[Senate Hearing 111-86]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 111-86
 
                   A NEW WAY HOME: FINDINGS FROM THE
                 DISASTER RECOVERY SUBCOMMITTEE SPECIAL
                    REPORT AND WORKING WITH THE NEW
                    ADMINISTRATION ON A WAY FORWARD

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

                                HEARING

                               before the

                AD HOC SUBCOMMITTEE ON DISASTER RECOVERY

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 18, 2009

                               __________

       Available via http://www.gpoaccess.gov/congress/index.html

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



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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           JOHN McCAIN, Arizona
MARK PRYOR, Arkansas                 GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri           LINDSEY GRAHAM, South Carolina
JON TESTER, Montana
ROLAND W. BURRIS, Illinois
MICHAEL F. BENNET, Colorado

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


                AD HOC SUBCOMMITTEE ON DISASTER RECOVERY

                 MARY L. LANDRIEU, Louisiana, Chairman
CLAIRE McCASKILL, Missouri           LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois
                     Donny Williams, Staff Director
                  Andy Olson, Minority Staff Director
                       Kelsey Stroud, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Landrieu.............................................     1
    Senator Graham...............................................     4

                               WITNESSES
                       Wednesday, March 18, 2009

Nancy Ward, Acting Administrator, Federal Emergency Management 
  Agency, U.S. Department of Homeland Security...................     5
Nelson R. Bregon, General Deputy Assistant Secretary, Office of 
  Community Planning and Development, U.S. Department of Housing 
  and Urban Development, accompanied by Milan Ozdinek, Deputy 
  Assistant Secretary, Office of Public Housing and Voucher 
  Programs.......................................................    10
Karen Paup, Co-Director, Texas Low Income Housing Information 
  Service........................................................    17
Krystal Williams, Executive Director, Louisiana Housing Alliance.    19
Sheila Crowley, MSW, Ph.D., President, National Low Income 
  Housing Coalition..............................................    20
Reilly Morse, Senior Attorney, Katrina Recovery Office, 
  Mississippi Center for Justice.................................    22

                     Alphabetical List of Witnesses

Bregon, Nelson R.:
    Testimony....................................................    10
    Prepared statement...........................................    36
Crowley, Sheila, Ph.D.:
    Testimony....................................................    20
    Prepared statement with attachments..........................    91
Morse, Reilly:
    Testimony....................................................    22
    Prepared statement...........................................   102
Paup, Karen:
    Testimony....................................................    17
    Prepared statement with attachments..........................    39
Ward, Nancy:
    Testimony....................................................     5
    Prepared statement...........................................    27
Williams, Krystal:
    Testimony....................................................    19
    Prepared statement...........................................    86

                                APPENDIX

Letter dated April 8, 2009 and prepared statement from Equity and 
  Inclusion Campaign Housing Working Group.......................   111
Questions and responses submitted for the Record from:
    Ms. Paup.....................................................   118
    Mr. Bregon...................................................   146
    Ms. Ward.....................................................   150


                   A NEW WAY HOME: FINDINGS FROM THE



                     DISASTER RECOVERY SUBCOMMITTEE



                  SPECIAL REPORT AND WORKING WITH THE



                  NEW ADMINISTRATION ON A WAY FORWARD

                              ----------                              


                       WEDNESDAY, MARCH 18, 2009

                                     U.S. Senate,  
              Ad Hoc Subcommittee on Disaster Recovery,    
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 3:39 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Mary 
Landrieu, Chairman of the Subcommittee, presiding.
    Present: Senators Landrieu and Graham.

             OPENING STATEMENT OF SENATOR LANDRIEU

    Senator Landrieu. The Subcommittee for Disaster Recovery 
will come to order.
    Let me begin by welcoming our witnesses, both our first 
panel and our second, and begin by apologizing for the lateness 
of the start. It was unavoidable. We had four stacked, 10-
minute votes on the floor. That was scheduled this morning. Of 
course, this hearing was scheduled weeks ago, so I really 
apologize.
    Our Ranking Member, Senator Graham, will be with us 
momentarily, and we voted as early as we could so we could get 
started.
    Let me welcome you both and because of this late start, I 
would like to do my opening statement, then recognize our 
Ranking Member. I understand, Ms. Ward, you have a plane to 
catch later to actually head down to the Gulf Coast area in 
Louisiana, so we most certainly do not want you to miss your 
plane. We are happy for the attention and focus.
    So I think what we will do is we will go right to opening 
statements, and, Mr. Bregon, if you do not mind, we will do 
questions first, and then come back to our HUD witness, and we 
will try to expedite this.
    And my Ranking Member is joining me. I just told them, 
Senator, that we were delayed unavoidably because of four 
stacked votes, and it would have been impossible for us to come 
back and forth between each one. So we made the decision 
together to start as soon as we could after the series of 
votes.
    I am going to start with an opening statement, and then we 
will go forward with this hearing.
    Today, of course, we have come to have our first hearing 
finalizing a 9-month investigation of the many problems 
associated with the Federal Government's response to the great 
housing need created by not just the storms, Hurricanes Rita 
and Katrina; not just in Louisiana, but Mississippi, to some 
degree Alabama, and Texas; but also the failed response to the 
catastrophic flooding that exacerbated an already terrible 
situation. And this is the report. I want to say that my 
Ranking Member was not the Ranking Member when this report 
started, so I want to thank him for his cooperation with this 
hearing. He, of course, has reviewed--and his staff--this 
report and will have his own comments.
    But I want to begin before my formal remarks by saying this 
is not an ``I got you'' hearing, but this is a hearing to 
suggest that there are some startling findings that have been a 
result of this report. And it is to lay the groundwork for a 
better response for the future, and that is what we remain 
hopeful for as we move forward.
    I would like to begin with one story, but this could be a 
thousand stories of people in the Gulf region who found 
themselves at their wits' end after this storm and our failed 
response. This is Dr. Catchings, a college professor from 
Biloxi, Mississippi, who wanted to rent to families who needed 
housing because of the hurricanes. She owned four rental houses 
there and rents to low-income families with children. FEMA's 
red tape stopped Dr. Catchings from renting to hurricane 
survivors she wanted to help. She accepted State loans for 
repairs she needed to do after Hurricane Katrina. Later, she 
was told that this meant she could not rent to hurricane 
survivors who were getting help from FEMA or from HUD because 
this would be what the Federal Government called ``duplication 
of benefits.'' Worse still, Dr. Catchings was originally told 
that accepting State loans would not prevent her from renting 
to hurricane survivors.
    So what was the result of the government's rule? A landlord 
who had houses before the storm, who wanted to repair them to 
put survivors in after the storm, to get people out of trailers 
and into houses, was told that this was against the rules.
    Two rental apartments sat empty, which could have been 
homes to these families who needed homes after the hurricanes. 
These letters are in the thousands. They are in Senator 
Cochran's office. They are in my office. They are in Senator 
Vitter's office, our congressional delegation.
    So, today, we only had time to tell one story, but this 
report could tell thousands of stories about the failed 
response. We need to improve.
    Hurricanes Rita and Katrina and the manmade catastrophic 
flood that followed have been well documented and were 
horrific. But it was magnified exponentially when survivors 
registered for FEMA's Disaster Housing Programs.
    Last month, the Subcommittee concluded a 9-month 
investigation into Federal Disaster Housing Programs and our 
Nation's failed response. The report details that the prior 
Administration's efforts in large measure were dysfunctional 
and wasteful. Housing response contributed actually to making 
the disaster even worse.
    In this flood, more than 1.2 million homes were damaged, 
far outstripping any disaster of its kind in recent memory. 
While the storms ravaged the Gulf Coast nearly 4 years ago, 
which will be 4 years this August, thousands remain without 
permanent housing and thousands more are still rebuilding their 
homes and are still waiting for either Federal assistance, 
State assistance, local assistance, or some nonprofit to come 
to their aid.
    This report is a comparison analysis of what went wrong. It 
is also a blueprint for how this current Administration can now 
fix the Federal response. We reviewed more than 100,000 pages 
of documents. The staff met with 70 housing officials, traveled 
to the impacted areas numerous times.
    After this exhaustive investigation, we are left with the 
overarching conclusion that, after spending $15 billion on 
housing programs, much of it was spent inadequately, unsafely, 
on short-term housing like trailers and mobile homes; even more 
than after six pieces of legislation were introduced to attempt 
to fix it and numerous public hearings, FEMA still remains 
unprepared to this day to adequately provide--or HUD, for that 
matter--catastrophic housing, in the event of a catastrophic 
disaster.
    First, we found--and I am going to go through these as 
quickly as I can in the next 2 minutes. FEMA in 2002--now this 
is prior to the current Administration at the table. In 2002, 
their own internal documents demonstrated that they were not 
prepared. This is clear from this report.
    Second, it seems as though at some point early after the 
storms, which is indicated in here, FEMA rejected HUD's 
overtures to try to step in and help, recognizing, I guess, on 
HUD's part that FEMA was just not equipped to handle--they are 
not a housing agency. HUD was. They thought they could help. 
Those efforts were rejected. This was a tragic decision, as 
this report concludes.
    Third, this issue that resulted from ``purchase trailers 
until I say `Stop' ''--which is the testimony of one of these 
officials that was asked what their policy was, and that was 
the dictate in the testimony, ``Purchase trailers until I say 
`Stop' ''--is curious to me because what we also discovered was 
if trailers were supposed to be the answer, either mobile homes 
or travel trailers--remember, travel trailers at 16 feet by 8 
feet--it is curious as to how that could be the plan if 300,000 
people or 400,000 families needed shelter, since we only 
manufacture 12,000 a month in the United States of America. So 
we would have had to tap almost 100 percent of the market and 
still at that rate would have taken months to get the trailers 
to put people in. There was no back-up plan, which is very 
concerning.
    Fourth, trailers are expensive. According to a DHS 
Inspector General, the total cost of providing a single trailer 
for 18 months was $59,150 on the low end. Installing a much 
larger mobile home trailer was over $100,000. What is 
disturbing is hundreds, if not thousands, Mr. Bregon and Ms. 
Ward, of these trailers are sitting in places like Hope, 
Arkansas, and throughout the country now rotting away, unable 
to be used for the next disaster, and money spent and wasted in 
that way.
    And, finally, it seems as though the lawyers with FEMA 
continue to make very narrow interpretations of legal 
authority, resulting in very inflexible rules and decisions 
that led us to this. So we say, as usual, here we can blame the 
lawyers as well. We think they had authority, but they chose 
not to use it. We want to find out why.
    Hundreds of thousands of people may have unjustifiably been 
denied housing assistance. These are not just low-income 
families but middle-income families that we believe were denied 
any assistance because of very strict rules and regulations--
not because of strict rules and regulations but strict 
interpretation of the Stafford Act.
    So the recommendations are as follows: Allow a rental 
repair program that makes sense for FEMA to begin repairing in 
a catastrophe like this the rental units available for people 
to live in. HUD should take the lead, in our opinion. Explore 
using military repair teams. Create additional authority with 
flexibility, hopefully with common sense, driven by 
intelligence. Reforming the institutions is imperative. 
Improving and simplifying processes and, obviously, this report 
leads us to the conclusion that we must very soon have a plan, 
either a FEMA plan or a HUD plan or a combination plan.
    As I have said--and I will conclude with this--my Ranking 
Member is familiar with hurricanes. They happen in his 
territory as well. But one day, an earthquake is going to hit 
Memphis or a tsunami is going to hit Seattle or a major 
hurricane is going to hit Long Island, like it did in 1938 when 
the population was much less, and let this Senator say clearly: 
A plan to put people in travel trailers and mobile homes in 
Times Square or in Long Island will not work. It did not work 
well in New Orleans in the Gulf Coast. It is not going to work 
in North Carolina or South Carolina. We need a smart, 
intelligent plan that recognizes the dimensions and scale and 
nuances and characteristics of a catastrophic disaster.
    So I am committed, as Chairman of this Subcommittee, with 
the able help of my Ranking Member, to continue to get to the 
bottom of what happened, not so much for the purposes of 
wasting a lot of time blaming, but to lay a foundation for a 
future blueprint and development.
    Senator Graham, I will turn it over to you for a comment.

              OPENING STATEMENT OF SENATOR GRAHAM

    Senator Graham. Well, very briefly, the work you have put 
into this has been extraordinary. I was not on the Subcommittee 
before, so I have a lot of catching up to do. But you can tell 
from the report that you have paid a lot of time and attention 
to this.
    The fact that no one was prepared for a million displaced 
families is not shocking. Four years later, I think we probably 
should have made more progress. And you are right, the next 
disaster is right around the corner. I hope it is never like 
this again, but learn from our mistakes and try to get squared 
away for future events. And I look forward to being part of the 
Subcommittee, and this is something that Republicans and 
Democrats should come together pretty quickly on because when 
one of these storms hits or a catastrophe hits, no one asks 
your party affiliation, and that is the attitude I am going to 
have working with Senator Landrieu.
    Senator Landrieu. Thank you, Senator. I look forward to 
working with you. We have been together on many different 
efforts, and I think this one will be successful as well.
    Let me now turn it over to Ms. Ward, and thank you very 
much again for your patience.

   TESTIMONY OF NANCY WARD,\1\ ACTING ADMINISTRATOR, FEDERAL 
   EMERGENCY MANAGEMENT AGENCY, U.S. DEPARTMENT OF HOMELAND 
                            SECURITY

    Ms. Ward. Thank you, and good afternoon, Senator Landrieu 
and Ranking Member Graham. It is a privilege to appear before 
you today on behalf of the Department of Homeland Security and 
the Federal Emergency Management Agency. As always, we 
appreciate your interest in and continued support of the 
challenging field of disaster recovery--specifically, disaster 
housing.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Ward appears in the Appendix on 
page 27.
---------------------------------------------------------------------------
    Let me first acknowledge right from the start, Senator, 
that I commend you on a thorough report, and after reviewing 
your findings and your recommendations as they are 
characterized in the report, I can say there is very little, if 
anything, I disagree with. You have outlined the problems. We 
acknowledge that there have been problems. And your 
recommendations are valid and ones that I see great opportunity 
in working with you on.
    The report recognizes what we, FEMA, and all of our housing 
partners have continuously reiterated, which is that one of the 
most challenging aspects of the recovery process is disaster 
housing, and how those challenges intensify and increase in a 
catastrophic event. Many of your recommendations are addressed 
by and reflected in the National Disaster Housing Strategy, so 
I know we have a common vision on what needs to be 
accomplished.
    I truly believe that this issue will not be solved until a 
national dialogue on disaster housing happens in this country, 
and that discussion must include all stakeholders. In a 
catastrophic event, we have learned that no single entity is 
capable of meeting all of the needs of housing, and it is 
foolish to continue to move forward under that premise. I 
believe the National Disaster Housing Strategy is the basis for 
this discussion. It is itself a fluid document meant to set 
universal frameworks that ensure a common set of principles 
allowing all housing stakeholders the necessary tools to create 
a concrete implementation plan. This strategy defines and 
outlines the intersection and interaction of Federal, State, 
and local roles, responsibilities, resources, and options. 
Further, and perhaps most importantly, this strategy recognizes 
and reinforces the need for all parties to plan and 
operationally prepare to play a much greater role in disaster 
housing.
    The launching point for the National Disaster Housing 
Strategy is the establishment of the Joint Housing Task Force. 
The task force is currently being organized and will engage and 
interact with all key stakeholders to not only initiate the 
national dialogue, but establish the deliberate planning 
framework to provide States, tribes, and local governments the 
support they need to become engaged partners.
    Let me also say that while the housing strategy is a good 
basis to start, it is not the panacea for all housing 
challenges. By bringing together State, local, and tribal 
partners to the table, other Federal agencies into the national 
discussion, and seeking expertise and ideas from the private 
sector, we will leave no stone unturned to seeking solutions. 
And we can only achieve this consensus when the dialogue starts 
at the beginning with everyone's ideas and thoughts integrated 
into one comprehensive plan.
    Secretary Napolitano has already made her commitment to 
improving intergovernmental coordination. Almost immediately 
upon being confirmed, she issued Action Directives on improving 
ties with State and local governments. The strategy echoes this 
philosophy by highlighting the roles and responsibilities of 
State and local governments, the need for closer collaboration, 
and the encouragement of State-led housing task forces to 
ensure that State and local governments are empowered and take 
the lead in determining the best and appropriate housing 
options to meet the needs of the residents of their States. And 
the Federal Government has a responsibility and must assist 
them in getting there.
    To emphasize the Secretary's importance regarding this 
issue, 2 weeks ago she and Secretary Donovan of HUD, as you 
know, traveled to the Gulf Coast to assess outstanding recovery 
needs and also collaborated on the extension of disaster to the 
residents affected by Hurricanes Katrina and Rita. Secretary 
Napolitano is committed to and has made strong efforts already 
to partner with HUD and to explore opportunities to support the 
Federal disaster housing mission. We hope to better align our 
roles and responsibilities as you have outlined, with FEMA 
focusing on the immediate and emergency needs of disaster 
victims, such as sheltering and interim housing, and HUD taking 
the lead in providing the expertise for long-term housing.
    Senator we both know how important it is to get this right 
for the American people. Secretary Napolitano wants to get it 
right. President Obama's new nominee to FEMA, Craig Fugate, 
will be an extraordinary leader in this area to get it right, 
and together we will take your work and your recommendations 
and move forward in a collective way forward to get it right. 
Thank you.
    Senator Landrieu. Thank you. I so appreciate those 
comments, and let me get right into my questions, but I failed 
in the introduction of you, which you most certainly deserve, 
Ms. Ward, to say that you have been a long-time employee of 
FEMA. Your career is very notable, your experience is 
impressive, and I know the confidence that the new Secretary 
had in you when she sent you down to New Orleans upon the 
change in Administration to oversee or to give a report back as 
to how our situation could be improved based on your long 
experiences, I think it was, in District 9 out in California.
    You mentioned the new FEMA Director nominee, and I am 
looking forward to getting to know him better, but from what I 
have spoken to, the professionals in the area seem to be very 
impressed with his experience coming, I think, out of the 
Florida district, because that is what the people of the Gulf 
Coast are looking for, is just solid, experienced, qualified 
leadership that can take a very tough situation and make it 
better.
    I would be remiss, however, if I did not begin by asking 
you about the problems at the Transitional Recovery Office in 
the Gulf Coast. I know it is not the subject of this, but we 
notified your staff that I would be asking our question because 
it is of such interest to the people that I represent.
    Can you please give us a brief update about your review of 
the New Orleans office? The charges that have been made by 
employees there are very serious in terms of sexual harassment 
and other issues, as well as some general dysfunction of the 
way the office is being operated. I know that the report is not 
finalized, but I must ask you to give a comment about where we 
are and what some of the changes could potentially be.
    Ms. Ward. Senator, I would be happy to. As you know, I was 
sent to the Gulf to spend 5 or 6 days down there after the 
stories of the allegations on the office broke, and I did 
several things by going down there. I not only held all-hands 
meetings at our facility, each of our facilities, I also just 
walked around myself personally to each and every floor and 
cubicle of the offices that we have down in Louisiana--the 
three main ones, anyway. And you are absolutely right. I was 
deeply concerned about some of the allegations, the fear, quite 
honestly, of people coming forward to make allegations or to 
complain, provide themselves with EEO counseling.
    What we have done, as you know, is we did an initial 
climate survey, and I heard loud and clear from the employees 
there during the all-hands meetings that--not everybody got to 
be heard. We only did a sampling of about 10 percent of the 
people. So as of yesterday, we did an all-employee, online 
survey to all the employees so that they could provide their 
responses and their ideas, their concerns. We did it online 
even though it was done outside of the Louisiana offices, in 
offices here in Washington, DC, and the information is 
confidential and will be compiled separately. In addition to 
that, we have identified training that we will be conducting, a 
series of training, quite honestly, not only for staff but for 
line managers as well.
    There are several formal complaints that are going through 
their due process. I have to say, though, Senator, I know that 
there was--and you and I spoke about the initial allegations of 
30 complaints against one employee. That is not true. I am not 
really sure where those numbers came from or what they were 
derived from. As I offered to you previously, if you have that 
information, I would gladly take and review it in the context 
of the entire report.
    But, nonetheless, it was disturbing to walk into an 
environment that is under FEMA leadership and to see the kinds 
of concerns that employees had about their general work 
environment.
    So we are making several recommendations to the Secretary 
about work environment issues--training, communications, the 
expanded survey. We are also making several organizational 
structure recommendations to the Secretary, and we hope to have 
those and be able to brief her within the next week. But I am 
headed back down there to do more of the same, walking around 
and providing staff another opportunity to meet with me 
personally.
    Senator Landrieu. Well, thank you. I think it is very 
important for that exercise to continue because the people that 
this office is attempting to serve are very interested in how 
this office is functioning. If there was ever a FEMA office 
that needed to function well, in tip-top shape, given the 
challenges that it has been tasked with, it would be this one.
    Ms. Ward. Absolutely.
    Senator Landrieu. And it is so disturbing to find out that 
not only are we not in tip-top shape, we could potentially be 
the worst FEMA-run office. We do not know. But it has been very 
disappointing. And so that is what I am hoping to see, some 
real change, and the people that I represent want to see real 
change.
    I was happy to see this cooperative endeavor reached pretty 
quickly in the early part of the Administration between FEMA 
and HUD. I know HUD will testify to this as well, but could you 
elaborate in some more detail about why you all came to that 
conclusion, what is the essence of it, and what can we expect 
to see because of this collaborative arrangement?
    And let me for the record also say--I think those in the 
room may know, but for those listening--to my knowledge, it 
might have been the first time that actually two Secretaries 
came together, both Secretary Napolitano and Secretary Donovan, 
and I did not even have to ask them to do it, which was 
wonderful. It signaled to me a real basic understanding that 
this catastrophe is going to have to be a multi-faceted 
approach from a variety of different Federal agencies, as well 
as the State and private sector entities. But could you comment 
about this cooperative agreement?
    Ms. Ward. Well, I will speak for FEMA. I have been here in 
Washington, Senator, working on the transition since September, 
and I would have to say that the collaborativeness of both HUD 
and FEMA, since I have been here, has been extraordinary. What 
I think solidified that was the two Secretaries coming together 
and to jointly feel that a real change needed to happen, not 
just in Washington, but on the ground in what was happening 
with the emerging programs and what we could do to support each 
other in a much more collaborative way. That is my take since I 
have been here since September.
    I think the staff has always been collaborative. I think, 
though, that we now have two Secretaries that are--their 
expectations and their commitment to what has happened and 
trying to change the future is very strong.
    Senator Landrieu. And can you comment again on this Joint 
Housing Task Force? Who is chairing it? Is it staffed, I am 
assuming, with professional staffers from a variety of 
different agencies? Would you comment more about that?
    Ms. Ward. Yes. Currently, Senator, we have an acting 
executive director, and, quite frankly, it is a long-time FEMA 
employee, a Federal coordinating officer right now, only 
because we did not want to wait. But we have not selected an 
executive director purposely to allow the new administrator, 
Administrator Fugate, to be able to select someone that shared 
his vision, the Secretary's vision, because this person reports 
directly to the office of the administrator. And we felt that 
it was important based on Mr. Fugate's--or whoever was coming 
in--we figured they would have expansive experience. But we 
held off purposely before we hired an executive director.
    We are in the process of hiring permanent staff. We also 
have members from HUD, the VA, USDA, and the American Red 
Cross.
    Senator Landrieu. OK. Let me just ask something about this 
rental repair program. Do you know how many units have been 
repaired by FEMA under the pilot program that FEMA has 
established currently? Do you know that number?
    Ms. Ward. I think from the pilots that we have done, there 
have been 36 in Texas and 12 in Iowa. Our report to Congress is 
due by the end of this month, to be quite honest, and we are 
hoping to see this as a permanent option for FEMA.
    Senator Landrieu. Well, I would hope so because you can 
imagine how heart-wrenching--that is really a good word--it is 
to me to have really pressed so hard from a policy perspective 
to have a rental repair program adopted, and only to be told 
that it was not necessary; and then when we did get one, to 
basically say it would only be prospective, not for Hurricanes 
Katrina, Rita, or Wilma. So the Gulf Coast residents were 
completely shut out of that. I am hoping that the new 
Administration will revisit that given the billions of dollars 
that have been wasted on temporary, inappropriate, and unsafe 
housing when money could have been so much better spent 
actually repairing the hundreds of historic structures that 
might have been damaged but not completely destroyed from 
Galveston to Mobile, and what has been lost, lost 
opportunities, is just going to be very hard to ever really get 
a handle on. But I would hope that the new Administration would 
think that there is some better way than just, again, the 
trailer option for housing people.
    I have asked you about the task force. I have asked you 
about the roles.
    Let me just ask one thing about case management because 
this is something that is right now with the extension of DHAP. 
We have a plan for several thousand people. I want to make it 
perfectly clear for the record that there are low-income 
families in this group, but there are also working families 
that are low-income, working families that have some modest 
means. Also, based on HUD's analysis, about a third of this 
group of 31,000 families were prior homeowners who are now 
homeless homeowners. These are not chronic homeless. These were 
homeowners that are now homeless because of the dysfunction of 
this system.
    How are we getting a handle on the case management issues 
here. And I am going to ask HUD the same question, but, Ms. 
Ward, if you would comment about this.
    Ms. Ward. Well, I will just say that HUD does this very 
well, but FEMA is evaluating four different types of programs, 
either grants to States to help them with case management, 
working with HUD in their DHAP, also working with HHS in their 
Aid to Facilities and Children case management program as well.
    So we agree with you, Senator, that it is not just 
assistance via money or a voucher for a rental property. It is 
case management wrap-around services for these folks. It is a 
compendium of support and assistance that needs to be done, and 
we could not agree with you more on that.
    Senator Landrieu. OK. Thank you very much. Ms. Ward, you 
have been very generous with your time. I appreciate it. And 
why don't we go now to the HUD testimony, and please feel free 
to step out when you need to. We understand, and we will have 
many more hearings that we will expect you to be there the 
whole time, but we understand today was a special situation.
    Mr. Bregon.

  TESTIMONY OF NELSON R. BREGON,\1\ GENERAL DEPUTY ASSISTANT 
 SECRETARY, OFFICE OF COMMUNITY PLANNING AND DEVELOPMENT, U.S. 
  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, ACCOMPANIED BY 
  MILAN OZDINEK, DEPUTY ASSISTANT SECRETARY, OFFICE OF PUBLIC 
                  HOUSING AND VOUCHER PROGRAMS

    Mr. Bregon. Thank you, Senator Landrieu and Members of the 
Subcommittee, for hearing my testimony here today. My name is 
Nelson Bregon, and I am the General Deputy Assistant Secretary 
for the Office of Community Planning and Development at HUD. It 
is an honor to come before you today to discuss the 
Subcommittee's Special Report, ``Far From Home: Deficiencies in 
Federal Disaster Housing Assistance after Hurricanes Katrina 
and Rita.''
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Bregon appears in the Appendix on 
page 36.
---------------------------------------------------------------------------
    First of all, I would like to commend you, Senator 
Landrieu, your Committee, your membership, including previous 
Members of this Committee, and your entire staff for putting 
together this wonderful report. With new leadership in the 
White House and new Secretaries and their staff in place across 
the Administration, we are re-evaluating and re-examining the 
role that Federal agencies play in Federal disaster housing 
assistance. A new Administration always ushers the opportunity 
to take a fresh look at the way government does business, and 
in regards to Federal disaster preparedness, this is an 
opportunity that we must not waste.
    Under the leadership of the new HUD Secretary Shaun 
Donovan, we welcome the opportunity to fully consider and 
discuss with our Federal partners the Special Report and the 
National Disaster Housing Strategy, which was issued by the 
previous Administration. It is clear that the report highlights 
interagency issues to address and legislative proposals to 
consider. We look forward to working with our partners on both 
Capitol Hill and in other Federal agencies, particularly FEMA, 
to resolve these issues and become effective leaders, as well 
as partners, in disaster recovery.
    At the direction of the President and in coordination with 
the Subcommittee, Secretary Donovan joined with the Department 
of Homeland Security Secretary Napolitano to recently visit the 
communities in Louisiana and throughout the Gulf Coast. The 
visit was both enlightening and confirmative. The Secretary, 
through discussions with local leaders and housing advocates, 
learned that while some progress has been made, still more must 
be done. He noted several times during his visit and since 
returning that he is personally committed to HUD's learning 
from and improving on its experience from Hurricanes Katrina 
and Rita.
    It is in that spirit that I would now like to briefly 
discuss some of the issues from the Special Report that HUD is 
focusing on. HUD is considering a broad range of policy issues, 
from its role in recovery to strategic partnerships in 
providing long-term housing. Overall, the issues raised in the 
Special Report are consistent with our internal examination of 
agency-wide policies and practices that is being instituted by 
Secretary Donovan.
    HUD will be the center of governmental reform and renewal 
in this Administration. As Secretary Donovan has been stating 
publicly, we will invest at an unprecedented level in research 
and evaluation, and we will hold ourselves accountable to the 
highest standards. We strive to be results oriented, so we can 
quickly learn from any missed opportunities and change. We will 
revitalize our policy development and research organization, 
and we will form broad partnerships with foundations, 
universities, stakeholders, and State and local agencies on the 
ground.
    Last, I would like to say that change takes time, and at 
the present, HUD is fully committed and engaged in reviewing 
the issues detailed in the Special Report.
    I again just want to thank you, Senator Landrieu, and the 
Subcommittee for your time today, and I am happy to take any 
questions that you may have. Thank you.
    Senator Landrieu. Thank you, Mr. Bregon, and I do have 
several. Let me say I do understand and the whole country 
understands the tremendous challenges that HUD has before it 
with the unprecedented housing crisis now engulfing the Nation. 
And we recognize that the Gulf Coast is not the only area of 
the country in crisis. But as I have said, while some actions 
of financial markets and some irresponsible behavior of many 
Americans have foreclosed their homes, or had their homes 
foreclosed on, many of the people that I represent engaged in 
none of that behavior, and Mother Nature and the Corps of 
Engineers, when their levees failed, foreclosed on their homes.
    And while I have often taken to the floor of the Senate and 
explained that while having 10 percent of your homes in a 
county, for instance, foreclosed on, 1 out of every 10, or 7 
percent--and those are the high ranges in the counties in 
Nevada and California--there is no county--or in our case, 
parish, but no county in America that has the vacancy rate, the 
uninhabitable--the numbers of homes that are uninhabitable 
except to contrast with what is still the case in St. Bernard 
Parish, in large parts of Orleans Parish, some parts of 
Jefferson Parish, Cameron Parish, some counties in the coastal 
areas of Texas, and the counties in Mississippi.
    In St. Bernard's case, every single home except for five 
out of 26,000 people was destroyed. Every single one. And I was 
just there last week with your Secretary, and I still get 
emotional going through St. Bernard Parish and the Lower 9th 
Ward and in parts of Lakeview, 4 years later, to watch people 
struggle to save their single most important asset to them, 
financially and emotionally, caught in a system that totally 
failed them in so many ways.
    So I hope that you will communicate to the Secretary that 
while we are very sensitive to the foreclosure issues and what 
Americans need around the country to save their own homes, 
there is still a huge problem for people in the Gulf Coast 
area. And unless some of these laws coming out of the Banking 
Committee are changed in terms of terminology to recognize 
these needs of homeowners in the Gulf Coast, we will then have 
the most unfortunate situation, spending billions of dollars, 
and still not help them since the first couple billion we spent 
went in such inappropriate ways, and now these billions coming 
past us only seem to be helpful if you fail to pay your 
mortgage because you got in financial difficulty, not if you 
lost your job because of the storm or lost your home because of 
the storm, etc.
    So if you could take that one message back that one size 
does not fit all, there are different needs in different parts 
of the country, and we remain still in desperate need of 
adequate housing.
    So let me ask you if you believe--or let me say, Is it the 
position of this new Administration that HUD should take the 
lead role in housing in a catastrophic situation? And if that 
is the policy, why?
    Mr. Bregon. Madam Chairman, the Secretary, with his vast 
knowledge of housing by being, first of all, a Deputy Assistant 
Secretary for Multi-Family with the Department of Housing and 
Urban Development under the Clinton Administration, and more 
recently the Housing Commissioner in New York City, knows 
exactly how to deal with large-scale issues as they relate to 
housing.
    In discussions with him, as we give him recommendations, he 
feels that the Department of Housing and Urban Development is 
the agency that has the knowledge and the infrastructure in 
place to undertake this kind of assignment or mission, if you 
will.
    One of the concerns that we have at this point, Madam 
Chairman, is that although we have the infrastructure and we 
have the knowledge, in many instances if this is a large-scale 
undertaking, we would need the resources, not only the 
financial resources but the human resources as well, and the 
legislative authority, to undertake some of the programs that 
we would like to for long-term housing recovery.
    As you have so well stated, the attorneys in other agencies 
perhaps have interpreted the Stafford Act too narrowly, 
preventing agencies from doing things that we feel as career 
Federal employees that we could have done. So once I feel that 
and the recommendation to the Secretary, which he is in 
agreement at this point, is that if we are given the authority 
and the financial resources, yes, we are the agency that can do 
it, can do it well, and can do it quickly.
    Senator Landrieu. Do you have any estimate of what those 
resources might be at this point?
    Mr. Bregon. Madam Chairman, I think that it all depends on 
the extent of the disaster. I think we have some preliminary 
estimates of what it would take to create an office that will 
focus on disaster, not only recovery but prevention as well, 
preparedness. We have some estimates that we could share with 
you.
    Senator Landrieu. OK. I would hope that you could get that 
information as soon as you can to this Subcommittee so that we 
can communicate that to our broad Committee, and also get the 
information to the appropriators, which is very important.
    But I have to play a little bit of the devil's advocate 
here, if you will forgive me for this, because I know there is 
a new HUD, and we certainly desperately need one. But in this 
disaster, this pie chart will show that basically FEMA assisted 
99 percent of the people for housing; HUD assisted less than 1 
percent. So there were 718,000 people that FEMA assisted in 
some shape, form, or fashion. That could be from sheltering all 
the way to temporary rental assistance, hotel, vouchers of 
various kinds, etc. And HUD assisted 1 percent. So making this 
pie chart blue as opposed to red is going to take a serious 
change.
    On the second point--and I think the second panel will 
speak to this even more directly than I can--some people would 
say that of the 1 percent that HUD was supposed to take care 
of, it did not work out so well for that 1 percent in terms of 
the public housing, particularly.
    So it is quite a challenge to think about the kinds of 
housing and the kinds of families that are served, ranging from 
your homeless population that was on the street before the 
flood waters were there, and were there after, to your disabled 
community, to your senior citizens that rent, to your senior 
citizens that were homeowners but unable to do any repairs 
because physically they just cannot do that, to your young 
couples, young couples with children--I mean, on and on--public 
housing folks, regular folks, all sorts of different kinds of 
situations. And it is very difficult to really from my 
perspective appreciate that none of the agencies up here seemed 
to have a grasp of those special needs of all of those 
communities and treat them with dignity and respect that they 
deserved. And, again, not just a handout, but a hand-up based 
on the fact that most of these families, whether they were 
poor, wealthy, or middle class, were willing to do a lot for 
themselves, but just never could get their footing or never 
could get the right rules and regulations to really help them 
to get back. And we do not even want to go into the faulty 
system of insurance or the holes that existed for those 
families that did have insurance.
    And remember for the record that in our State and in 
Mississippi and Texas, you were not required to have insurance 
unless you had a mortgage. So you have the horrible situation 
of people who had paid off their mortgage, who owned their 
homes outright, who had sacrificed their whole life to make 
those payments and had equity in their home for their 
retirement or their children or their grandchildren to be the 
first to go to college in their families--all of those dreams 
are gone. So this is a significant piece of this recovery 
because it is not just the house but it is the general wealth 
of a community that is in large measure--or was--in their 
homes.
    Let me just see if there is one more question here. Can you 
comment from your perspective on this rental repair program and 
what HUD is thinking about in terms of its usefulness as we go 
forward so we can think about something other than trailers, 
but rental repairs in the community affected as well as maybe 
vouchers and communities like Houston or Atlanta or Dallas in 
our case that might work for a population temporarily 
displaced?
    Mr. Bregon. We feel that the rental rehab program is a very 
important component in revitalizing a community, especially as 
we look at long-term recovery. We have models of programs that 
have been funded with the CDBG supplemental appropriations, 
either administered by the Louisiana recovery agencies or in 
Texas or in Mississippi by the Mississippi Development 
Authority there. And we fully understand some of the concerns 
that you have raised about what some agencies feel is perhaps a 
duplication of benefits when they rehab a unit with FEMA monies 
and then perhaps a tenant wants to use a voucher or some kind 
of other subsidized program to rent that unit.
    We in HUD are of the opinion that we do not consider that a 
duplication of benefits. Under our CDBG program, the CDBG 
program can be used for tenant-based rental assistance, the 
same thing with Road Home. And I think again that was an 
interpretation by some attorneys that was too narrow and too 
strict.
    So those are the things that we have to look at and, again, 
engaging in conversations with our other Federal agencies early 
on to look at those policies and determine what are the right 
policies to implement to make these programs effective.
    Senator Landrieu. OK. Two more questions, and then we will 
move to our second panel. Are you aware of one of the legal 
interpretations that we cite in here that required homeowners 
that received Road Home grants through the Community 
Development Block Grant fund that HUD runs--when they received 
their Road Home payment--now this is true of Louisiana. I am 
not sure this is true of Mississippi, but it may be. But in 
Louisiana, when they received their Road Home grant--which the 
average grant was $67,000, up to a maximum of $150,000--that 
the lawyers required those homeowners to pay in full their 
small business loan back, which to me defeats the whole purpose 
of the grant.
    Are you aware of that situation? And is there something 
that you could potentially do to correct it.
    Mr. Bregon. The CDBG supplemental appropriations were 
distributed by formula to the five affected States, and 
Louisiana received approximately around $10 billion of the 
total $20 billion that were appropriated. The State of 
Louisiana developed the Road Home program and administered the 
Road Home program, and they did it as a compensation program, 
unlike other States. Texas, for instance, instituted a 
rehabilitation program, and that was the flexibility that the 
legislation and the program provided to the State.
    There was early interpretation--and you are correct--that 
they felt that even unpaid taxes had SBA loans to be prepaid 
before the net grant would be given to the homeowners, and 
those were decisions that were made at the local level by the 
Louisiana Redevelopment Authority and the company that they 
hired to administer that program, CFI.
    Senator Landrieu. OK. Well, they are not here to testify, 
but I am going to have them respond in writing to that because 
they were under the impression that this was required at the 
Federal level. And I asked time and time again for relief.
    I just cannot tell you how upsetting it is to homeowners 
who were literally washed out of their homes, in many cases 
their relatives drowning on the way out, to receive finally a 
grant after 8 months of $75,000 to begin to repair a home that 
was valued at $350,000 and nothing is left, to be told that 
before they could get their hands on any of that money, they 
had to pay off in full their SBA loan that they took out to 
start their business again so that they could hire back not 
just themselves but their neighbors or people that they 
employed to go back to an area that had no one there because 
they thought it was important for them as Americans to get back 
to work. They were told by their Federal Government they had to 
pay that loan back. And then they had to pay the taxes in full 
to the entities--not the taxes, the mortgages to the mortgage 
companies, and so basically they might have gotten the net of 
$20,000 and stood in front of their house with $20,000 in hand 
and their entire house destroyed. And for some reason, the Bush 
Administration and the people that ran the show up until a few 
months ago could never understand the problem with that. So I 
hope you will take back to this new President that message, and 
to Secretary Donovan, that I have some inkling they might 
understand that and see what they can do to fix it.
    The Secretary was with me at this hearing. We were at a 
roundtable in New Orleans, and we were talking about the DHAP 
Housing Choice Program, and this issue came up in our questions 
and answers. Right now, I understand it is a little 
complicated, but there is a law that requires HUD to count the 
greater of the actual income derived from all net assets or 
percentage of the value of such assets based on current 
passbook savings rates--let us just assume--I know they may be 
0, but let us assume they are 2 percent--if the asset is not 
being rented out.
    The bottom line of this is this provision would seem to 
make sense because we do not want to give vouchers to people 
that have significant assets. But in our case, if a family 
still owns a lot with a slab, which is in large measure what 
exists in many parts of St. Bernard and Lower 9th Ward, that is 
valued at $10,000, if you applied a passbook account rate to 
that, a family of four that made $22,000 a year would actually 
receive a voucher. But if we have to take the asset, which is a 
slab in a lot, no market, hard to get a value, but it is being 
applied, it discounts them from a voucher.
    So do you understand the dilemma that some families are in 
that were homeowners--not homeless people, but homeowners. Not 
that it is wrong to help homeless people, but these homeowners 
who had invested in a home, and at the time of their greatest 
need, where they just need a voucher to keep them off the 
street that they have never been on, they are disqualified 
because of the value of a slab.
    Now, the Secretary was alarmed--he should be--when we heard 
this. Do you have any indication that we might fix this and 
how?
    Mr. Bregon. Madam Chairman, it is my understanding that we 
are looking at that, but if you will allow me, I have with me 
Milan Ozdinek, who is the expert on that matter, and I would 
like to perhaps----
    Senator Landrieu. Yes, if he would come forward, I would 
appreciate it.
    Mr. Bregon. Thank you.
    Senator Landrieu. Would you introduce yourself for the 
record, please?
    Mr. Ozdinek. Certainly. Good afternoon, Madam Chairman. My 
name is Milan Ozdinek. I am the Deputy Assistant Secretary for 
the Office of Public Housing and Voucher Programs, and am 
principally responsible for the DHAP program and the follow-on, 
the Transitional Close-out Housing Program, which we announced 
recently with Secretary Donovan.
    I believe this is fixed. There could have been some 
confusion during your visit with the Secretary to New Orleans. 
I met this morning with Karen Cato-Turner and Dwayne Muhammad, 
who is the Section 8 director. A family at $22,000 a year that 
owns a slab valued at $10,000, or $15,000, or even $20,000 a 
year should not by law or regulation be preempted from getting 
a voucher. We ensured this morning through Dwayne Muhammad and 
his staff that they have all been trained. Anyone calling or 
coming into the DHAP center that owns a property, whether it is 
a slab or a property, will have----
    Senator Landrieu. And it is uninhabitable.
    Mr. Ozdinek. Uninhabitable. In the example--and we would be 
more than happy to give you some examples for you and your 
staff to show you what the net impact would be on a de minimis 
value of a piece of property. But in the example that you gave, 
Madam Chairman, the value of that property, when incorporated 
with the income that the family has, would be negligible and 
would affect their rent just barely on the margins.
    So, in fact, the $15,000 property would be considered as an 
asset and would be valued at the passbook rate of 1 percent or, 
as you said, 2 percent, annualized, and then taking 30 percent 
of that, divided by 12, that would be the amount that would be 
added to rent. We have families in the Section 8 program that 
do own property and still have Housing Choice voucher 
certificates.
    Senator Landrieu. OK, because remember--and I will conclude 
with this--that while the Section 8 program was developed, it 
was not developed with victims or survivors of catastrophe in 
mind. It was developed under normal housing circumstances. What 
I am trying to communicate here is nothing about this is 
normal, and we need to have some flexibility or some 
modifications so that when these disasters happen, you take 
your normal government programs, but apply a screen of what a 
real disaster is like and make your programs work for that. 
That has not been done in the last 4 years. I am very hopeful 
that will be done, and if the law is not flexible enough to 
allow you to do it, I would hope you would write it down, send 
it to me, and we will change the law because it has to be fixed 
for people that find themselves in these situations.
    I think that ends my questions for this panel, and we will 
move to the second panel. They have been very patient, and we 
will move through this pretty quickly. Thank you very much.
    I know you all are on tight time frames, so we are going to 
go right into this. And because of schedules as well, we are 
going to start with Karen Paup, Co-Director of the Texas Low 
Income Housing Information Service, and then Krystal Williams, 
Executive Director of the Louisiana Housing Alliance; third, 
Sheila Crowley, President and CEO of the National Low Income 
Housing Coalition; and Reilly Morse, Senior Authority for the 
Mississippi Center for Justice.
    All of you have been very active in this whole area of 
housing assistance for people in a variety of different 
circumstances. We are looking forward to hearing your 
testimony, and because of the time, let us go to Ms. Paup, 
starting with you, if we can take 2 or 3 minutes for an opening 
statement and then questions.

   TESTIMONY OF KAREN PAUP,\1\ CO-DIRECTOR, TEXAS LOW INCOME 
                  HOUSING INFORMATION SERVICE

    Ms. Paup. Thank you, Madam Chairman and Subcommittee 
Members. My name is Karen Paup, and I work as Co-Director of 
the Texas Low Income Housing Information Service, a nonprofit 
research, information, and advocacy organization in Austin, 
Texas.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Paup with attachments appears in 
the Appendix on page 39.
---------------------------------------------------------------------------
    For over two decades, I have worked with low-income people, 
lenders, government, and nonprofits to help deliver solutions, 
model solutions, for housing the poor in my State. Since 
Hurricane Katrina, my organization has been engaged on a daily 
basis with hurricane housing issues. Community leaders, 
advocates, and hurricane survivors with whom I work would 
uniformly embrace the findings and recommendations in your 
Subcommittee report.
    The testimony of Sheila Crowley and Reilly Morse speaks to 
solutions for low-income renters, so I am going to focus my 
comments today on long-time homeowners, and I have done so more 
extensively in my written comments.
    The core of the problem is this: Disaster housing programs 
are designed to assist moderate-income homeowners. They have 
insurance, and the disaster program makes up the gap, a narrow 
gap. Low-income homeowners are in a different situation, and in 
Texas, we have many extremely low-income homeowners who have 
been affected by the hurricanes that struck our State. Many 
were elderly, many were disabled, many were also extremely low-
income working families who paid off their mortgages, as you 
noted earlier, Senator, or who built their houses themselves or 
who inherited the houses. And FEMA mostly offered them 
emergency shelter and rental assistance and pushed them to get 
out of that assistance, instead of coming up with a plan for 
how they would recover their homes.
    I have four changes to recommend in the Federal housing 
disaster programs.
    First, implement the strike team concept. Fund these more 
extensive repairs by tapping some of the funds that would 
otherwise be used for temporary housing. In other words, spend 
the funds to replace the roofs, fix the sheetrock, get the 
family back in the home quickly, and avoid long-term temporary 
re-housing and its costs.
    Two, establish funding and support for a more coordinated 
relationship with faith-based and nonprofit organizations. We 
have seen that they have been a major part of our response, and 
with more coordination, they could be a greater part of the 
response.
    Three, recognize the special needs of the elderly and 
people with disabilities among the poor in the wake of a 
disaster.
    And, last, implement a case management system, as 
recommended in your report, whereby a single individual serves 
as a point of contact from emergency shelter until the 
household is completely, permanently re-housed. The caseworker 
needs to understand the family's economic situation, their 
housing needs, and their housing construction process in the 
case of homeowners. The caseworker would work to determine the 
best recovery option for the family. If that is to repair the 
house, then the caseworker would help with work write-ups and 
cost estimates and hiring a reliable contractor, and then help 
through the construction of the repair work. If the approach is 
a replacement home, the caseworker would help to get the family 
into a reconstruction program or a program that offered 
alternative housing from fabricated housing construction 
companies.
    In the case of elderly households or persons with 
disabilities, the counselor would offer the option of a 
permanent Section 8 housing voucher and to assist the family in 
finding an appropriate rental unit where they could use their 
voucher.
    For all other households, the counselor would assist with 
the transition to a State-assisted long-term recovery program, 
including temporary housing until they are complete in that 
reconstruction program with the State. And details of the 
family's housing needs should be provided to the States so that 
the States can properly budget for serving the housing needs of 
the families in this category.
    I thank the Subcommittee for this opportunity to testify, 
and I would be happy to answer questions or to bring you back 
written answers if need be. Thank you.
    Senator Landrieu. Thank you, I really appreciate that, Ms. 
Paup. Let me ask you, because I know you may have to slip out: 
When you speak about serving your low-income families, at what 
level of income, approximately, do you consider low? Are we 
dealing with families of $10,000 and less, $20,000 and less, 
$25,000 or $30,000? What is your cut-off?
    Ms. Paup. Extremely low-income families would be people on 
minimum Social Security benefits, so elderly people with small 
Social Security checks, they would be mostly below $10,000; 
people who have minimum wage jobs, so they are maybe below 
$15,000; and then people who are little better off than those, 
who are below $20,000.
    Senator Landrieu. I think you raise a very important point 
which programs do not seem to really recognize that many of 
those families, which was very true of parts of the Lower 9th 
Ward, because these homes had been inherited, many family 
members, but still, families without a lot of current income.
    I agree with you also about using nonprofits as partners. I 
find several of them to be outstanding. Could you mention one 
or two models or one or two particular programs that you have 
seen operate in your area that you could recommend for review 
or a model that you think works better than others? Is there 
anything that comes to your mind that you would like to share 
with our Subcommittee?
    Ms. Paup. There is a coalition of faith-based organizations 
in southeast Texas that has been particularly active in Port 
Arthur and Beaumont, in that area, to help families rebuild 
their houses. And church volunteers come from around the 
country and Canada to conduct repairs over a fair period of 
time, and they have done some pretty substantial repairs.
    Senator Landrieu. Do you know how many homes they have 
actually repaired?
    Ms. Paup. I can get you a written figure on that. I cannot 
quote off my head, and I do not want to give you the wrong 
information.
    Senator Landrieu. Well, if you could, that would be 
helpful, because this Subcommittee will be looking for models 
that work, that are effective, and scalable. And we have some 
in mind, but any of you that might have some suggestions, we 
would most certainly appreciate it.
    We will go to Ms. Williams next. Thank you.

TESTIMONY OF KRYSTAL WILLIAMS,\1\ EXECUTIVE DIRECTOR, LOUISIANA 
                        HOUSING ALLIANCE

    Ms. Williams. Thank you, Madam Chairman and Members of the 
Subcommittee. My name is Krystal Williams, Executive Director 
of the Louisiana Housing Alliance. We are the only statewide, 
nonprofit, policy advocacy organization regarding housing in 
Louisiana.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Williams appears in the Appendix 
on page 86.
---------------------------------------------------------------------------
    The findings of the report can be undoubtedly supported by 
many State and local agencies and nonprofit organizations, 
especially the effectiveness of Federal public assistance funds 
should not be dependent on which particular State they are 
allocated to, to the dependency of Federal agencies upon local 
government; and, second, FEMA's post-disaster housing 
assistance programs were not designed to address the needs of 
the severely low income.
    The responsibility of program implementation of Federal 
funds fell heavily upon State and local agencies that were 
beyond the capability to respond effectively. They lacked case 
management to properly implement programs and administer 
assistance. Deadlines and numerous expirations of Disaster 
Vouchers and Temporary Housing Assistance continue to threaten 
families served by FEMA and DHAP assistance programs with 
eviction and homelessness.
    Many private developers participating in the small rental 
program under the Louisiana Recovery Authority built affordable 
rental units after Hurricane Katrina, but are still waiting on 
reimbursements, and while families and individuals receiving 
assistance are still waiting to transition into homes. Also, of 
the 1,271 FEMA trailer sites that exist in Orleans Parish, half 
of the homeowners living there have just begun to fix their 
homes, and the other half have not even started.
    According to the Long Term Recovery Initiative Program of 
the United Way for Greater New Orleans, there is a great need 
for Federal funding for case management. Most nonprofit 
organizations in this area have hundreds, if not thousands, of 
clients that have not yet been assisted. The greatest fear is 
that these clients will be left with no one to help navigate 
them through the process once agencies no longer have long-term 
recovery case management programs due to lack of funding. These 
clients, especially those with FEMA housing, will ultimately 
end up homeless or living in uncomfortable conditions.
    Federal public assistance must be uniform across the Gulf 
Coast, not heavily reliant upon State and local government 
agencies to direct recovery in their time of suffering. This 
will help guarantee that the missions of FEMA and HUD will be 
successfully accomplished by providing stronger oversight and 
public assistance.
    Recently, from across the Gulf Coast Region, housing 
advocates convened in Washington, DC, with national partners to 
discuss disaster recovery. From that meeting, problems were 
identified and recommendations for improvement were made to 
FEMA and HUD, and they include as follows:
    Move FEMA outside of the jurisdiction of the Department of 
Homeland Security to again become an independent, Cabinet-level 
agency; devise an effective National Disaster Housing Strategy; 
articulate clear structure for implementation; ensure that the 
60-day extension of direct housing does not expire without a 
concrete plan to transition current residents into permanent 
homes; revise the Robert T. Stafford Disaster Relief Act to 
protect against future disasters; and structure funding sources 
to address the most vulnerable needs quickly. And in my 
testimony, I included a more extensive explanation of these 
recommendations.
    Senator Landrieu. Thank you, Ms. Williams.
    For now, I am going to go right to Ms. Crowley.

TESTIMONY OF SHEILA CROWLEY, MSW, PH.D.,\1\ PRESIDENT, NATIONAL 
                  LOW INCOME HOUSING COALITION

    Ms. Crowley. Thank you very much, Senator Landrieu. I am 
pleased to have the opportunity to testify today, and let me 
start by thanking you for this report, for initiating this 
investigation, and for producing a report of this caliber.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Crowley with attachments appears 
in the Appendix on page 91.
---------------------------------------------------------------------------
    The report affirms for hundreds of thousands of people who 
experienced what was an incoherent housing assistance response 
to the hurricanes that what they went through really was a 
failure of the government and not something that they were 
doing wrong.
    What the report does not say explicitly, but what is clear 
to anyone who chooses to see, is that the people who received 
the shoddiest treatment were, by and large, poor, aged, 
disabled, and/or black.
    My written testimony comments on the report's 
recommendations, and I want to just take a moment to emphasize 
a few key points here.
    First, one of the most serious flaws in the Hurricane 
Katrina housing response was the disconnect between the 
temporary housing programs and the housing recovery strategy. 
And so any approach to disaster housing recovery should be more 
holistic, in which the temporary housing and the permanent 
housing needs are addressed in a coordinated fashion, much as 
Ms. Paup described. It certainly would be more effective, more 
humane, and a lot less costly. The bifurcation of these two 
functions--the temporary housing assistance to the Federal 
Government and the housing recovery to the State government--
simply did not work.
    Two, just as the private rental housing stock needs to be 
repaired quickly, so does the HUD-assisted stock. HUD has yet 
to do a full accounting of the HUD-assisted units that were 
damaged or destroyed and clearly has no idea what happened to 
many of the tenants who were living in those homes. HUD must 
ensure that all HUD-assisted properties are: One, properly 
insured and, two, that there are resources there to repair and 
reoccupy these properties right after a disaster. It was absurd 
that, in the case of Hurricane Katrina, the public housing 
agencies and private owners of HUD-assisted properties and 
private owners of HUD-assisted properties had to compete with 
other developers for the low-income housing tax credits and the 
CDBG dollars allocated to the States in order to repair 
federally assisted properties. That was a Federal function, and 
it should not have been left to the States to come up with that 
money.
    Third point, many, and perhaps tens of thousands, of 
Hurricanes Katrina and Rita evacuees were erroneously or 
wrongfully denied or terminated from FEMA rental assistance. 
There just can be no doubt about that. And we really recommend 
that we go back and try to make those people whole as much as 
possible. We recommend that the Department of Homeland Security 
Inspector General or another appropriate Federal official 
undertake a case-by-case analysis and that we go back over that 
and figure out really what happened to people and what 
assistance they are entitled to.
    Fourth point, as has been described very well, one of the 
most serious flaws of the Hurricane Katrina housing response 
was the chaotic manner in which evacuees received information 
or received mis-information about services and programs to 
which they were entitled. Part of the blame lies in how the 
disaster relief was structured, but blame must also be 
attributed to the unskilled and untrained workforce that FEMA 
deployed in order to be able to deliver those services, which 
your report very clearly outlines. Even the assertive and 
articulate clients had difficulty navigating that service 
system.
    The report recommends better use of case managers in 
disaster response, especially for vulnerable people. A case 
management system to assist people who are displaced by 
disaster from their homes should be community based. You should 
not be calling a toll-free number and talking to a different 
person every single time. You should have a human being that 
you relate to, much as Ms. Paup described. A case manager, by 
definition, is one person working with one family.
    We recommend consideration of assigning this responsibility 
to the public housing agencies. Now, go, ``Oh, my God,'' but 
public housing--there are 3,500 public housing agencies. They 
serve local jurisdictions. They have a direct funding and 
accountability relationship with HUD. If we could design a 
system by which public housing agencies were the key agency in 
each community that would have to be responsible for housing 
needs during a disaster, both temporary and permanent, and have 
a core of caseworkers that they could call upon, not working 
for the agency at that point but people from faith-based, 
nonprofit, people who were trained to do this and who could be 
called up, just like you call up the National Guard in a 
disaster, call up this corps of caseworkers to take on this 
function, who would know all the programs and know how to 
navigate all those systems. HUD would need a lot more money to 
do that. Of course, we would not want HUD to be left doing that 
without the proper resources.
    And then, finally, I think that it is important to note, 
despite all the complaints that we have had about the way the 
programs were designed and the problems with the response, that 
just as Hurricane Katrina exposed extreme poverty in the United 
States, it also exposed the acute shortage of rental homes for 
the lowest-income people in our country. There are 9 million 
extremely low-income renter households--that is, people with 
incomes under 30 percent of area median income or less--and 
there are only 6.2 million rental homes that rent at prices 
that they can afford. Our analysis of the 2007 American 
Community Survey data shows us that for every 100 extremely 
low-income renter households in the United States, there are 
only 38 rental homes that they can afford, that are available 
and affordable to them. So there is a very serious gap, and we 
have given you a lot of data from our analysis.
    So when HUD develops the National Housing Stock Plan that 
is called for in the report, it will become clear that there 
are serious housing stock deficiencies. The affordable rental 
housing shortage is a longstanding structural problem that 
affects millions of low-income Americans every day. It also is 
a structural impediment to a viable National Disaster Housing 
Strategy.
    There has to be physical places for people to live. We do 
not have enough physical places for poor people to live in the 
United States.
    So let me close by saying that the purpose of the National 
Housing Trust Fund that was established by Congress last year 
is to correct the structural deficit in the housing stock for 
the lowest-income people. We are now seeking sufficient funding 
for the National Housing Trust Fund that we will be able to 
produce and preserve $1.5 million rental homes over the next 10 
years, and I would submit that a National Disaster Housing 
Strategy would depend upon that kind of renewed commitment to 
housing the poor in the United States. Thank you.
    Senator Landrieu. Very good, Ms. Crowley. Mr. Morse.

TESTIMONY OF REILLY MORSE,\1\ SENIOR ATTORNEY, KATRINA RECOVERY 
             OFFICE, MISSISSIPPI CENTER FOR JUSTICE

    Mr. Morse. Thank you for this in-depth report and for this 
invitation to testify. Most of all, thank you for confirming 
what tens of thousands of displaced and traumatized clients 
already knew who sought assistance from the Mississippi Center 
for Justice and similar organizations across the region. They 
were not the problem. Our government mismanaged the Nation's 
worst housing catastrophe, erroneously denied assistance to 
many thousands of people, and it required extensive, time-
consuming, and costly legal intervention to begin to correct 
the government's mistakes. So some lawyers, Madam Chairman, 
were part of the solution.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Morse appears in the Appendix on 
page 102.
---------------------------------------------------------------------------
    The recommendations of this report would complete the task 
for future disasters, but there remains unfinished business in 
the Gulf region, particularly for renters. We welcome the call 
to establish a standing rental repair program and expedited 
repair sweep teams. In Mississippi, Hurricane Katrina damaged 
over 62,000 rental units, almost half of which were single-
family rentals with less than major damage. The figures were 
orders of magnitude higher in Louisiana, but they point to the 
fact that repairing existing rentals is faster, more cost-
effective, healthier, and more humane than trailers, and it 
will also produce a quicker response than we currently struggle 
with in the CDBG-funded programs.
    Like in Louisiana, Mississippi's CDBG-funded small rental 
repair program is slow to put products online, slow to put 
restored units online. The public housing repair program, 
likewise funded by CDBG and tax credits, also has failed to 
timely restore badly needed, very low-income rental units for 
our poorest residents. We invite consideration of any 
additional means to close the gaps, including retroactivity 
provisions to increase assistance for post-Katrina housing 
needs today, such as some of the matters you raised earlier: 
Retroactive provisions for Section 9(k) or for the pilot rental 
repair program.
    Your report also touches on the alternative housing pilot 
program, and as Ms. Crowley mentioned, there needs to be 
coordination between the temporary and the permanent housing 
programs. This was a $400 million experiment to allow FEMA to 
evaluate new alternatives for housing disaster victims. In 
Mississippi, this program funded 3,000 Mississippi cottage with 
larger living space, greater wind resistance than FEMA 
trailers, and they were also capable of being converted into 
permanent housing. Well, in Mississippi we are fighting local 
jurisdictions that are trying to prevent them from coming in, 
characterizing them as ``no better than the Katrina trailers,'' 
even though there are substantial differences. But the time 
delay associated with that is eating up the time that is 
available for FEMA to cover the cost of permanently placing 
these units, and so the opportunity for some of the hardest-to-
house people--and this is across the region; this will be as 
true for Louisiana as it is for Mississippi--the opportunity to 
use this pilot program successfully and provide FEMA a success 
rests with FEMA deciding to extend the deadline for using this 
money to permanently place them. And so we would ask you to 
invite FEMA to extend the deadline for the permanent conversion 
of these cottages to December 31--it is now set to expire in a 
couple of months--so these people can realize an important 
opportunity and FEMA can have a fully successful pilot program.
    This report critiques the Stafford Act and explains all of 
these conflicts over policy interpretation and agency roles 
that help public interest lawyers understand the chaos we and 
our clients faced with FEMA. We welcome these recommendations 
for change, and those are covered in more detail in my written 
remarks, so I will pass those.
    We also want to take a moment to recognize and be grateful 
for the change in the rules on the duplication of benefits that 
was referred to by Dr. Catchings, who is someone who came to 
the center early on, along with several other people with this 
same problem, and we are grateful that problem was solved.
    In conclusion, Madam Chairman, I would like to speak as a 
third-generation Mississippi lawyer. We understand nothing in 
these catastrophes is normal. My parents went through the 1947 
hurricane. My parents and I went through Hurricanes Camille and 
Katrina. No one should ever doubt the gratitude of those of us 
who are displaced by these storms. But no one should ever 
refrain from requiring a comprehensive accounting or a reform 
of what went wrong and how to fix it, which is what we have 
seen here, and we are grateful to you for a high-quality and 
in-depth critique and set of recommendations and urge you to 
carry them into action.
    Thank you.
    Senator Landrieu. Thank you very much, Mr. Morse. And let 
me apologize for getting all the lawyers aggravated because 
there are some very excellent lawyers that helped, including 
the two that helped to write this report. So I stand corrected, 
and we are grateful to all the lawyers that have helped so many 
of our people in the Gulf Coast.
    Let me ask two questions because time is really pressing us 
to close. Ms. Crowley, when you talk about the housing trust 
fund, which I am also optimistic can be designed in a way, how 
would you suggest that while we expand the opportunity for 
rental for low-income families--which is a great need that you 
have amply described and the evidence is really indisputable. 
How do we create rental programs that actually give people an 
opportunity to become homeowners? Which I think for many, it is 
still a real dream to move from, a lifetime of renting to an 
opportunity for homeownership, even with low income. Are there 
any models that you have seen that have worked? Or what are 
some of your suggestions?
    Ms. Crowley. Well, I think we now have seen plenty of 
models that did not work, which has caused this horrible 
meltdown--I am sorry--this rush to all sorts of exotic products 
to try to get people who did not have the resources to become 
homeowners and that has led to the subprime crisis.
    It is a question we often get asked because we are 
generally advocates for an improved rental housing system, and 
people want to know about what the next step is.
    My very strong belief is that the best homeownership 
program for a low-income person is the development of a stable 
rental housing stock where the family can afford--you can 
afford the rent; you can live there stably; you can develop a 
credit history. You are not being forced to move from place to 
place. Your kids are able to stay in the same school. You can 
maintain employment. People who are very poor who are moving 
from one rental place to the next do not have that kind of 
stability.
    So housing stability should be our first goal for people, 
and once you have housing stability, when you have created the 
kind of rental housing stock that people can live in and be 
proud of and can take care of, then people have the chance to 
do things like save for a downpayment, do all the things that 
lead to the ability to become a homeowner.
    But there is no magic step that anybody has to take. It is 
really a matter of having the resources to be able to get into 
a home and maintain it. And that requires sufficient income. It 
also requires that people have a sense about what homeownership 
is going to require.
    So the counseling programs we have I think are very good, 
and one of the things that is clear, when all the dust will 
settle on the subprime crisis, is that the people who went 
through really good homeownership counseling programs, through 
Federal agencies, federally funded agencies, the Neighborhood 
Reinvestment Corporation, NeighborWorks America, all of those 
kinds of places, they did fine because they were well prepared 
to be able to move into their homes, and they did not get 
caught up in these crazy kinds of mortgages.
    But for many people, that is not the case, and they are 
going to need to be able to do well in rental housing until 
their incomes improve.
    Senator Landrieu. Well, I asked you that question because I 
really do believe that while we do need to stabilize the rental 
market and expand it, we should always have an opportunity or a 
pathway to homeownership, and there are models out there that 
have worked. Habitat for Humanity is one that impresses me 
everywhere I go, including in my own home State. There are 
counseling organizations--the New Orleans Foundation that 
started 25 years ago that has a default rate a fraction of what 
the regular commercial default rate is, even though they are 
serving families with incomes under $16,000.
    I think our government, if it wanted to, could look and 
find models that actually work and do both at the same time.
    Ms. Crowley. Oh, I agree.
    Senator Landrieu. Expand your rental and expand 
opportunities for people to create equity, not the least of 
which is a program some of us have been trying to get in place, 
an IDEA, basically an IRA for poor people where the government 
matches, allowing you to save for a downpayment for a home or 
save for an investment in a business, and to continue to 
believe that, if given the opportunity, most Americans are 
able--some are not because of serious mental or emotional or 
sometimes physical--in some cases not able, but most people, if 
given the chance, can really begin to move themselves firmly 
into the middle class.
    Ms. Crowley. Senator, one of the programs that gets very 
little publicity but has worked for some people is a program 
that HUD runs called the Family Self-Sufficiency Program, and 
it is for people who are receiving Federal housing assistance 
through public housing or vouchers. And they have to be 
working, and they have to agree to participate in a variety of 
services, programs, educational programs. But they actually put 
money away, and that money is matched. Their rents do not go up 
during that time, and after a 5-year period, they have a chunk 
of money to use to start a business or buy a house.
    So we do have those kinds of things. They have to be well 
funded and they have to be carefully structured, and the 
clients have to be people that we can do the kind of work with 
that will get them there. But you are right, there are models.
    Senator Landrieu. OK. And let me just add, is there anybody 
that wants to make a 30-second close or feels like something 
they need to say needs to go on the record before we close out? 
I am sorry. I can only recognize those that are at the table, 
but I will speak with you privately afterwards.
    Mr. Morse.
    Mr. Morse. Let me offer one other possible model that 
occurs in North Gulfport. It is a community land trust in which 
the organization owns the land, buys up distressed land, small 
lots in communities that have demographics almost identical, if 
not worse in some instances, to the 9th Ward. Houses are placed 
on them through various subsidized means. The trust sells the 
house to the occupant, has a long-term lease to the property; 
when the house is resold, the occupant realizes part of the 
appreciation, the land trust keeps part of the appreciation, 
and there is an ongoing generational affordability built into 
that stream. It is a smaller-scale project. It is so far 
successful. But with greater support, I think it could become a 
model for communities that have to find ways to creatively 
layer financing and to also hold onto and build back the 
integrity of communities at risk of blight.
    Senator Landrieu. Thank you, Mr. Morse. Ms. Paup.
    Ms. Paup. I would like to mention another model in Texas. 
We modeled a program after USDA's Self-Help Mortgage Program 
where the State offers 0-percent mortgages. We call it the 
``Bootstrap Program,'' and it is a self-help program that 
started in South Texas, in Colonias, where people have very few 
resources, but they are willing to build their homes. And the 
prices of those homes are very modest because they build a very 
modest home, but it is a means to homeownership for extremely 
low-income Texans.
    Senator Landrieu. Thank you. If there are any other models 
that come to your mind, please submit them, because as I said, 
this report is as much an indictment of what went wrong as a 
blueprint to move forward, and we want to get your best 
suggestions.
    As I close, let me especially thank the chief counsel 
Charlie Martel, who is here, who led this investigation with 
Donny Williams, our Staff Director; our Senior Investigative 
Counsel, Alan Kahn; our Professional Staff, Amanda Fox; Ben 
Billings, who is a Professional Staff with the Subcommittee; 
and Kelsey Stroud, who is the Clerk. This group behind me did a 
wonderful job. They worked very hard under very difficult 
circumstances, conducted hundreds and hundreds of interviews to 
produce this report that, again, we hope will serve as a 
foundation to improve the lives of so many in the Gulf Coast 
and reach out to people around the country and potentially even 
have an impact internationally as other communities and nations 
struggle to response to these catastrophic disasters.
    The hearing is concluded. Thank you very much.
    [Whereupon, at 5:11 p.m., the Subcommittee was adjourned.]


                            A P P E N D I X

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