[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

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

                                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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            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

                              ----------                              

                           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

                              ----------                              


                       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:]


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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:]


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    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:]


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    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:]


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    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:]


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    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:]


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    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:]


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    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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