[Senate Hearing 111-1151]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1151
A YEAR LATER: LESSONS LEARNED, PROGRESS MADE, AND CHALLENGES THAT
REMAIN FROM HURRICANE IKE
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 25, 2009
__________
Printed for the Committee on Small Business and Entrepreneurship
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Available via the World Wide Web: http://www.fdsys.gov
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED ELEVENTH CONGRESS
----------
MARY L. LANDRIEU, Louisiana, Chair
OLYMPIA J. SNOWE, Maine, Ranking Member
JOHN F. KERRY, Massachusetts CHRISTOPHER S. BOND, Missouri
CARL LEVIN, Michigan DAVID VITTER, Louisiana
TOM HARKIN, Iowa JOHN THUNE, South Dakota
JOSEPH I. LIEBERMAN, Connecticut MICHAEL B. ENZI, Wyoming
MARIA CANTWELL, Washington JOHNNY ISAKSON, Georgia
EVAN BAYH, Indiana ROGER WICKER, Mississippi
MARK L. PRYOR, Arkansas JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland
JEANNE SHAHEEN, New Hampshire
KAY HAGAN, North Carolina
Donald R. Cravins, Jr., Democratic Staff Director
Wallace K. Hsueh, Republican Staff Director
C O N T E N T S
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Opening Statements
Page
Landrieu, Honorable Mary L., Chair, and a United States Senator
from Louisiana................................................. 1
Witnesses
Thomas, Honorable Lyda Ann, Mayor, City of Galveston............. 9
Eiland, Honorable Craig, a Texas State Representative from
District 23.................................................... 19
Callender, MD, MBA, FACS, David, President, University of Texas
Medical Branch................................................. 20
Gillins, Curtis, Co-Owner, Y'a Bon Village Coffeehouse........... 35
Dryden, Frank, Owner, Island Flowers and Nefertiti Boutique...... 44
Alonzi, Achille, Assistant Division Administrator, Texas Federal
Highway Administration, U.S. Department of Transportation...... 55
Tombar, Frederick, Senior Advisor, Office of the Secretary, U.S.
Department of Housing and Urban Development.................... 63
Gonzalez, Manuel, Director, Houston District Office, U.S. Small
Business Administration........................................ 70
Eckels, Honorable Robert, Judge, and Chairman, Governor's
Commission for Disaster Recovery and Renewal, State of Texas... 77
Harris, Brad, Texas Federal Coordinating Officer for Hurricane
Ike, U.S. Federal Emergency Management Agency.................. 89
Appendix Material Submitted
Alonzi, Achille
Testimony.................................................... 55
Prepared statement........................................... 57
Supplemental responses....................................... 115
Callender, David
Testimony.................................................... 20
Prepared statement........................................... 23
Colbert, Dr. Linda
Prepared statement........................................... 169
Cornyn, Honorable John
Prepared statement........................................... 97
Dryden, Frank
Testimony.................................................... 44
Prepared statement........................................... 47
Eckels, Robert
Testimony.................................................... 77
Prepared statement........................................... 80
Eiland, Honorable Craig
Testimony.................................................... 19
Gonzalez, Manuel
Testimony.................................................... 70
Prepared statement........................................... 73
Gillins, Curtis
Testimony.................................................... 35
Prepared statement........................................... 37
Information for the Record................................... 159
Harris, Brad
Testimony.................................................... 89
Prepared statement........................................... 103
Hutchison, Honorable Kay Bailey
Prepared statement........................................... 99
Landrieu, Honorable Mary L.
Opening statement............................................ 1
Prepared statement........................................... 4
Letter dated October 13, 2009, to Karen G. Mills............. 117
Response dated December 3, 2009, from Karen G. Mills......... 120
Letter dated September 30, 2009, to Governor Rick Perry...... 122
Response dated October 27, 2009, from the Texas Department of
Rural Affairs.............................................. 124
McKinley, Jr., James C.
Article titled ``As Galveston Recovers From Hurricane Ike,
Some Residents Feel Left Behind''.......................... 155
Paul, Honorable Ron
Prepared statement........................................... 101
Steele, Jack
Letter dated September 24, 2009, to Charlie Stone............ 126
Texas Appleseed
Prepared statement........................................... 129
Texas Forest Service
Prepared statement........................................... 171
Thomas, Honorable Lyda Ann
Testimony.................................................... 9
Prepared statement........................................... 12
Additional materials for the record.......................... 249
Fact Sheet: Galveston Island After Hurricane Ike............. 263
Testimony and Overview of Recommendations.................... 265
Prepared statement to the U.S. House Committee on Homeland
Security dated March 3, 2009............................... 278
Prepared statement to the Ad Hoc Subcommittee on Disaster
Recovery dated September 23, 2008.......................... 288
FEMA Hurricane Ike Response and Recovery Statewide Activity
Report..................................................... 300
City of Galveston Hurricane Ike Orders Index................. 305
Tombar, Frederick
Testimony.................................................... 63
Prepared statement........................................... 66
U.S. Small Business Administration
Disaster Recovery Plan....................................... 176
Vitter, Honorable David
Prepared statement........................................... 96
A YEAR LATER: LESSONS LEARNED, PROGRESS MADE, AND CHALLENGES THAT
REMAIN FROM HURRICANE IKE
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FRIDAY, SEPTEMBER 25, 2009
United States Senate,
Committee on Small Business
and Entrepreneurship, and
The Committee on Homeland
Security and Governmental
Affairs Ad Hoc Subcommittee
on Disaster and Recovery
Galveston, TX.
The Committee met, pursuant to notice, at 1:21 p.m.,
Galveston Island Convention Center, 5600 Sewall Boulevard, Hon.
Mary L. Landrieu (chair of the committee) presiding.
Present: Senator Landrieu.
OPENING STATEMENT OF THE HONORABLE MARY L. LANDRIEU, CHAIR, AND
A UNITED STATES SENATOR FROM LOUISIANA
Chair Landrieu. Thank you, ladies and gentlemen, and I
apologize for the delay. We were waiting for some of our
special guests to join us.
I am Senator Mary Landrieu, and I would like to call this
field hearing to order. I thank all of you for spending some
time this afternoon focused on a very important issue, which is
the recovery of this part of the country from the terrible
destruction of the Hurricane Ike and to also focus on the
procedures, at the federal, state, and local levels that can be
improved, particularly with the focus on the federal level
today.
We have two distinguished panels with us. Let me begin by
welcoming our first panel. We have asked them to keep their
testimony relatively brief, but, as the Mayor and I toured
Galveston this morning, she said to me, ``Senator, I think I am
going to need a little bit more than five minutes.''
Mayor, you are going to have a little bit more than five
minutes today, and let me start by thanking the Mayor and
acknowledging her tremendous effort. Since the storm, Mayor
Thomas is one of the many local leaders who have really had to
stand up and speak forcefully about what needs to be done and
continue to lead a very complicated effort.
We are also joined by the----
[Applause.]
Thank you, Mayor.
The mayor has traveled to Washington several times on your
behalf. At one of the meetings I said to her, ``Mayor, I will
absolutely be in Galveston sometime soon,'' so I am here today.
I want to also acknowledge our speaker pro tem who is here
with us, and I will be asking him to comment in just a moment.
Let me introduce the first panel. These will be very
familiar individuals to all of you. Mr. David Callender,
President of the University of Texas Medical Branch; Mr. Curtis
Gillins, Owner of Y'a Bon Village Coffee House; and Mr. Frank
Dryden, Owner of Island Flowers and Boutique.
We have business owners, a leader of a great medical
school, a Mayor, and a speaker pro tem that will start our
panel in just a moment, but let me give just a brief opening
statement as we begin.
Senator Hutchinson and Senator Cornyn could not be with us
this afternoon. Senator Hutchinson was with me touring the area
this morning. Senator Cornyn is at work in Washington, marking
up the health care initiative in the Finance Committee as a
member of the Finance Committee, so he apologized for not being
here; however, both of their staffs are present.
Also, Congressman Ron Paul has his staff here in the
audience and was unable, because of scheduling conflicts, to be
with us. I want to acknowledge other elected officials that are
in the audience, as well.
Let me begin by saying that I have long wanted to come to
Galveston as a resident of New Orleans and as a senator now
from the State of Louisiana into my third term, and
particularly as I helped to lead our efforts to recovery after
Hurricane Katrina, when Ike came ashore, hurting not just
Texas, but the Louisiana Coast, as well. I could feel the pain
that this community was going through, having basically just
gone through it ourselves with Hurricane Katrina. Given that
our ports have such similarities, our oil and gas interests,
our historic housing, our medical complexes, the loss of the
trees and the greenery that we are so proud of along the Gulf
Coast, the threat to our beaches, to our tourism industry right
here in the wonderful convention center, Mayor, and looking at
these grand hotels up and down the coastline, we all need to do
a much better job of understanding that we are in the middle of
Hurricane Alley. We need to do a better job of hardening our
defenses and preparing for storms, but also and equally
important, attempting to recover more vigorously as soon as
possible because the livelihoods and futures and dreams of our
citizens most certainly depend upon it.
As I helped to lead our efforts in the aftermath of
Hurricane Katrina, I actually asked to form this Subcommittee
of the Homeland Security Committee to form a special committee
that could look specifically at the ways our Federal government
could better help all communities in America, but with a
special emphasis, of course, on the Gulf Coast that sits really
in the middle of a hurricane path that can be devastating and
it seems, as with these weather patterns, changing.
We can only look forward, unfortunately, to more frequent
and more ferocious storms. Making sure that FEMA is working at
its optimal level, that there is coordination at the federal
level that really honors and respects the hard work going on at
the street level or the local level is important to me, and
having our communities work together, sharing before, during,
and after each storm on lessons learned, best practices. This
hearing is going to focus in large measure on some of those
issues today.
I do not have to remind you all that Hurricane Ike's 110-
mile-an-hour winds blew off hundreds of rooftops, and water
reached levels as high as 20 feet flooding up to 75 percent of
Galveston Island and ate through more than 17,000 homes and
businesses. Not just the City of Galveston, but other cities in
this entire region were impacted. About 20 percent of the
residents of this city, representing about 4,000 families, are
yet to return to the community because of all sorts of
challenges associated either with housing, employment, health,
or others.
One of the things that I am hoping to do is to make sure
that the Federal government realizes that local communities
cannot do this alone and that federal help must be abundant,
must be quick, must be reliable, and must be transparent and
understandable through all different agencies to help
communities like this.
I also want to make sure that there is better coordination
between federal agencies, whether it is FEMA, SBA, HUD,
Agriculture, or Transportation. We have made some changes in
the law and some changes in policy, but we have more to go.
As this is a joint hearing between Homeland Security and
Small Business, I also want to focus on the changes that SBA
has made and implemented since Hurricane Katrina and to explore
a little bit today. Have you all seen improvement here on the
ground? We want to hear from our local small businesses.
Another issue: Is the aide coming from Washington to the
state and then distributed down to the locals? Is it being
distributed on an equitable and objective basis, trying to get
those Community Development Block Grant monies actually to the
communities and to the neighborhoods that suffered the most
damage?
These are just some of the things that we want to explore
today, and I am going to submit the rest of my testimony to the
record so we can get right onto our panel.
This record of the committee will be open for two weeks.
Anyone that wants to submit records for this hearing in writing
can be submitted anytime in the next two weeks.
So, Mayor, why do not we begin with you? I understand that
the speaker pro tem may have to leave, so, I will go to you
next. But, Mayor, why do not we begin with you, and please take
as much time as you need. Thank you very much.
[The prepared statement of Chair Landrieu follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
STATEMENT OF THE HONORABLE LYDA ANN THOMAS, MAYOR OF GALVESTON,
TEXAS
Mayor Thomas. Thank you very much, Senator, and thank you
for the opportunity that you are giving all of us to meet with
you today, and we did enjoy meeting with Senator Hutchison this
morning, and Senator Cornyn spoke to me earlier this morning. I
am sorry that they are not able to be here, but I do want to
express my thanks on behalf of the city to each of them and to
our Texas Delegation, as well.
The topic that you have chosen, I think, is timely. The
topic is: A Year Later, Lessons Learned and Progress Made and
Challenges That Remain from Hurricane Ike.
In Galveston, we do not say if a storm comes, but when.
Galveston was as prepared as we could be for Ike's wind and
rain. It was his surge that swamped our city, damaging 75
percent of our homes and businesses. Surging flood waters
ripped into our aging infrastructure. Our sewage, wastewater
treatment, and water plants, the city's and the economy's
underpinnings were either damaged or destroyed.
John Sealy Hospital and the entire University of Texas
Medical Branch could not function without proper water and
sewage delivery. Had necessary city infrastructure been
repaired proactively as a part of planned mitigation by the
city and UTMB with FEMA before the storm or expeditiously after
the storm, it is possible that the hospital and UTMB would not
have been threatened with drastic downsizing and subject to the
turmoil it went through to recover. Nor would the city's
business interests have suffered the shock of economic disaster
threatened by UTMB's downsizing. Ike taught us that time is at
essence and that time is money.
Minimal public health and safety requirements absolutely
delayed the return of our citizens, including business owners
and operators, for a vital 10 days, during which time mold took
hold, rust set in, and ground-floor furnishings, equipment,
wallboard, electrical outlets, and shop inventories were
destroyed.
Because FEMA requires that the city conduct a Residential
Substantial Damage Estimate Program which takes several months
to complete and costs approximately $1 million, the city
recommends to you that FEMA include this as a precontracted,
reimbursable item, as treated in the Stafford Act. It is called
for and it is allowed in the Stafford Act.
Galveston is proud to say that we have a number of
preconditioned contracts, and, in the future, we would like
this one to be added to our list and paid for by FEMA. The City
has tried to convince FEMA that, aside from quick fixes, it is
more cost effective as soon as possible to redo a whole system
at one time rather than piecemeal, as has happened at our Main
Wastewater Treatment Plant and our airport pump station.
To harden our infrastructure, the city must comply with the
Texas Commission on Environmental Quality standards. We could
do that if FEMA followed the provision in its rules that it
will pay to reconstruct to new codes and standards.
There are many faces of FEMA: The friendly, helpful Johnny
on the spot rescue and response FEMA, the ever-changing faces
of the FEMA occupying army of bureaucrats, the arbitrary rule-
making, changing, deadline-setting and resetting again and
again, and always at the last minute FEMA, and the nay-saying,
penny-pinching FEMA that stands in the way of all the help FEMA
is supposedly there to provide.
The good intentions of FEMA's hundreds of representatives
over the last 12 months cannot be questioned. They were here,
and they did what they could. Especially Brad Harris and Jerry
Stoller and Jim Feinman. They did not fail the system; it
failed them, and us, in the process.
What is required is consistency and coordination of command
with decision-making authority on the ground, and dispersal of
necessary funds upfront to get the job done before the costs
mount. You are fulfilling a vital part of the Stafford Act,
which calls for a standard of review, and I quote, ``The
President shall conduct annual reviews of the activities of
federal agencies and state and local governments in major
disaster and emergency preparedness and in providing major
disaster and emergency assistance in order to assure maximum
coordination and effectiveness of such programs and consistency
in policies for reimbursement of States under this Act.''
There has been an abysmal lack of coordination and
effectiveness of programs. UTMB and the city operated with two
different FEMA teams in two different universes. FEMA failed to
clarify for itself or the city exactly where its jurisdiction
began and ended.
Examples are the confusion over repair and reconstruction
of the Pelican Island Bridge and responsibility for our traffic
signals, including school zone signals. FEMA thought they were
responsible. Months later, it was discovered that the Federal
Highway Administration has jurisdiction over the Pelican Island
Bridge and our traffic signals.
Now, with HUD CDBG disaster funding finally beginning to
flow into city coffers, FEMA is indicating that it might pull
back some of its funding to honor its role as ``the funding
source of last resort.'' FEMA should be our first funding
source, with the CDBG a vital backup for housing,
infrastructure, and economic development.
Now, in light of Katrina and Rita, the city looks to the
standard of ``consistency in policies for reimbursement of
states,'' and Galveston has earned your trust. We are aware
that there is a discrepancy in the programs and especially the
100 percent reimbursement for all categories of FEMA public
assistance granted to Katrina victims.
The surge destroyed our urban forest, which we consider
part of our infrastructure. An estimated 40,000 trees,
providing protection from coastal erosion, energy efficiency,
reduced carbon emissions, as well as beauty, and you were able
to see those trees this morning.
It would be cost effective for FEMA to remove the thousands
of dead trees. Why piecemeal this project? Not only to remove
the trees, but to also pay for the stump-grinding, which they
have left in place, and planting of their replacements, and we
ask FEMA to consider this request for Galveston.
Finally, the challenge for the growth in the future and for
development of our Gulf Coast Region could be met by three
major undertakings by the Federal government.
One is the release of 600 acres of seawall-protected land
that could be on the city's tax rolls that the Corps of
Engineers has used for dredge spoils over the last century.
Two is the support of Galveston-Houston efforts to
construct shoreline protection for the Texas Gulf Coast. And,
three, to provide funding for high-speed commuter rail between
Galveston and Houston.
As we recover and move into the future, we must consider
the challenges that we face for the future, and those are three
of them, and we will appreciate federal help and support.
The written testimony that is attached will amplify my
statement here and provide further recommendations. And, again,
Senator, thank you for this opportunity to speak to you today.
[The prepared statement of the Mayor Thomas follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Mayor, for that clear
presentation.
[Applause.]
Thank you, Mayor, for that clear presentation and excellent
suggestions.
Let me now turn to State Senator Craig Eiland, speaker pro
tem. Thank you very much.
STATEMENT OF THE HONORABLE CRAIG EILAND, A TEXAS STATE
REPRESENTATIVE FROM DISTRICT 23
Representative Eiland. Thank you, Senator, and thanks to
your brother, the Lieutenant Governor of Louisiana, for all of
his help in our time of need, as well.
I am going to be very brief today. To me, it is always
important that FEMA remembers that the ``E'' in their name
stands for emergency, not eventually.
[Laughter.]
And that often times seems to be an issue. It is not the
people, because, like she said, we have great people down there
working for us, but it is the system and the process that slow
things down.
One issue that came to light early on is that jurisdictions
do not matter after disaster. The prime example was in debris
cleanup. The City of Galveston has a preposition to contract,
the State, for some inexcusable reason, did not, and, so, when
the debris was all over our streets, city streets could be
picked up by the city contractor and the streets cleaned of
debris, but those same contractors could not pick up debris on
state roads within the City of Galveston. And, so, Broadway was
trashed, the side streets were clean. So, if the people on
Broadway pushed their debris out the side door, it got picked
up. If it was pushed out the front door, it sat there rotting
for actually over 45 days.
That was inexcusable in the State of Texas not to have a
debris contractor prepositioned, but it is also ridiculous to
have such jurisdictional issues so that people have to wonder
is this a state highway, is this a county road, or is this a
city street to know who can pick the debris and get reimbursed.
Second, insurance. Under FEMA is the Federal Flood Program.
We have to have coordination among our states and the Federal
government on insurance. State cat pools or catastrophe plans--
it is called Texas Windstorm Insurance Association of Texas.
When somebody thinks they have ``full coverage,'' they go to
their insurance agent and say how much does it cost so I am
insured for everything? They pay that, they have to have one
policy for windstorm, one policy for homeowner's, one policy
for flood, and they think they are covered.
Well, here comes the storm with wind and flood, and then
they realize they are not covered for everything because the
flood program says it is wind, the wind insurance says it is
the flood, and then there is mismatched coverage because if it
is wind, you can get alternative living expenses when you are
out of the house, if it is flood, you do not. If you are a
business, you can buy business interruption insurance for wind,
but you cannot buy it for flood, so, you do end up caring which
one it is because it impacts what coverages you have. That
needs to be coordinated because, at the end of the day, the
constituent, the policyholder just wants to get fixed and back
in place, and let the state and Federal government fight over
whether it was wind or flood as opposed to the homeowner
fighting over whether it was wind or flood because they were
not there. They evacuated.
Same issue is, the Federal government, we need to have a
backstop to our state plans. Louisiana has a state plan; Texas
has a state plan, Mississippi, Florida. It would be very good
if we could have some type of federal coordination to back up
so that we are not all trying to prepare for the worst case
scenario because that gets rather expensive for all of us. We
could all go to some type of standard, and then have the
Federal government back that up with the federal backup or
backstop like we do with terrorism insurance, that would be
beneficial to everybody.
And then, finally, these are two real kind of practical
suggestions. We have had Rita and Ike hit especially the
Beaumont and Chambers County area. It might be good if we had
the Blue Tarp Program to change colors every storm season so
that we would know that hey, there is still damage in this
community from Rita three years ago that has not been repaired
as a reminder to us instead of it all looking blue tarps, and
we are not knowing if they are still damaged.
Chair Landrieu. Excellent idea.
Representative Eiland. And when there are hoards of FEMA
people here, and I did not realize the multiple jurisdictions,
the multiple responsibilities that all those people have
because they all just wear a windbreaker or a cap that says
FEMA, and then you want to go talk to them about debris, well,
I do not do debris. Or I only do debris in the water. I do not
do debris on the land. You are like well, then put that on your
shirt or your windbreaker.
[Laughter.]
Chair Landrieu. Identify yourself.
Representative Eiland. Identify yourselves. We know you are
FEMA. What part of FEMA? What can you help with, so that we
will know who to run around to and ask. Either that or do not
wear the windbreaker.
Chair Landrieu. Excellent suggestion, and I will take that
directly back to Craig Fugate, the new FEMA Administrator, who
is very experienced on the ground, from Florida, knowledgeable,
and is trying to put some of these practical suggestions in
place.
Thank you very, very much, and I know if you have to slip
out, please.
Mr. David Callender.
Dr. Callender. Thank you, Senator. My mom would want you to
know that I am also a medical doctor.
Chair Landrieu. Doctor. Sorry. Doctor.
STATEMENT OF DAVID L. CALLENDER, MD, MBA, FACS, PRESIDENT, THE
UNIVERSITY OF TEXAS MEDICAL BRANCH AT GALVESTON
Dr. Callender. My first calling actually is as a physician
and surgeon, and, from that perspective, I know what it looks
like when people cannot get access to the care that they need.
And that is what happened here after Ike's passage.
The storm had a profound impact on our institution. I think
you got to see an element of some of the damage that remains
today. If you include the business interruption losses, the
value of the damage is over $900 million.
Our campus consists of about 7 million square feet of
buildings, and over 1 million square feet of first floor space
was damaged by flooding. Thanks to heroic efforts on the part
of our people, our recovery has progressed more quickly than
anyone expected, and I can certainly assure you that our
outlook today is much more positive than it was a year ago.
I do want to express my deep appreciation for the
tremendous effort put forward by all agencies of the Federal
government to help UTMB recover and rebuild. And, as Speaker
Pro tem Eiland and Mayor Thomas mentioned, the individuals
themselves have done, I think, as much as they can or could
within the confines of the FEMA process. It is the process that
we think needs attention.
I mentioned to you earlier. I described an anecdote about
our recovery. A couple of weeks after the senior FEMA claims
writer had been on our campus, he looked around and estimated
the amount of damage that was present. Now, we are months
later, and almost 4,000 project worksheets into the process,
and the amount that damage that we have is pretty darn close to
what that estimator first said it would be.
So, what is the holdup? What could be done to improve the
process to allow funds to flow more quickly and to allow places
like UTMB that offer critical services, oftentimes to people
that cannot get them elsewhere, get back on their feet as
quickly as possible?
I also want to echo the mayor's concern about the basic
infrastructure that supports our city. It needs to be
sufficiently restored not only to help the citizens of the City
of Galveston, but UTMB. And, of course, I am talking about
services that we often take for granted: water flow, waste
water treatment, natural gas, and electricity flows.
Certainly thanks to FEMA in a large part and the State of
Texas and some great supporters we know, we have been able to
develop and resource a plan to harden our facilities at UTMB
against floods and windstorms. But that is not going to do
anybody much good if the City of Galveston's infrastructure is
not also similarly hardened.
So, we suggest going forward that there be much closer
coordination and communication between the FEMA teams assigned
to UTMB and the City of Galveston. The major focus would be the
process and plans for the rebuilding of that critical
utilities' infrastructure that supports both entities. A more
holistic view of the infrastructure restoration would be most
beneficial, and may even reveal ways to create greater
efficiency in funding the recovery process.
Finally, one of Hurricane Ike's silver linings has been the
renewed awareness of UTMB's importance to our region's health
care system and economy. We are very thankful to the investment
that you all in Washington are making in our recovery, which
will allow us to continue our 118-year tradition of serving the
health needs of Texas and the Gulf Coast in general. We
certainly want you to consider ways that you can ensure that an
aging municipal infrastructure's recovery can proceed
unfettered and that our own recovery is not hindered in any
way.
Again, thank you for the opportunity to speak to you today,
and thank you for all of your efforts to help all of us who
live along the Gulf Coast.
[The prepared statement of Dr. Callender follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Doctor. I appreciate it, and we
will come back to this, but I will mention that on the anecdote
that you shared about the initial estimate down, that we have
subsequently passed at least one law that will help, and if we
can expand it, it would cover that instance where we have
required FEMA now to basically reimburse as a whole police
stations, fire stations, and public schools.
We pressed them to do the reimbursement for all public
projects. They have resisted so far, but we are going to
continue to press so that each project does not have to receive
several thousand project work order sheets and some initial
assessment can be made that would save the taxpayers money,
save everyone time, and be a much more effective way.
So, while we have made some progress, thank you for
continuing to press that. It is extremely important that we
eventually get that law changed to authorize them to do that.
Thank you.
Mr. Gillins.
STATEMENT OF CURTIS GILLINS, CO-OWNER, Y'A BON VILLAGE
COFFEEHOUSE
Mr. Gillins. Yes. Madam Chair, it is indeed an honor and a
privilege to provide testimony to this distinguished committee
regarding our experience as business owners here in Galveston
during and after Hurricane Ike. It is not often that a business
of our size gets this opportunity, and we are grateful for this
moment.
My name is Curtis Gillins. My wife and I owned a small,
family business located in an inner city neighborhood on the
north side of the island at one of its lowest elevations. We
opened our business in December 2005. It took great financial
and personal sacrifice to get to that point.
Within three months of opening our doors, Y'a Bon Village
Coffeehouse survived two arson attempts from suspected drug
dealers who did not want us there. Between 2005 and 2008, we
suffered from two hurricanes. Hurricane Rita damaged the
building in 2005, just before our planned opening. In 2008,
Hurricane Ike stuck and left four feet of water outside, five
feet of water inside. It damaged the building and destroying
everything inside, including supplies, furniture, fixtures,
appliances, and refrigerated boxes. Although the building was
insured for wind and flood, the business contents were only
covered by wind. We received insurance funds to restore the
building, but no money to restore business content.
Hurricane Ike also destroyed the neighborhood. The public
housing community across the street known as Cedar Terrace got
nine feet of water. After the storm, Cedar Terrace was torn
down, and suddenly hundreds of families no longer lived within
footsteps of our business.
The whole area was so damaged that traffic dried up going
east to west on Church Street and north to south on 29th
Street. The area around our business became a ghost town. The
storm had not only damaged our business, it took away our
customers. Now, we are faced with restoring our business in a
local economy that had drastically changed. We do not have the
money to replace our business content, and, even if we did, our
customer base has dried up due the damage from the storm.
Our application for SBA loan assistance was denied, but we
are hoping to qualify for grants which could only be awarded if
the SBA loans were denied. We have not received any offer of
grants from SBA or any other source.
The future of our business remains unknown. We have made
progress in restoring the building, but we simply do not have
the money to start over in the existing economic climate. We
have not lost hope, but we have an overwhelming need for help
that will enable us to reopen a business that will survive.
The city has also suffered, but we are encouraged by signs
of development that are underway in the neighborhood. The
public housing community that was across the street from our
business will be rebuilt for low- to moderate-income families.
Plans for the new community offer residents a safe, attractive,
and green environment.
Plans are also underway to expand the historic downtown
Stand District. The plan extends to downtown historic area to
26th Street between Harborside and Winnie. The plan will bring
improvement to that area such as better lighting, drainage, and
green areas, as well as improvements in the overall economic
climate for small businesses. The problem is plans for the
development and improvement of the area do not include the
three blocks between 26th Street and 29th Street. Leaving out
the area between 26th Street and 29th Street means the plan for
development does not include our business, nor the area
immediately to the east of the new housing community or
immediately west of the historic district.
If this three-block area is left out of the plans for
development, residents of the new housing community will have
no shops, stores, or grocery stores to support their new
community. Small businesses will not be able to come to the
area because of the economic and personal risk required to
locate there.
That three-block area will also threaten the Strand
Historic District to the east. If left unchanged, the area
would, again, be dominated by crime, drugs, and prostitution
that would surely spill over into the area serving tourists and
cruise passengers.
In short, we want to include in the overall plan for
development of the areas so that our business will survive and
our community will survive. We desperately need business
incentives and grants that will enable small businesses to
locate and thrive in this challenged area. We want to serve our
local residents, and we also want to be included in plans to
serve the tourists and cruise passengers that are so vital to
the city's economy.
We appeal to you to ensure that our city and our
neighborhood get their fair share of available funds, such as
Community Development Block Grants, to enable us to be whole
again. I have included more details in my written testimony,
and I hope that the committee will have an opportunity to
review my complete testimony and see some of the images that
help to tell our story.
In conclusion, my wife and I would like to thank Senator
Landrieu and this committee for the opportunity to provide
input on our personal recovery and the recovery of our
neighborhood and our city. Thank you for your time and for your
caring.
[The prepared statement of Mr. Gillins follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Mr. Gillins, and I guess it is
extremely appropriate, given the subject of this hearing and
the nature of the work before us, that you would be sitting
next to Dr. David Callender, one of the largest if not the
largest employer in the community, and you being one of the
smallest, that our work really has to reach both of you.
Mr. Gillins. Thank you.
Chair Landrieu. And to reach it to you in a way that really
helps you and honors your vision and your spirit of
entrepreneurship and dedication to this community. That is our
hope and intention, and I am very pleased that we have a
representative from HUD on the second panel, and I will ask him
specifically what their plans are to help the small businesses.
That is important, if not even more important, not that one is
more important than the other, but the numbers of businesses
that are small in the communities like Galveston and the
surrounding area are quite substantial. So, thank you.
Mr. Dryden.
STATEMENT OF FRANK DRYDEN, OWNER, ISLAND FLOWERS AND NEFERTITI
BOUTIQUE
Mr. Dryden. Thank you, Senator Landrieu, for the
opportunity to testify as part of this panel.
My wife, Constance, and I evacuated Houston 12 hours before
landfall of Ike, and were not allowed to return to Galveston
for a look and leave until a week later. It was almost two
weeks before we returned to begin cleanup. We were too late to
stop demolition of Nefertiti, the Boutique, long enough to
salvage any items, but we were able to save many of our
containers and wedding props at Island Flowers with great
effort and difficulty.
The daily confrontation with the demolition crew to give us
needed time to salvage goods and the cash expense to hire
workers for needed assistance took its toll mentally,
physically, and monetarily. After depleting all available cash,
my wife, Constance, and I cleaned items every day for six weeks
out front from dawn until dusk, as there was no electric power.
We stored salvaged items in a 24-foot rent truck and out in the
open until we were able to move them inside the building.
Our landlord was able to get us back into Island Flowers in
December, but we did not reopen Nefertiti until Labor Day, five
days short of one year, because of many complications.
We were supplied with daily food, water, and ice by the Red
Cross, Salvation Army, and other charities. The way the
volunteers came in from across the U.S., in some cases the
world, was a Godsend.
Then began the task of trying to claim on insurance
policies and find agencies for financial help.
Our business interruption coverage was tied to windstorm,
TWIA, T-W-I-A, so, we received nothing. The adjuster left much
to be desired. When we asked for a reevaluation, we were again
rejected. When I told him the building policy authorized roof
replacement, window replacement, and many other items, he
commented he would not have approved them. Another insurance
company said we had no claim because we were not in a major
disaster area. Our personal flood contents' coverage paid on
Nefertiti and the HOA, home owner association, master policies
on the structure, both flood and windstorm, are in the process
of covering with a different adjuster, but not our business
interruption. We are in the process of taking legal recourse
against TWIA.
Since we did not receive business interruption
compensation, we turned to FEMA-SBA for assistance. The waiting
lines took most of the day. One FEMA-SBA volunteer, after
noticing my frustration with not making it to the
representative after being in line for most of the day, said if
I went to the office in Texas City, which was connected with
the College of the Mainland, I would receive personal
assistance in completing all forms. This would be a great help,
as all my business records have been submerged under eight feet
of black muck and saltwater.
After several hours of consultation with the representative
in Texas City, I had help with form completion. An onsite SBA
representative checked the forms and submitted them overnight
to the Fort Worth Office for approval. An SBA representative
visited me the next week and confirmed the damage and loss.
Within three weeks, we received a telephone call saying we
were approved for $86,900 with the terms of the note and
payments. I asked what was the next step, and I was told all
paperwork would be forwarded to us. We waited for several
weeks, and I called the Fort Worth Office and was informed we
had been rejected because our new credit report contained a 60-
day delinquency on our mortgage. Then they made the comment
that we only had one more chance at the loan so our credit
better be clear when we reapply.
I called my mortgage company, as they had given us a
forbearance on the loan because of Ike. The mortgage company
said the credit report was an error and they would correct
this, as well as write me a letter to that effect.
I called SBA in Fort Worth and explained the situation to
them, offering to get the mortgage company to fax this letter
to the SBA directly, but was told we must reapply from the
beginning. We were going to do this, but my wife's credit
record to one of the credit companies never was cleared from
this error, and, to add insult to injury, the mortgage company
did it to us again the next month.
Added to these struggles, bank card companies raised
interest rates and cut credit limits based on the excuse of
debt ratio on multiple credit cards, not because of delinquency
or over limits. One cut my credit limit, and then informed me I
was now over limit with a charge.
Another lowered my credit limit because I had not used the
card, and then included a $4.50 paper statement fee to
encourage online payment and a $35 credit-builder fee per
purchase after they cut my credit limit for nonuse of the card.
And some of these companies the public bailed out.
And then there was the continuing battles with the power
companies attempting to bill us based on estimated usage with
no actual meter readings, even during the period the entire
city had no power and threatened to disconnect us when we had
no meter. We were not connected.
Chair Landrieu. You have to laugh because if you do not,
you will cry.
Mr. Dryden. We were exhausted both physically and mentally.
Then a miracle happened. Jeff Sodjstrom from Galveston Economic
Development Council walked in the door and offered us the
opportunity to participate in a loan which was in conjunction
with the Houston Galveston Area Council. We accepted, and the
$30,000 made available bought us a replacement flower cooler
and other much needed items. It was like $1 million when you
have no resources.
It has been an unbelievable struggle to bring our
businesses back after Hurricane Ike. We are opening both
businesses with no outside employees except for part-time help
at Island Flowers on busy wedding weekends. The weddings are
there, but, in most cases, the brides are cutting back due to
the economy. We attempt to keep limited regular hours at
Nefertiti, but, for now, must work around the flower studio
schedules.
The support of friends and neighbors who went through Ike
have been a wonderful blessing. We owe Mayor Thomas and her
staff, City Government Services, and all first responders a
debt we can never repay.
Situations improve with time, but we could still use a cash
influx to see us through this difficult period. Disillusionment
has been hard to combat since, often, there is some new
situation to overcome. But my wife and I love our island home,
and we have made the choice to continue to live here and make a
living in Galveston.
Thank you for your time and kind attention to letting me
speak before this committee.
[The prepared statement of Mr. Dryden follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Mr. Dryden. Let us give him a
round of applause.
[Applause.]
Mr. Dryden, both you and Mr. Gillins' comments were very
heartfelt, and we appreciate the spirit in which they were
delivered, and the way in which you have communicated something
that has to be extremely painful and very frustrating and very
aggravating, and we have heard these stories, unfortunately,
hundreds, if not thousands of times since Katrina until today,
and we are determined to fix these systems the best that we
can.
I will have a question about the credit card issue, but I
do want to acknowledge that a representative from the SBA will
be here on the second panel, and we will ask him specifically
what he can do to assist you if you intend to go forward.
I can tell you that after Katrina, this was the SBA
document that was presented to the Small Business Committee. It
required all sorts of things to apply for help, like having
four years of your last tax returns in triplicate, and, in some
cases, if you had it in blue ink, it was rejected because it
needed to be in black ink. This is what we found when Katrina
hit. So, we forced the SBA to come up with a new, more
comprehensive, readable plan, and now our job is to make sure
that this plan is enforced, and hopefully that will help some
of what you have outlined, but there is obviously a great deal
more that we need to do, and we are very sorry to hear
situations like this, but that is what this hearing is for, to
get on correcting them.
So, let me go on to some questions based on the testimony
we have heard.
Let me start with you, Mayor. You testified that the FEMA
Rental Repair Pilot Program when you were in Washington, as you
recall, in March, you talked about the FEMA Rental Repair Pilot
Program, you said that you were hoping that it would work well
here for the rental housing that had been destroyed.
What is your assessment now about how well this program
worked? What are some areas this program could be improved as
you and your housing team work to not only bring back single
family homes, but multifamily and rental units, particularly
for moderate- and low-income, as well as workers necessary to
rebuild the city?
Mayor Thomas. Well, first of all, I think we still have
roughly 4,000 people on the voucher program spread out. We do
not know where they are exactly, but I think many of them are
here and some on the mainland, and the problem with the program
in the beginning had to do with--FEMA does very well as a first
responder, but when they transition into dealing with human
beings, there is a whole different policy or philosophy in
dealing with citizens, and, so, just to start with, the fact
that our people lost everything, had nowhere to go, and came to
FEMA for a voucher of some kind so they could get a roof over
their heads, the citizen would be allowed to go into a hotel,
for instance, or rent an apartment. Of course, in Galveston,
for quite some time, there was not an apartment that anyone
could rent, but there was some of the hotels open, and then two
weeks and maybe three weeks later, FEMA would say well, you got
to get out; these are just two-week vouchers. Yet, two more
weeks, three more weeks, and the frustration, but also the
sadness of it all, is these are human beings. They did not have
anywhere to go to begin with. Surely, FEMA can take one look at
a disaster area and see that the citizens have to have a place
to live for more than two weeks.
And, so, when I was in Washington before and I say now that
FEMA has got to change that program. A person should have a
voucher for two months, three months before they are told to
get out of a hotel room. And then on the day they are to get
out, they have packed their bags, their baggage, which is
generally in a paper sack. Remember, these folks had no shoes,
they had nothing. They get down in the lobby and FEMA says
okay, you can stay another two weeks.
And FEMA has stopped that now. They have the vouchers now,
I believe, are for longer periods of time. We still have people
waiting for assistance from FEMA, and I do not have any
statistics for you, but there are still people waiting for FEMA
to say we have assessed your house, you can rebuild it. We have
people waiting for FEMA to say here is some money for you to
restore your business.
It just does not work, Senator. None of the policies that
apply to the human element after a storm, they are not
consistent. There is no coordination.
I think it is getting a little bit better, but all cities,
I am sure, have a long way to go before FEMA says here is what
you need, and it does remind me of the story that Dr. Callender
told at lunch, where the FEMA representative came in a few days
after the storm, took one look, and said this thing is going to
cost $600 million to fix. A year later and thousands of work
project things having been submitted, FEMA says to restore UTMB
is going to be, what did he say, $6 million.
So, my subject is, again, give us what we need in the front
end, and that includes people who have apartments that they can
fix for people. FEMA should be upfront with its contributions
to helping citizens. Worry about what we have to pay back
later.
Chair Landrieu. And let me ask you this about paying back.
What loans were available to the City of Galveston and any
other communities that you care to comment about that you may
know of after the storm in terms of just general loans to the
city? What were the limits? What were the conditions? What were
the payback requirements that you were afforded? Anything at
all from either the state or the Federal government or from
your local banking community?
Mayor Thomas. None from the Federal government. Because of
our experience watching you and others go through Katrina, the
City of Galveston was fortunate enough to have a local banking
community who sat down with me immediately, within a day of the
storm, and they all came together and they all agreed to loan
money to our local businesses, whoever needed it, and I think
that has amounted to somewhere over 60 or $75 million----
Chair Landrieu. But to businesses----
Mayor Thomas [continuing]. From our local banks----
Chair Landrieu [continuing]. Not to the city?
Mayor Thomas. Ma'am?
Chair Landrieu. To the city itself. Loans to the----
Mayor Thomas. Oh, to the city?
Chair Landrieu [continuing]. City government itself?
Mayor Thomas. Nothing that I know of.
Chair Landrieu. So, what is your annual budget roughly for
the city?
Mayor Thomas. It is about $90 million.
Chair Landrieu. $90 million.
Mayor Thomas. It is not a big budget.
Chair Landrieu. So, your city was virtually destroyed in
large part, and there was no immediate place for you, as the
mayor of the city, to turn to to borrow money from any fund
that the Federal government might have on terms and conditions
that would be reasonable for you to continue to try to maintain
some semblance of city order and city work while your thousands
of businesses, your major medical school came by--if anyone
from the staff wants to join to add.
Mayor Thomas. I am going to let Steve LeBlanc answer that
question, because we did have an answer, and we had a process,
but we did it ourselves.
Chair Landrieu. Okay. Steve, do you want to----
Mayor Thomas. And I am going to let Steve answer it. He is
in charge of the money around here.
Mr. LeBlanc. We were able to apply for and receive the
maximum of $5 million community disaster loan for operations.
Mayor Thomas. And I want you to repeat that for the record.
Go ahead and tell this group what is the maximum amount of
money under the current federal law that you could borrow.
Mr. LeBlanc. Five million dollars was the maximum we could
receive. We did receive the maximum. Our budget, as the mayor
said, is actually $96 million.
Chair Landrieu. Let me just stop you right there and say I
know that you all clapped for the Mayor, but let us clap for
her again.
[Applause.]
Could you imagine running an operation of $90 million, and
you turn to the Federal government and all they can offer you--
the City of New Orleans budget, just FYI, is $265 million, and
the Federal government offered us $5 million? I said you could
keep it because it is not going to help, and we had to try to
convince the Federal government that there must be for
disasters a pool of funding available to cities and counties to
quickly borrow and pay back over a long period of time.
Obviously, the City of Galveston is a worthy creditor, and that
issue reflects in large businesses within the city, unable
sometimes to receive support at a time when they need it, as
well as the small businesses, and I just wanted to make sure
that was part of the record, but go ahead and continue.
Mr. LeBlanc. Part of the process that we went through was
we tried to get more and we asked for the formula to be
changed, and I think there was some effort to make that happen,
but the process and the formula was insurmountable, and, so, we
were left with--and we certainly appreciated the $5 million and
we took that, but, as the mayor mentioned, we helped our self
with the $20 million through the local banks, and the rest was
just through cutting.
Just for the record, we cut about 15 percent of our staff.
We all took a pay decrease across the board, and we just scaled
back as much as we could to make things happen.
Chair Landrieu. So, you could almost argue at a time when
cities like Galveston and larger and smaller communities need
more staff because the work before it is 10 times or 20 times
worse than what it is on a normal day in Galveston, a normal
day picking up garbage, a normal day trimming trees, a normal
day running the operations of the city, at a time when those
efforts go up 10- or 20-fold, the staff after a disaster in
these cities must be cut because there is currently nothing in
the federal law that allows cities or counties to borrow any
amount of money more than $5 million after a disaster hits.
That would be one of the first places we need to start.
This senator has tried to change that law for four straight
years in a row. So, I hope the HUD officials will step up and
give some voice now to this need.
Dr. Callender, let me ask you this: Where did you all get
your initial operating funds? Did you touch into your reserves?
Did you go to friendly bankers? Did you go to some wealthy
people in the community? How did you continue, if you do not
mind sharing some of that.
Dr. Callender. We ate deeply into our reserves, and it was
a critical issue for us following the storm.
As I mentioned in testimony, we count on the revenues
coming in from our health system to sustain our operations. Our
budget before the storm was about $1.5 billion per year, and
over half of that comes from the operation of our health
system.
Our health system was not able to return to operation as
quickly as possible for many of the reasons I mentioned, we had
people who had lost everything in the storm, and we did not
have jobs for them. We were eating into our reserve. We ended
up taking a very, very hurtful step of a significant layoff of
over 2,300 people, many of whom had lost almost everything, or
significant elements of their life to this storm, and that was
something that was terrible, but it was really our only
recourse because we did not have access to critical funds other
than our reserves.
Chair Landrieu. And, Mr. Gillins, did you have any offer
from any of--obviously, you said the SBA was not forthcoming.
Any local bank effort, any city effort, any HUD effort? Was
there any place for you to turn for some additional capital to
keep you all going or to tide you over?
Mr. Gillins. No, actually, we were told by FEMA
representatives to apply for the SBA, and even if we are
denied, they would get back with us, and that some kind of
supposedly grant for the ones that were denied, but we never
heard from anybody.
Chair Landrieu. And, Mr. Dryden, any of your local banks
step up or local community?
Mr. Dryden. No, only the Galveston Economic Development
Council.
One thing I wanted to say, when you mentioned FEMA, I
remember a quip on the news awhile back where the newscaster
said Galveston, you shot yourself in the foot, and she went on
to say you did too much too fast with your own resources, and
FEMA does not think you need hardly anything. So, I----
Chair Landrieu. Was that somebody from FEMA said that or a
newscaster?
Mr. Dryden. She was quoting.
Chair Landrieu. Oh.
Mr. Dryden. She was quoting a statement by someone at FEMA.
This was a choice we had to make.
Chair Landrieu. Well, you had to. You had no----
Mr. Dryden. My wife and I sat there----
Chair Landrieu. Lots of business people did that.
Mr. Dryden. And we said, do we stay or do we go? And when
we decided to stay, what resources can we pull together to try
and do this?
Chair Landrieu. And when did you start your business? What
year? How long have you all been in that business?
Mr. Dryden. The flower shop was started in 1999. The dress
shop was started in June of 2007.
Chair Landrieu. Okay, so, 10 years, and then a shorter
period.
All right. Thank you, all, very much. We are going to move
to the second panel. We very much appreciate your testimony.
Thank you, all.
[Applause.]
STATEMENT OF MR. ACHILLE ALONZI, ASSISTANT DIVISION
ADMINISTRATOR, TEXAS FEDERAL HIGHWAY ADMINISTRATION, U.S.
DEPARTMENT OF TRANSPORTATION
Mr. Alonzi.----Between the FHWA Texas Office and TxDOT.
Before Hurricane Ike made landfall, our division office advised
the state concerning emergency relief program eligibility and
engineering and contracting issues and shared lessons learned
from prior emergency situations. USDOT also dispatched a member
of the Evacuation Liaison Team managed by FEMA to provide
technical advice in the event of an evacuation.
As soon as it was safe and practical after the storm, FHWA
deployed personnel to the effective areas to work alongside
state and local highway officials to assess the damage and to
facilitate response and recovery efforts.
In the months after the hurricane, the Texas Division
Office conducted three workshops on our Emergency Relief
Program and claims process for joint FHWA and State Damage
Assessment Teams and local government agencies, increasing the
efficiency with which emergency relief program qualification
decisions were made.
To date, FHWA has made down payments to the State of Texas
for emergency relief, including $2 million of quick-release
emergency repair funds with the dredging of the vehicle ferry
between Galveston Island and the boulevard peninsula. In
addition to the immediate infusion of funds for emergency
repairs, FHWA is continuing to process reimbursement claims for
permanent repairs.
FHWA has allocated $70 million in emergency relief funds to
the Texas Department of Transportation. As of last week, TxDOT
has submitted $73.4 million in emergency relief claims covering
38 counties. FHWA has approved $63.9 million as eligible for
reimbursement and is reviewing the remaining $9.4 million in
claims.
FHWA is also involved in interagency coordination to ensure
rapid recovery assistance.
For example, we have coordinated with FEMA, TxDOT, and the
Galveston County Navigation District One on repairs to the
Pelican Island Causeway Lift Bridge.
In March, these agencies met to discuss the repair needs
for the bridge, and, to date, FHWA has reimbursed the
navigation district for $1.55 million for initial and permanent
repairs and contracts for the remaining permanent repairs are
being finalized.
As our state and local partners submit additional claims
for Emergency Relief Program funding, FHWA will work to
determine eligibility for projects and allocate the funding.
The American Recovery and Reinvestment Act is also
providing resources to repair damage caused by Hurricane Ike.
Construction has began on the project on State Highway 87 here
in Galveston County, using approximately $6.17 million in
Recovery Act funds for new pavement and to raise the roadway
elevation for better flood protection.
FHWA is continually striving to improve its coordination
and the assistance it provides to state, local, and tribal
governments. Together with our partners, we are making progress
in repairing the transportation systems destroyed by Hurricane
Ike, but work remains. We will continue to be actively engaged
with our local, state, and federal partners to ensure that
highway recovery efforts are completed quickly and in a
fiscally responsible manner, and we look forward to continuing
our efforts to assist the citizens of Texas.
Madam Chairman, thank you again for the opportunity to
testify, and I am pleased to answer any questions you may have.
[The prepared statement of Mr. Alonzi follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Mr. Alonzi, and I will have two
specific questions that you can be thinking about, and we will
come back to them. One is: Is the contract in place for the
debris removal on state highways, and, if so, could you
describe it? And then what is the rough estimate of all of the
damage of highways, bridges, anything under the Texas
Department of Transportation, the rough, gross estimate of what
the damage was, and what is the gap in funding that exists? In
other words, this is the damage, we can see this amount of
money coming from these sources, and then what is the gap, so
we can have that for the record.
Mr. Tombar.
STATEMENT OF FREDERICK TOMBAR, SENIOR ADVISOR, OFFICE OF THE
SECRETARY, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mr. Tombar. Thank you, Chairman Landrieu. I appreciate
being able to----
Chair Landrieu. And you might want to pull the mike a
little bit closer.
Mr. Tombar. Yes, ma'am.
Chair Landrieu. You have to speak right into it for volume.
Mr. Tombar. I appreciate the opportunity to testify before
you, and, in the interest of time, as you requested, I will
shorten my comments, but ask that my full testimony be included
in the record.
My name is Fred Tombar, and I am a Senior Advisor to
Secretary Donovan at HUD. And, as you are aware, Secretary
Donovan has an extreme commitment to the recovery of Texas and
the entire Gulf Coast. It is a commitment that he expressed in
his very first days as an appointee to the Obama
Administration. His first official visit as secretary was to
the Gulf Coast, initially to New Orleans, and followed a day
later here in Texas, where he had an opportunity to meet with
Mayor Thomas and other local leaders.
He followed that commitment up by subsequent visits, and
most recently to New Orleans to mark the anniversary of
Hurricane Katrina with his entire senior team. Unprecedented in
the history of HUD, showing his full commitment to the recovery
of the Gulf Coast.
On the 23rd of July last year, Hurricane Dolly struck South
Texas and Northern Mexico, and it was followed in September by
Hurricane Ike.
HUD entered into an interagency agreement, IAA we call it,
with FEMA to provide Disaster Housing Assistance Program,
assistance to families impacted by Hurricane Ike, and, later,
amended that agreement to include families that were impacted
by Hurricane Gustav.
To date, there have been some 51,000 families that have
been referred into the program, and, currently, we serve just
over 12,000 families in that program, 72 percent of which are
actually here in Texas.
As part of the case management and continued eligibility
process for families, they provide information to us on their
current income, and based upon this information, the department
estimates that nearly 10,000 families have incomes below 50
percent of the area median income in their community and may be
eligible for long-term, subsidized housing after DHAP-Ike.
Under DHAP-Katrina, as you are aware, Congress appropriated $85
million in special-purpose Housing Choice Vouchers for eligible
DHAP-Katrina families in need of long-term subsidized housing.
While there are currently no funds appropriated to address
long-term subsidized housing needs among DHAP-Ike families, the
Administration is working with its federal, state, and local
partners to develop a plan.
DHAP-Ike terminates on March 13 of next year, and that is
the last month that families will receive assistance payment
under this program.
In addition to the above measures to address devastation
left in the wakes of Hurricanes Ike, Gustav, and Dolly, as well
as a range of other natural disasters that occurred in 2008,
Congress appropriated $6.5 billion in HUD Community Development
Block Grant disaster recovery funding on September 30, 2008.
After the appropriation, HUD's goal was to get the money to
the state grantees as quickly as possible so that the funds
could properly and promptly be used in their disaster recovery.
On February 13, HUD published an initial notice in the
Federal Register that contained the allocation of funds and
program requirements, including waivers requested by the
states. Of the $6.5 billion in the appropriation, $2.145
billion was allocated to 14 states, with the largest
allocation, $1.314 billion, going here to Texas.
In Texas' case, HUD received the state's allocation action
plan for the use of those funds on March 6, 2009, and approved
it immediately. By March 31, the grant agreement was signed
between HUD and the state, and shortly thereafter, the $1.314
billion in CDBG disaster recovery funds was released by HUD to
the State of Texas.
On August 14 of this year, a subsequent notice was
published which allocated the remaining funds and granted
additional waiver requests to Texas and several other states.
The second allocation to the State of Texas was approximately
$1.7 billion, bringing their total of 2008 CDBG disaster
funding to over $3 billion. The state's amended action plan is
due to us by September 30.
Based upon the state's initial action plan, Texas is
distributing the majority of its money, its initial allocation,
to 11 regional Councils of Organized Government or COGs. These
COGs have identified uses of funds in housing, restoration, and
repair of infrastructure and economic development.
CDBG has played a significant role in assisting states and
communities with disaster recovery, especially long-term
recovery. Over the last four years, we have identified many of
the challenges that face our federal-state partnership in
quickly administering grant assistance at the individual and
neighborhood level.
We are dedicated to working through these challenges, while
ensuring a continued focus on both performance and
accountability. Long-term recovery and rebuilding after a
disaster is complex and requires tough decisions at all levels,
as well as the ability to acquire additional capacity to carry
them out. But I am confident that, together, we can and will
move Texas from recovery to revitalization.
Thank you for the opportunity to appear before the
committee. This completes my testimony, and I look forward to
your questions.
[The prepared statement of Mr. Tombar follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Mr. Tombar. We are going to talk
at question and answer about the distribution of that Community
Development Block Grant funding and if it is based on damage or
other factors, and how it is being allocated to the different
parts of Texas.
Mr. Gonzalez.
STATEMENT MR. MANUEL GONZALEZ, DIRECTOR, HOUSTON DISTRICT
OFFICE, U.S. SMALL BUINSESS ADMINISTRATION
Mr. Gonzalez. Good afternoon, Madam Chairman and members of
the Texas Congregation Delegation. Thank you for inviting me to
discuss how SBA applied the lessons learned from Hurricanes
Katrina, Rita, and Wilma to better assist the survivors of
Hurricane Ike. The process improvements that had been made,
that have been put into place allowed SBA to assist the
survivors in an effective manner.
My name is Manuel Gonzalez, and I am the District Director
of the Houston District Office. I am proud to lead the local
team of dedicated staff in Houston.
Through our Office of Disaster Assistance, ODA, the SBA is
responsible for providing affordable, timely, and accessible
financial assistance following a disaster to businesses of all
sizes, private, nonprofit organizations, homeowners, and
renters. Many disaster survivors have insurance, which covers
part or all of their losses after a declared disaster, but, for
uncompensated losses, an SBA loan is a primary form of long-
term, federal financial assistance.
This financial assistance is available in the form of low-
interest loans, and since the SBA's inception in 1953, it has
provided 1.9 million loans for more than $47 billion.
The damage to the Gulf Coast from Hurricane Ike elicited a
strong and proactive response from the U.S. Small Business
Administration. The agency was prepared to undertake a
multifaceted, aggressive approach in response to the storm, and
provide millions of dollars of relief to the victims.
The SBA approved more than $638 million in disaster loans
to help more than 10,000 Texas homeowners, renters, businesses,
and nonprofit organizations recover and rebuild from the damage
caused by Hurricane Ike.
The SBA approved over $432 million in disaster loans for
8,473 Texas residents to repair or replace their disaster-
damaged or destroyed homes and personal possessions.
SBA approved over $206 million for 1,574 Texas businesses
and private, nonprofit organizations to repair or replace their
real estate, machinery, equipment, inventory, and other
business assets and provide working capital to help meet
disaster-related needs.
The SBA disaster loan program also provided funds to help
residents and businesses with the cost of making improvements
to prevent or minimize the same type of disaster damage from
occurring in the future.
Additionally, SBA responded to the needs of Texas residents
and business owners by deploying 503 SBA disaster assistance
workers to Texas to provide one-on-one service to disaster
victims. SBA representatives staffed 72 Disaster Recovery
Centers, 29 Mobile Disaster Recovery Centers, 9 SBA Disaster
Loan Outreach Centers and 8 SBA Business Assistance Centers.
At these centers, SBA representatives personally met with
more than 88,400 disaster victims to answer questions, explain
SBA's disaster loan program, help complete disaster loan
applications, and close disaster loans.
Chair Landrieu. Mr. Gonzalez, just try to summarize, if you
could. Just summarize a little bit.
Mr. Gonzalez. Okay.
Chair Landrieu. So we can keep time for questions.
Mr. Gonzalez. Okay. Following the 2005 Gulf Coast
hurricanes, SBA experienced significant challenges in response
to natural disasters of such a large scale. The cumulative
result of the Gulf Coast disasters caused damage that was so
extensive that the number of resulting disaster loan
applications overwhelmed SBA's capacity to process them. SBA
recognized the severe challenges that hindered its efforts to
aid recovery in a timely manner, and has made dramatic
improvements to its process operations.
Today, by incorporating lessons learned and process
improvements, SBA's Disaster Assistance Program and our sister
federal agencies have overhauled the processes and response
protocol. We learned important lessons from the 2005
hurricanes, and have significantly executed our role to support
the postdisaster economic recovery following hurricanes like
Ike.
SBA is better prepared than ever to process loans faster,
provide better-quality service, and be more helpful to our
customers, disaster survivors.
Some of the improvements have been--SBA has made
significant improvements in our application processes since
2005. The average processing time during Hurricane Katrina was
66 days for disaster business loans, 74 days for disaster homes
loans.
Today, the average processing time is 14 days for disaster
business loans and 6 days for disaster home loans.
Additionally, on August 4, 2008, SBA introduced an electronic
loan application which is currently in use and has capability
of 5,600 applications per hour.
Furthermore, we have revamped the postapproval process,
improving process and tools for loan closing and fund
disbursement by creating case management teams with staff from
each key area, such as loan processing and legal. The emphasis
is on customer service and accountability, with each approved
loan assigned to a team and an individual case manager.
On top of this, we have increased the Disaster Credit
Management System capacity from 1,500 to 12,000 concurrent
users, expanding our workforce to include over 2,000
reservists, along with enhanced training and quality assurance
to ensure consistent adherence to policies and procedures,
expanded infrastructure, including 210,000 square feet of surge
space and equipment and better coordination between nondisaster
field staff and improved harmonization across disaster center
operations.
In closing, we appreciate the opportunity to share with the
committee the role SBA plays in small business disaster
recovery efforts, and we believe that the reforms we have
instituted and the new tools Congress has provided will allow
us to more effectively and efficiently respond to the needs of
our nation's citizens. I look forward to further describing
these efforts and answering your questions.
Thank you.
[The prepared statement of Mr. Gonzalez follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you very much, Mr. Gonzalez, but,
obviously, I am going to ask you about Mr. Dryden's specific
case when I come back and why a business like this going
through the process that he did would have been rejected by you
all. Also, you have had 536 business loans approved, only 280
dispersed in Galveston, so, I am going to ask you about that
discrepancy, and generally how many businesses were destroyed
and how many loans you all have made in the general area of
Ike.
Go ahead, Judge Eckels.
STATEMENT OF THE HONORABLE ROBERT ECKELS, JUDGE, AND CHAIRMAN,
GOVERNOR'S COMMISSION FOR DISASTER RECOVERY AND RENEWAL, STATE
OF TEXAS
Judge Eckels. Madam Chairman, I am pleased to be here again
to visit with you about the storm, while I wish it was not
about storms every time we have a chance to do this.
Chair Landrieu. And pull this a little closer.
Judge Eckels. Certainly.
Chair Landrieu. Because I can hear you, but I am not sure
the audience can.
Judge Eckels. It is important that I thank you, too, for
your efforts and those of Senator Cornyn and Senator Hutchison
for the use of CDBGs Relief Funds for federal match. That is an
important one for us, while it is not really a topic here
today, I thank you for you interest in that----
Chair Landrieu. Thank you. We just passed that amendment
this week off the Senate floor, and we hope it stays in the
bill because it will give the State of Texas a great deal more
flexibility in how those Community Development Block Grant
monies can be used and can leverage them well. Taxpayers, I
think, will get a better outcome and better result.
Judge Eckels. It is particularly important in small
jurisdictions, where $750,000 may seem like a lot of money, but
they do not have the quarter million to match, and it is an
important component, so, we do appreciate that.
I was appointed by Governor Perry in October to chair the
Governor's Commission on Disaster Recovery and Renewal. Jeff
Sodjstrom, he was with us earlier, was a member of that
commission, and we appreciate his work and for all of those
members.
In the interest of time, I will submit my written comments
earlier for the record and try to briefly cover some of those
points and be able to answer questions, as well.
Like you found today, we found public testimony invaluable
in gathering the firsthand knowledge of those issues, and Mayor
Thomas did a great job today in outlining a lot of those kinds
of things.
We did issue our preliminary report in March with several
recommendations that needed quick action by the legislature.
Again, we were not set up as a state-centric kind of
organization here. It was more local-centric in response, but
they did include more than $600 million in disaster-related
appropriations to state agencies, departments, higher-education
institutions, school districts, health care facilities, and
probably, most importantly, a disaster contingency fund that
can match federal dollars for local jurisdictions that have
specific financial hardships in the declared disaster areas.
Any state or local government can request money from the
Disaster Contingency Fund to pay for disaster preparation and
recovery, and we can use these funds to preposition equipment,
personnel, and other vital resources in future disasters so
that we do not have the issues that came up earlier about some
of the highway and debris-removal projects.
Chair Landrieu. They still cannot hear you, Judge.
Judge Eckels. I am sorry.
Chair Landrieu. Yes.
Judge Eckels. As you know, in November of 2008, Congress
appropriated more than $6 billion in Community Development
Block Grants for the disasters of 2008. HUD announced its first
allocation of $2.1 billion dollars in disaster recovery
assistance to 13 States and Puerto Rico. Of that amount, HUD
allocated $1.3 billion dollars to the State of Texas.
We did have to wait more than six months, and had a lot of
persistence on behalf of the governor and others, including
members of this committee, where they made their final
allocation of CDBG funds in 2009. Of the second allocation,
Texas received $1.7 billion in assistance.
The Texas Department of Rural Affairs is the lead agency in
that partnership to administer these funds, and although HUD
announced that second round of funding in June, the federal
guidelines were not published until mid-August, and the TDRA
has worked to quickly draft an amended action plan for round
two funds, and is in the process of gathering public comment.
After hearing the concerns about the initial round two
draft plan, the governor directed TDRA to develop a new formula
for proposed allocation, and that is currently pending. I have
appreciated today in the public comments from others here today
that there are concerns still out there about this, and we will
convey those concerns back to the TDRA.
They also received extensive feedback requesting more local
control over the direction of the funds, and local officials
and staff have felt they were best equipped to identify their
communities' priorities for recovery. I believe they were
right, and the new proposal provides that recommended housing
and the nonhousing allocations by regions, but that those
regions would be able to move the funds between housing and
nonhousing interchangeably, based on need. That takes off a lot
of other state controls. The deadline for submission for this
action plan is September 30th.
In business recovery, since the Federal Emergency
Management Agency, FEMA, and CDBG primarily addressed housing
and infrastructure needs, there are limited options for
business owners needing disaster assistance. The SBA has
approved over $200 million in business loans, but many
businesses are still struggling or have closed their doors.
Population decreases and temporary relocation of people while
their homes and communities are repaired have reduced the
number of patrons and people that are able to keep these
businesses going. That has a chain reaction that affects the
tax base in the small communities that are already struggling
to pay their share of the FEMA projects and cover other needed
repairs that are not eligible for FEMA assistance.
You mentioned earlier, too, the--well, I have touched on
some of the questions that you asked earlier, do you want to
follow-up on some of those, the impact it has had and found
around the state?
Texas is rebuilding, and we are pleased with the progress
in many areas that are being made. Although Galveston lost 180
business members of their Chamber of Commerce, they gained 130
members. So, there is some rebound you have seen coming in, and
you have heard Mayor Thomas and the folks earlier talking about
how that happened.
The General Land Office in Texas, Commissioner Patterson
has just announced over $135 million in custom protection
projects.
As we move forward, I would encourage you to keep up your
effort and for Congress to revise the Stafford Act to
accommodate recovery from catastrophic events. One year after
the storm, while there is a lot left to be done, a lot has
happened, and there is a lot of progress, and that is a credit
to the local officials who are caught up in much of this
process.
None of us here doubt the intentions or the desires of FEMA
or of Congress to help our communities recover, but, as you
heard from Mayor Thomas and others today, the process often
frustrates the promise of help.
I would recommend personally, and it is not a commission
recommendation, but personally that Congress revise the
Stafford Act to allow the director or the secretary to empower
states to directly handle public assistance and individual
assistance. There is really no reason to have to send a project
worksheet to Washington for approval when time is of the
essence. I would provide that contemporaneous audits of this
process and send the money through the state directly to the
mayors and the county judges who do the jobs. Again, with
transparency and a strong audit trail.
Texas faced three hurricanes, two tropical storms, and
three major rain events in fifty-eight days last year. On top
of that, we just come off our most devastating wildfire season
in history. And with the efforts of the mayors and the judges
and the regional councils of government, we are moving forward
with recovery.
You should create a process in Congress that lets those
local leaders in the communities respond quickly to the needs
of the government, the people, and the businesses who live and
work there.
I thank you again for your opportunity that you presented
for us to be here, and we will be happy to answer questions
that you may come up with or respond to some of those earlier
questions, too.
[The prepared statement of Judge Eckels follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Judge, so much. Thank you, all,
for your testimony, and we will go through these questions as
quickly as we can because I know we are somewhat limited in
time, although, I will extend this hearing probably until 3:15
to make sure we get all of these questions in.
Let me begin with this issue of Community Development Block
Grant, which is really the bulk of the flexible funding that
the Federal government has been using for this particular
program, beginning actually with the attacks in New York on 9/
11, then followed-up with the hits of Hurricanes Katrina and
Rita, and then with Hurricanes Ike and Gustav, et cetera, to
help fill in the gaps that the general disaster programs miss.
This Community Development Block Grant money from the Federal
government is in large measure one of the largest streams of
revenue that comes down from the Federal government. There is
some transportation funding, there is some direct FEMA funding
through private assistance, but this is the largest and most
flexible, so, in some ways, it is the most important.
Let us talk about this first allocation. I was actually
pleased that this was actually my amendment, supported by
several of the members of the Senate to require that one-third
of the funds be dispersed within 60 days, Mr. Tombar, because
what had happened in Katrina is the money was there, but it was
never dispersed to the locals. We insisted, and you all
responded and acted, that one-third of the money be
distributed. That was done.
We also insisted in this language that the money be
distributed based on damage and unmet needs because we had seen
in the past that some of the money in previous storms had been
distributed on basis other than damage, and, obviously, if you
are trying to recover from a storm, our view, my view in
particular but it is shared with many members of the Congress,
is that when this money comes down, it should come to the
communities that were hurt the worst where the needs are the
greatest.
I would like you, Judge Eckels, to comment about how the
state is coordinating these efforts and how you are tracking
this directive, and then for HUD to comment if you generally
agree with that directive and will you all be following it?
So, Judge Eckels, could we start with you?
Judge Eckels. We appreciate your efforts to ensure that
those funds were made quickly. On round one, the $1.3 billion
have already starting going out the door, and millions of
dollars in grants have started reaching applicants, and I think
it is largely because of your efforts to push that process
along.
I do not have the specific numbers in front of me. I have
been working with the policy side, but I will be happy to get
that for you.
Chair Landrieu. Texas, the $6 billion that is for all the
states in disasters in 2008, because of the requirement that we
insisted--and your senators fought hard for this, but so did I,
having been on the wrong side of this formula with Hurricane
Katrina--we insisted that the money be distributed as between
states based on damage, which is why out of the $6 billion,
Texas will receive $3 billion.
It went to all states in the union with disasters in 2008,
but because the damage here in the State of Texas was the
greatest, you all will receive the greatest amount based on
damage, and that objective data was used to generally
distribute that funding.
Now the question is to both the judge and to Mr. Tombar, as
that money now comes to the State of Texas, $3 billion in two,
big tranches, how is the formula being designed to make sure
that that money then gets to the counties and the cities and
the communities that were the hardest hit----
Judge Eckels. Sure, the----
Chair Landrieu. And, Mr. Eckels, go ahead.
Judge Eckels [continuing]. The plan that we currently have
allocates more than 90 percent of the funds to the Regional
Councils of Government, is distributed, and they decide how
those funds are split up within those local regions. And,
again, it is an example probably as you go around the country
and look at the nation.
There was an earlier question about the loan funds and the
budgets of New Orleans and Galveston, and New Orleans does
different things, and because of the state law in Galveston, it
is combined city, county, schools, and other things.
We find the same issues here. Different cities have
different needs, different regions have different needs, and we
found the Councils of Government to be an effective mechanism
with distributing these funds among the cities and through the
regions.
Chair Landrieu. But are the Councils of Governments around
the whole state or are they just in the areas of the disaster?
Judge Eckels. No, they include the whole state. In this
area, the damage within a region, HEAC, for example, in the
first round, they would look at the damage estimates and
distribute the funds into this region, and then HEAC would
distribute that for projects among the communities.
It works very well. There are some issues that come up.
Large, regional projects.
We are looking now at a storm surge study, for example,
that it would be working with Louisiana, as well, on this
because we are trying to take it all away from the southern
Brazoria County, Galveston County, and on up the coast towards
Jefferson and Orange Counties, and the Sabine River, you may
have heard them talk about it here in Galveston of the Ike
Dike. The governor is very strong on doing a surge study, but
it transcends regional councils, it transcends the state
agencies, and, so, we are looking to create a partnership among
the local governments in this region that can administer and do
that study because there is really no one in our structure that
is designed to do it as you might have in Louisiana. So, it is
the flexibility for us to be able to deal with those issues as
our laws and process works is very helpful.
Chair Landrieu. Okay. Mr. Tombar, could you comment about
the Secretary's and Administration's view on principles about
how that money should be distributed once it hits the state?
Mr. Tombar. Certainly. Again, as you mentioned, the
Community Development Block Grant Program is extremely flexible
in its design. And it does not give a lot of latitude to the
Federal government in determining how that money is used. But
Congress directed us to take into account the extent of damage
when making distributions to the state, and we did that using
data from some of our federal partners from FEMA and SBA and
others to make determinations about loss and housing and
business and infrastructure damage, and use that to make a
determination.
Some states, your home state of Louisiana, for example,
request the data that we use to make our determinations about
distributions across the states because we also have that at
the local level and use that to make the determinations. That
is not a federal requirement. The CDBG Program does not work
that way, however, some do that, and we make those data
available when requested.
In the case of Texas, I am not aware that that request has
been made to us, nor is the distribution being made necessarily
in that way following the way that we made the distributions
from a federal level. It is not a requirement. Part of the
reason that local and state officials like the Community
Development Block Grant Program is because it does provide that
level of flexibility though.
Chair Landrieu. Yes, and I am going to follow this up with
you all because I do have other questions to the other panel,
but I want to be very clear about one principle, that we are
now using Community Development Block Grant at the federal
level to try to respond to communities that are struck by
disasters because the current programs are just not sufficient.
After a catastrophic disaster in particular, there are so many
unmet needs in the communities affected by the disaster. It is
not necessarily meant to be a Community Development Block Grant
bonanza for the entire state.
I am sensitive to the fact that in these storms, there are
many counties and parishes that are damaged. Some more than
others, but it is the great hope of this Chair and I think many
members of Congress on both sides of the aisle that that money
will track to the communities that are the hardest hit, and I
am going to ask HUD to look carefully, and we will work with
our Texas leaders and the other leaders that are in other
states.
Missouri had some terrible flooding. I think Idaho had some
terrible flooding. So, there were about 12 or 13 states in
2008, as I recall, that had some serious damage, and we saw
just last week the terrible flooding in Atlanta, Georgia, from
rains. If we send the Community Development Block Grant to
Georgia, the idea is to get it to the area in Atlanta that is
flooding, not other areas of Georgia that might have very
worthy and significant projects.
So, I hope that you receive this in the spirit because that
is our only tool right now at the federal level. Until we are
able to fine tune and provide other tools for the SBA, there
are so many gaps, and we are trying to fill them with this
imperfect program that was not even designed, as you know----
Mr. Tombar. Yes.
Chair Landrieu [continuing]. To be a disaster recovery
program. It was designed to be a revenue sharing program for
local communities and their ongoing, everyday, ordinary
development of roads and schools and bridges, et cetera, et
cetera. We are using it as a disaster relief program now almost
routinely, and HUD has a great position in this because you
have to approve the spending plans.
Mr. Tombar. If I may, you are right that, as I have
mentioned, the State of Texas, we are expecting a plan for them
on the second allocation by sometime next week, September 30.
However, the program itself, the Community Development Block
Grant Program, and you have heard me testify to you about this
before, that it is sort of a square peg in a round hole. It is
a program that is, one, meant to be incremental. It is a
program that was never designed for a disaster context, but it
is used in that context because of the flexibility, because of
the way that money can quickly reach communities.
What it does not provide is any type of stick or hammer,
anything for the Federal government to be really directive
about how those monies are used, beyond cajoling, beyond
encouraging, we really--if the plan, that an actual plan that a
state submits meets the really broad national objectives that
the Community Development Block Grant has established based
upon by Congress, we then have to approve that plan. There is
no way to disapprove it.
Chair Landrieu. I am going to be watching this very
carefully, and we will work with our friends in Texas because
this is our best effort to get money from the Federal
Government to the communities that found themselves hardest
hit, and there are requirements that 50 percent of these funds
in the standard law need to go to moderate- and low-income
individuals.
Mr. Tombar. Yes, ma'am.
Chair Landrieu. And a special requirement--that is a
standard.
Mr. Tombar. Yes.
Chair Landrieu. That is not the Landrieu Amendment. That
was the standard of the law. We also required specifically that
10 percent of this funding go for, I think, rental, affordable
housing. That has to be in the plan because it is required in
the law. I am happy that we got the 10 percent waiver lifted so
that money now can become very flexible, and I was happy to
leave that.
Let me ask Mr. Gonzalez a question, and then I want to get
to you, Mr. Harris.
Please respond to the heartfelt testimony of Mr. Gillins
and Mr. Dryden. Two small businesses right here in Galveston.
They said that they were never approached by the SBA. Mr.
Dryden's testimony is he finally got the application process
through and was rejected.
Could you please give us some sense that the SBA is
actually aggressively reaching out after disasters to small
businesses, and, if so, how did you miss these two? Please give
us some numbers that help us to really understand what the SBA
is doing.
We have been able to figure out that original loans
approved--this is for Galveston County only. Okay, I do not
have the data with me. We have it, but I do not have it with me
for others. Of five hundred thirty-six business loans, only two
hundred eighty loans were dispersed. We do not know what the
average amount of those loans were, but we know the total
amount, $64 million.
Do we even know how many businesses are in Galveston
County? Does anybody know? Does anybody know from the city what
the universe of businesses are? And, if you do not, that is
fine. I am just asking for rough numbers. I do not know if we
have 2,000 small businesses.
Mr. Gonzalez. We can get that.
Chair Landrieu. Or 1,000 small businesses, but we only went
through the SBA 280 businesses received loans. Those loans
could have been for $10,000 or $30,000 or $50,000. We have
those records. Please give us some idea, because this is a real
problem we are finding in many places after storms that the
smallest businesses that are really responsible in many
communities for over 60 to 70 percent of the employment. Small
businesses can represent in some communities 90 percent or more
of the employment, are having a very hard time getting the
loans necessary to get back into business so that they can keep
themselves employed, hire other people, and get the communities
back rebuilding. It is virtually impossible to rebuild a
community without the small business base.
Mr. Gonzalez. Madam Chairman, I am in total agreement with
you of that statement. Looking at the graph, first of all, I
would say that one of the main components that probably impact
the difference between approved loans and dispersed loans is
that some of the homeowners and business owners have received
insurance proceeds that cover the losses incurred. The other
components, I do not have the data, but I would be glad to get
it to you, to your staffers. As far as the number of businesses
in Galveston, I do not have that either, but we can get the
data to your staffers.
Chair Landrieu. Okay, because I am going to ask you in the
assessment of Ike, which is now a year into Ike, in the areas
that were impacted most severely, how many small businesses
were there and how many of those businesses actually received
help through the SBA?
Mr. Gonzalez. Again, I do not have a----
Chair Landrieu. I think it is a relatively small number.
Now, we do not expect all help to come from the SBA. We
could have more partnerships with some of the local banks, but
what we are going to do is gather information in these disaster
areas, how many loans, how much help came from the SBA, how
much help came from the local banks, how much help came from
national or international banks, and then where the gaps are.
Mr. Gonzalez. Okay.
Chair Landrieu. So that after disasters, particularly on
the Gulf Coast, where these small business people are putting
everything on the line, everything on the line, they need to
have confidence that if another storm comes, there is someone
that can help them with a combination of loans and grants, and
it does not have to be a complete reeducation every two or
three years.
Just like if there is an emergency in your house, you pick
up the phone and call 911, and, for the most part, it works.
Not in every case, but we are getting better. After a storm,
they pick up the phone and call 311 or 611, and the Small
Business Administration answers and says yes, Mr. So-and-So, we
know you have been in business 10 years. We are going to help
you get back in business; pick up your money Friday. I mean,
that is where we want to be.
We are so far from where we need to be, because our cities
and counties are going to have a very hard time attracting
people to come to start businesses here when they know the
risks are so great. Their insurance will not cover their
losses, and they cannot find the SBA when they need them.
I want to say this before I ask Mr. Harris. I want to
acknowledge publicly the two banks that were here that helped.
What is the small business?
Would the bankers that are here please be acknowledged?
Could you acknowledge the two bankers that stepped up to the
plate to help the business we went to today?
Unidentified Speaker. [Off microphone.] Was HomeTown Bank
of Galveston. And, just as background, we have estimated there
are about 3,500 businesses on the island. I do not have an
estimate for you for the county, but we provided that to your
staff. And, so, there were four local banks that actually came
together to lend $40 million to $50 million in private loans to
the businesses immediately after the storm.
Chair Landrieu. A model like that, we would like to
acknowledge in this public hearing. We are going to look into
it more and potentially use it so it is a partnership between
the local banks that actually know that the businesses were
here before, they know the ones that were profitable, the ones
that were successful, and can help maybe in partnership with
the SBA. I mean, 3,500 businesses on Galveston Island. I hope
we reach more than a few hundred, and we need to really step it
up.
Mr. Harris, I want to speak to you, and we are going to
finish in just a minute, but can you comment about FEMA's work
with HUD and how you all have decided to now work together, as
the law now requires under the new disaster plan that FEMA is
responsible for housing up to what, 60 days or 90 days, and
then when and how does HUD step in? I would like both of you to
comment because we have 4,000 families in this area still
having not been able to return. We toured a lot of
neighborhoods today that still need to be renovated and homes,
single-family, multi-family, et cetera. I think it would worth
commenting how, under the new requirements, you all are working
with HUD for the record?
Mr. Harris. Disaster housing is always a critical issue in
a major event, and we addressed it with multiple options.
Sometimes and a lot of times, the victims, the survivors
can find housing with relatives, friends, second homes,
whatever. That is a percentage. Others need help in finding
hotel and/or apartment units.
We have the Temporary Shelter Assistance Program that we
manage, and, from there, it goes into other units, such as the
Disaster Housing Assistance Program, which is a HUD Program,
and then the final things that we use is our temporary housing,
mobile homes.
So, it is a combination of programs that can address each
individual's needs, see where they stand in the system, and
provide them the exact service that they need.
Now, HUD, I mean, everyone would think that Housing and
Urban Development would be the lead in this, but, really, they
have only been part of disaster housing as a formal disaster
response industry as in the last few years. And I think we need
to improve this coordination bottom line because they have
their way of doing things, and we have ours. We have people
talking at the headquarters level and they are just not linking
up to our benefit or the peoples' benefit in the field because
it is communication, it is different usages of words and
verbiage and they are tracking one number, and we are using
another number, and we find out we are not even using the same
language.
I would suggest that a potential solution for this is that
instead of--and we realize that they do not have budget for
this. I mean, this is a new thing that they are stepping into,
providing emergency disaster housing.
We handle a lot of other federal agencies under a mission
assignment process. Why do not we do that with HUD? And why do
not we do that with the Highway Administration?
Chair Landrieu. Well, that is a very good suggestion, but I
just want to be clear that FEMA has been in the business of
short-term emergency housing, but I put the emphasis on
``short.'' Prior to Katrina, these disasters were sort of
garden variety disasters. I mean, Hurricane Andrew was quite
large, 18,000 homes were destroyed, and the community was
really topsy-turvy for 10 years, but, for regular storms, which
come in and go out where a few hundred homes are destroyed,
FEMA would put a few trailers, give out a few vouchers, in a
year or so, and everybody was back. But what we have to
recognize is, unfortunately, those days of garden district
storms are over with. Garden variety storms are over. These
storms are big, they are fierce, the damage is substantial, and
the reason that we have asked HUD to try to step up is because
we are rebuilding cities now. We are not just providing
temporary housing to people, and that is what FEMA does not do,
is rebuild cities, that is what HUD and the Department of
Transportation and others--in the rural areas, it is Department
of Agriculture--have jurisdiction over to try to rebuild these
small towns and large cities, which is why we are attempting at
the federal level to try to get these two agencies to come
together.
It has been required by amendment after amendment after law
by law, and I am saying that our patience is running thin about
getting it right. You are going to take the first 90 days, and
then you all take 90 days plus, or there is a trigger. If the
disaster is X large, you have your role, you have your role
because there are people who are homeless who have never been
homeless in their life, who are homeowners that have no place
to live. They have never been on government assistance. Then
you have got the whole other group who has been on government
assistance is depending on the government to help them to get
in a more self-sufficient manner.
Mr. Tombar, can you give us any hope that this is being
done in the new Administration?
Mr. Tombar. Certainly. As you are aware, that visit that I
mentioned earlier that Secretary Donovan took to the Gulf Coast
in March just weeks after his confirmation, he was joined by
Secretary Napolitano, and it signaled it is certainly a
coordination between the two departments that has continued.
I, on behalf of Secretary Donovan, in regular
communications with people at the Department of Homeland
Security and FEMA are working on a national coordination. In
fact, we already have in advance of any possible hurricane or
other disaster this year an agreement that has been all but
worked out to provide DHAP assistance should it be necessary.
There are a few final things that we are working through, but
that agreement essentially could be signed by Days Inn so that
we have something in place.
As Mr. Harris testified, there is not a permanent funding
source at HUD for any type of disaster program. In fact, the
DHAP Program is funded by FEMA under the rules of the Stafford
Act, and, in fact, as I testified, the DHAP-Ike Program
terminates in March. Unless there is some other provision that
is made available, there is not assistance right now to help
those families that we recognize under our program rules would
qualify for permanent assistance.
We have been able to transition some 12,000 families under
DHAP-Katrina with the assistance of FEMA to our permanent
housing program, using the $85 million that Congress made
available. After the Northridge Earthquakes, Congress also
provided for permanent housing for those families that needed
it, but there is no such provision.
Part of the problem is that there simply has not been a
permanent program created. The Obama Administration, as you
asked, has been working to identify in the event of a major
disaster or catastrophic disaster, beyond, as you said, the
garden variety disaster, what are some of the basic authorities
and programs and funding that we need? And we are prepared in
working with some folks from your staff and others on Senator
Lieberman's staff to soon come before the Congress and actually
make a presentation of what is----
Chair Landrieu. Well, we are looking forward to it. This
has been very frustrating, and I know it is extremely
frustrating to the communities on the ground, the families who
need to be given some direction.
I want to ask you, Judge, and this is going to have to be
the final question, and we could, of course, stay here for days
on this subject, but under the plan that the State of Texas is
putting together for the distribution of Community Development
Block Grant, do you know what percentage of that plan is
dedicated to housing?
Judge Eckels. I do not know the housing. You asked earlier
about the CDBG funds and COGs around the state. I want you to
understand that----
Chair Landrieu. Yes.
Judge Eckels. The CDBG funds will be distributed only to
those disaster-eligible counties. So, only those COGs that are
in disaster-eligible counties.
The split between housing, I do not have that number. I
know that we are providing some flexibility on that for the
local levels because, in many cases, in our initial allocation,
we had to hit to the hard allocation between housing and the
other funds available for CDBG, and we found that they could
not expend the housing funds, that it was not enough providing
a little more flexibility in our new formula to allow the local
councils and regional councils to be able to adapt for those
areas.
Chair Landrieu. Okay. Well, if you could get that to us.
Judge Eckels. Sure.
Chair Landrieu. We would be very interested, but I am glad
you clarified the CDBG money is not being distributed
statewide.
Judge Eckels. It is only to those counties that are----
Chair Landrieu. It is being distributed----
Judge Eckels [continuing]. Disaster-eligible counties that
are declared.
Chair Landrieu [continuing]. To the counties where they
were declared disasters. And then each of those regional, what
do you call them, COGs?
Judge Eckels. Councils of Government, yes.
Chair Landrieu. COGs are coming up with formulas as to how
to spend that money.
Judge Eckels. Within their regions, they distribute those
to the cities, and, again, there are some areas that transcend
regions, and the governor will have a little bit out for those.
Another issue, and it is kind of a left field here at the
very end, and I hate to throw it in, but it was mentioned
earlier, and these are the ones from Ike. These are the Ike
funds.
Now, we understand we are under four--the entire coast from
the Rio Grande to the Sabine River is under disaster
declaration today because of the hurricanes. We had three
hurricanes, two tropical storms, four, big rain events.
Chair Landrieu. So, this would extend down to the----
Judge Eckels. This is Ike. But, yes, it extends all the way
to the valley, and when you pick up the other storms----
Chair Landrieu. The valley and went all the way to the
point?
Judge Eckels. To the border with Mexico.
Chair Landrieu. To the border.
Judge Eckels. One issue that you mentioned specifically
here and a little bit, is the people trying to take care of
themselves. They bought insurance. And if you think in terms of
the flood insurance and the windstorm insurance, you heard a
little testimony before of confusion.
The flood insurance we spent a lot of time working on that
issue with the rising water, and it does a good job for that,
but when you have a combined surge and wind event and the
building is gone and there is a debate between the flood folks
and the windstorm people, if there was a mechanism to do a
combined windstorm and flood, and they are different programs,
the state is operating the windstorm program and the federal is
doing the flood program, if we could find a way to do a
combined windstorm and flood in those areas where you have a
hurricane with 150-mile-an-hour winds and a 20-foot storm
surge, right now, both sides are denying the claims and saying
oh, it is a flood, no, it is wind.
Chair Landrieu. We have to get this straight for the
economic vitality----
Judge Eckels. But throw that out----
Chair Landrieu [continuing]. Of the Gulf Coast from Texas
all the way really up through the East Coast, as well,
because----
Judge Eckels. And Mid Atlantic, as well.
Chair Landrieu. Certainly through our states.
All right, one more comment, Mr. Gonzalez.
Judge Eckels. Thank you again for having us.
Chair Landrieu. Thank you.
Mr. Gonzalez. Madam Chairman, I would like to suggest
something to the two gentlemen business owners that had their
disaster requests declined, and that is to reach out to our
resource partner, the University of Houston Small Business
Development Center. One of their satellites is here, College of
the Mainland here in Galveston. To get some assistance by
recrunching the numbers, see if we missed something, and they
could pick up something.
And, also, if they wish to apply under the Guaranty 7(a)
Program that I lead out of Houston, especially now that we have
the Economic Recovery Assistant Act of 2009, where we will
guarantee 90 percent of the loan and pay the guaranteed fees,
that might entice some of the local lenders, especially those
four that the gentleman mentioned, to help these two small
businesses.
Chair Landrieu. Thank you very much. I appreciate that.
Thank you all. You have been very patient. Again, we could go
on all afternoon, but thank you very much, and the meeting is
adjourned.
[Whereupon, at 3:26 p.m., the hearing was adjourned.]
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