    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

                   PROTECTING THE AMERICAN DREAM (PART III):
    ADVANCING AND IMPROVING THE FAIR HOUSING ACT ON THE 5-YEAR ANNIVERSARY
                              OF HURRICANE KATRINA

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

                                    HEARING

                                   BEFORE THE

                       SUBCOMMITTEE ON THE CONSTITUTION,
                       CIVIL RIGHTS, AND CIVIL LIBERTIES

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JULY 29, 2010

                                   __________

                               Serial No. 111-145

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

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                           COMMITTEE ON THE JUDICIARY

                     JOHN CONYERS, Jr., Michigan, Chairman
    HOWARD L. BERMAN, California         LAMAR SMITH, Texas
    RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr.,
    JERROLD NADLER, New York                 Wisconsin
    ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
    MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
    ZOE LOFGREN, California              BOB GOODLATTE, Virginia
    SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
    MAXINE WATERS, California            DARRELL E. ISSA, California
    WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
    STEVE COHEN, Tennessee               STEVE KING, Iowa
    HENRY C. ``HANK'' JOHNSON, Jr.,      TRENT FRANKS, Arizona
      Georgia                            LOUIE GOHMERT, Texas
    PEDRO PIERLUISI, Puerto Rico         JIM JORDAN, Ohio
    MIKE QUIGLEY, Illinois               TED POE, Texas
    JUDY CHU, California                 JASON CHAFFETZ, Utah
    TED DEUTCH, Florida                  TOM ROONEY, Florida
    LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
    TAMMY BALDWIN, Wisconsin
    CHARLES A. GONZALEZ, Texas
    ANTHONY D. WEINER, New York
    ADAM B. SCHIFF, California
    LINDA T. SANCHEZ, California
    DANIEL MAFFEI, New York
    JARED POLIS, Colorado

           Perry Apelbaum, Majority Staff Director and Chief Counsel
          Sean McLaughlin, Minority Chief of Staff and General Counsel
                                     ------

      Subcommittee on the Constitution, Civil Rights, and Civil Liberties

                       JERROLD NADLER, New York, Chairman

    MELVIN L. WATT, North Carolina       F. JAMES SENSENBRENNER, Jr.,
    ROBERT C. ``BOBBY'' SCOTT, Virginia  Wisconsin
    WILLIAM D. DELAHUNT, Massachusetts   TOM ROONEY, Florida
    HENRY C. ``HANK'' JOHNSON, Jr.,      STEVE KING, Iowa
      Georgia                            TRENT FRANKS, Arizona
    TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
    JOHN CONYERS, Jr., Michigan          JIM JORDAN, Ohio
    STEVE COHEN, Tennessee
    SHEILA JACKSON LEE, Texas
    JUDY CHU, California

                         David Lachmann, Chief of Staff

                        Paul B. Taylor, Minority Counsel

                                C O N T E N T S

                                  ----------

                                 JULY 29, 2010

                                                                       Page

                               OPENING STATEMENTS

    The Honorable Jerrold Nadler, a Representative in Congress from
      the State of New York, and Chairman, Subcommittee on the
      Constitution, Civil Rights, and Civil Liberties................     1

    The Honorable F. James Sensenbrenner, Jr., a Representative in
      Congress from the State of Wisconsin, and Ranking Member,
      Subcommittee on the Constitution, Civil Rights, and Civil
      Liberties......................................................     3

    The Honorable John Conyers, Jr., a Representative in Congress
      from the State of Michigan, Chairman, Committee on the
      Judiciary, and Member, Subcommittee on the Constitution, Civil
      Rights, and Civil Liberties....................................     4

                                   WITNESSES

    Mr. James Perry, Executive Director, Greater New Orleans Fair
      Housing Action Center
      Oral Testimony.................................................     8
      Prepared Statement.............................................    10

    Mr. Daniel M. Rothschild, Managing Director, State and Local
      Policy Project, and Director, Gulf Coast Recovery Project,
      Mercatus Center, George Mason University
      Oral Testimony.................................................    23
      Prepared Statement.............................................    26

    Mr. Reilly Morse, Co-Director of Housing Policy, Mississippi
      Center for Justice
      Oral Testimony.................................................    91
      Prepared Statement.............................................    93

    Ms. Stacy E. Seicshnaydre, William K. Christovich Associate
      Professor of Law, Tulane Law School, New Orleans, LA
      Oral Testimony.................................................   105
      Prepared Statement.............................................   108

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Prepared Statement of the Honorable F. James Sensenbrenner, Jr.,
      a Representative in Congress from the State of Wisconsin, and
      Ranking Member, Subcommittee on the Constitution, Civil Rights,
      and Civil Liberties............................................   147

    Prepared Statement of the Honorable Henry C. ``Hank'' Johnson,
      Jr., a Representative in Congress from the State of Georgia,
      and Member, Subcommittee on the Constitution, Civil Rights, and
      Civil Liberties................................................   150

    Response to Post-Hearing Questions from James Perry, Executive
      Director, Greater New Orleans Fair Housing Action Center.......   152

    Response to Post-Hearing Questions from Daniel M. Rothschild,
      Managing Director, State and Local Policy Project, and
      Director, Gulf Coast Recovery Project, Mercatus Center, George
      Mason University...............................................   156
    Response to Post-Hearing Questions from Reilly Morse, Co-Director
      of Housing Policy, Mississippi Center for Justice..............   159

    Response to Post-Hearing Questions from Stacy E. Seicshnaydre,
      William K. Christovich Associate Professor of Law, Tulane Law
      School, New Orleans, LA........................................   162

     PROTECTING THE AMERICAN DREAM (PART III): ADVANCING AND IMPROVING THE
        FAIR HOUSING ACT ON THE 5-YEAR ANNIVERSARY OF HURRICANE KATRINA

                                  ----------

                            THURSDAY, JULY 29, 2010

                  House of Representatives,
                  Subcommittee on the Constitution,
                     Civil Rights, and Civil Liberties,
                                    Committee on the Judiciary,
                                                        Washington, DC.

        The Subcommittee met, pursuant to notice, at 2:18 p.m., in
    room 2141, Rayburn House Office Building, the Honorable Jerrold
    Nadler (Chairman of the Subcommittee) presiding.
        Present: Representatives Nadler, Conyers, Sensenbrenner,
    King and Franks.
        Staff Present: (Majority) David Lachmann, Subcommittee
    Chief of Staff; Kanya Bennett, Counsel; and Paul Taylor,
    Minority Counsel.
        Mr. Nadler. This hearing of the Subcommittee on the
    Constitution, Civil Rights, and Civil Liberties will come to
    order.
        I will begin by recognizing myself for a statement. Today
    the Subcommittee on the Constitution, Civil Rights, and Civil
    Liberties holds its third in a series of hearings examining the
    Fair Housing Act. The hearing today will examine current fair
    housing issues in the context of the aftermath of Hurricanes
    Katrina and Rita.
        In the 5 years since the City of New Orleans was devastated
    by Hurricane Katrina, we have watched that city try to rebuild,
    and have had the opportunity to witness the struggles of its
    citizens as they try to rebuild their lives and communities.
    Some of the hardships were a result of a natural disaster of
    historic proportions. But as is often the case, the devastation
    wrought by natural forces was compounded by human activity.
        One important area was housing. For the displaced, whether
    homeowners or renters, discrimination made it more difficult
    for them to return to their homes and get on with their lives.
    In St. Bernard Parish, the local government engaged in a
    variety of actions to prevent African Americans from taking up
    residence. One ordinance outlawed single-family home rentals to
    anyone other than blood relatives. The parish repealed the law
    when the Greater New Orleans Fair Housing Action Center brought
    suit.
        In September 2008, the parish tried again, this time
    imposing a building moratorium on the construction of
    apartments with five or more units in response to a developer's
    proposal to build new apartment complexes with 70 percent of
    the units set aside for low-income renters. In March of last
    year, the United States District Court for the Eastern District
    of Louisiana found that, ``the parish and the council's intent
    in enacting and continuing the moratorium is and was racially
    discriminatory and, as such, defendants have violated the Fair
    Housing Act.''
        In other instances, websites with names like
    www.Katrinahousing.org allowed ads to be posted with messages
    like, ``I would love to house a single mom with one child. Not
    racist, but White only,'' or, ``Not to sound like a racist, but
    because we want to make things more understandable for our
    younger child, we would like to house White children,'' and
    ``Prefer White Catholic family, children.''
        Had these ads appeared in the newspaper, the publisher, in
    addition to the advertiser would have been found to have
    violated the Fair Housing Act. Because of a provision in the
    Communications Decency Act, these Internet publishers were
    protected.
        Post-Katrina reconstruction efforts have also used Federal
    funds in a discriminatory manner. For example the Road Home
    Program, run by the Louisiana Recovery Authority using funds
    appropriated by Congress through the Community Development
    Block Grant Disaster Recovery Grant funds and administered by
    HUD, devised a formula for determining the amount of assistance
    to homeowners that had the effect of providing smaller grants
    to homeowners in African American neighborhoods than to
    homeowners in White neighborhoods with similar homes. The
    formula devised by the Louisiana Recovery Authority in
    consultation with and with the approval of HUD provided
    homeowners with the lesser of the pre-storm value of the home
    or the cost of repairing a home. After controlling for
    conditions found in quality homes in African American
    communities were valued at much lower amounts than homes in
    White communities. The resulting disparity, especially when the
    value of the home is less than the repair costs, which do not
    vary from neighborhood to neighborhood, has had the effect of
    discriminating the allocation of the funds on the basis of
    race.
        It would be unfair to single out Louisiana and that is not
    the purpose of this hearing. Discrimination exists, and our
    prior hearings have documented that it is still all too common
    in housing rentals, sales and financing around the country.
    While the aftermath of Katrina brings many of these issues into
    higher relief, none of what happened there is by any means
    unique to that part of the country. As a result of the
    information we have gathered at these hearings, I plan to
    introduce legislation when Congress returns in September--this
    is beginning to make real that we are going to be out of here
    next week--when Congress returns in September to update the
    Fair Housing Act to address emerging issues and to ensure that
    the act provides the tools necessary to protect the right of
    every American to a decent place to live, free from
    discrimination.
        I want to note that the Fair Housing Act passed the same
    year that the distinguished Chairman of the full Committee
    joined the House of Representatives and joined the Committee.
    He has always been a vigorous champion of civil rights, and I
    look forward to working with him as we continue the efforts to
    ensure fair housing rights for all.
        I yield back the balance of my time.
        I now recognize the distinguished Ranking Member of the
    Subcommittee.
        Mr. Sensenbrenner. Thank you, Mr. Chairman.
        The purpose of this hearing is to explore potential gaps in
    the fair housing laws that some argue were exposed by events
    following the devastation caused by Hurricane Katrina in 2005.
        Whatever Congress may decide about the merits of those
    arguments, it should make such a decision having more complete
    understanding of the role dysfunctional layers of bureaucracy
    had on the availability of housing and other resources.
        Congress should also reject the use of litigation that
    relies on the Justice Department's assertion of legal theories
    but go beyond those that are authorized by statute.
        As I have mentioned in previous hearings on similar topics,
    one such theory involves what are called disparate impact
    claims. The Obama Justice Department has made it clear that it
    intends to follow the Clinton administration and file more of
    such claims. Disparate impact lawsuits challenge practices that
    lead to statistically worse results for a particular group
    relative to other groups without alleging that the practice is
    actually discriminatory in its terms, design, or application.
    That is, disparate impact lawsuits claim there is
    discrimination when there often is no discrimination at all
    under any reasonable definition of that term.
        The abuse of the disparate impact theory in courts has
    real-world consequences. There were many pressures on mortgage
    lenders to relax the standards under which loans were extended
    in the 1990's, but one factor was the Clinton administration
    Justice Department's aggressive pursuit of disparate impact
    claims in which it sought to prosecute entities whose mortgage
    lending practices did not intentionally discriminate but only
    had a disparate impact on one group or another.
        In 1998, for example, Clinton administration Housing
    Secretary Andrew Cuomo announced the results of a Federal
    lawsuit settlement in which a bank was forced to extend $2
    billion in loans to people who posed a poor credit risk.
    Secretary Cuomo even admitted during a press conference
    televised on C-SPAN that the $2.1 billion lending amount in the
    mortgages will be a higher risk, and I am sure there will be a
    higher default rate on these mortgages than on the rest of the
    portfolio, unquote.
        A leading article published in the Banking Law Journal at
    the time made it clear that lenders relying on written
    standards and criteria in making decisions as to whether to
    grant a residential mortgage loan application run the risk of
    exposure to liability under the civil rights law doctrine known
    as disparate impact analysis. Several underwriting guidelines
    that are fairly common throughout the mortgage lending industry
    are at risk of disparate impact analysis, including
    creditworthiness standards.
        These lawsuits pressured lenders to bend traditional and
    time-tested accounting rules and extend more mortgages to many
    who couldn't afford them. These relaxed lending standards are
    now widely regarded as being a prime cause of the current
    financial crisis.
        Even The Washington Post editorialized that the problem
    with the U.S. economy has been the government's failure to
    control systemic risk that the government itself helped to
    create. We are not witnesses to a crisis of the free market but
    a crisis of distorted markets. Government helped make mortgages
    a purportedly sure thing in the first place, unquote.
        As one economist wrote recently in The Wall Street Journal
    in addressing housing policy, ``political leaders must face up
    to the actual causes of the crisis, not fictitious causes that
    fit political agendas and election strategies.''
        In our efforts to enforce the Nation's housing laws, I hope
    we don't repeat past mistakes. And I look forward to all of our
    witnesses today and yield back the balance of my time.
        Mr. Nadler. I thank the gentleman.
        I now recognize for 5 minutes the distinguished Chairman of
    the full Committee.
        Mr. Conyers. Thank you, Chairman Nadler.
        And thank you, too, Jim Sensenbrenner, the former Chairman
    of the Committee. We appreciate your concern about disparate
    impact lawsuits.
        But I asked our counsel if the Chairman of the Committee
    had mentioned that, and he did not mention it one time.
    Unfortunately, I wasn't going to mention it either, until you
    mentioned it.
        And so I'm going to take another look at the case you make
    for not bringing them. Unfortunately, the Department of Justice
    is bringing those cases. The question I asked the other counsel
    here on the Committee was, were any of these kinds of suits
    brought during the previous Administration? And they're
    researching it now. So I will be happy to--the answer is no,
    that they did not.
        So in the spirit that moved our Committee yesterday to
    break the crack cocaine disparity problem, which I congratulate
    you on, I would like to join you in working on some resolution
    of this problem.
        Mr. Sensenbrenner. If the gentleman would yield?
        Mr. Conyers. Yes, sir, I will.
        Mr. Sensenbrenner. Well, I am certainly looking forward to
    what your proposal is, and we may have a counterproposal.
        Mr. Conyers. Well, I don't have any proposal. I am looking
    at it because you are complaining about it.
        Mr. Sensenbrenner. Maybe my complaint is legitimate.
        Mr. Conyers. So, returning, Mr. Chairman, and Committee, to
    my own statement, I regret that 5 years after Hurricane
    Katrina, we're still considering what went wrong. And not only
    what went wrong but what continues to go wrong.
        This isn't a historical examination. Katrina is still very
    visible, its effects. And I am looking forward to the witnesses
    enlightening us on that particular area, not just what mistakes
    were made, but what needs to be done now.
        Now we all knew that when the President told Federal
    Emergency Management Chief Michael Brown the classic phrase,
    ``Brownie, you're doing a heck of a job,'' it was the biggest
    incorrect assessment of one of his people in the Administration
    of maybe all time. The compliment would still be premature
    because 5 years later, we can't point to what's going right
    with the government's response to Katrina.
        So I commend the Committee for getting to the bottom or
    still exploring this. This may not be the last hearing, as a
    matter of fact, the way things are going.
        So the questions outstanding are, how did the government
    bungle this response to Katrina? And why does it take 5 years
    later still trying to get our acts together? There were 1,464
    deaths officially reported as a result of Hurricane Katrina,
    1,464; children left parentless, the sick without medical
    attention, the elderly without assistance, homes damaged and
    buildings destroyed.
        We hope that we will hear about the pain of displacement,
    of how this displacement was made worse because of clearly
    discriminatory behavior in violation of the Fair Housing Act,
    not just by perpetrators, citizens, but by the government
    itself. Post-Katrina year four, when FEMA ended its temporary
    housing assistance program, 3,450 households were still in need
    of long-term housing. Today, New Orleans is missing
    approximately 92,000 of its pre-Katrina residents. So I have
    asked that a study be done--a summary study was put together
    just today a few hours ago of how our former colleague, the
    Governor of Louisiana, Governor Jindal, has been handling the
    matter.
        And here's the background that I would like to lay before
    the Committee and the witnesses for their examination and
    disposition. First was his response to President Obama's Joint
    Session address to the Congress on February 24, 2009. He
    described being in the office of Sheriff Harry Lee during
    Katrina and hearing him yelling into the phone at a government
    bureaucrat who was refusing to let him send volunteer boats out
    to rescue stranded storm victims because they didn't have the
    necessary permits. Jindal said he told Lee, that's ridiculous,
    prompting Lee to tell the bureaucrat that the rescue effort
    would go ahead, and he or she could arrest both Lee and Jindal.
    But now a Jindal spokesman has admitted, in reality, Jindal was
    overheard talking about the episode to someone else by phone
    days later. Just when we were about to give him some credit, it
    turns out that it might not be deserved. I have got a Web site
    and documents for all of these examples.
        Who doesn't know that it was the Governor of Louisiana that
    rejected Federal assistance for Katrina and in the same speech
    delivered for our conservative party, the response on February
    24, 2009, to President Obama's address to a Joint Session of
    Congress? And then, as his response as spokesman, he called the
    President's economic stimulus plan irresponsible and argued
    against government intervention. He used Hurricane Katrina to
    warn against government solutions to the economic crisis. And
    here's what he said: Today in Washington, some are promising
    that government will rescue us from the economic storms raging
    about us. This is Jindal. Those of us who lived through
    Hurricane Katrina, we have our doubts.
        I will now refer to how the Governor made clear, based on
    his rejection of Federal assistance for Katrina but the
    acceptance of Federal assistance for the British Petroleum oil
    spill. On April 29, 2010, the same Governor Bobby Jindal asked
    Federal authorities to grant funding for Louisiana National
    Guard members joining the multi-agency response to the offshore
    oil spill. Here's what he said: The National Guard will provide
    security, medical capabilities, engineers and communication
    support in response to this threat.
        I only have a few more comments about the Governor of this
    State, currently the Governor. Governor Jindal vetoed a bill
    that both Houses of Louisiana's legislature unanimously passed
    which would have created a statewide federally funded agency to
    address homelessness. Governor Jindal rejected a nearly $100
    million unemployment insurance funding from the Federal
    Government, ruining over 25,000 unemployed residents' lives and
    prevented them from receiving unemployment compensation
    insurance.
        Governor Jindal claimed that the Federal Government is
    ``the problem'' and ``cannot be trusted,'' which I think is
    totally unhelpful when the one time he's praising the Federal
    Government, another time he's not taking Federal funds, and
    another time he's telling us how untrustworthy the same Federal
    Government that is sending him money is.
        And finally, one last point about the Governor of a State
    who knows the potential impacts of natural disasters as well as
    any, Governor Jindal mocked President Obama and his
    Administration for its funding of what he called ``something
    called volcano monitoring,'' which he sees as a very bad and
    useless activity.
        And now we come to the present Administration. Public
    confidence in the Obama administration's handling of the
    British Petroleum oil spill gets him very poor ratings.
        The Obama administration enforced the July 1, 2009,
    deadline by which people were forced to leave FEMA temporary
    housing, even though it was clear that they could not afford to
    restore their homes or have the resources to find other
    housing.
        After Katrina resulted in a shortage of drywall, the
    Federal Consumer Product Safety Commission failed to prevent
    the usage in Louisiana of Chinese drywall that is known to
    cause serious health problems.
        The present Administration, in displacing these temporary
    housing residents, failed to implement the United Nations'
    guiding principles on internal displacement, namely a human
    rights policy that has for several years guided our government
    in providing temporary and permanent homes for people in
    foreign countries who become displaced by earthquakes, typhoons
    and flooding and implementing, instead, a far harsher and
    callous policy on those in his own country.
        This Administration continues the previous Administration
    of breaking international law by demolishing public housing,
    thereby preventing displaced, low-income, largely minority
    residents from returning back to New Orleans.
        And under the current Administration and during a time of
    extremely high unemployment, people who are jobless can't
    participate in the Administration's trial loan modification
    program. So there's a need for increased HUD accountability
    post-Katrina.
        Louisiana's Road Home program is stifling African American
    New Orleans homeowners' rebuilding efforts, as the African
    American Road Home participants are finding their recovery is
    limited to the depressed values of their pre-storm segregated
    housing instead of the actual cost of repair.
        So the Chairman of the Committee has raised a number of
    issues that I join in with him in raising.
        And I would like to point out that, with his approval, we
    called the Secretary of HUD, Mr. Donovan, to suggest that he
    come. He was unable to respond. His schedule wouldn't allow him
    to come. But he sent instead attorney Renae Campbell, who is
    here instead of the Secretary, and we appreciate her presence.
    She is a special assistant in his department, working on these
    kinds of matters. She is special assistant to the general
    deputy assistant secretary for the Office of Fair Housing and
    Equal Opportunity in HUD, Mr. Bryan Greene. She has been with
    HUD since 2002, and she has been in this position for a year
    and a half. I welcome her presence.
        And I thank the Chairman for his generous relinquishing of
    time for me to make this statement.
        Mr. Nadler. I thank the gentleman.
        Without objection, all Members will have 5 legislative days
    to submit opening statements for the record.
        And without objection, the Chair will be authorized to
    declare recesses of the hearing.
        We will now turn to our panel of witnesses.
        We have four witnesses. James Perry is the executive
    director of the Greater New Orleans Fair Housing Action Center.
    Mr. Perry also serves on The Board of Directors, National Fair
    Housing Alliance, the National Low-Income Housing Coalition,
    the Gulf Coast Fair Housing Center and chairs the Louisiana
    Housing Alliance's Board of Directors. He holds a bachelors
    degree in political science from the University of New Orleans
    and a J.D. from Loyola University School of Law.
        Daniel Rothschild is the managing director of the Mercatus
    Center's State and Local Policy Project, where he coordinates
    Mercatus research on State and local economic policy and
    directs the Gulf Coast Recovery Project, previously managing
    international economic development programs at the Mercatus
    Center. He earned his BA in history from Grinnell, his M.A. in
    modern British history from the University of Manchester, and
    his master. in public policy from the Gerald Ford School of
    Public Policy at the University of Michigan.
        Reilly Morse is the co-director of housing policy at the
    Mississippi Center for Justice Katrina Recovery Office in
    Biloxi. Mr. Morse is a former assistant municipal judge and
    prosecutor in the City of Gulfport. He is also a member of the
    Affordable Housing Committee of the Governor's Recovery
    Commission and the Harrison County Recovery Committee. He is a
    graduate of the University of Mississippi School of Law and
    Millsaps College.
        Professor Stacy Seicshnaydre is the William Christovich
    Associate Professor of Law and director of the Civil Litigation
    Clinic at Tulane University Law School. Following law school,
    she clerked for the Honorable W. Eugene Davis of the U.S. Fifth
    Circuit Court of Appeals. In 1995, she served as the first
    executive director of the Greater New Orleans Fair Housing
    Action Center and became the organization's general counsel in
    2001. She began teaching as an adjunct faculty member at Tulane
    Law School in 1998. Ms. Seicshnaydre earned her B.A. from the
    University of Notre Dame and a law degree magna cum laude from
    Tulane.
        I am pleased to welcome all of you. Your written statements
    in their entirety will be made a part of the record. I would
    ask you to try to summarize your testimony in 5 minutes. To
    help you stay within that time, there is a timing light at the
    table. When 1 minute remains, the light will switch from green
    to yellow, and then red when 5 minutes are up.
        Before we begin, it's customary for the Committee to swear
    in its witnesses. If you would please stand and raise your
    right hand to take the oath.
        [Witnesses sworn.]
        Mr. Nadler. Let the record reflect that the witnesses
    answered in the affirmative. You may be seated.
        Mr. Nadler. I will begin by recognizing for 5 minutes Mr.
    Perry.

       TESTIMONY OF JAMES PERRY, EXECUTIVE DIRECTOR, GREATER NEW
                   ORLEANS FAIR HOUSING ACTION CENTER

        Mr. Perry. Chairman, thank you for this opportunity.
        And thank you, Representative Conyers.
        My name is James Perry, and I serve as executive director
    of the Greater New Orleans Fair Housing Action Center. In 1
    month, we will commemorate the fifth anniversary of Hurricane
    Katrina. Unfortunately, in the 5 years since Hurricane Katrina
    has hit, you will find that our recovery in New Orleans is not
    complete. And consistently, you will find that there are a few
    groups of people who have had a more difficult time in that
    process: People with disabilities, families with children, low-
    income families and people of color have had an extremely
    difficult time. Inconsistently, housing discrimination has been
    a factor, but regretfully the thing that's been different since
    Hurricane Katrina is that in addition to individual landlords
    and apartment complexes engaging in discrimination, it's been
    the acts of government entities and government bodies that's
    made it extremely difficult for people to recover.
        One specific example is the action of the Louisiana Road
    Home program. It's a program that was established to assist
    people in their recovery. When insurance companies didn't pay
    enough money to folks trying to recover, the Road Home program
    was supposed to step in and bridge the gap. We found in
    examining the Road Home program that its formula was
    discriminatory. The program made payments based on the value of
    a person's home. And so based on the historic pattern of
    segregation in the City of New Orleans, if you had two
    identical homes, one in a White neighborhood and one in an
    African American neighborhood, that sustained the exact same
    damage, the home in the White neighborhood generally got more
    money because it was worth more than the African American home.
    And so the result has been that consistently thousands and
    thousands of African American homeowners have gotten less money
    under the Louisiana Road Home program. We estimate that it is
    as many as 20,000 homeowners who have been shorted by the
    program.
        Now, of course, one of the problems is that this is a
    program that is a Louisiana State program. The State of
    Louisiana gets funding from the United States of America. In
    fact, it receives Community Development Block Grant funding.
    Under that funding formula, it's required to affirmatively
    further fair housing in its efforts, and it has failed to do
    that.
        In addition, the program is monitored and in some ways
    managed by the U.S. Department of HUD. So HUD plays a key role
    in what's happened in that program and its failure to citizens
    in the City of New Orleans.
        In addition, many folks have read about litigation in St.
    Bernard Parish that my organization is engaged in. St. Bernard
    Parish passed an ordinance that made it almost impossible for
    African American residents to live in the parish. It passed
    what was called the blood-relative ordinance and said that in
    order to rent a single-family home in the parish, you had to be
    a relative by blood to the owner of the home. St. Bernard
    Parish is a parish that is a majority White; 93 percent of the
    homes in St. Bernard Parish are owned by White homeowners. The
    result has been that it was almost impossible for Black, Latino
    and Vietnamese homeowners to find housing in St. Bernard
    Parish.
        My organization filed suit against the parish and forced
    them to overturn that ordinance. But shortly afterwards, St.
    Bernard Parish passed an additional ordinance that continued to
    make it very difficult. So over the course of the 5 years since
    Hurricane Katrina, we've been in litigation with St. Bernard
    Parish at almost every single point in an effort to ensure that
    there were equal housing opportunities. Again, this is a
    community that receives Federal funding. There's no way that
    this community should be allowed to engage in these
    discriminatory acts, particularly to make them part of the
    actual law.
        You will find in my written testimony a number of examples
    of circumstances where government entities, where State and
    local government entities have engaged in actual
    discrimination, and you will even find circumstances where the
    U.S. Department of HUD was involved or played some very
    significant role in the discriminatory activities that
    happened.
        As we approach the 5-year anniversary of Hurricane Katrina,
    there is one last opportunity for us to make sure that the Gulf
    Coast is rebuilt in an equitable fashion, but it requires a
    reconsideration of fair housing laws and a reconsideration of
    the government's commitment to the City of New Orleans.
        And so I ask the Members of this Committee to reconsider
    the Federal Fair Housing Act and to reconsider regulations
    dealing with affirmatively furthering fair housing. The true
    teeth in the affirmatively furthering fair housing provisions
    and regulations would give a real opportunity to people
    attempting to recover in New Orleans and would also be key to
    lending, fair lending and fair housing practices across the
    Nation. Thank you very much.
        [The prepared statement of Mr. Perry follows:]
                       Prepared Statement of James Perry

                                   __________

        Mr. Nadler. Thank you.
        Before we go to Mr. Rothschild, let me ask you a question
    at this point. The program you referenced a moment ago giving
    those--where you said there was discrimination based on the
    worth of the homes, were those grants or loans?
        Mr. Perry. Those were grants.
        Mr. Nadler. Those were grants. Now one might say, if it
    were a loan program, that prudence or standard lending
    practices would say you shouldn't lend to more than the value
    of the home, because the home is a collateral for the mortgage.
    So even though the repairs cost more, that's too bad because
    you are limited by the value of the home in order to recover
    the funds. But that's for a loan.
        For a grant, that logic doesn't apply.
        The question I have for you is, was any rationale ever
    offered by the State authority as to why they were doing this?
        Mr. Perry. Sure. Chairman, that's a great question. And I'd
    start by noting that you are absolutely right to note that this
    is very different from a loan program. In fact, it's more
    similar to an insurance program. And for anyone who has insured
    their own home, you know that you have a choice to get
    insurance based on the value of your home or the cost to repair
    your home, should damage happen.
        Mr. Nadler. Obviously. But did they ever express a reason
    why they were doing this?
        Mr. Perry. We are in litigation over this issue right now,
    and Judge Kennedy, the gentleman who is considering the case,
    said in his ruling so far that there has been offered no
    reason--no reasonable reason for not--for engaging in this
    formula that had this discriminatory impact.
        Mr. Nadler. Thank you. I'm sorry.
        Mr. Rothschild is recognized.

    TESTIMONY OF DANIEL M. ROTHSCHILD, MANAGING DIRECTOR, STATE AND
        LOCAL POLICY PROJECT, AND DIRECTOR, GULF COAST RECOVERY
           PROJECT, MERCATUS CENTER, GEORGE MASON UNIVERSITY

        Mr. Rothschild. Chairman Nadler, Ranking Member
    Sensenbrenner, thank you for the opportunity to discuss the
    important issue of housing in the Gulf Coast area after
    Hurricane Katrina and lessons about how we can apply this to
    future disaster response. I commend the Subcommittee for
    keeping the spotlight on this issue almost 5 years after the
    hurricane.
        Let me start off by explaining my background on the
    subject. I am not a legal scholar but rather a field researcher
    who has spent much of the past 5 years learning about the Gulf
    Coast's recovery after Hurricane Katrina. I serve as the
    director of the Gulf Coast Recovery Project at the Mercatus
    Center at George Mason University, a university-based research
    group focused on the economics of public policy issues.
        I am part of a team that has conducted over 450 hours of
    interviews with nonprofit leaders, social and economic
    entrepreneurs, public officials, clergy, community leaders, and
    everyday citizens in Louisiana and Mississippi, who are working
    hard to rebuild their lives, businesses, schools and
    communities after Katrina.
        The important questions to ask are, what worked after
    Hurricane Katrina? What didn't work? And what can public policy
    improve?
        I would like to first address what did work with regard to
    housing and neighborhood redevelopment after Katrina and then
    discuss what failed. Our research is described in much greater
    depth in the written statement I have provided to the
    Subcommittee.
        Virtually every success related to rebuilding housing has
    stemmed from the resilience and hard work of the communities
    affected by Katrina, each in a different way. To give just a
    few examples, the Broadmoor Improvement Association partnered
    with universities and businesses to bring expertise and funds
    to the community, leading to over two-thirds of the
    neighborhood's homes being rebuilt or under repair 2 years
    after Katrina.
        In New Orleans East, the Mary Queen of a Vietnam Catholic
    Church, served as a rallying point for the Vietnamese American
    community, which rebounded quickly as a result.
        Brad Pitt's Make It Right Foundation worked with the Lower
    Ninth Ward Neighborhood Empowerment Network Association to
    rebuild that devastated community.
        Habitat for Humanity built a small neighborhood especially
    for musicians and artists, and the list goes on.
        Community leaders, clergy, and social entrepreneurs have
    leveraged social capital and local knowledge to spur
    rebuilding, and over 1 million Americans have volunteered their
    time, some for weeks and some for years, to gut, fix, and
    rebuild houses one at a time.
        In short, housing has been rebuilt from the ground up.
        Public policy, however, has in many cases done more to
    impede than to promote the restoration of the Gulf Coast
    housing stock after Katrina. To take just one example, look at
    Louisiana's Road Home program. Though it was established and
    funded by the end of 2005, by January 2007, Road Home had
    written fewer than 1,000 checks to Louisiana homeowners. Two
    years after Katrina hit, only 23 percent of those who had
    successfully navigated a 57-step application process had
    received settlements. Because the program endeavored to operate
    not just as a disaster compensation program but also as a
    community development program, homeowners whose homes were
    damaged could not leave the State or become renters without
    significant penalties to their settlements.
        Hazard mitigation grants, which provided funds to
    homeowners to elevate their homes, were abruptly stopped in
    March 2007, when FEMA informed Louisiana that the State's
    implementation of the program failed to comply with Federal
    regulations. The program did not resume for 7 months.
        Also in March 2007, a HUD ruling made Road Home subject to
    a host of additional Federal regulations which shut down the
    program for a month so it could be redesigned.
        In short, Federal and State policies designed to rebuild
    homes sowed confusion and uncertainty, making it difficult for
    people to make informed choices about how, when, and where to
    rebuild.
        Local policy in some places aggravated this. The City of
    New Orleans undertook five different replanning processes, one
    of which suggested that whole neighborhoods, including
    Broadmoor and the Lower Ninth Ward, should not be allowed to
    rebuild. Put together, the confusion resulting from
    bureaucratic, politically-designed programs and the city
    planning mentality that viewed New Orleans as a blank slate
    contributed more than perhaps any other factors to slowing the
    rebuilding of homes and neighborhoods after Katrina.
        Three key policy principles come out of our research and
    interviews. The importance of certainty by government;
    flexibility for citizens; and simplicity in execution.
        Certainty, certainty about what economists call the rules
    of the game for rebuilding is the best way to get homeowners
    and landlords to revamp their properties, which in turn is the
    best way to increase the quantity and reduce the cost of
    housing. Unclear planning policies, confusing and contradictory
    programs and broken promises only serve to slow the process.
    Government must provide citizens with, for example, accurate
    flood maps and information about public services and not change
    these rules of the game.
        My second point is flexibility. Flexibility means that
    citizens can adapt and make choices that work for them within a
    set of rules that do not change. Allowing people in communities
    to figure out their own solutions to both short-term and long-
    term housing problems will unleash creativity and create
    opportunity.
        Finally, simplicity, policy goals and programs should be
    simple. Policymakers should avoid creating perverse incentives,
    such as Louisiana did when the Road Home program effectively
    penalized people for having carried homeowner and flood
    insurance. Establish concrete and simple policy goals and
    execute them to the simplest means possible.
        To conclude, certainty, flexibility, and simplicity should
    be the bedrock principles of postdisaster housing policy. I
    thank you for your time and look forward to taking your
    questions.
        [The prepared statement of Mr. Rothschild follows:]
                   Prepared Statement of Daniel M. Rothschild

                                   __________
        Mr. Nadler. I thank you. And I will now recognize Mr.
    Morse.

       TESTIMONY OF REILLY MORSE, CO-DIRECTOR OF HOUSING POLICY,
                     MISSISSIPPI CENTER FOR JUSTICE

        Mr. Morse. Thank you, Chairman Nadler, and Members of the
    Committee for inviting Mississippi Center for Justice to
    testify before your Committee.
        While this Nation has made major strides toward greater
    residential racial integration, there remains stubborn pockets
    of segregation. My home community Biloxi/Gulfport, already
    historically segregated, became more racially segregated during
    the 1990's. So, in 2005, when Hurricane Katrina devastated tens
    of thousands of homes along the coast, Mississippi faced a
    crossroads. Would we build back better than before, as the
    Governor put it? Or in fair housing terms, more integrated than
    before? Or would we restore the status quo?
        The Fair Housing Act expected HUD to use its grant-making
    power to reduce discrimination and segregation to the point
    where the supply of genuinely open housing would increase.
    Congress generously appropriated funds to Mississippi for
    disaster relief but prudently required that HUD ensure
    compliance with the Fair Housing Act, a nonwaivable
    requirement. HUD had the duty to ensure that the action plan
    submitted by Mississippi would rebuild communities in ways that
    would reduce or eliminate discrimination and segregation.
        Unfortunately, with the blessing of a HUD led by the
    previous Administration, Mississippi set itself upon an unjust
    course. Among other things, the State spent over $1 billion to
    benefit primarily wealthier insured homeowners. The State
    certified that this action met the Fair Housing Act using
    promises to update its 2004 Analysis of Impediments to Fair
    Housing and its promise to use the remaining funds to increase
    the supply of affordable housing.
        Mississippi did not keep these promises and suffered no
    consequences as a result. Its analysis of impediments was not
    updated until after it diverted almost $800 million away from
    housing programs and into business and economic development. It
    never provided required race data. And the State's record since
    the first and most generous program has been to spend less,
    later and more slowly on low-income housing.
        The second homeowner grant program, for instance, Mr.
    Chairman, capped the grant at $100,000, while the first one for
    wealthier homeowners was at $150,000. No explanation for that
    was ever given.
        Today the State is over 5,200 units short of the affordable
    housing unit forecasts it has set for itself.
        Also, Mississippi obtained waivers from HUD for the
    requirement to spend funds on lower-income residents, covering
    $4 billion out of the $5.5 billion Mississippi received. Today
    our organization estimates that well over 5,000 households
    still require assistance to repair their existing homes or
    secure permanent safe housing, and that African Americans with
    unrepaired damage outnumber Whites by two to one.
        One reason for this disparity was Mississippi's decision
    not to the provide assistance to wind-damaged homeowners.
    Several concentrated areas of unrepaired damage lay north of
    the railroad tracks, with some homes only three blocks from the
    beach. The rail bed held back the tidal surge but not the
    hurricane-force winds.
        Depending on which side of the tracks you lived, Mr.
    Chairman, you could get up to $150,000 or nothing. One of our
    clients, Ms. Chamberlain, escaped the hurricane surge during
    the storm, crossed the tracks to take refuge in a Black
    family's home. Ms. Chamberlain received a grant but not the
    woman whose wind-damaged roof sheltered her in the storm.
        South Mississippi's classic southern pattern of residential
    segregation meant that excluding wind-damaged households
    disproportionately burdened African American neighborhoods.
        Meanwhile, displaced south Mississippi renters waited for 3
    years for the State to start spending on rental programs and
    watched local government block private efforts to build
    subsidized multifamily apartments in Whiter, more affluent
    neighborhoods. Others who occupied Mississippi cottages, small,
    sturdy, modular shotgun houses to replace the infamous FEMA
    trailers saw their hopes of obtaining affordable permanent
    housing thwarted by local government prohibitions, including
    veto power extended to anyone within 160 feet of the lot.
        In both cases, HUD and State officials administering
    Federal block grant dollars had but failed to use the leverage
    of withholding other the Federal funds to municipalities for
    their refusal to affirmatively further Fair Housing, as was
    ultimately done in St. Bernard Parish, Louisiana.
        Today, however, HUD has clearly taken more seriously its
    responsibilities to deeply assess the State's use of disaster
    block grants. When Texas proposed to use Hurricane Ike funds in
    ways that would have diverted resources away from the housing
    needs of the most vulnerable storm victims, HUD stepped up.
    Assistant Secretary For Community Planning and Development,
    Mercedes Marquez, turned down Texas's proposal, perhaps a first
    in HUD's history, because Texas did not have a current Analysis
    of Impediments and because the proposal as structured would
    likely stray too far from the core emergency disaster
    assistance objectives set by Congress.
        Texas and HUD later reached an accord which, among other
    things, required an updated analysis of impediments to be
    prepared before, not after, funds were obligated and spending
    percentage targets for housing and lower-income residents.
        This laudable strengthening of commitment under the current
    HUD administrator now should be turned to the difficult
    inherited problems remaining in my home State set forth in,
    ``How Will Mississippi Turn the Corner,'' a report released
    today by my organization. Thank you very much.
        [The prepared statement of Mr. Morse follows:]
                       Prepared Statement of Reilly Morse

                                   __________

        Mr. Nadler. Thank you. We will now hear from Professor
    Seicshnaydre.

      TESTIMONY OF STACY E. SEICSHNAYDRE, WILLIAM K. CHRISTOVICH
     ASSOCIATE PROFESSOR OF LAW, TULANE LAW SCHOOL, NEW ORLEANS, LA

        Ms. Seicshnaydre. Thank you, Mr. Chairman.
        As a native New Orleanian and someone who teaches and
    practices Fair Housing around New Orleans, I have had an
    opportunity to study post-Katrina recovery through a fair
    housing lens. I have been working on a paper, a work in
    progress, that I have excerpted for the Committee, and I would
    like to spend a few moments now highlighting in my remarks the
    challenges we've faced in the rebuilding process and rebuilding
    a more inclusive New Orleans.
        New Orleans is certainly unique in its challenges, but I
    believe in studying this issue that New Orleans can illustrate
    the dynamic in which federally assisted housing programs
    operate everywhere and the way we seem destined to repeat and
    build on racial segregation in federally assisted housing
    programs in the absence of a more robust commitment to
    affirmatively furthering fair housing.
        In looking at New Orleans pre-Katrina, it was clear that we
    exceeded the poverty concentration averages when compared with
    the top 50 MSAs nationally. We had extremely high----
        Mr. Nadler. You mean the Metropolitan Statistical Area?
        Ms. Seicshnaydre. Yes. Yes, sir.
        So when you look at New Orleans in comparison to the larger
    cities in the country, our levels of poverty concentration,
    segregation were higher. And in the 1990's, whereas other
    communities were experiencing improvements with respect to
    racial segregation, New Orleans was becoming more segregated.
        I think one of the most compelling statistics is when you
    compare low-income Whites with low-income African Americans and
    consider, what are the comparative housing choices between
    those two groups? What you can find when looking at pre-Katrina
    2000 Census numbers is that, whereas African Americans are
    overwhelmingly concentrated in high-poverty neighborhoods, low-
    income Whites have access in overwhelming numbers to middle-
    class neighborhoods throughout the metropolitan area of New
    Orleans.
        So the question of whether Whites and African Americans had
    equal housing choice pre-Katrina is certainly answered in the
    negative.
        So, Katrina, of course, provided an opportunity to undo
    these patterns of racial and economic concentration and
    segregation in our housing and create a more inclusive New
    Orleans with a more regional approach to meeting the housing
    needs of families of all incomes. And the reason we had this
    opportunity was that our housing was destroyed, over 200,000
    units were destroyed, and we had a massive infusion of Federal
    dollars coming into our community to help us rebuild.
        So did we embrace this opportunity to approach the
    rebuilding effort from a more regional perspective and a more
    conclusive perspective? Unfortunately not. And what we see is
    sort of some enduring fears, customs and market dynamics, as
    well as government failures that have operated to facilitate
    exclusion. And unless we understand these dynamics, we appear
    poised to repeat our past failures.
        What are these dynamics? We've seen a proliferation of
    rental bans, and these have been alluded to by earlier
    testimony. We have rental bans appearing throughout the metro
    area. We also have seen--and I think even more disturbingly,
    we've seen that communities that had disproportionately fewer
    rental units before the storm have taken steps to eliminate
    rental units that pre-existed the storm. So rather than using
    Katrina as an opportunity to correct historic imbalances of
    rental versus homeownership units, we're seeing communities
    take steps to exacerbate or intensify the imbalance.
        The other thing that we've seen is that communities that
    might be considered the second-rung communities on the housing
    ladder, the places where we're seeing some level of
    affordability and some level of integration, these tend to be
    the first places where federally assisted housing is proposed.
    Now St. Bernard Parish is a huge exception, because that
    community has remained racially segregated, even though it
    might have some greater levels of affordability. But we've seen
    that instead of using Federal resources to make communities
    more open, more affordable, we're seeing the resources sort of
    follow a path of least resistance and go to the communities
    that already have some level of affordability and already have
    some level of integration.
        So, in conclusion, I think New Orleans can help illustrate
    what the enduring forces of segregation are and how we need to
    better understand them and resist them, not only in New Orleans
    but nationally. And in order to do this, we need to use the
    affirmatively furthering provision of the Fair Housing Act. We
    need to define it. We need to make it enforceable by private
    parties. And HUD needs to use the affirmatively furthering
    provision to ensure that it is doing more than just providing a
    subsidy, that it's actually opening neighborhoods not already
    open, making affordable what's not already affordable, enabling
    housing subsidies to act as gateways to educational and
    employment opportunity, inform families historically excluded
    from housing markets about their choices. Any Federal housing
    interventions that are not so aimed will almost certainly
    exacerbate existing racial segregation and poverty
    concentration. Thank you.
        [The prepared statement of Ms. Seicshnaydre follows:]
                  Prepared Statement of Stacy E. Seicshnaydre

                                   __________

        Mr. Nadler. Thank you.
        I will now recognize myself for some questions.
        First Mr. Perry. In May 2008, you testified before the
    Financial Services Subcommittee on Housing that the State of
    Louisiana post-Hurricane Katrina adopted a new building code
    but removed all the provisions that would have forced
    developers to build multi-family units in a manner that was
    accessible for people with physical disabilities, closed quote.
    Is there any improvement in terms of fair housing for people
    with physical disabilities in the building code to date in
    Louisiana?
        Mr. Perry. Unfortunately, there has not been any
    improvement. My organization did a study of new construction
    shortly after that testimony. We investigated 22 new apartment
    complexes and found that every single one, 100 percent of those
    complexes, failed accessibility tests under the Federal Fair
    Housing Act.
        Mr. Nadler. And they failed the accessibility test under
    the ADA?
        Mr. Perry. Not under the ADA. Well, some of them may have
    had ADA failures, but we didn't investigate for the ADA. We
    investigated exclusively under the Fair Housing Act.
        Mr. Nadler. Now during the same testimony--well earlier,
    actually 2 months earlier, you recommended the Congress require
    municipalities to engage in specific activities that further
    fair housing. What specific activities do you suggest that we
    could require municipalities to do in order to promote fair
    housing?
        Mr. Perry. Well, the first is that if organizations or
    cities are going to get Federal funding, then they should have
    inclusionary zoning ordinances, ordinances that ensure that
    there will be some level of construction of affordable rental
    housing, and it can be properly integrated into communities.
    Second is that they should engage in education and outreach
    around Fair Housing laws. And so many communities don't do
    anything, but they should engage----
        Mr. Nadler. You are saying, in other words, as a condition
    of receipt of Federal funds, they should have to have
    inclusionary housing laws and do outreach?
        Mr. Perry. Absolutely. And last but not least, they've
    failed to engage in enforcement, of fair housing laws, and they
    should engage in enforcement or fund organizations that do
    engage in enforcement, in their communities.
        Mr. Nadler. What would your recommendation be to make them
    do that enforcement?
        Mr. Perry. Well, I think it's very simple. It's that there
    aren't regulations for the affirmatively furthering fair
    housing requirements under the fair housing laws. So if we were
    to promulgate regulations, those regulations could require them
    to do so.
        Mr. Nadler. Thank you.
        Mr. Rothschild, you have been very critical of the Federal
    Government in its role in the Gulf Coast rebuilding efforts
    post-Katrina today. You have suggested the best approach to
    rebuilding occurs by ``allowing people in communities to figure
    out their own solutions to both short-term and long-term
    housing problems.'' This approach, in your words, ``unleashes
    their creativity and allows for that pre-Katrina life
    closure.'' Where does the Federal Government fit into your
    bottom-up approach to recovery efforts, if anywhere?
        Mr. Rothschild. The Federal Government has an absolutely
    critical role to play in rebuilding and recovery after any kind
    of disaster like this, and that's through establishing and
    enforcing clear rules of the game, through which people on the
    ground can make informed intelligent decisions about how to go
    about rebuilding their communities and their homes.
        Mr. Nadler. But if we're allowing people in communities to
    figure out their own solutions to both short-term and long-term
    housing problems, how can we do that and have the Federal
    Government establish those policies as you have just suggested?
        Mr. Rothschild. I think that also goes to what I was saying
    about the importance of simplicity in programmatic goals and
    then simplicity in the execution of those goals.
        Mr. Nadler. I mean, in allowing people and communities to
    figure out their own solutions, what do you do about protecting
    people in communities where those communities engage in
    discriminatory practices? What do you do for the people who
    find themselves subjected to discriminatory ordinances and
    policies for which the Federal Fair Housing Act should serve as
    a check if you do this bottom-up development?
        Mr. Rothschild. As I mentioned at the beginning of my
    testimony, I am not a legal scholar so that's not an issue that
    I could directly address.
        Mr. Nadler. Well, but if you're talking--okay, but if
    you're talking about a bottom-up approach, it seems to me you
    have to make a recommendation in there either to say, we don't
    care about enforcing fair housing provisions, or, despite the
    bottom-up approach, this doesn't interfere with the enforcement
    of fair housing provisions if do you this and that.
        Mr. Rothschild. Again, I think the really critical thing is
    that there is certainty about the rules of the game and that
    the rules of the game are not constantly changing underneath
    people's feet as they try to rebuild. So it's important that
    the government make those clear, credible commitments
    regardless of what they are.
        Mr. Nadler. Even if they're clear Federal commitments about
    discrimination and fair housing policy, as long as they're
    there and people know what they are, then they can do the
    bottom-up?
        Mr. Rothschild. It's dangerous any time the government--
    it's dangerous to the recovery process if government makes a
    promise or makes a commitment and government doesn't follow
    through on it.
        Mr. Nadler. But if it makes a rule, you may not
    discriminate. This is what discrimination is. And that's okay?
        Mr. Rothschild. I'm sorry. Could you repeat the question?
        Mr. Nadler. If it makes a rule--because you said
    certainty--if it makes a rule, you may not discriminate in
    whatever you do, and here's how we define discrimination, then
    that's okay.
        Mr. Rothschild. It's important to follow through on the
    rules that are created, but it's also important that those
    rules be done in a way--are enacted in a way that people on the
    ground can understand and can be expected to follow.
        Mr. Nadler. Thank you.
        Mr. Morse, in a list of recommendations you've shared with
    us today, you include, quote, ``The endorsement of the
    interpretation of section 804(b), which is the prohibition of
    discrimination in sale or rental of housing under Block v.
    Frischholz.'' en banc, the Seventh Circuit found that the Fair
    Housing Act reaches a broader range of post-acquisition
    conduct, which in this case could include the condominium
    board's repeated removal of a family's mezuzah attached to the
    front door frame of that family's condo. With such a favorable
    ruling, can you discuss the need for Federal legislation that
    ensures the reach of the Fair Housing Act includes post-
    acquisition conduct? And are you aware of other conduct like
    that which occurred in the context of religious symbols that
    dwellers would be particularly vulnerable to without
    legislation?
        Mr. Morse. Well, I would say, it's a great ruling for the
    Seventh Circuit.
        Mr. Nadler. It's a great what? I'm sorry.
        Mr. Morse. I said, that's a great ruling for the Seventh
    Circuit, and it's a great ruling I think for the companion
    case, the Ninth Circuit. I don't know that--the Fifth Circuit,
    where most of us reside and work, yet have that direct
    advantage of that ruling. The problem for us is to get
    consistency and uniformity across the Nation on a specific
    ruling of that sort. So that's why we would encourage that
    legislation put that formally in place.
        Mr. Nadler. So you would encourage legislation on this?
        Mr. Morse. I would encourage you to put everything firmly
    in place explicitly, given the sometimes hostile interpretative
    approach of the courts to the Fair Housing Act.
        Mr. Nadler. I will tell you that I designed such
    legislation after that mezuzah case came down from a three-
    panel circuit--I think it was the Seventh Circuit, but then
    they reconsidered it in Block, so we put that on the side. But
    you are saying that because of the uncertainty in circuits, we
    might reconsider that?
        Mr. Morse. I would encourage you to.
        Mr. Nadler. Okay. You have discussed the NIMBY syndrome,
    Not In My Backyard. We have seen this approach taken with the
    Mississippi cottages, which were a response to the problem-
    riddled FEMA trailers that were provided to Katrina victims,
    which I know seem to be being reused now after the Gulf oil
    spill, which is incredible. But anyway, jurisdictions are now
    pursuing ordinances that would eliminate such housing and,
    again, displaced residents because they, quote, ``don't want it
    in their backyard.'' We can create laws to combat such laws,
    but in the end, when nothing has been done to educate
    individuals, families and communities as to the importance of
    having fair and inclusive housing, we will not truly bring an
    end to the NIMBY syndrome. What can be done in terms of
    education to combat the NIMBY mind-set in your opinion?
        Mr. Morse. Well, on the Gulf Coast, one of the efforts
    undertaken was something called Warm Welcome Gulf Coast, which
    humanized and personified individuals, working families, folks,
    which other residents of the Gulf Coast area could readily
    identify with and put a human face on folks who are advantaged
    by having more inclusionary zoning and more housing
    opportunity. Those sorts of things, those very public
    discussions are essential. There is essential leadership that
    needs to be expressed at the local government level and there
    has been a paucity of that. So maybe the sort of education
    efforts that Mr. Perry was referring to would also add to it.
        But I must tell you, it's a chronic problem, and it
    sometimes seems to me that it needs to have some kind of
    intervention possibility and either through threatening other
    funds available to municipalities or through some kind of
    public interest override. I have heard of such a thing in some
    cases where repeatedly multifamily rentals are vetoed in local
    government situations, and the developer in some jurisdictions
    can appeal to the courts to say, I have made every possible--I
    have met every possible requirement and this is just an
    instance of NIMBY. And if you meet a certain set of standards--
    I think that's a rule that may be in place in Massachusetts--
    some version of that sort of override has got to be available
    because there are some stubbornly recalcitrant jurisdictions
    where just education----
        Mr. Nadler. Nothing will ever work.
        Mr. Morse. Correct.
        Mr. Nadler. Thank you. Now you have also testified before
    other Committees in Congress on the serious housing barriers to
    lower-income families with limited reading, literacy or
    financial literacy abilities. Are there still requirements for
    housing assistance that make the acquisition of such assistance
    impossible or unnecessarily difficult for low-income families
    that are limited in reading or literacy or financial literacy
    skills?
        Mr. Morse. Well, last year, for example, Mississippi
    received a series of vouchers to try to help very low-income
    renters who were being pressured to leave FEMA trailers and
    MEMA cottages to access affordable rental in the area. And the
    multistep process folks had to go through to achieve
    eligibility and actually convert that voucher into a location
    was a serious problem. And in fact, the State officials, folks
    with whom we've had not an especially warm relationship,
    reached out to us and asked us to help try and increase the
    usage of those vouchers. So the answer is, yes, there is that
    sort of need. And it needs to----
        Mr. Nadler. There is what?
        Mr. Morse. There is a sort of need to provide--I would call
    it just extra strong case management and extra strong
    explanations and very careful sort of guiding people through
    some of these processes. It's even more true when folks are in
    displaced situations and their minds are distracted----
        Mr. Nadler. So, in other words, you are saying that--you
    use the phrase case management to help people through the
    bureaucracy and the forms and so forth.
        Mr. Morse. In certain cases, I do think that's an important
    part of the process. And I think that there are thousands of
    people in the Gulf region who have just walked away in futility
    and are living with other relatives just because they can't----
        Mr. Nadler. So what would you think of a provision of law
    that said that X percent of any grant had to be used by local
    government either to do it itself or to subcontract with some
    private organization to provide case management services to
    applicants?
        Mr. Morse. I think it's a worthwhile approach. But I would
    certainly encourage Congress to consider urging municipalities
    to bring in nonprofit community organizations which, generally
    speaking, have warmer, more approachable relationships with the
    disadvantaged populations you are trying to deal with. A lot of
    times just trying to do the case management through the city
    people is just reproducing the same problem over and over
    again. These folks are the same folks that can't help them in
    the first instance get through the process, so they need
    someone who can function more as an advocate, Mr. Chairman.
        Mr. Nadler. So you would say that even if the purpose of
    this division of the city government with the function of the
    advocates----
        Mr. Morse. Well, I have yet to encounter that where I live,
    sir. I have yet to encounter that kind of city government
    official where I live. So I'm unfamiliar with that.
        Mr. Nadler. Okay. Now you have previously described FEMA's
    failure to provide elderly and disabled displaced storm victims
    with suitable housing. You noted that the Federal Government
    needs to improve its performance with disability access in
    catastrophic disasters. What do you think we should do,
    Congress should do, to ensure that appropriate housing for
    elderly and disabled disaster victims is afforded properly in
    the future?
        Mr. Morse. If you are talking about postdisaster, I think
    the thing that Congress needs to do is, they need to not leave
    unfettered discretion to Governors on what to set the
    priorities at. Congress needs to be more directive in how it
    tells States to spend money. In Mississippi, it was more than 3
    years before our State started actually spending money on any
    rental program. What Congress could do is say, for particularly
    elderly disabled folks, folks who are especially vulnerable and
    do not have the ability to lift a hammer and pull themselves up
    by their bootstraps, is to say, early dollars that you spend
    need to go out to the most vulnerable populations. We figured
    the folks who got the money in Mississippi, by about a rate of
    80 percent, were relatively wealthy or insured folks, folks who
    could earn their way or borrow their way or get insurance to
    hire somebody to take care of their needs.
        Mr. Nadler. Do you think the State government and local
    government doesn't make such judgments?
        Mr. Morse. I am just saying that historically that is not
    what we have seen in either Louisiana or Mississippi. This is
    not unique to Mississippi. The thing that I am suggesting you
    do is to be more explicit and directive and formulaic in the
    way that you use these moneys.
        Mr. Nadler. We should be more explicit and formulaic in
    directing money in ways that make obvious sense, that benefit
    the most vulnerable populations, in the expectation that if we
    don't do that, the States often won't.
        Mr. Morse. Precisely. When you and other Members of
    Congress came to the coastal area, your sympathies were excited
    by elderly, disabled folks knee deep in mud. Well,
    unfortunately, since nobody put it into the law, they did not
    get the early money that you would have wished them to get. I
    am encouraging you to be more explicit about that next time
    around.
        Mr. Nadler. Thank you.
        Professor Seicshnaydre, a couple of years ago, you said
    that post-Katrina planning has resulted in two false choices
    when it comes to affordable housing options. The options are to
    either, one, keep public housing as it was before the storm,
    meaning segregated, or two, remove blight, redevelop it, and
    attract market rate tenants to reduce the number of affordable
    apartments, which I assume would mean segregated. As this
    August will mark the fifth-year anniversary of Katrina, are we
    now at a point where we have real choices when it comes to
    affordable housing options? If so, how have these housing
    options been pursued and implemented?
        Ms. Seicshnaydre. Chairman, that question runs directly
    into the discussion about the NIMBYism that I think we've all
    commented on today. And that is that, unfortunately, we've seen
    a disconnect between public housing redevelopment policy and
    policy to create more regional, inclusive approaches to
    providing affordable housing. If we're focused on tearing it
    down, but we're not focused on creating access and inclusion in
    a metropolitan area, then have we really succeeded in
    deconcentrating poverty? Though justifications for the public
    housing redevelopment programs are to deconcentrate poverty.
        Mr. Nadler. Say that again.
        Ms. Seicshnaydre. Many of the justifications fueling the
    redevelopment of public housing are based on the notion that
    public housing historically has concentrated poor people and
    has segregated them racially and economically.
        Mr. Nadler. And you are saying we shouldn't do that again,
    obviously.
        Ms. Seicshnaydre. We shouldn't do that again. But when we
    go about fixing that, we need to have a comprehensive approach
    so that we're not just tearing it down without making sure
    people have a place to go. And unfortunately, in New Orleans--
    and I don't think New Orleans is so unique to other communities
    in this respect--unfortunately, what we've seen is, we tore it
    down, but we didn't make sure that on a regional basis, we were
    ensuring that folks had a better place to go.
        Mr. Nadler. So you are saying that if you tore it down x
    units of low-income housing, you weren't making sure that in
    the reconstruction you were replacing at least x units of low-
    income housing in the region?
        Ms. Seicshnaydre. Certainly there was not one for one
    replacement and that was a matter of great concern.
        Mr. Nadler. Do you think Congress should mandate a one-for-
    one replacement?
        Ms. Seicshnaydre. I would recommend that Congress
    reconsider that and put back in a one for one replacement
    provision.
        Mr. Nadler. Back in, it used to be there?
        Ms. Seicshnaydre. Used to be.
        Mr. Nadler. When was it there?
        Ms. Seicshnaydre. I would have to--I'm not positive about
    that.
        Mr. Nadler. Are we talking ancient history or until 5 years
    ago.
        Ms. Seicshnaydre. I'm thinking maybe in the 1990's.
        Mr. Nadler. In the 1990's, such a requirement which had
    been there was removed?
        Ms. Seicshnaydre. I believe that it was eliminated, yes.
        Mr. Nadler. Whenever it was eliminated, do you know what
    was the rationale at that time?
        Ms. Seicshnaydre. Probably expense.
        Mr. Nadler. Okay. Now you have argued that a just public
    housing policy would be resident-conscious, meaning it would be
    resident-driven and focused on the residents who lived in
    public housing before the makeover. That's what we were just
    talking about in fact. Are you aware of a city, town or other
    jurisdiction that has implemented a successful resident-
    conscious public housing policy?
        Ms. Seicshnaydre. Well, unfortunately, the jurisdictions
    that have really managed to embark upon a resident-conscious
    approach are jurisdictions in which there has been litigation.
    So where housing authorities and HUD have been sued for
    historic segregation in their programs, consent decrees have
    emerged that have brought residents to the table and ensured
    that, over time, housing authorities and municipalities, you
    know, remedied historic segregation in a way that included
    residents.
        Mr. Nadler. And those policies have been implemented in
    various places?
        Ms. Seicshnaydre. Yes.
        Mr. Nadler. And how have they worked out?
        Ms. Seicshnaydre. Well I think in communities like Dallas,
    in communities where--Baltimore is still--they're still
    struggling to implement--actually, they're still negotiating a
    remedy. Chicago had the Gautreaux litigation that had a remedy
    in place for decades. Those communities are further along. I
    don't think we can say that they've managed to eliminate racial
    segregation in their metropolitan areas, but they are further
    along than certainly we are in New Orleans.
        Mr. Nadler. Okay. And finally, as we discuss these fair
    housing issues in the context of Katrina--we are all aware that
    these issues of discrimination and housing sales, rentals,
    financing occurred throughout the entire country--not in the
    exact form necessarily. But overall they necessarily do. Aside
    from re-establishing the one-for-one replacement rule, what
    recommendations would you have for Federal legislation that
    could strengthen and improve the Fair Housing Act?
        Ms. Seicshnaydre. I would strongly recommend that we look
    at the affirmatively furthering fair housing provision as kind
    of the missing link in ensuring that when we intervene in the
    housing market, when the Federal Government intervenes in the
    housing market, that it does so in a way that promotes a more
    regional approach, that it promotes inclusion, and that
    affordable housing can be provided in a way that gives people
    more housing choice and access to high-opportunity
    neighborhoods. There is some hope on the horizon. There are
    some programs in HUD's 2011 budget that give us some hope that
    we can move in a positive direction.
        But I think, with respect to Congress, the affirmatively
    furthering provision needs to be better defined. We need a
    private right of action, and we need to make sure that HUD
    actually enforces it.
        Mr. Nadler. Private right of action is very important here.
        Ms. Seicshnaydre. Yes.
        Mr. Nadler. Thank you. I thank the witnesses.
        Without objection, all Members will have 5 legislative days
    to submit to the Chair additional written questions for the
    witnesses, which we will forward and ask the witnesses to
    respond as promptly as they can so that their answers may be
    made part of the record. Without objection, all Members will
    have 5 legislative days to submit any additional materials for
    inclusion in the record. And we're thanking the Members and
    thanking the panelists and the witnesses.
        This hearing is adjourned.
        [Whereupon, at 3:33 p.m., the Subcommittee was adjourned.]
                                A P P E N D I X

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                   Material Submitted for the Hearing Record