to help the people in Louisiana now, not sitting in 
the bank.
    Mr. Kopplin. The State surplus came from all over the 
State, and we are investing significantly in our recovery with 
that money.
    Senator Coburn. All right. I have some questions for Mr. 
Powell, but I think I will just submit them to the record so we 
can speed this up, if we can.
    Chairman Landrieu. Thank you very much. Senator Stevens.

              OPENING STATEMENT OF SENATOR STEVENS

    Senator Stevens. Thank you very much, and I am sorry to be 
late, Madam Chairman. We had a distinguished visitor from 
China, Madam Wu, and I was with the leaders with her.
    I am a little bit confused about one thing. Are these 
estimates, the 132,000, the 123,000, the 106,000, are they 
estimates of the homes that have been damaged?
    Mr. Kopplin. The 123,000 homes were estimates based on 
FEMA, based on satellite. Now our projections are based in part 
on 96,000 actual home inspections by a trained home inspector 
for the program. So we think that those particular data sets 
are quite a bit better than what was used in the negotiations 
last February with Mr. Powell.
    I would just point out that Mr. Leger behind me had 7-foot 
on satellite----
    Senator Stevens. I have only a short period of time. Just 
please answer the question?
    Mr. Kopplin. Yes, sir.
    Senator Stevens. We had terrible disasters up our way, the 
largest earthquake on the North American continent. We had 
enormous floods and fires. When we make estimates of the homes 
that have been destroyed and businesses destroyed, but then 
when we come to the program we find that a lot of people have 
packed up and gone and they are not coming back.
    Now, have you found out how many of those homeowners or 
previous occupants want them rebuilt?
    Mr. Kopplin. A significant number, and you will hear from 
some----
    Senator Stevens. Have you found out how many? Do you have 
applicants for these?
    Mr. Kopplin. In the program, about 85 percent--and the 
program staff can get this specifically. But about 85 percent 
are taking Option 1, which is to repair or rebuild their house 
in Louisiana--Option 1 or 2.
    Senator Stevens. Documents have been filed with you?
    Mr. Kopplin. Yes, sir.
    Senator Stevens. Not estimates.
    Mr. Kopplin. That is actual documents filed, yes, sir.
    Senator Stevens. That is pretty high compared to some of 
our disasters, because people, when they have gone through 
really bad disasters, they decide to move somewhere else, and 
they are not coming back. I understand the Governor's Road Home 
Program, but have you actually contacted people who moved 
somewhere else and said, ``Are you coming back?'' Do you know 
how many are actually coming back?
    Mr. Kopplin. Well, I think the best data we have are actual 
Road Home applications where they have signed up and said, ``I 
am choosing to repair my house in Louisiana.'' I think the 
number is 80 to 85 percent of the folks have chosen that Option 
1.
    Senator Stevens. Of which number: 132, 123, or 106?
    Mr. Kopplin. I think it is--none of the above. It is of 
actual applicants who have selected their option for us, and I 
think that number is something on the order of 45,000 right now 
have filed.
    Senator Stevens. Well, that is what I am getting at. We are 
not at a numbers crunch yet. We are at a numbers crunch because 
of your estimates of how much it is going to cost to do them 
all, right?
    Mr. Kopplin. Right.
    Senator Stevens. What is your plan right now of how much 
money you need in this fiscal year?
    Mr. Kopplin. We believe that about $750 million to $1 
billion per month will be awarded going forward over the next 6 
or 7 months to meet the current level of applicants that we 
have got.
    Senator Stevens. But you have got that money, right? You do 
not need any help with that. You have got that, right?
    Mr. Kopplin. We have got $6.3 billion of CDBG allocated to 
it. We have got $1.2 billion from FEMA that we cannot use yet 
because they have not approved it. And with those two, that is 
a $7.5 billion budget. We have got an estimated projected 
program cost of $10.4 billion, so we are short right now $2.9 
billion, without reallocating other money in the CDBG----
    Senator Stevens. How can that be? We covered the estimate 
of 106,000.
    Mr. Kopplin. You covered the estimate for 106,000, and we 
designed a program to cover--with lower grants than were 
initially decided, to cover the wind damage that Mr. Powell 
would not agree to fund. But the FEMA estimates from back in 
February are low in terms of the number of houses who had major 
and severe damage and low in terms of the damage per house.
    Senator Stevens. How many did they estimate back then that 
people would actually seek a replacement or repair?
    Mr. Kopplin. I am sorry?
    Senator Stevens. How many did FEMA actually estimate would 
seek repair? How many homeowners did they----
    Mr. Kopplin. We estimated that 95 percent of eligible 
applicants would participate in the program, so about a hundred 
and----
    Senator Stevens. I am not talking about eligible 
applicants. I am talking about people who were in those homes 
before the incident. How many of them were going to come back? 
You said 85 percent, right?
    Mr. Kopplin. We estimated that 85 percent, approximately, 
are choosing the repair or rebuild option.
    Senator Stevens. That is of applicants. Now, we are still 
missing each other. I am trying to compare the number of people 
that are making application to those that were there before the 
incident. All right?
    Mr. Kopplin. And I believe, Senator, that it is 
approximately 85 percent. Whether it is the people who have 
filed so far or the people who have applied so far, we will 
still hit about that 85 percent. It has been consistent with 
every measure so far.
    Chairman Landrieu. People that were there before.
    Senator Stevens. If that is the case, why are you short of 
money now?
    Mr. Kopplin. Because the program criteria was that you had 
to have major or severe damage as estimated by FEMA, and it 
turns out that the 123,000 major or severe damaged houses that 
we used as the baseline at Mr. Powell's request, because it was 
the best data we had at the time, is short by about 20,000 
houses in Louisiana, and the average level of damage is 
significantly higher than those FEMA estimates projected. We 
have about 70 percent severe damage in reality, whereas FEMA 
projected 52 percent severe damage.
    Senator Stevens. Well, I said when I went down there right 
after the incident--that I have seen World War II, I have seen 
a lot of damage in my day. I have seen damage from our 
earthquakes and fires. I have never seen anything like this 
one.
    But, on the other hand, I also saw block after block after 
block totally destroyed, and those people are somewhere else 
now. Are you telling us you believe 85 percent of those people 
are going to come back?
    Mr. Kopplin. They are going to come back and repair their 
houses, and you will hear from some of them this afternoon who 
are fighting to do that.
    Senator Stevens. There is nothing to repair. What I saw, 
there was nothing to repair.
    Chairman Landrieu. But rebuild.
    Mr. Kopplin. Well, they can rebuild them. The grants cover 
rebuilding as well, and in many cases, that is a better option.
    Senator Stevens. How many have you actually rebuilt so far?
    Mr. Kopplin. Twenty thousand grants at the end of today 
will have been distributed.
    Chairman Landrieu. But rebuilt houses, Mr. Kopplin, do we 
know how many----
    Senator Stevens. How many have actually been rebuilt?
    Mr. Kopplin. Thousands have been rebuilt, Senator, but I do 
not have a number on that because our program is designed to 
give the resources that the individual needs to repair or 
rebuild their houses. A requirement that they sign and obligate 
themselves to committing to do that repair. But in terms of how 
much progress that they have made, I do not have a specific 
number on that at this time.
    Senator Stevens. I am running over. I am sorry.
    Chairman Landrieu. No. Go right ahead.
    Senator Stevens. Is it possible for a person to go and get 
the money to rebuild and rebuild it and then get repaid from 
your program?
    Mr. Kopplin. Yes. That is, in fact----
    Senator Stevens. How many have done that?
    Mr. Kopplin. Thousands, Senator. I do not know the specific 
number, but you can travel through New Orleans and the 
surrounding areas. Lots of folks have done those repairs, and 
we wanted to make sure that pioneers who got it done, got it 
done.
    Senator Stevens. Are you holding up anything now waiting 
for more money?
    Mr. Kopplin. No, sir. The only thing that is on hold right 
now is elevations, because first we had to resolve a FEMA and a 
HUD elevation issue that Mr. Powell alluded to. And now, 
because the HMGP money has not been approved yet, we are 
evaluating, given this budget shortfall, whether those funds 
are going to have to be transferred to run a local elevation 
program, which would be very time-consuming and difficult for 
homeowners, which we do not want to have happen, which is why 
it is so important that this HMGP money be approved for 
Louisiana.
    Senator Stevens. By elevation, you have got to build so far 
off the ground? Is that what you are talking about?
    Mr. Kopplin. Yes, sir.
    Senator Stevens. Thank you very much.
    Mr. Powell. May I make a couple of comments?
    Chairman Landrieu. Mr. Powell.
    Mr. Powell. Directly to Senator Stevens' questions. This is 
according to the U.S. Postal Service. Of all the flood-damaged 
areas, there is a 68-percent vacancy rate. Of the wind-damaged 
areas, there is a 4-percent vacancy rate. Furthermore, in fact, 
just the flood-damaged areas, using the current projections we 
have now, if we just funded that, there would be approximately 
a $600 million surplus.
    Chairman Landrieu. A $600 million surplus of what?
    Mr. Powell. Of money.
    Chairman Landrieu. In the CDBG for Louisiana?
    Mr. Powell. Yes, ma'am.
    Chairman Landrieu. OK. Let us get back to that. I have been 
joined--Senator, I am sorry. Are you finished?
    Senator Stevens. Yes.
    Chairman Landrieu. Senator Pryor from Arkansas has joined 
us. Thank you, Senator, very much. I do not know if you have 
any questions, but if you do, it would be your time. Or I can 
come back to you later.

               OPENING STATEMENT OF SENATOR PRYOR

    Senator Pryor. No, I do not have any questions, but I do 
want to thank you for holding this hearing. It is very 
important. I am sorry. I have been in a markup in the Armed 
Services Committee since about 10 o'clock this morning, and it 
is still going on. But, Senator Landrieu, I want to thank you 
publicly for your work, and I want all the folks here to know, 
especially the people from Louisiana, and really all over the 
country, that Senator Mary Landrieu works every single day on 
trying to rebuild her State after those hurricanes. And she has 
done a fantastic job, and if I can speak candidly, she wears us 
out every day trying to help her State. We appreciate it.
    Chairman Landrieu. Well, I thank you, Senator Pryor. If we 
could just get some numbers straight, we might be able to get 
this job moving. But thank you very much.
    I would like to get back to what Senator Stevens said, and 
then we have got to move on to our next panel, because we have 
two other panels. But let me ask you this, Mr. Powell, trying 
to get some of these numbers. You are aware of the total amount 
of money that Mississippi received in community development 
block grants. What is that total? Is it $5.5 billion?
    Mr. Powell. Five-point-five billion dollars.
    Chairman Landrieu. If the State of Mississippi based on 
their accurate numbers today uses the money to fund homeowners, 
owner-occupied, at just flood, how much will that be? And what 
will they have left? And I would like that data right now if 
somebody on your staff has it.
    Mr. Powell. They have two----
    Chairman Landrieu. Hold on. I just want to say if they took 
their $5.5 billion and gave everybody in Mississippi with 
severe damage for flood only up to the $150,000 maximum, 
reduced by insurance, etc., how much would that cost? Does 
anybody on your staff know that?
    Mr. Powell. We can get that for you, Senator. They have two 
programs. Their eligibility requirements, they have no wind 
reimbursement.
    Chairman Landrieu. Correct. That is what I am saying. Just 
flood.
    Mr. Powell. It is homeowners only, and if you did not have 
insurance----
    Chairman Landrieu. And there is no rental, no wind, only 
flood.
    Mr. Powell. That is right. We can get you those numbers. 
Then they have a second program that will address senior 
citizens and also income.
    Chairman Landrieu. But the reason that is important to 
know, because we have to----
    Mr. Powell. We can get that for you.
    Chairman Landrieu [continuing]. Get down to apples and 
apples and oranges and oranges, is because----
    Mr. Powell. We can get that for you.
    Chairman Landrieu. Right. If we gave Mississippi $5.5 
billion and they are just going to do flood, and that costs, 
let's say, $2 billion, they are going to have a $3.4 billion 
surplus, and Senator Coburn is looking for some surplus money 
right now. And so we have to figure out where there might be 
some real surpluses that we could get to apply to shortfalls 
elsewhere.
    So I am going to press hard on that number.
    Mr. Powell. We can get it for you.
    Chairman Landrieu. And then we are going to take it to when 
and where was wind decided to be excluded. I have not talked to 
my Mississippi counterparts. They may not be aware that wind is 
not being covered. There is a huge debate in Mississippi right 
now among insurances, whether it is wind or flood. They may be 
surprised----
    Mr. Powell. Storm surge.
    Chairman Landrieu [continuing]. To know that we are not 
even going to attempt to cover some wind damage here. I do not 
know. And then, finally, the question would be if the flood in 
Mississippi only costs $2 billion and they got $5.5 billion, 
what else are they able to use their money for that maybe 
Louisiana or Texas or Alabama does not seem to have the option?
    Let me end this panel, if I could. I thank you all. 
Obviously, we have just begun, but I urge you to continue to 
work together to see if we can get this program moving and 
dollars found. Thank you.
    Would the next panel of homeowners come forward?
    [Pause.]
    Chairman Landrieu. Thank you all very much.
    Our next panel will consist of five citizens from the State 
of Louisiana. All of them will share their experiences with the 
Road Home Program that, as you all can imagine, has been 
difficult and caused many anxieties. They are applicants who 
have received their checks and are here prepared to talk about 
how that process worked.
    I would like to begin, if I could, with Tommy Tee Thomas, a 
resident of the Lower 9th Ward.
    Then we will hear from Connie Uddo, a New Orleans native 
and resident of Lakeview. She has opened her home to neighbors 
and friends as a Beacon of Hope Resource Center for her 
neighborhood that was very hard hit, as was the Lower 9th Ward. 
She also provides counseling and volunteer coordination for 
others in her neighborhood, and so not only is she here to tell 
her own story, but she knows many of her neighbors.
    Our next witness is Debbie Gordon, President and Board 
Member of the Chimney Wood Homeowners' Association. She serves 
as a claims representative for the U.S. Railroad Retirement 
Board. In May, she became the senior claims representative. She 
has also worked in Houston, Texas, in the wake of Hurricane 
Katrina.
    Next we will hear from Frank Silvestri, a lifelong resident 
of New Orleans. Mr. Silvestri began working with the Citizens' 
Road Home Action Team assisting residents to understand the 
intricacies and ins and outs of this program to help them 
negotiate the best option for themselves and their family. He 
is a graduate of Tulane Law School and has worked for the past 
30 years with his firm in a general practice.
    And, finally, we have Frank Trapani, President of New 
Orleans Metropolitan Association of Realtors. Frank Trapani, 
thank you very much for joining us. The realtors have played an 
integral part in our rebuilding, and many of your members have 
given many people in the region hope that we can return and 
rebuild our communities. He has, of course, membership in many 
organizations. We thank you.
    I would like to ask you all to limit your remarks to 3 
minutes each so that we will have questions and comments. Mr. 
Thomas, you may begin.

 TESTIMONY OF WALTER THOMAS,\1\ RESIDENT, LOWER 9TH WARD, NEW 
                       ORLEANS, LOUISIANA

    Mr. Thomas. First of all, I would like to thank Senator 
Landrieu and the staff for inviting me here today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Thomas appears in the Appendix on 
page 86.
---------------------------------------------------------------------------
    My name is Walter Thomas, a/k/a Tommy Tee. I reside in the 
Lower 9th Ward, New Orleans, Louisiana. I was a victim of 
Hurricane Katrina. The community was flooded a second time when 
Hurricane Rita landfalled in New Orleans. Residents of the 
Lower 9th Ward, and my house was approximately 24 feet under 
water. The estimation from the community said it was 28 feet, 
so that is way over my house. So is that wind or water?
    In the community surrounding us, I was closer to the levee, 
the Industrial Canal where the levee was breached. That is why 
the water was so high in my area. Since then, my house had been 
demolished. I am currently residing in a FEMA handicapped 
trailer. I have been seriously ill ever since the hurricane. I 
applied for the Road Home Program in August 2006. The community 
was informed everyone had to reapply again because the initial 
applications were lost, and no further explanation was given by 
the Road Home officials.
    I reapplied in October 2006. I was never contacted to 
submit my application and ownership. And to get to the next 
phase, I took it on myself to walk into a Road Home office that 
was newly open on Willard Street in New Orleans East, and there 
the lady accepted me--I had to wait about an hour, but she took 
time. I had everything professionally prepared with the 
assistance of the Lower 9th Ward Homeowners' Association. They 
was very instrumental in helping me put everything together so 
that it can be professionally done. They did research. We took 
our time, took about 3 weeks to do everything that needed to be 
done. I commend them on doing a wonderful job.
    The lady told me that I was the first one to walk into her 
office where everything was perfect, and I felt good about 
that. I felt like I had a check on the way. I do not know when 
they came out to inspect the house, but it was completed.
    During a recent hospital stay, which I was in the hospital 
recently, I was contacted by Road Home to conclude my 
application. But I was too ill to schedule and discuss the 
procedure. Two days after coming out of surgery for stomach 
cancer and colon cancer, I was taking pain medicine every 15 to 
30 minutes. I had my cell phone on in the hospital so I could 
tell my parents--I mean my brothers and sisters where I was 
located.
    I never heard from Road Home again. I called 30 to 40 
times. Every time I called I get the same answer: ``Someone 
will get back to you.'' It never happened. I gave up. I put it 
in God's hands. I know we are a great city and we will survive. 
And that is part of the story. That is it.
    Chairman Landrieu. Thank you, Mr. Thomas. I very much 
appreciate it. Ms. Uddo.

 TESTIMONY OF CONNIE UDDO,\1\ DIRECTOR, ST. PAUL'S HOMECOMING 
 CENTER/BEACON OF HOPE RESOURCE CENTER, NEW ORLEANS, LOUISIANA

    Ms. Uddo. Thank you, Senator Landrieu. First of all, I want 
to thank you so much for putting this together because I feel 
today that we are truly at a tipping point in our recovery.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Uddo appears in the Appendix on 
page 88.
---------------------------------------------------------------------------
    Things have changed and evolved for me in my life since 
opening my home up as the Beacon of Hope. I work with the 
Episcopal Diocese of Disaster Response now, and we have a 
homecoming response/recovery center in Lakeview. Lakeview is a 
middle-class neighborhood that was flooded by the 17th Street 
Canal breach.
    I was asked to come here today as a voice of the people. I 
am in gutted homes, trailers, and storm-ravaged yards. Every 
day I see the depression and the hopelessness that has shifted 
from the storm to the despair that our residents are in due to 
the failures and the flaws of the Road Home Program. We have 
lost thousands to this program, and we really need to prevent 
losing thousands more.
    Senator, as Director of the St. Paul's Homecoming Center, 
our Lakeview Response/Recovery Center, I am the encourager, I 
am the cheerleader that keeps telling people to hang in there, 
your life will come back, it will be better, we will be a 
community again. But, I can no longer tell people that. I 
cannot look them in the eye and say that anymore. Our future is 
suddenly that bleak. This is a 911 call from me.
    I brought a stat board and I put a piece of paper up there 
for you to show--and I think this might help Senator Stevens, 
because some of the questions you were asking about that you 
might draw from this. We have highlighted in the second box 
under household summary, you see, we are supposed to be setting 
the benchmark. We are a model for recovery. We are really doing 
well in Lakeview supposedly. So 41 percent were rebuilt and 
were in the process of rebuilding. But if you look in the 
highlighted yellow box, 59 percent, 4,000 approximately, are 
demolished and trailers for sale are inactive.
    If you go down to the next box, the highlighted part, the 
total Lakeview applications for Road Home Program is 4,421. 
That is 60 percent right there are locked. Why are we inactive 
60 percent? Because we are locked up in this Road Home Program. 
Your numbers speak for themselves.
    When we broke this down, the 531 people that have received 
their money in Lakeview averages out to about 44 closings a 
month. It will take 7 years for the balance of our residents to 
get their money. My point is--and I brought pictures--can we 
live without a post office for 7 years or no grocery store? Can 
we live without a library, no public schools?
    I brought personal testimonies, and anybody in here can 
grab these before they leave. But this is the chronological 
nightmare that our residents are in in this Road Home Program. 
We are talking about shortfalls, but I am here to talk about 
the $6 billion that is there that we cannot get out. Why cannot 
our homeowners get this money? The hold-ups are just 
ridiculous.
    Now, I am working with a faith-based group, and I can tell 
you volunteers are coming in by the thousands to help us. And 
we have moved from gutting, and we are going into the 
rebuilding phase. But because people do not have the money to 
buy their sheetrock and their building materials--the Episcopal 
Diocese is now fronting homeowners money to do what this Road 
Home Program should be providing. And to me that is very sad, 
and I see it in the faith-based. They are getting discouraged 
because they feel like they are carrying the recovery on their 
backs. They have shouldered this with us. And now they are 
having to front the money. Something is just desperately wrong 
there.
    So I just wanted to share a story where a little girl came 
to volunteer with her mom from Boston. She was 9 years old. And 
she asked her mother on the third day of working in Lakeview 
with the Beacon of Hope: ``Mom, when are we going back to 
America?'' I said I was not going to do this, but it hit me 
between the eyes. And I ask you, Subcommittee Members and the 
Senators and our government: When are we coming back to 
America? We really want to rejoin the country. We are real 
American lives. We are a real American neighborhood. We want to 
be real Americans again. But it is just not happening.
    Chairman Landrieu. I thank you for that wonderful 
testimony, and that is a magnificent way to end a beautiful, 
heartfelt testimony, and that is why our Subcommittee is here, 
to see what we can do to get people back in their homes. And as 
you can see, the numbers are scrambled and jumbled. There is a 
lot of information that needs to be cleared up.
    In the next panel will be people that have the ability to 
expedite this program, and most certainly those of us up here 
can do that as well. Ms. Gordon.

    TESTIMONY OF DEBBIE GORDON,\1\ PRESIDENT, CHIMNEY WOOD 
        HOMEOWNERS' ASSOCIATION, NEW ORLEANS, LOUISIANA

    Ms. Gordon. My name is Debbie Gordon. My home is located in 
New Orleans East. Our community received up to 10 feet of 
water, in which 5 feet sat for 21 days. This was far more 
catastrophic than the hurricane itself.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Gordon appears in the Appendix on 
page 93.
---------------------------------------------------------------------------
    The administration of the Road Home is dysfunctional and 
bureaucratic. Why? Everyone knows what is needed, but 
incompetency and politics is making it difficult for the 
victims to be compensated. My personal experience with Road 
Home has been discouraging, frustrating, and stressful.
    Chairman Landrieu. You can take your time if you need to.
    Ms. Gordon. The recent announcement regarding the shortfall 
of money has created additional stress and fear. I applied for 
my grant the same day it became available on the Web. It has 
been 9 months since I started this process, and I am still 
waiting. I attended the required interview. I had all the 
documentation. I was subject to fingerprinting like we are the 
criminals.
    Again, we had to take it thinking this will all be over in 
a short time and I can get my life back. I was displaced three 
times and was dealing with the situation from afar, but I did 
my part. My home was inspected, and I thought I was on my way 
to an award letter. My application has been in the option 
letter created status since October, and as of this date I have 
never received my letter, nor do I have an appointment for any 
final closing.
    Being the president of our association, I stay informed of 
all developments and heavily involved with the constant 
changing developments. Our community of 74 homeowners is all in 
the same situation. One out of 74 homeowners has made it to the 
title company but has yet to be scheduled to sign and receive 
any money. We have 74 homes that are sitting there, and we all 
still have mortgages.
    The responsiveness to inquiries with the Road Home 
counselors is a waste of time because they do not know what is 
going on themselves. They have been trained to remain customer 
friendly and close with the script--``Remember, Louisiana wants 
you to come home''--which is a slap in the face when you cannot 
get answers. If I had to grade the responsiveness on this 
program, it would receive an ``F.''
    Expedite all awards like yesterday. Besides the Road Home 
grants, our community needs major infrastructure repairs, basic 
city services, hospitals, grocery stores, and everything that 
goes with the quality of life we had before Hurricane Katrina. 
My community had two hospitals before Hurriciane Katrina, and 
as of this date we have none. I mean zero hospitals.
    The State Government has been informed of the health crisis 
but do not seem to care. We still do not have a major grocery 
store chain and none that has committed to come back. I suggest 
local, State, and Federal stop finding ways to delay the 
process. The fraud prevention attachments with the Road Home 
grants should be added to the administrators instead of the 
citizens. We did not commit a criminal act, so why are you 
treating us like we did?
    If layers of verification are removed and you streamline 
the process, you upgrade the computer system, this can happen 
fairly quickly. And as far as Senator Coburn, who is gone, he 
wants to know why Louisiana has a surplus. It is because the 
people that are repairing have put that money back into the 
surplus. And that surplus needs to go for infrastructure. And 
to compare us to Mississippi--there is no comparison.
    I am sorry for getting emotional, but this has been an 
emotional time. I thank you for letting me come up here, and I 
hope at least I can get my application processed today. Thank 
you.
    Chairman Landrieu. Thank you, Ms. Gordon. You may very 
well, and I really appreciate it. It was tough for some of the 
homeowners to come up and to have to testify in this way, but I 
think that by getting this on the record, we will all be in a 
better position to be able to meet the needs of this program 
and to deal with it more with some more urgency. And that is 
what my hope was when we called this hearing, and your 
testimony will be very well received.
    Mr. Silvestri.

TESTIMONY OF FRANK A. SILVESTRI,\1\ CO-CHAIRMAN, CITIZENS' ROAD 
        HOME ACTION TEAM (CHAT), NEW ORLEANS, LOUISIANA

    Mr. Silvestri. Thank you, Senator Landrieu. The stories you 
have just heard from the people on the panel are unfortunately 
representative of a great many residents of the Greater New 
Orleans area. There are 120,000 people waiting for grant 
checks, and the program is running out of money. If it was not 
bad enough before, the thought that after all this time of 
waiting that they may not get their grants or their grants are 
going to be cut is eliminating what little hope people have had 
left.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Silvestri appears in the Appendix 
on page 96.
---------------------------------------------------------------------------
    Neither the State of Louisiana nor the Federal Government 
should let this happen. The people that this program was 
intended to help are hard-working, honest homeowners. They are 
determined to rebuild their lives. But they have been stretched 
to the breaking point, and their greatest enemy right now is 
time. The longer it takes, the fewer of them will come back, 
Senator Stevens. Many have come back. Many more want to return, 
but they cannot do it without the money.
    Our organization has worked with the LRA and the Office of 
Community Development and the Road Home Program to try to help 
make the program better, and we have found that the officials 
involved, despite all the mistakes that have been made and all 
of the wrong turns that have occurred, are good people who want 
to do this job. They want to do it right. They are somewhat 
hamstrung, however, by the program being stuck in the Stafford 
Act, the Federal regulations they have to comply with under HUD 
and FEMA, and policies that seem to change at the Federal level 
every other week. That makes it really hard to plan and to 
administer those funds.
    There is red tape both at the State and Federal level, and 
it needs to be eliminated. Whatever this Subcommittee could do 
to identify the red tape that could be cut out, it needs to be 
done.
    The suspicion that Louisiana is treated differently from 
other States, is borne out by the fact that unlike other 
States, we are still not given the waiver of the 10-percent 
match contribution for FEMA that was given to New York after 
September 11, 2001, and Florida after Hurricane Andrew. The 
damage estimates were wrong. FEMA was wrong. You only have to 
go to New Orleans and the area to see that. The damage was 
substantial, and it was greater than estimated. We just found 
out this week that FEMA was wrong on the damage that was 
estimated for the city.
    This Subcommittee and Congress should stand squarely behind 
the principle that no victim of this catastrophe should be left 
behind or told that a grant has to be cut because there is not 
enough money.
    It is widely held that the canal walls failed because there 
was shortsightedness in planning flood protection, that the 
Federal levees and canals were not strong enough because we cut 
corners there. Do not cut corners on the recovery. You are 
going to compound one disaster with another.
    There are 16,000 people living in FEMA trailers right now, 
and we have another hurricane season coming. Last year, an 
elderly woman that lives in a neighborhood right down the 
street from me was about to move back into her home, and she 
died because a tornado struck. And as I say, we are rapidly 
coming up on hurricane season, and we are out of time.
    Your help is urgently needed. The President said whatever 
it takes, however long it takes. The job is not finished. We 
need your help to rebuild New Orleans.
    Chairman Landrieu. Thank you. Mr. Trapani.

   TESTIMONY OF FRANK A. TRAPANI,\1\ PRESIDENT, NEW ORLEANS 
  METROPOLITAN ASSOCIATION OF REALTORS, NEW ORLEANS, LOUISIANA

    Mr. Trapani. The Metropolitan New Orleans Association of 
Realtors thanks you, Senator Landrieu, and the Subcommittee for 
continuing to focus on the challenges caused by Hurricanes 
Katrina and Rita and the levee failures. There is much to be 
learned by this disaster, and we applaud your effort and 
leadership.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Trapani appears in the Appendix 
on page 111.
---------------------------------------------------------------------------
    The second disaster that we are faced with is the 
implementation of the Road Home Program. We have heard the 
architects of the Road Home Program just this afternoon differ 
on its building, whether or not we are covering wind damage, 
flood damage, 106,000 people, 137,000 people, and people like 
Ms. Uddo and Mr. Thomas here are having difficulties relating 
to the indecision on the part of government. The problem is we 
need money. We either have money or we do not have money or we 
need to appropriate money.
    The numbers are anywhere from 3 to 4, 5 times what is 
appropriated or we have adequate funds. We are not instilling 
confidence in the people who we need to, and the President did 
say we would put them back in their homes and help repair New 
Orleans as it was prior to the hurricane.
    We need to repair the damage to people's properties that 
the failure, again--and we cannot forget--the failure of the 
levee system created.
    Due to a lack of planning, jurisdictional issues, I think 
it was politics, as someone said, we have approximately 17,000 
people have received checks and an estimation of anywhere up to 
another 120,000 people sitting and waiting for an opportunity 
to receive the monies that they feel are due them to rectify 
their housing needs.
    We are sitting here with an obvious problem, administrative 
problem. I look at the local SBA business--I look at local 
banks on a daily basis providing SBA business loans on a day-
to-day basis that take a matter of days and weeks to approve. 
Is it possible they could have been used to provide SBA 
disaster funds? This would have allowed some funds to be 
distributed throughout the Metropolitan New Orleans area and 
may have saved some of the businesses that these folks talk 
about that have gone bankrupt--the grocery store, the local 
cleaners, the drug store, any number of local businesses that 
make a community. They moved back to their respective 
neighborhoods and have to travel miles to be able to go to a 
grocery store. That is not living. That is existing. And the 
people were living in a community and happy in their community 
before the levees failed and created this problem
    We are hoping that the Congress can as a result of looking 
at this problem recognize that a comprehensive national 
disaster plan be created.
    Chairman Landrieu. If you would wrap up in 30 second.
    Mr. Trapani. I thank you all for hearing us today, and I 
just want to share with you that one other problem exists. When 
these folks rebuild their houses, there is a serious insurance 
problem out there. Rebuild the house, try to refinance it, and 
then have to try to get homeowner's as a result of a flood that 
they had nothing to do with leaves them in a situation where 
they cannot afford to insure their properties.
    I thank you all very much for taking the time to listen to 
us.
    Chairman Landrieu. Thank you very much. I have just a few 
questions, and then we are going to move to the next panel, but 
let me again thank each of you for your testimony.
    Is it true--and let me just ask you, Ms. Uddo. Is it true 
that homeowners throughout----
    Senator Stevens. Excuse me. May I ask just one question?
    Chairman Landrieu. I am sorry. Go right ahead.
    Senator Stevens. I really do have to go. I am confused 
about one thing, though. You all say you want checks given to 
the applicants. We have never given checks to the applicants. 
We have given approval to rebuild a home and drawn a check 
payable to the applicant and the builder. Now, am I hearing 
this wrong? Do you all want checks given to the applicants 
without the house being under construction?
    Mr. Thomas. No.
    Mr. Silvestri. May I say, Senator, the problem is that the 
State cannot administer the program efficiently if they are 
hamstrung by Federal regulations and by inconsistent policy at 
the Federal level.
    Senator Stevens. It is Federal money, Mr. Silvestri. So I 
do not want to hear that. You are going to have to live up to 
the same regulations we live up to in all of our emergencies 
and earthquakes and what-not, as I told you. But are you saying 
that the Federal Government should draw a check to an applicant 
before the house is even under construction?
    Chairman Landrieu. That is the way the program was 
designed.
    Mr. Silvestri. Yes.
    Chairman Landrieu. And that was the way the program was 
designed in Mississippi, I understand. But I could be wrong 
about that. But I believe that the check is a compensation 
check to homeowners with X amount of damage, and the checks go 
to the applicants. Now, that was originally done differently in 
Louisiana, but now that has changed, I believe, to reflect----
    Senator Stevens. And there is no obligation to rebuild?
    Ms. Uddo. Oh, no, there----
    Chairman Landrieu. Initially there was an obligation to 
rebuild. Ms. Uddo, why don't you respond to that, if you could.
    Ms. Uddo. You have options with Road Home. You can either 
rebuild--take your money, rebuild, or you can relocate. You can 
sell. You can turn over your right to your money to a new buyer 
if a new buyer will live there for 3 years. There are 
stipulations to that.
    So my question to you, Senator, is: How can one start 
construction if they do not have any money to start with?
    Senator Stevens. Well, you get approval for construction, 
and once you have the approval, the contractor starts building 
your house.
    Ms. Uddo. But a lot of contractors want money up front, and 
you need money--electricians want to be paid right away. I 
mean, it just does not work that way there.
    Senator Stevens. Well, I have got to tell you, the 
California earthquake, our earthquake, the enormous floods of 
the West, they have not had the delays that you have had in 
Louisiana. And I do not understand. We have all complied with 
the same Federal regulations that you have got.
    Now, I am sorry I have to go, but I do not understand the 
concept that you can draw a check to someone to rebuild a house 
or to replace a house and say they can walk off--could they go 
to Texas with the money, buy a house there?
    Ms. Uddo. No.
    Senator Stevens. How do you know?
    Chairman Landrieu. Well, not under our program initially 
designed, but under the Mississippi program, there was no 
requirement for rebuilding. And I keep bringing that up only 
because in both situations we have done some different things 
than we have done in the past, and not saying which one is 
better or worse, but that it does exist. The compensation 
program which was approved by HUD that does the CDBG 
allocation----
    Senator Stevens. Well, we had a fire that destroyed a lot 
of homes, and James Lee Witt of FEMA went up with me, and we 
reached an agreement on a policy that he put into effect that 
they could rent trailers, bring them to the place, and they 
started a self-help process, and they actually started their 
own homes that same year. And they got checks payable as they 
made progress on the home.
    But this is a different concept, and I understand that to a 
certain extent some of the problems about delay, if a person 
just comes in and says I want the money to rebuild my house 
with, there is no approval of the concept of rebuilding at all? 
I mean, I thought the money was to rebuild New Orleans.
    Chairman Landrieu. Go ahead.
    Mr. Silvestri. The program changed, and I think it was an 
effort--as it has been described to us by the LRA, it was a 
hybrid program between compensation and rebuilding. And as 
originally intended, they built in guarantees and incentives to 
encourage rebuilding. And then HUD policy changed about 2 
months ago, and they were told, it is our understanding, they 
had to issue the payments in a lump sum.
    Now, one other quick thing. What is holding up--for 
example, the $1.4 or the $1.7 billion that FEMA will not 
release, that is elevation grant money. That is money that you 
have to have to elevate before you can rebuild, and now the 
program is in a stall mode because if that money does not get 
turned loose and people cannot know whether they are going to 
get money to elevate, they cannot know whether or not they are 
going to be able to rebuild, because you have to elevate first. 
Right now the program is paralyzed or stalled because FEMA will 
not release this additional money.
    Senator Stevens. I understood elevation to be building so 
far off the ground.
    Mr. Trapani. Correct.
    Senator Stevens. Right? Is that your elevation? Go over to 
Rehoboth. They had a terrible disaster over there when the 
ocean came in and destroyed so many houses. They built the area 
below the homes, and then they built the homes above it. But 
they did not have to build one before they built the other.
    Mr. Silvestri. No, but you have to elevate before you 
rebuild. If your house is damaged, you are going to want to 
pick it up first and get the foundation under it before you 
start working on it. You do not want to fix it up and then pick 
it up and then damage it in the process of elevating it.
    Ms. Gordon. Can I say something? Senator Stevens, most of 
the people have put their roofs on, their windows, their 
siding. All the Road Home really is is a gap from what the 
insurance has not paid, and every grant that is given, we are 
required to sign agreements stating that we are going to either 
rebuild or comply with the laws that have been driven.
    Senator Stevens. I understand that now. Thank you very 
much.
    Chairman Landrieu. Thank you, Senator, for coming.
    Go ahead, Mr. Thomas.
    Mr. Thomas. They have Option 1, 2, and 3. It is so 
confusing. I understand Option 2. I own the property. Once they 
agree--once the guy called me when I was in the hospital in 
severe pain and could not even talk, he said, ``Hey, live or 
die, we are ready to settle it right now.'' I said, ``Well, my 
life is worth more than the money. I am going to live. Talk to 
you later.''
    But what happened is I selected Option 2. Option 2 states 
that after the insurance money come out, whatever is left, they 
cut a check and I give them the deeds to the property. And then 
I can go anywhere I want to go and relocate, which I will stay 
in New Orleans because we have family property. But to the end, 
I would say I could not understand the rest of it. I could not 
be where I was no way because I am right by the levee, would 
never get a permit to build there again. That is my 
understanding. You cannot meet the regulation, cannot get high 
enough, cannot get enough money, $100,000 is not going to be a 
$250,000 home. I am on a fixed income. I am hungry, broke.
    Chairman Landrieu. But you are very good in your testimony, 
Mr. Thomas, and let me----
    Mr. Thomas. And I am healthy and I am blessed.
    Chairman Landrieu. Thank you. And let me just add as we 
wrap up this panel, and I have one or two questions. I think as 
you all can sense from even Members who have been very focused 
on the situation--Senator Stevens has been down there himself. 
He has walked through several of the neighborhoods. Senator 
Coburn has come down, I think not once but twice in terms of 
hearings.
    There is still a difficulty understanding the scope of the 
disaster and the destruction of the neighborhoods, how broad it 
is. And when you ask people are they coming home, they would 
like to come home to a neighborhood. But as you said, if there 
is no store, there is no drug store, there is no library, there 
is no school, should they get their Road Home money and go live 
somewhere else in the city? Or should they take the 40-percent 
reduction and go move to Arkansas or Texas?
    These are very difficult decisions, and I think there is a 
way--obviously, there has got to be a way to make this more 
simple.
    But I want to ask for the record from homeowners, are 
homeowners--and I understand this is true, but I want you to 
say it, if it is, on the record. Are homeowners paying 
mortgages since Hurricane Katrina and Rita hit, continuing to 
pay mortgages?
    Mr. Thomas. Yes.
    Ms. Uddo. Yes.
    Chairman Landrieu. Has there been any relief given? So 
people are paying mortgages on homes that either do not exist 
and have not been livable for 18 months?
    Ms. Uddo. And you will see a lot of foreclosures. There are 
numerous foreclosures. The mortgage companies are pressing in.
    Mr. Thomas. The mortgage company waived a lot of those 
notes with no interest, ma'am. They really did.
    Ms. Uddo. Initially.
    Mr. Thomas. They waived a lot of them.
    Chairman Landrieu. You said in your case they did. In your 
case, Ms. Uddo, they did not. In your case, Ms. Gordon?
    Ms. Gordon. No, they----
    Ms. Uddo. They worked with you for a short term, most 
homeowners. They gave us all a few----
    Ms. Gordon. Three months.
    Ms. Uddo. Three months, but, now for months, for at least a 
year, people have been having to pay their mortgages. Now, the 
SBA loans that people have taken out, those are coming due now, 
so you have some cases where you have someone paying rent 
somewhere else, mortgage, plus now they are accountable for 
their SBA loan.
    Chairman Landrieu. And what is the Federal Government 
telling you about the SBA loans? Do they have to be paid back 
with your grant or not?
    Mr. Silvestri. Yes.
    Chairman Landrieu. So once you get your grant, you have to 
pay your small business loan back with the money that you got 
from the grant.
    Mr. Thomas. And that hurts.
    Ms. Gordon. I cannot answer that because I have not been 
there.
    Chairman Landrieu. Well, that is my understanding.
    Mr. Silvestri. There is a coordination of the SBA benefits. 
There was some confusion about that initially, but I think that 
has been worked out now with LRA and SBA. But, yes, some of 
the--if the homeowner knows how to do it right and they are 
getting the--I think they are getting good instruction now, 
they can maximize their recovery there Road Home and also get 
SBA. But they do have to pay a portion of the SBA back.
    Ms. Uddo. One thing I wanted you to know--and Senator 
Stevens--that third option was you can sell your property to 
the State, which is a whole other issue because now we have 
homeowners deeply concerned about what the States is going to 
do with those properties. And so we have homeowners actually 
holding up on rebuilding because they know that neighbor next 
door is selling to the State. And, that is just a whole other 
problem that is keeping people from rebuilding. So I did not 
know if you knew that.
    Chairman Landrieu. Thank you. Thank you all very much.
    Let's call the next panel. The last panel this afternoon is 
made up today of Nelson Bregon of HUD, David Maurstad of FEMA, 
Susan Elkins from the Office of Community Development, and 
Isabel Reiff from ICF International, which is the contractor. 
As you all are taking your seats, I will introduce you because 
of our time constraints.
    Nelson Bregon is Assistant Deputy Secretary for Disaster 
Policy and Response at the Department of Housing and Urban 
Development. He is responsible for oversight of the $18 billion 
in disaster grants primarily focused on long-term disaster 
recovery in the Gulf Region.
    Our next panelist is David Maurstad, Director of Mitigation 
and Administrator of FEMA. He is responsible for leading some 
of America's multihazard risk reduction programs, working to 
secure the homeland from natural hazards.
    Susan Elkins is our next panelist. She is the Executive 
Director of the Office of Community Development. She was born 
and raised in Baton Rouge, has been committed to the State of 
Louisiana throughout her career. She has been working for the 
State since 1972, and she now serves as the point person in the 
Office of Community Development that runs the program.
    And our last witness is Isabel Reiff. She is a Senior Vice 
President of ICF. She is the Chief Program Executive Officer of 
the Road Home Program.
    If we could begin, Mr. Bregon, with you, please, and if you 
would limit your testimony to 3 minutes, we are going to have 
some questions, if we could, about the panel before and the 
program status.

 TESTIMONY OF NELSON R. BREGON,\1\ ASSISTANT DEPUTY SECRETARY 
 FOR DISASTER POLICY AND RESPONSE, U.S. DEPARTMENT OF HOUSING 
                     AND URBAN DEVELOPMENT

    Mr. Bregon. Thank you, Chairman Landrieu. My name is Nelson 
Bregon. I am a Senior Executive Service career employee with 
the U.S. Department of Housing and Urban Development. I started 
my career with HUD 27 years ago under Secretary Moon Landrieu. 
I think you know who I am talking about.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Bregon appears in the Appendix on 
page 113.
---------------------------------------------------------------------------
    Chairman Landrieu. I have heard of him before.
    [Laughter.]
    Mr. Bregon. Yes. I have recently been appointed as the 
Assistant Deputy Secretary for Disaster Policy and Response by 
Secretary Alfonso Jackson to coordinate HUD's disaster response 
across the Department, with other Federal agencies, and to deal 
with any red tape that perhaps shows up as we undertake this 
great task.
    Previously, I was the General Deputy Assistant Secretary in 
the Office of Community Planning and Development, and that is 
the office responsible for the Community Development Block 
Grant Program. So I have vast experience in disaster funding. I 
worked directly with the Empire State Development Corporation 
and the Lower Manhattan Development Corporation dealing with 
the September 11 supplemental appropriation of about $3.5 
billion.
    In the past year, through the tireless efforts of State and 
local government staff in Louisiana, Mississippi, Texas, 
Alabama, and Florida, and with more than $3.1 billion expended, 
the groundwork has been laid for a sustained recovery. Yet many 
challenges remain, especially in the State of Louisiana.
    In response to the disasters, President Bush signed the 
first supplemental appropriation providing $11.5 billion on 
December 30, 2005. Within 1 month, Madam Chairman, HUD 
Secretary Jackson allocated the funds, and the State of 
Louisiana received the maximum 54 percent that we have been 
talking about.
    Last June, after the President signed the second CDBG 
supplemental providing an additional $5.2 billion, the 
Secretary once again promptly allocated these funds to the 
affected States--again providing the maximum amount allowed by 
law to the State of Louisiana. In total, HUD has allocated a 
combined $10.4 billion in supplemental CDBG funding recovery 
funds, the maximum amount allowed by the law. Today, almost $2 
billion has been expended.
    The CDBG supplemental appropriations acts passed by 
Congress were clear in their intent and extraordinary in the 
flexibility provided to the States, far beyond the traditional 
nature of such supplemental block grant funding. Congress 
directed that HUD shall, the Secretary shall waive any statute, 
any regulation with his control. There were only four 
exceptions that he could not waive. That was civil rights, fair 
housing, environmental laws, and Davis-Bacon.
    Chairman Landrieu. You have 10 seconds, please.
    Mr. Bregon. In the case of Louisiana's Road Home Program 
for homeowners, the State's action plan set aside about $6.3 
billion based on local estimates. Two factors largely 
determined the program's delivery cost. These were the 
estimated number of households and the amount per grant.
    I tell you what, Madam Chairman. I have a lot more to say, 
so why don't I stop and we will open it for questions and then 
perhaps I would be able to answer all your questions.
    Chairman Landrieu. Thank you. Mr. Maurstad.

  TESTIMONY OF DAVID I. MAURSTAD,\1\ ASSISTANT ADMINISTRATOR, 
 MITIGATION DIRECTORATE, FEDERAL EMERGENCY MANAGEMENT AGENCY, 
              U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Maurstad. Good afternoon, Chairman Landrieu and Ranking 
Member Stevens. I am David Maurstad, Assistant Administrator 
for FEMA's Mitigation Directorate. FEMA's Hazard Mitigation 
Grant Program provides States and communities with post-
disaster funds to help them implement long-term mitigation 
measures. By funding such activities, the Federal Government 
helps communities rebuild stronger and safer.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Maurstad appears in the Appendix 
on page 116.
---------------------------------------------------------------------------
    As early as the fall of 2005, Louisiana recognized 
mitigation's value and set aside $250 million in HMGP funds to 
encourage local governments to plan for and prioritize 
traditional mitigation activities such as planning, elevation, 
and acquisition. Since then, the State has invested valuable 
time trying to incorporate the bulk of their HMGP funds, over 
$1 billion, into Road Home, a State-designed program to 
compensate storm victims with HUD CDBG funds.
    Unfortunately, Louisiana did not consult FEMA while 
developing Road Home; consequently, they have encountered 
difficulties trying to combine the two programs. In August 
2006, FEMA worked with HUD and Louisiana in a flexible and 
accommodating manner, offering creative options to address 
barriers to progress. Ultimately, the State's decision to 
exempt senior citizens from a Road Home penalty, again, without 
consulting FEMA, makes their Road Home Program unworkable 
because the exemption conflicts with the Stafford Act's 
nondiscrimination in disaster assistance section, which states, 
``Relief and assistance activities shall be accomplished in an 
equitable and impartial manner, without discrimination on the 
grounds of race, color, religion, nationality, sex, age, 
disability, English proficiency, or economic status.''
    The primary goals and objectives of the two programs are 
different. The Road Home is a compensation program to 
individual homeowners; whereas, HMGP helps communities reduce 
their vulnerability to future events with Federal grants. Last 
October, Louisiana submitted a single HMGP application for over 
$1 billion to acquire properties under Road Home. The proposal 
did not indicate whether the properties met HMGP requirements, 
nor did it describe how such requirements could be met. Without 
this information and considerable legal barriers, FEMA denied 
the application.
    Madam Chairman, I would like to provide two copies of 
letters related to these matters for the hearing record.\1\
---------------------------------------------------------------------------
    \1\ The letters submitted by Mr. Maurstad appears in the Appendix 
on page 227.
---------------------------------------------------------------------------
    Community-wide mitigation educates citizens about hazards, 
motivates them to incorporate mitigation into their land-use 
decisions, and galvanizes them to reconstruct stronger. I have 
visited the Gulf Coast many times since August 2005, and I know 
the victims are frustrated, and they do not see progress. I 
have heard firsthand similar testimony as was shared by the 
previous panel.
    As a former Mayor, State Senator, and Lieutenant Governor, 
I am no stranger to the challenges that sometimes accompany 
Federal funds. My experience also makes me confident that a 
concerted Louisiana-FEMA focus on HMGP will result in effective 
mitigation activities across the State. If the Road Home and 
the HMGP operate separately, FEMA can provide the State's 
communities with the resources they need to reduce future 
property damage and loss of life during future events--our 
collective mission. With Road Home's attention to homeowners 
and HMGP's community focus, Louisiana-FEMA collaboration can 
result in a whole that is greater than the sum of its parts.
    Thank you, Madam Chairman, and I look forward to your 
questions.
    Chairman Landrieu. Thank you. Ms. Elkins.

  TESTIMONY OF SUSAN ELKINS,\2\ EXECUTIVE DIRECTOR, OFFICE OF 
           COMMUNITY DEVELOPMENT, STATE OF LOUISIANA

    Ms. Elkins. My name is Susan Elkins, and I am here today 
representing the Office of Community Development. The Office of 
Community Development is the fiscal agent responsible for 
administering the disaster relief funds provided by Congress. 
We are now in our 11th month of the program since the launch of 
the recovery program.
---------------------------------------------------------------------------
    \2\ The prepared statement of Ms. Elkins appears in the Appendix on 
page 123.
---------------------------------------------------------------------------
    As of May 23, over 139,000 applications have been received, 
115,000 appointments have been held, 60,000 benefit option 
letters have been sent to homeowners, 41,000 homeowners have 
selected their option, and we have closed 20,000 homeowners as 
of today. We have spent over $1 billion to date that has been 
paid out to homeowners. We will close 10,000 cases this month, 
and we will continue to ensure that those closings increase as 
the throughput allows.
    We have heard a lot about how slow the program is going, 
and I would like to address that.
    To determine how fast or slow the Louisiana program is 
moving, there is no precedent for this type of program. The 
only possible comparison might be how Mississippi did in the 
same amount of time after starting its program.
    Mississippi began their program in January 2006. Louisiana 
began their program in June 2006, approximately 6 months later. 
This was due to the need for the additional disaster recoveries 
that were provided by Congress in June 2006. Mississippi has 
done a fantastic job in their program.
    In the materials that we have provided, you will find a 
chart that compares activities that are common to both 
Louisiana and Mississippi programs starting from the time that 
each State selected its management contractor and tracking 
progress on a month-by-month basis.\1\ By the ninth contract 
month, Louisiana sent over 30,000 more option letters than 
Mississippi, and we closed more than 15 times the number of 
closing. In the same time frame, Mississippi received 
approximately 17,000 applications, while Louisiana had 110,000 
applications--six times more.
---------------------------------------------------------------------------
    \1\ The chart referred to appears in the Appendix on page 134.
---------------------------------------------------------------------------
    At this time I would like to offer some observations for 
you to consider in examining how you can aid the process and 
using Federal funds for future disaster recovery, and first is 
data. There is great incompatibility in the data that is 
generated and kept by individual Federal agencies, all of which 
gather information, but there are no standard conventions for 
the most basic entries like street addresses, and there is no 
standing agreements to provide that information, and it takes 
months to get that information. Much time has been wasted 
because the information needed from these agencies to make 
informed decisions was not available or reliable or usable. And 
an example is the first time we used the FEMA data, which we 
had to have for verification. We could only get a 10-percent 
match right for the verification of duplication of benefits.
    The second is redundancy. We have lost count of how many 
times the same work has been done but by different agencies. 
Here is one example: The same properties have been inspected 
four and five times--first by FEMA, then by SBA, then the 
private insurers, then the Road Home, and then the lenders. So 
homeowners are frustrated.
    There is also the duplication of benefits, which is huge. 
The Stafford Act requires us to find and quantify funds from 
other sources--including private sources--that are presumed to 
be duplications. The need to do this has slowed down the 
recovery enormously. Just try getting insurance information 
from hundreds of private insurance companies for tens of 
thousands of payments that are made each day, daily, because 
they change, from an industry that is already overwhelmed and 
they have no business incentives to provide this information to 
the State. Sometimes it would take 90 days or longer. It is a 
nightmare.
    I urge you to revisit the duplication of benefit 
provisions, particularly as they relate to private as opposed 
to Federal funds, and how they apply to loans such as those 
from SBA as opposed to grants.
    Last, but not least, the Federal regulations inhibit rapid 
response to disasters. Given time, I could recite a litany of 
examples of how these well-intended regulations--and they are 
well intended. Clearly, they are needed in normal times, but 
they hamper and hamstring recovery efforts tremendously.
    Chairman Landrieu. Can you wrap up, please?
    Ms. Elkins. The CDBG rules differ from FEMA rules, SBA 
rules. SBA rules differ from DOT rules. And that is why we are 
not able to leverage these dollars to use them in the recovery 
process. We have worked now for a year with FEMA to be able to 
use the HMGP dollars, and to date, we have not been able to use 
those.
    So I will wrap it up.
    Chairman Landrieu. Thank you, and you can submit the rest 
for the record. Finally, Ms. Reiff.

   TESTIMONY OF ISABEL REIFF,\1\ SENIOR VICE PRESIDENT, ICF 
  INTERNATIONAL, INC., AND CHIEF PROGRAM EXECUTIVE, LOUISIANA 
                       ROAD HOME PROGRAM

    Ms. Reiff. Good afternoon, Chairman Landrieu. I am Isabel 
Reiff. I am a Senior Vice President of ICF and the Chief 
Program Executive for the Louisiana Road Home Program.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Reiff appears in the Appendix on 
page 135.
---------------------------------------------------------------------------
    Before I begin, let me say that it has been a privilege to 
work on this program with the citizens of Louisiana. We take 
the responsibility very seriously to both deliver the grants to 
these individuals who have suffered so much and to do it with 
compassion. The resilience of these homeowners has been nothing 
short of inspiring, and I give you my word that we will reach 
out to each of the individuals here and to everyone else whom 
we have provided with anything less than A-plus service.
    We appreciate the opportunity to discuss the challenges and 
issues that ICF and our team face in delivering the largest 
recovery program in our Nation's history. To summarize some of 
the accomplishments, as of last night we have received, as 
Susan Elkins just said, about 139,000 applications and just 
under 108,000 homeowners have scheduled or held appointments. 
By this time next week, we will have submitted 70,000 award 
letters and we will have held more than 20,000 closings, which 
result in a commitment of $1.5 billion to homeowners. At this 
rate and with no further program changes, 90,000 eligible 
homeowner applicants will receive their Road Home funds by the 
end of this year.
    Madam Chairman, it is important to understand that this 
program has been delivered over the past 7 months in a very 
challenging post-disaster environment during which many changes 
have been made to the program, including alterations to the 
calculation of benefits, the additions of new categories of 
eligible recipients, and a revised process of establishing pre-
storm value.
    I want to be very clear when I say that we recognize that 
these changes were made in a very honest effort to improve the 
program and for the benefit of the homeowner. But the fact is 
that there has been an extraordinary number of midcourse 
corrections to the underlying delivery model of this program in 
an environment that would not tolerate an interruption in 
service. We need stability.
    From a delivery perspective, it is difficult to satisfy a 
homeowner if we cannot give them definitive information in a 
changing environment. We are very concerned about the quality 
of our customer service, and we continuously work to improve 
it. However, the program is ahead of schedule, and I am afraid 
that the accelerate pace has come with a price.
    Madam Chairman, because there is often confusion in the 
press and elsewhere about when ICF started operations in 
Louisiana under this contract, let me take a moment to provide 
some context. We signed our contract in June 2006, a full 10 
months after the hurricanes. Under the terms of the contract, 
the production phase, the actual processing of claims did not 
begin until this past October, 14 months after the hurricanes. 
So we have only been in production for 7 months, and it is in 
those 7 months that we have achieved the accomplishments that 
we have just recently referred to.
    This program has already been audited seven times by State 
and Federal authorities without major concern. We are 
comfortable with that degree of transparency. We have always 
operated that way. We have, of course, faced significant and 
unprecedented challenges. We are proud of our achievements as 
we accelerated the final stage of getting grants to the 
homeowners.
    I should point out that originally the Road Home contract 
required ICF to complete the process of closing on all of these 
transactions by the end of 2008. We now project that much of 
this work will be done and most grants awarded a full year 
earlier than the original schedule, assuming that there are no 
additional changes to the program and that there is an 
application deadline.
    We do appreciate that nothing would be fast enough for the 
thousands of homeowners anxious to return to their homes, and 
we are constantly seeking ways to accelerate our progress and 
improve our performance.
    Finally, as part of our obligation to inform the State of 
program progress and outlook, ICF has been providing weekly 
reports on Road Home progress since November.
    So, in summary, I would like to emphasize the following 
points: The Road Home Program is a recovery challenge 
unprecedented in its scope and complexity. It was designed and 
approved by the State of Louisiana, and ICF has been 
implementing this program at an accelerated pace for the past 7 
months, but only for 7 months. The program constantly evolves, 
and we have made dozens of complex changes in delivery with 
virtually no interruption in service. And despite all of these 
challenges, working together, with all programs stakeholders, I 
believe that dramatic progress has been made and most eligible 
homeowners will have been compensated by year-end, much earlier 
than required under our contract.
    I would be pleased to answer any questions that you may 
have.
    Chairman Landrieu. Well, thank you. There are going to be 
many questions. There will be many submitted to the record, 
and, of course, you all will be given a time frame to respond. 
Our time will only allow just a few questions this afternoon.
    I would like to begin with our HUD representative, if I 
could. Since HUD is in the business of providing housing--and 
this is the greatest challenge we have on the Gulf Coast, is 
getting our people back into their homes. This has been focused 
today on homeowners, but, of course, we have renters and we 
have multifamily homes. These are predominantly single detached 
homes that we are talking about. But if the 54-percent cap on 
the initial allocation between Mississippi and Louisiana had 
not been placed, has HUD yet done a calculation as to what the 
actual amount of money would be needed to cover the programs 
that have been described today? And if you have done it, give 
me what the numbers are. If you have not done it, are you able 
to do it? Because I am going to ask you to do those 
calculations?
    Mr. Bregon. Madam, again it is a matter of how do you look 
at damage and what is it that the State wants to accomplish. 
Right now, for instance, the program that has been described by 
the State is an eligible activity, whether they want to do the 
basic compensation, whether they want to do wind mitigation. 
Those are all eligible activities----
    Chairman Landrieu. With all due respect, that is very clear 
right now, what the Louisiana program is and what the 
Mississippi program is, and it is getting clearer as this 
hearing is going on. There is still a question as to whether we 
are trying to cover wind and flood. But have you done those 
calculations?
    Mr. Bregon. We do have the numbers of how many----
    Chairman Landrieu. What are they, do you know?
    Mr. Bregon [continuing]. Units are--well, they fluctuate 
between 105,000 and 150,000, which was what the chart showed 
that we had before.
    Chairman Landrieu. There is a big difference between 
105,000 and 150,000, and so what I would like to do is, without 
pressing today, I am going to submit a letter to HUD to ask the 
question: If there was no arbitrary cap placed by Congress, 
which I acknowledge was done, just looking at the program that 
has been described, up to $150,000 grant for flood only, what 
would that number be? Since you all are in the business of 
housing, I am going to ask the housing officials to give us 
that number.
    Now, Mr. Maurstad, if I could ask you, you stated in your 
testimony that the State never consulted you about the use of 
hazard mitigation grants. Could you go over that again? I do 
not know if, Ms. Elkins, you would be the appropriate one from 
the State to respond, but that is not my understanding. But if 
you could please repeat that?
    Mr. Maurstad. Yea, ma'am. When the Road Home Program was 
developed, we were not consulted as to how the Hazard 
Mitigation Grant Program would be involved in the Road Home 
Program.
    Chairman Landrieu. But was Don Powell consulted about that 
issue?
    Mr. Maurstad. That I am not sure.
    Chairman Landrieu. Was HUD consulted about that issue?
    Mr. Bregon. No, ma'am.
    Chairman Landrieu. OK. So the State arbitrarily on their 
own decided to--the hazard mitigation money, there was not 
conversation----
    Mr. Maurstad. No. In all fairness, we began working with 
the State in the fall of 2005 with the first $250 million that 
they allocated to the various parishes for traditional hazard 
mitigation work. There was a lock-in amount that was provided 
to the State that they would have approximately $1.47 billion 
available totally for hazard mitigation. As they have discussed 
in testimony today, they were looking at incorporating the 
balance of the Hazard Mitigation Grant Program into Road Home.
    Chairman Landrieu. Because they thought they would be short 
on the Road Home money and needed to use that $1.5 billion to 
reach their target number of homes covered.
    Mr. Maurstad. That very well may be the case. That is not a 
conversation that I have had with----
    Chairman Landrieu. But you all did not have that 
conversation with them at the time?
    Mr. Maurstad. No. There is--the State----
    Chairman Landrieu. So after they included that, then 
several months later you all came back and said that really 
could not be done that way.
    Mr. Maurstad. In June last year, we began discussions of 
trying to look at how we could incorporate HMGP----
    Chairman Landrieu. And we are almost in June this year, and 
that has not been resolved yet, has it?
    Mr. Maurstad. We began working with them. There was 
concern. Administrator Paulison created a separate working 
group with HUD, the State, myself. That began working in 
August. We started going through the issues until they then 
made the decision--again, without consulting with us--about the 
nondiscrimination issue.
    Chairman Landrieu. But the bottom line is that FEMA and 
Secretary--with Secretary Paulison and FEMA and the State have 
been trying to work this out for 1 year, almost 1 year, and it 
is not working out yet. Is that basically correct?
    Mr. Maurstad. We have been working on it with them trying 
to find ways to make it work for 1 year.
    Chairman Landrieu. All right. Let me ask you, Ms. Elkins, 
if I could, this chart from the Lakeview Homeowners' 
Association--I am actually going to ask either the City 
Planning Commission in the region to potentially, if they can, 
provide charts like this for all the neighborhoods, because I 
think this really kind of gets us to where we need to be. You 
all both testified that you think within a year the 
applications will be out and people will have their checks. But 
according to this one neighborhood projection, it will take 7 
years for the homeowners that have applied in Lakeview to 
receive their checks. So I am confused as to what this record 
should reflect. Do you disagree with these numbers?
    Ms. Elkins. I have not had time to look at it, but just 
glancing at it, I think what they did is they looked at the 
money from the 20 months, with the storm, and we just received 
the money. So I do not think that this is accurate. We have 
actually been in production for 7 months. We have only had a 
contract for 11 months. We had the pilot program first. So our 
goal is to move at least 10,000 each month.
    Chairman Landrieu. OK. Well, I am going to ask you, if you 
do not mind, just for this record to take this document and see 
if you could work with the Lakeview Association and upgrade it, 
and if you all could submit that for the record, because if it 
can be done for this one neighborhood, there are dozens and 
dozens of neighborhoods throughout, not just the New Orleans 
region, but St. Bernard and Cameron Parish, etc. And it will 
give people some hope as to when their applications can be 
finalized.
    One final question to the coordinator. You stated the only 
missing piece to the original contract were benchmarks for 
option letters sent to homeowners and for closings completed. 
You stated you spoke with several housing experts to determine 
what you should use as appropriate time frames for closings, 
that you looked at Mississippi's program because they contained 
similar tasks as Louisiana's. You looked at title searches 
verifications. But even as you found it difficult to find a 
precedent time frame for the completion of option letters and 
closings, why did you fail to consult with advocacy groups who 
have been working in the field with Hurricane Katrina victims 
such as some of the low-income housing organizations, lawyers' 
committees to determine a suitable time frame? Or did you 
consult with these and other groups? Ms. Reiff, this is to you.
    Ms. Reiff. The time frames for the program and for the 
contract were provided by the State of Louisiana. We do meet 
with local groups. We have a complete outreach effort. We work 
with nonprofits. We use and rely on nonprofits to reach out to 
special needs populations, to encourage them to come in and to 
provide them services. And we work often with different 
organizations to make sure that the materials we are providing 
are usable, are transparent, and are helpful. So, yes, I do 
believe we speak with a variety of groups all the time.
    Chairman Landrieu. OK. Are there any other comments that 
you would like to make for the record? I will give you each 30 
seconds before we close, if there is anything you think you 
have not answered or responded to.
    Mr. Bregon. Yes, Madam Chairman, if I may. Again, I want to 
focus on the fact that the State is the responsible agent here 
for the administration of the CDBG funds. HUD has been very 
flexible, and we have worked very closely with the State. We 
feel that the State has the capacity to run this program. They 
have been running the CDBG program at the State level for over 
20 years.
    The other thing I would like to mention is the issue of the 
environmental reviews. Our position at HUD was we advised the 
staffers that perhaps they should give the authority to the 
Secretary to waive the NEPA, the environmental requirements, 
which is one of the stumbling blocks, barriers----
    Chairman Landrieu. Was that waiver given?
    Mr. Bregon. It was not, Madam.
    Chairman Landrieu. Not given, OK.
    Mr. Bregon. That is correct.
    Chairman Landrieu. Mr. Maurstad, any closing remarks?
    Mr. Maurstad. Three very quick points.
    First of all, for the record, we want to make sure that 
there is an understanding that the numbers for the housing were 
not a FEMA estimate. FEMA provided HUD data call information 
that HUD used with a number of other pieces of information to 
come up with the housing numbers. So if we could clear that 
up----
    Chairman Landrieu. Let me try to clear that up for the 
record. So FEMA is saying do not use our numbers, use HUD 
numbers?
    Mr. Maurstad. No. They asked us for information. We 
provided that information with a series of caveats on what that 
information was used for and what that information meant. HUD 
fully understood that and used that in their overall 
calculations. But they are not strictly FEMA numbers.
    Chairman Landrieu. Because this Subcommittee is going to 
find the right numbers, who should we go to to get the real 
numbers about how many homes were severely damaged in 
Mississippi and in Louisiana? Just tell me, who should we go 
to?
    Mr. Maurstad. Well, since you have asked my opinion, it 
would seem to me that there should be a group from the LRA, 
from HUD, and from Mr. Powell's office that should sit down and 
be tasked with coming up with a set of numbers that they can 
all agree with.
    My second point would be that it is important that we 
emphasize that the critical obstacle with HMGP folding into the 
Road Home Program is the nondiscrimination section violation of 
the Stafford Act, and so we would like to be able to provide 
additional information to you on that.
    And last is to emphasize that I believe in my working with 
both the State--is that the HMGP and Road House programs can 
run parallel and meet the objectives of both. We can run the 
HMGP program outside but parallel to the Road Home Program and 
achieve what I believe the Road Home is trying to accomplish 
with the program inside Road Home.
    Chairman Landrieu. And you are testifying based on the 
current funding? You do not think this program will be short so 
they can take out the hazard mitigation and run it parallel?
    Mr. Maurstad. I have not looked at that because that is--I 
mean, our money is available to them.
    Chairman Landrieu. Correct, but you do not know if you take 
out the one--your testimony is that you do not know that if you 
take out the $1.5 billion hazard mitigation that the program 
then would have enough money to cover all the----
    Mr. Maurstad. I have not studied the overall needs of the 
Road Home program.
    Chairman Landrieu. OK. That is fine.
    All right. Ms. Elkins, any closing comments?
    Ms. Elkins. I think that there needs to be greater 
consistency in the Federal regulations, and I would like, for 
the record, to ask how long would it take to run this parallel 
program with HMGP dollars for the homeowners?
    Mr. Maurstad. Do you want me to respond, ma'am?
    Chairman Landrieu. Go ahead.
    Mr. Maurstad. We have already been working with the 
parishes on the first $250 million. We worked initially with 
the parishes to make sure that--only three parishes had local 
mitigation plans that they needed to be able to be eligible for 
the funds. We worked with them. All of the parishes and 
communities except one now have that. They are poised to be 
able to implement the Hazard Mitigation Grant Program in this 
disaster, just like Louisiana has done in previous disasters. 
This is not a new program. The State has administered this 
program in the past. They understand the rules, the 
regulations. They have done it before, and I believe we can 
work with them and do it again.
    Chairman Landrieu. OK. I thank you all very much. The time 
has come for us to conclude the hearing. Let me thank all of 
our panelists. Let me particularly thank the homeowners who 
gave such heartfelt testimony and helped us to focus on the 
importance of getting this program fixed, getting the data 
right, the numbers right, the coverage right. I do not want any 
homeowner in Louisiana or Mississippi to believe that this 
government is not going to fulfill its promises. We do not know 
at this point how exactly that will be done, but this 
Subcommittee and I believe the full Committee of Homeland 
Security and Governmental Affairs wants to make sure that this 
program works better, more completely, more quickly, and more 
efficiently to help build these communities. And we are going 
to continue to have hearings until we can figure out the 
numbers, figure out the coverage, and accelerate the help for 
the people that are depending on us to do that.
    Thank you so much.
    Mr. Bregon. Madam Chairman, if I may, I would like to 
request to include my prepared statement.
    Chairman Landrieu. Your statements will be recorded to the 
record and additional questions will be submitted by us very 
shortly.
    Thank you. The meeting is adjourned.
    [Whereupon, at 5:16 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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