[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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