FEDERAL HOUSING RESPONSE

TO HURRICANE KATRINA

HEARING

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

FEBRUARY 6, 2007

Printed for the use of the Committee on Financial Services

Serial No. 110–1

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FEDERAL HOUSING RESPONSE TO HURRICANE KATRINA

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FEDERAL HOUSING RESPONSE

TO HURRICANE KATRINA

HEARING

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

FEBRUARY 06, 2007

Printed for the use of the Committee on Financial Services

Serial No. 110–1

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

LINCOLN DAVIS, Tennessee 

ALBIO SIRES, New Jersey 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

ROBERT WEXLER, Florida 

JIM MARSHALL, Georgia 

DAN BOREN, Oklahoma 

SPENCER BACHUS, Alabama 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

RICK RENZI, Arizona 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MARSHA BLACKBURN, Tennessee 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III)

C O N T E N T S 

Page 

Hearing held on: 

February 6, 2007 .............................................................................................. 1

Appendix: 

February 6, 2007 .............................................................................................. 139

WITNESSES 

TUESDAY, FEBRUARY 6, 2007

Andrews, Julie, spokesperson for Residents United and a public housing 

resident ................................................................................................................. 119

Bernardi, Hon. Roy A., Deputy Secretary, U.S. Department of Housing and 

Urban Development ............................................................................................. 43

Boustany, Hon. Charles W., Jr., a Representative in Congress from the State 

of Louisiana .......................................................................................................... 15

Bright, Edgar III, President, Standard Mortgage Corporation, on behalf of 

Mortgage Bankers Association ............................................................................ 94

Browne-Dianis, Judith A., co-Director, Advancement Project ............................. 123

Crowley, Sheila, President, National Low Income Housing Coalition ................ 86

Garratt, David, Acting Director of Recovery, Federal Emergency Management 

Agency ................................................................................................................... 45

Jefferson, Hon. William J., a Representative in Congress from the State 

of Louisiana .......................................................................................................... 13

Johnson, Derrick, President, Mississippi State Conference NAACP ................... 115

Kegel, Martha J., Executive Director, UNITY of Greater New Orleans ............. 125

Kelly, James R., Chief Executive Officer, Catholic Charities Archdiocese of 

New Orleans ......................................................................................................... 117

Koo, Doris W., President and CEO, Enterprise Community Partners ................ 113

Leger, Walter, Chairman, Housing and Redevelopment Task Force, Louisiana 

Recovery Authority .............................................................................................. 48

Mehreteab, Ghebre Selassie, co-Chairman and CEO, NHP Foundation ............ 90

Melancon, Hon. Charlie, a Representative in Congress from the State of 

Louisiana .............................................................................................................. 17

Perry, James H., Executive Director, Greater New Orleans Fair Housing 

Action Center ........................................................................................................ 91

Richardson, James A., John Rhea Professor of Economics, E.J. Ourso College 

of Business, Louisiana State University ............................................................ 95

Swoope, Gray, Executive Director, Mississippi Development Authority ............. 50

Tate, Kirk H., Chief Executive Officer, Orion Real Estate Services, on behalf 

of National Multi Housing Council ..................................................................... 88

Taylor, Hon. Gene, a Representative in Congress from the State of Mississippi .................................................................................................................. 10

Turner, Margery Austin, Metropolitan Housing and Communities, The Urban 

Institute ................................................................................................................ 121

APPENDIX 

Prepared statements: 

Baca, Hon. Joe .................................................................................................. 140

Blackburn, Hon. Marsha .................................................................................. 141

Brown-Waite, Hon. Ginny ................................................................................ 142

Carson, Hon. Julia ............................................................................................ 143

Garrett, Hon. Scott ........................................................................................... 145

Sires, Hon. Albio ............................................................................................... 147

Taylor, Hon. Gene ............................................................................................. 148

Page

IV

Prepared statements—Continued

Waters, Hon. Maxine ........................................................................................ 153

Andrews, Julie M. ............................................................................................. 160

Bernardi, Hon. Roy A. ...................................................................................... 162

Bright, Edgar III ............................................................................................... 167

Browne-Dianis, Judith A. ................................................................................ 180

Crowley, Sheila ................................................................................................. 267

Garratt, David .................................................................................................. 299

Johnson, Derrick ............................................................................................... 306

Kegel, Martha J. ............................................................................................... 312

Kelly, James R. ................................................................................................. 316

Koo, Doris W. .................................................................................................... 320

Leger, Walter .................................................................................................... 327

Mehreteab, Ghebre Selassie ............................................................................ 352

Perry, James H. ................................................................................................ 358

Richardson, James A. ....................................................................................... 363

Swoope, Gray .................................................................................................... 374

Tate, Kirk H. ..................................................................................................... 379

Turner, Margery Austin ................................................................................... 385

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Frank, Hon. Barney: 

Letter to the Board of Governors of the Federal Reserve System, the 

Federal Deposit Insurance Corporation, the Office of the Comptroller 

of the Currency, the Office of Thrift Supervision, and the National 

Credit Union Administration, dated January 17, 2007 ............................. 399

Response letter from the Board of Governors of the Federal Reserve 

System, the Federal Deposit Insurance Corporation, the Office of the 

Comptroller of the Currency, the Office of Thrift Supervision, and 

the National Credit Union Administration, dated February 5, 2007 ....... 401

Statement of Habitat for Humanity ................................................................ 404

Statement of American Association of Homes and Services for the Aging 

(aahsa) ........................................................................................................... 407

Statement of National Association of Housing and Redevelopment Officials (NAHRO) ............................................................................................... 413

Statement of the National Association of Realtors ........................................ 423

Statement of The Housing Policy Council of The Financial Services 

Roundtable ..................................................................................................... 426

Statement of Volunteers of America Greater New Orleans .......................... 434

Statement of The National Association of Home Builders ............................ 443

Green, Hon. Al: 

Letter to David R. Paulison, Director, Federal Emergency Management 

Agency, dated December 7, 2006 ................................................................. 450

Response letter from David R. Paulison, Director, Federal Emergency 

Management Agency, dated January 12, 2007 ........................................... 454

Report of the National Low Income Housing Coalition ................................. 456

Melancon, Hon. Charlie: 

Charts pertaining to the Federal Government’s commitments to Louisiana .............................................................................................................. 526

Waters, Hon. Maxine: 

Newspaper articles from the Washington Post and the Wall Street Journal .................................................................................................................. 528

Responses to supplemental questions submitted to FEMA ................................. 535

(1)

FEDERAL HOUSING RESPONSE TO 

HURRICANE KATRINA 

Tuesday, February 6, 2007

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The committee met, pursuant to notice, at 10 a.m., in room 2128, 

Rayburn House Office Building, Hon. Barney Frank [chairman of 

the committee] presiding. 

Present: Representatives Frank, Waters, Maloney, Velazquez, 

Watt, Ackerman, Sherman, Meeks, Capuano, Clay, McCarthy, 

Baca, Lynch, Scott, Green, Cleaver, Moore of Wisconsin, Davis of 

Tennessee, Sires, Ellison, Klein, Wilson, Perlmutter, Donnelly; 

Bachus, Baker, Castle, Gillmor, Jones, Biggert, Miller of California, 

Capito, Feeney, Hensarling, Garrett, Pearce, Neugebauer, 

Blackburn, Bachmann, and Roskam. 

Also present: Representatives Taylor, Jefferson, Boustany, and 

Melancon. 

The CHAIRMAN. This hearing of the Committee on Financial 

Services will come to order. I want to begin with an apology to 

members of the public. It was not the decision of this committee 

to expand the committee. You may note that there is a row of seats 

facing the audience that ideally should be part of the audience, but 

the committee has grown in size, and that has taken up some of 

the room that would be for the public. We apologize for this. We 

do have another room where people can listen. We promise not to 

be too interesting, so those who only listen will not be too deprived, 

and I welcome the witnesses. 

This is a very important hearing. There are few areas in the 

judgment of many of us on this committee where Federal policy has 

failed to meet its responsibilities more clearly than in helping respond to the terrible tragedy that hit people in Louisiana and Mississippi with Hurricane Katrina. There was, of course, a lot of controversy about the response of the Government, particularly the 

Administration here in Washington, and other governments at the 

time. It is one thing for people not to be able to respond in a terrible emergency in a period of a few days. It is, in my judgment, 

inexcusable that this much later—a year-and-a-half after those 

events—so little has been done. No one can use the justification of 

an emergency or of unpreparedness. What we have is a conscious 

decision not to remedy terrible conditions in which people should 

not have to live. 

The purpose of this hearing is not simply to document that failure, although documenting failure is an important part of any efVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
2

fort to move forward. People say that we should ignore the past 

and just look to the future, forgetting that dealing intelligently 

with the future requires an understanding of what went wrong in 

the past. Our intention—and I speak here for myself and the Chair 

of the Subcommittee on Housing, the gentlewoman from California 

who has been very much concerned with this since the day of the 

terrible hurricane—is to listen, to elicit information, and within a 

fairly short period of time, certainly by March, come forward with 

legislation which we believe will begin to address problems that 

have for so long been unaddressed. This committee has particular 

jurisdiction over housing. There is shared jurisdiction. Insurance is 

shared with the Committee on Homeland Security, and flood protection is shared with other committees. 

But our jurisdiction is completely in the area of housing, and we 

have a terrible problem in that a large number of housing units 

were destroyed. The information we received was that in Louisiana, 204,000 homes were destroyed or suffered severe damage; 

in Mississippi, 61,000. Of those, 82,000 homes in Louisiana and 

20,000 in Mississippi were renter-occupied, and we have two related problems: The ability of homeowners to rebuild and get back 

into their homes; and a shocking neglect of the need for rental 

housing. The absence of that rental housing is not simply a social 

problem, but it is an economic problem, as well. An article in the 

New York Times about a month ago reported the decision by the 

Oreck Company to shut down a factory that they had reopened in 

Mississippi after the hurricane to great praise, and one of the reasons they gave, and there are always a lot of reasons and people 

can be for or against a decision, but one of the reasons was that 

they had a hard time getting workers because there was no place 

for these workers to live. The economy of New Orleans, a service 

economy with hotels and restaurants, requires housing where people who work in those occupations can live. They will be renters 

to a great extent. We have seen a complete failure on the part of 

the Administration here in Washington to respond to that crisis, 

and indeed, there have been efforts by the Administration to oppose things that we have put forward that would provide some of 

the resources. 

Now, let me just say, obviously a lot of governments are involved. 

Our primary responsibility as a committee of the Congress of the 

United States is to look at our responsibilities as part of the Government of the United States. People will be commenting and there 

will be testimony from State officials from Mississippi and Louisiana. And that is part of the mix, but the remedies we control, 

the measures we will propose will deal with the Federal Government’s response because it is the Federal Government for which we 

bear responsibility, and in my judgment it is the Federal Government which has failed completely to meet its responsibilities and, 

indeed, to live up to the promises that were made by the President 

and high officials of this Administration in the days immediately 

after Hurricane Katrina. We have given out some paper that 

makes that clear—that contrasts the President’s promises with the 

failures. 

And finally, let me say, people will say, why are you now getting 

to this? In the period after the hurricane— 

3

I apologize for my condition, but unlike the condition of the people in Louisiana, it will take care of itself. A cold goes away. A lack 

of housing for people does not take care of itself, and it perpetuates 

until action is taken. 

The gentlewoman from California, when she was the ranking 

member of the Subcommittee on Housing, and I was the ranking 

member of the Full Committee, we spent as much time in this past 

15 or 16 months in trying to sort out the problems in Louisiana as 

anything else. She has been there. She plans to bring this subcommittee there later this month. We tried very hard to sort this 

out, and we were frustrated in our ability to do so. But now as 

members of the majority, it is our intention to insist on answers, 

including from the people who live there and the people who have 

been trying to deal with it, as to how we can improve the situation, 

what we, the Federal Government, can do to begin to meet a need 

that should have been met 15 and 16 months ago, to help people 

rebuild their homes and come back to their homes, and we then 

plan to have a legislative package. 

We have consulted with other committees, the Committee on 

Ways and Means, which has jurisdiction over the tax credits and 

others, and we will have a package. I believe that it is appropriate 

for those of us in the Federal Government to apologize to the people of the Gulf area, of Louisiana and Mississippi, to apologize for 

having done so little to alleviate the pain that was inflicted upon 

them through no fault of their own. I can’t undo the past 15 

months, the past 16 months, but we can commit ourselves to doing 

everything that is within the power of this committee to start to 

do what we should have done a while ago. 

I now recognize the ranking member of the committee. 

Mr. BACHUS. Let me start by thanking Chairman Frank for 

scheduling this hearing and for his leadership of the committee. 

This committee has a long history of working together effectively 

in a bipartisan way, and I appreciate the positive working relationship that we have established and look forward to building on that 

relationship. Let me welcome my former Congressional colleagues. 

You will be introduced in a very short time. I would also like to 

welcome the folks from the affected States, as well as Deputy Secretary Bernardi. We are all aware of the tremendous cost wrought 

by Hurricane Katrina. 

Most Americans recall the stark images that were broadcast by 

the news media during that last week of August 2005, images of 

suffering, devastation of neighborhoods, communities, dreams and 

fortunes swept away in a very short time, and unfortunately, yes, 

human lives swept away. A great American city, New Orleans, reduced to near primitive conditions. Along the Mississippi coast, 

century old homes that had withstood storm after storm were no 

longer there; they were lost forever. As frightening as all that was 

for those of us who viewed Katrina’s wrath from a distance, via television or news reports, only those who experienced it firsthand 

can truly appreciate the devastation and anguish left in Katrina’s 

wake. I remember Gene Taylor saying that if you are a Member 

of Congress and you haven’t been there, you need to go there because it is worse than it is portrayed on TV. Those of us who went 

there—and most Members of Congress did—found that to be the 

4

case. And it was in December of that year that Congress first appropriated money for hurricane relief only a few months later. 

Then in February, you will recall that President Bush, after consulting with the Governors, put forth his budget recommendations. 

I know for Louisiana it was $4.2 billion, and at that time all the 

news reports said they thought that would be sufficient. So I know 

there have been failures, but I know that at least in February 

there was an agreement in this body shortly after the hurricane as 

to what amounts of money were needed and were appropriated. 

While many never lived to tell their stories and experiences of 

Katrina, some did, and I understand that some of the people testifying today actually went through the hurricane from start to finish. After the storm finished, here are some of the things that we 

found. One is that it devastated an area of 90,000 square miles. 

Now people, what is 90,000 square miles? Well, it is the size of 

Great Britain. It is an area bigger than Utah, closer to the size of 

Oregon, so imagine how widespread that is. That is historic. 

770,000 Americans were left homeless, 1,464 deaths in Louisiana 

alone. Almost 700,000—645,000, to be exact, people in Louisiana 

displaced without a home. About 67,000 in Mississippi. A smaller 

number in Alabama, my home State. 

From a personal standpoint, I am particularly interested in hearing the stories of those who continue to wrestle with the storm’s 

difficult and frustrating aftermath, to learn how effective the billions of dollars in Federal aid have been in supporting the relief, 

recovery, and rebuilding efforts. 

Further, and I think this is most important, I hope that from this 

hearing and others we will reach a consensus on some of the critical questions facing this Congress relative to this Nation’s disaster 

response preparedness, such as determining which Federal agency 

should lead the national response, in developing a strategy for 

dealing with uninsured losses. I know that particularly in Louisiana, people who thought they were fully covered found out that 

it was flood insurance or that it was wind insurance and it didn’t 

cover flooding. Once we determine an appropriate agency, it is of 

utmost importance to determine its role and its primacy. Does the 

State lead or does a Federal agency lead? Who supports? Who has 

final authority? Katrina not only left physical devastation in its 

wake, it left behind a reservoir of anger, strong emotions, and painful experiences. Our challenge is to channel those experiences and 

those emotions into an appropriate response. 

You have heard the chairman talk about his anger. We must not 

let our anger and the anger of our witnesses today, a rightful anguish, inspire us only to more legislative anger. The people addressing us today as well as thousands of affected Americans depend on us, Republicans and Democrats alike, not to get angry but 

to get it right. So do those families who in the future may themselves experience a Katrina-like tragedy. In the past few years, we 

have viewed the Middle East and events there and we have all, I 

think, questioned and hoped that people there would set aside agelong hostilities and grievances and come together and build a new 

society, one founded on cooperation and brotherhood, not on revenge. 

5

We face a similar challenge in this country. The natural inclination is for us to continue to criticize and denigrate the Katrina relief efforts, but what is needed is altogether different, and that is 

an honest commitment to come together and avoid the mistakes of 

the past. In summary, Mr. Chairman, it is imperative that we not 

waste our energy in concentrating on past mistakes, but rather 

focus on ways to avoid them in the future. Thank you. 

The CHAIRMAN. The next speaker will be the Chair of the Housing Subcommittee, who has devoted more time and energy to trying 

to deal with this problem, I believe, than any Member not from the 

affected area and, now that we are in a position to do something, 

will be taking the lead in our efforts, in fact, to provide that longneeded relief, the gentlewoman from California. 

Ms. WATERS. Thank you very much, Mr. Chairman. I want to 

thank you for holding this hearing, and I must admit that I was 

skeptical about holding yet another hearing. We have held countless hearings in various committees of Congress, and there have 

been so many visits both from the Senate side and the House side. 

Members of various committees have gone to the Gulf region, including, of course, New Orleans and all of the other cities, only to 

find ourselves here today understanding that with all the money 

that we have appropriated, and it looks as if it is $19.3 billion to 

FEMA, $16.7 in Community Development Block Grant funds alone 

and other moneys, that we still have displaced persons who do not 

know what the future holds for them. They are living outside of 

their home States, they are—some of them—their rents are being 

paid by HUD and they are paying market rate rents for these temporary quarters, some of which are not really habitable, worse than 

some of the public housing that people are being told they can’t return to, and some of those folks who are being taken care of by 

FEMA do not know from day to day whether or not FEMA will continue to provide the rental assistance for them, despite the fact 

that they have no permanent housing. 

What is very interesting about the situation is that, on one of my 

five visits to New Orleans, I discovered there were many businesses that could not operate properly because they didn’t have the 

personnel. And as a matter of fact, some of the big companies that 

got demolition contracts were bringing in people from all over the 

country, paying rental rates at hotels for them to stay to get involved to be doing some of the work while, in fact, the residents 

who were living in Dallas and Houston and all of these other places 

wanted to come home, wanted jobs, but there was no housing for 

them. I have visited these public housing projects, and I am 

amazed at the number of public housing projects that have minimal damage that could have been repaired. HUD again is paying 

market rate for many of the public housing tenants to live in other 

States, and these tenants all thought that they would be able to 

come back home after these units were repaired. Because some of 

the housing only suffered minimal damage, 2 to 3 feet of water at 

the base of the project, many people thought they would be able to 

come back home. They have since been told, ‘‘Oh, no, we are going 

to tear them all down, and we will provide an opportunity for you 

to be eligible for a unit in 5 to 6 years.’’ The residents are very 

upset, not only can they not wait 5 to 6 years to expect to come 

6

back to affordable housing, but they don’t trust HUD. And most of 

the whole six projects, they have lost two-thirds of the low-income 

housing in these mixed developments where there is an attempt to 

have market rate plus homeownerships and some public housing 

units. They have lost again two-thirds of these public housing 

units, and many of these people believe that not only does HUD 

not want them back in public housing units but even some of the 

city fathers and officials want to get rid of poor people, and this 

is a convenient way by which to do it. 

So the public housing residents have gotten with pro bono lawyers, and they have filed a lawsuit, and the judge has been telling 

HUD and the residents to work it out. HUD has insisted that it 

must demolish many more units than the residents believe need to 

be demolished. As a matter of fact, what is interesting about HUD 

is that some of the units that they now include in demolition have 

been approved since 1997, and they did not demolish them and replace them. The other thing that we are discovering about the 

housing authority in New Orleans, for example, is that it has not 

been maintained, that little money has been put into maintaining 

these properties. In addition, since HUD made the decision that it 

was going to demolish the units, they have done nothing to secure 

them. 

I walked through a number of these developments just a week 

ago last Sunday. I spent a day looking and walking through, and 

what I saw was this—some are in great disrepair. Much of what 

happened is as a direct result of Katrina, but because the doors 

have been left open, the vandalism has been great: copper piping 

has been stripped out and the roofs in some of them are in disrepair. The rain has come in because there has been no attempt 

to secure and maintain these developments. And so we have public 

housing that is standing there, and even that public housing that 

could have been unboarded and used to let people return was not 

repaired to enable people to come back. 

Now, let me just say a word about the homeowners; they are in 

just as bad a shape. This Road Home Program in Louisiana is a 

joke. We have given all of our CDBG money, over $16 billion I believe in CDBG money, to Louisiana and then come up with a statedirected program out of the Governor’s office, supposedly to help 

provide subsidies to homeowners, up to $150,000, and we find that 

somewhere between 228 and 400 homeowners have been assisted 

and not all with the full $150,000, out of 100,000 applicants. And 

we find that there is a program that is not designed to really help 

people but rather to keep people from getting the money because 

they think somehow they may be involved in fraud. 

Mr. Chairman and members, this subcommittee and this committee must undo this mess and undo it quickly, and I think we 

can. The CDBG money is Federal money, and the States don’t get 

an opportunity to take our money and do whatever they want to 

do with it. In Mississippi, Mr. Taylor, they have done a little better 

with over 10,000 units, homeowners who have been assisted, but 

still I don’t think it is good enough, and then you will tell us a little 

bit more about that. We intend to hold our hearings. We are going 

to go to New Orleans. We are going to work with the tenants as 

well as HUD and we are going to get some units opened back up. 

7

You are going to hear a lot about phased development and how we 

can do this. 

I welcome the opportunity to engage everybody today but the bottom line, Mr. Chairman, is we have to move it. We have to do 

something, and we have to guarantee that not only public housing 

residents but homeowners are going to be treated fairly and our 

money is going to be spent properly. 

I yield back the balance of my time. 

The CHAIRMAN. Pursuant to the agreement, I am now going to 

recognize members of the minority and instead of 5 minutes, I will 

make it 7 minutes to accommodate the extra, and pursuant to the 

instruction from the ranking member, I will first recognize the gentlewoman from Illinois for 4 minutes and then the gentleman from 

New Mexico for 3 minutes, if that is acceptable. The gentlewoman 

from Illinois is recognized. 

And I should at this point make it clear that all members are entitled to submit written statements for the record without any objection. The gentlewoman from Illinois. 

Mrs. BIGGERT. Thank you, Mr. Chairman, and thank you for 

chairing this hearing. By all accounts, certainly Hurricane Katrina 

was the most destructive and costly natural disaster in U.S. history. It led to the evacuation of a major city and the surrounding 

areas and it destroyed housing and infrastructure on an unprecedented scale. During the 109th Congress, the Financial Services 

Committee was at the forefront, I think, of the hurricane relief efforts with three hearings and four briefings, with approximately 80 

witnesses participating. In the months that followed this disaster, 

the committee shepherded needed relief legislation to the Floor, 

helping not only families in the immediate hurricane-ravaged 

areas, but those who suffered in the aftermath due to flooding. But 

the task of recovery and rebuilding in the Gulf Coast region continues to be monumental. We are 18 months removed from Hurricane Katrina, yet the challenges seem unending. To many of those 

affected, the recovery has been, to say the least, slow and 

unending. Rebuilding has been hindered by the severity of the 

damage, the need to limit future flood damage and the need to coordinate the recovery among many levels of government. There are 

still too many people who are without permanent housing, jobs, 

and infrastructure. How best to go about the reconstruction of the 

region and the problems facing the mortgage and financial services 

industry are all issues that must be addressed. 

One thing that is certain is that disasters will continue to happen. We need only to look at the devastating storms in Florida this 

past week as a reminder. We in Congress need to learn from our 

mistakes in the Gulf Coast. We must ask the difficult questions 

about how the $110 billion has been spent in the localities, could 

it have been spent more efficiently and cost-effectively? What accountability should there be? What Federal organization should be 

in charge of the Federal Government response? And what should 

be done about uninsured losses? These are difficult questions, but 

we must figure out how to get it right. 

As the new ranking minority member on the Financial Services 

Subcommittee on Housing, I certainly have a deep interest in this. 

Clearly the availability of affordable housing is critical to the overVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
8

all recovery after such a devastating storm. If there is no housing, 

there are no businesses. If there are no businesses, there are no 

jobs, and without jobs and businesses, residents will fail to return 

and provide the economic base that will spur the economy for the 

New Orleans metropolitan region. 

I hope that today’s hearing will shed light on the issues that 

Congress should consider in order to better plan for future disasters and how to improve the capability of all levels of government 

to respond to disasters effectively. And with that, I yield back. 

The CHAIRMAN. I thank the gentlewoman. At this point the gentlewoman from California would ask unanimous consent to be able 

to insert some material into the record, some newspaper articles. 

Is there objection? The Chair hears none. The gentlewoman may 

proceed to insert those materials. And the gentleman from New 

Mexico is now recognized. 

Mr. PEARCE. Chairman Frank, I appreciate this hearing. Like all 

Americans, I was deeply shocked and saddened by the events surrounding Hurricanes Katrina and Rita. Hurricane Katrina’s impact 

was of historic and devastating magnitude. Thousands of active 

duty troops and National Guard forces all deployed to assist and 

search in recovery efforts and to provide logistical and medical supports to supported areas. The President ordered the Department of 

Homeland Security through the Federal Emergency Management 

Agency to organize efforts between the Federal, State, and local authorities. And we all watched while it had less than spectacular results. 

Last year Congress held hearings and introduced several pieces 

of legislation in light of the Federal Government’s response to the 

disaster. These included efforts to make the Department of Housing and Urban Development the primary Federal agency responsible for coordinating housing assistance in connection with major 

disasters resulting in long-term housing needs. We learned a great 

deal from those efforts and their position not to rehash old criticism but to constructively utilize lessons that we have learned. 

As of this year, Congress has passed a series of supplemental emergency spending bills totaling $81.6 billion. These relief packages came at a cost greater than any our country has ever seen in 

the face of natural disasters. It is important to know that Congress 

exercised oversight in these dollars to ensure that they are wisely 

spent and truly reach those most in need. We must also understand why portions of this funding has yet to be spent and what 

impediments exist that may encumber the efficient use of these 

funds. 

On a personal note, I watched as Hurricane Rita circulated 3 

days over the Cancun area of Mexico. Shortly after that disaster, 

a friend of mine visited in order to see what the condition of the 

coast was for travel purposes. I will tell you that without billions 

of dollars spent, the people began to clean up the mess, they began 

to understand that their livelihood was dependent on tourism, and 

there was a concerted effort to cure the problem. 

Yes, I agree that we have underfunded and have not directed 

funds properly, but the tremendous cost is being borne by people 

in New Mexico who have had parts of their community burned by 

forest fires and no national effort to help them. In my own town 

9

last year, a prairie fire pushed by 50- and 60-mile-an-hour winds 

raced across 70 miles, burning right up to the edge of town, burning several businesses, and burning houses. The wind changed or 

the entire town may have burned down, and yet we are being 

charged in order to pay for people who lost possessions in a different natural disaster. We face tornadoes, we face other natural 

disasters, and never is the Federal Government standing by to help 

these people in New Mexico who have modest incomes averaging 

in the $20,000 range. So as we rush to spend the Federal dollars 

and to browbeat ourselves for not spending enough, remember the 

tremendous cost is being borne by people who are being charged 

flood insurance and yet they live in a portion of New Mexico that 

will never see a flood, not in 500 years, not in 1,000 years, but they 

are being charged higher rates in order to rebuild houses along the 

Gulf Coast and sometimes those houses are not just primary 

domiciles, sometimes those homes have been rebuilt multiple 

times, and we need to ask serious questions about why we are 

doing what we are doing. 

I agree with the chairman of the subcommittee who found great 

unsettlement at the minimal damaged apartments that were simply closed off and allowed to be stripped out. I, like most Americans, would share the outrage that such practices were allowed to 

happen in the aftermath of the hurricane. We will be happy to participate in the oversight, and we will be happy to hold the government accountable because that is what the Americans expect us to 

do. 

Thank you again, Mr. Chairman, for holding this hearing, and I 

yield back. 

The CHAIRMAN. Let me now explain—this is a little unusual with 

this hearing. It is a very important subject and we want to make 

sure that a wide range of people are heard. The gentlewoman from 

California will be heading the Subcommittee on Housing for this 

committee to New Orleans for a field hearing in February. We will 

be focusing today, and then, on specific ideas about what we can 

do to make Federal resources available and make them available 

in a way that leads to their being used efficiently. 

We are now going to hear from four Members from the affected 

areas, and I would ask unanimous consent at this point that the 

four Members from the affected area subsequent to their testimony 

be able to join us in participating in the hearing if they wish to do 

so. Is there objection? The Chair hears none. They will get a chance 

to question at the end of the regular membership if they wish to 

do so. 

Next, we will hear from a panel of government witnesses, after 

which we will take a break. That is an unusual thing, but I don’t 

want people to be rushed. I don’t want people to be sitting around 

and the audience to dwindle. So, when we finish the government 

panel, we will break; it will probably be around 1:00. We will break 

for about an hour, and we will come back at 2:00. This will be a 

late day for some. We will have two panels of witnesses, and I hope 

as many Members as possible will stay. These are important matters for us to air. I don’t think a day out of our lives, given what 

has been taken out of the lives of so many in the Gulf area, is too 

much to ask. The gentlewoman from California. 

10

Ms. WATERS. Yes. I would like to submit several articles, two 

from The Washington Post and one from the Wall Street Journal. 

These are articles that have been written about the ‘‘Road Home: 

Where is the Money?’’ I would like to submit these for the record 

and to pass them out to our members. 

The CHAIRMAN. Is there any objection? Hearing none, the permission is granted. I will now introduce our colleagues. We have the 

gentleman from Mississippi, Mr. Taylor, who represents the area 

in Mississippi that took the brunt of the hurricane. The gentleman 

from New Orleans, Mr. Jefferson, who represents New Orleans and 

on the Democratic side, the gentleman from Louisiana, Mr. 

Melancon, who represents the area adjacent to New Orleans, also 

very heavily hit by the flood. The gentleman from Alabama. 

Mr. BACHUS. I want to yield to the gentleman from Louisiana, 

who is heading up the Water Resources Committee with the Corps 

of Engineers, who has taken that position, the gentleman from 

Louisiana, who has really led our efforts on Katrina. 

Mr. BAKER. I thank the ranking member for yielding. I just 

wanted to introduce Dr. Boustany to the panel. Most of you know 

him as the Seventh District of Louisiana Republican. He came here 

by way of a career as a thoracic surgeon, so I believe he has elevated the Louisiana Congressional delegation’s abilities rather significantly, for which we take all the credit. 

The CHAIRMAN. We will now begin the testimony with the gentleman from Mississippi. 

STATEMENT OF THE HON. GENE TAYLOR, A REPRESENTATIVE 

IN CONGRESS FROM THE STATE OF MISSISSIPPI 

Mr. TAYLOR. Thank you, Chairman Frank, for calling this hearing. I want to thank you and all of my colleagues for the help you 

have provided to me, and more importantly to the people of south 

Mississippi, since Hurricane Katrina. 

The flood insurance buy-in bill that you and Chairman Watt 

drafted to help homeowners who had homeowner’s insurance but 

not flood insurance eventually led to the Mississippi and Louisiana 

homeowner assistance programs that were funded through the 

CDBG. Although the House Republican leadership in the Bush Administration blocked that bill, Senator Cochran was able to gain 

approval for the homeowners assistance use of CDBG funds. The 

Mississippi program is very similar to our bill except that it took 

a year for HUD and the State to create and implement this new 

program. Our bill would have provided relief more quickly to allow 

homeowners to file flood insurance claims up to the amount of their 

homeowner’s policy that would be funded with disaster appropriations. We are very grateful for the CDBG funds, but HUD and 

State created a slow bureaucratic procedure where the situation 

called for expedited action. Homeowners had to wait for insurance 

while the State tried to verify every detail with insurance companies, lenders, FEMA, SBA, and other agencies. Those companies 

and agencies did not have the extra personnel or motivation to 

quickly verify each claim. Homeowners should have been able to 

provide copies of the documents, sign affidavits, and then get their 

checks with the clear understanding that any fraud would be prosecuted to the full extent of the law. 

11

While the State was treating every disaster victim with suspicion, the Mississippi Development Authority, the State’s economic 

development agency, saw no problem in giving the contract to the 

State Senate Finance Committee Chairman and two other State 

legislators. I am sorry to report that the State Ethics Commission 

said it was okay for a State agency to award a contract to a legislature who has influence over that agency so long as only Federal 

funds and not State funds were involved. I hope your committee 

will pass language to prevent this in the future. 

In addition to the housing assistance grants, Mississippi is using 

CDBG funds to build water and sewer infrastructure, to rebuild 

public housing units, to rebuild utility infrastructure, and to temporarily subsidize homeowner’s insurance in the State wind pool. 

While I agree that these are important needs on our coast, I want 

to ensure that homeowners receive all of the assistance that they 

should from the grant program. For that reason, I ask the committee to require a full accountability of the grant program. There 

should be a list of who was paid and how much they were paid. 

These are Federal tax dollars, so we need to know that they were 

spent fairly and appropriately. 

Seventeen months after Katrina, south Mississippi’s recovery is 

still delayed by the refusal of several insurance agencies to pay fair 

wind claims. I wrote to Chairman Frank asking the Financial Services Committee to conduct investigative hearings about the denial 

of thousands of Katrina wind claims, wherever insurers could 

blame flooding. I am very grateful that Chairman Watt, the chairman of the Oversight and Investigation Subcommittee, has scheduled a hearing for February 28th. I intend to present a case at that 

time for a full investigation of the actions of insurance companies 

and the engineering firms, adjusting firms, and the contractors 

that they used to deny claims. 

For thousands of destroyed properties in Mississippi, insurers assigned all damages to flooding covered by the National Flood Insurance Program and none to their wind storm policies. The Mississippi Gulf Coast suffered several hours of very destructive hurricane winds before the inundation by a storm surge. Insurers paid 

billions of dollars of wind claims inland where they could not possibly blame flooding in the 79 counties north of the coast. Insurers 

paid more than 250,000 claims totaling $3.5 billion. Claims were 

paid in every county as far as 300 miles inland. Insurance claims 

data from three coast counties show that the National Flood Insurance Program in the Mississippi wind pool paid much more than 

did private insurers. NFIP estimates it will pay approximately 

18,000 flood claims in three Mississippi Gulf Coast counties for a 

total of $2.6 billion. That is an average of about $142,000 per claim 

where the average policy was $148,000. HUD will pay an additional $3 billion to CDBG funds to assist homeowners who did not 

have flood insurance. I am convinced that the insurance adjusters 

billed the flood program for some damage that should have been 

covered by private wind insurance. 

Last year Chairman Frank and Mr. Oxley helped make sure that 

I could offer an amendment to the flood insurance reform bill to 

have the Inspector General of Homeland Security investigate these 

claims. This amendment passed by a voice vote. Although the SenVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
12

ate did not pass the flood insurance bill, Senator Lott was able to 

pass that provision to the Homeland Security Appropriations Act. 

The Inspector General is required to report his findings by April 

1st. 

Insurance companies have a conflict of interest when we allow 

them to decide whether to assign damages to the Federal Flood Insurance Program or to themselves. The Flood Insurance Program 

does not provide sufficient oversight to protect our Nation’s taxpayers. The contract between NFIP and the insurance company requires an adjuster to represent the flood program as well as the insurance company. The Federal regulations require the adjuster to 

make a proper adjustment and to apply the same standards to a 

flood claim as to a wind claim. 

That certainly did not happen in Mississippi. There is documented evidence of cases in which insurance companies or their 

contractors pressured engineers to revise their reports or ordered 

a second report if the first report concluded that the damage was 

caused by wind. Once they learned that they could not control all 

of the engineers, State Farm simply stopped ordering engineering 

reports. Instead the company issued a wind water claims processing protocol from its headquarters in Illinois, instructing their 

adjusters to pay nothing on a wind claim if any damage could be 

caused by flooding. State Farm used Haag Engineering and adjusters from E.A. Renfroe to justify denials of wind claims. Both companies have a history of questionable actions, including a 2006 decision against State Farm’s denial of 1999 tornado claims in Oklahoma. The Oklahoma jury found that State Farm— 

The CHAIRMAN. The gentleman will have a chance to go into the 

insurance issue in great detail in the February 28th hearing, and 

we do have a fairly packed day. So I would ask him to come to a 

close. 

Mr. TAYLOR. One page, Mr. Chairman. The Oklahoma jury found 

that State Farm acted with malice and relentlessly disregarded the 

duty to act fairly and in good faith by employing Haag Engineering 

and Renfroe. In the February 28th hearing, I will ask Mr. Watt’s 

subcommittee to investigate State Farm, Haag, Renfroe, and any 

other partners that conspired against consumers and taxpayers. 

Later this week, I intend to introduce a bill to create a multiperil insurance option to the National Flood Insurance Program. 

That bill will create a new program to provide wind and flood coverage in one policy in order to be fiscally responsible and honor our 

commitment to pay-as-you-go budgeting. The premiums would be 

based on actual risk with no subsidy. If this bill is enacted, property owners will be able to buy insurance and know that the damage will be covered. They will not have to hire lawyers, engineers, 

and adjusters to try to prove what damage was caused by wind and 

what damage was caused by water. If insurance companies get 

away with placing the burden of proof on homeowners to prove that 

the damage was caused by wind, I am afraid a lot of people would 

not evacuate the next time a major hurricane approaches the Gulf 

Coast. I have had friends tell me that they plan to stay behind next 

time with a video camera so that they can document the damages. 

There is an urgent need for a wind and water insurance policy for 

the 53 percent of all Americans who live in coastal communities. 

13

In recent months insurance companies have canceled wind policies— 

The CHAIRMAN. The gentleman has to conclude. 

Mr. TAYLOR. Mr. Chairman, thank you very much. 

The CHAIRMAN. I appreciate it. I understand that there is some 

unfairness in the word-per-minute standard, but we do have to 

stick to some overall time limit. 

Mr. TAYLOR. I appreciate that, Mr. Chairman. 

[The prepared statement of Representative Taylor can be found 

on page 148 of the appendix.] 

The CHAIRMAN. The gentleman from Louisiana, Mr. Jefferson. 

STATEMENT OF THE HON. WILLIAM J. JEFFERSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. JEFFERSON. I am grateful to you, Mr. Chairman, and to the 

members of this committee, particularly subcommittee Chairs Waters and Watt, for the attention they are already paying to our recovery. This hearing is just another example of the commitment of 

this committee to rebuild the great City of New Orleans and the 

towns and cities surrounding it. 

I want to make two important points that I think should be 

made from the start. First, the Federal responsibility of our recovery in New Orleans is different from that of any recent disaster. 

The drowning of New Orleans was not caused by Hurricane 

Katrina itself. Were it so, it would rightly be described as a disaster caused solely by an act of God. Rather, according to the Interagency Reforms Evaluation Task Force, IEPT report issued by the 

U.S. Army Corps of Engineers, the Corps admits that its negligence 

in the design, construction, and maintenance of our levees was the 

cause of the destruction of the homes, businesses, and lives of hundreds of thousands of our people. Thus, ours is principally, by the 

Corp’s own admission, a manmade disaster or a Federal Government agency-made disaster. 

Second, this Federal Government agency-made disaster had been 

made worse by the failure of the Federal response from Congress 

and the President to use real numbers that match up to the scope 

of the devastation of our area and that would actually pay the true 

cost of recovering. This is not to say, of course, that we are not 

deeply appreciative of the $110 billion that has been made. That 

has been enormously helpful. In our area, $26 billion of this has 

been used for the recovery of buildings and homes, schools and libraries, and so on out of $110 billion, and the rest has been spent 

on other things. But the point is that the help that has been given 

has not matched up to the help that is needed to, in real terms, 

fully rebuild and to recover. And these numbers have largely been 

just put together as a matter of what is possible as opposed to what 

was actually necessary to get the job done. 

Against this backdrop there are four things in the short term 

that I would like to ask this committee to work with us on, which 

are tactical and long-term larger problems. The first is affordable 

housing. Before the storms, around 60 percent of New Orleans’ population rented housing. According to a survey of 680 randomly selected evacuees in Houston’s shelters, conducted by the Kaiser 

14

Family Foundation, 64 percent of evacuees forced into shelters 

were renters and 93 percent were African American. The affordable 

housing units lost in Katrina represented about 30 percent of destroyed or severely damaged rental housing. As of December 2006, 

more than 4,000 families that reside in public housing had not returned because their developments remained closed. Some of them 

have made their way back to the city, only to find that their units 

were boarded up, padlocked, and surrounded by fencing, despite demands by residents who hold leases that these units be reopened. Additionally, 32 percent of renters paid less than $500 a month 

for rent before the storm. Post-Katrina, the average rent has risen 

more than 70 percent. In 2005, prior to Katrina, there were 5,100 

families residing in public housing units. Currently, fewer than 

1,000 families have been able to return. And in June 2006, HUD 

announced plans to demolish 5,000 salvageable units. This represents a discriminatory and an illogical policy of destroying homes 

during a housing crisis. Moreover, many of these units proposed for 

demolition can be repaired and modernized at a fraction of the proposed cost. Demolition of these homes would cost approximately 

$450 million more than simply repairing the units, and most repairs are stemming from slight water damage and vandalism. 

The second is the effect of the Flood Insurance Program. As Mr. 

Taylor has alluded to, many of the homes in our area weren’t protected by flood insurance because the FEMA map said that they 

didn’t have to be, that the levees would take care of it all, and they 

would require—in many places like in the lower Ninth Ward we 

have heard so much about, 66 percent of the homeowners living 

there owned their own homes, and they had owned them for many 

years, they had been passed down from generation to generation, 

had no mortgage on them for the most part, and therefore had no 

flood insurance requirement. The flood comes, they are relying on 

FEMA estimates of risk, and their homes are lost, so they are penalized unfairly. We talked earlier about how to remedy this. 

Mr. Taylor proposed some time ago and I think this committee 

ought to still look at this whole issue of permitting people to retroactively get involved in the Flood Insurance Program. The Road 

Home Program you heard Ms. Waters describe this morning and 

others describe—we have gotten $10 billion of the CDBG money to 

provide home rebuilding in our area. The State has chosen to administer this program through what is called the Louisiana Recovery Authority, the LRA, with the help of an administrative contractor called ICF. To date, as she has stated, over 100,000 applications for assistance have been made. Only about 300 people have 

actually received Road Home grants. And while the creation of bureaucracy by the State and the Administration’s program in order 

to ensure against improper payment is laudable and necessary, 

guidance from this committee with respect to the use of banks to 

disperse these funds, deadlines for the disbursal of these funds and 

permissible use of funds for administrative costs and grants to 

business would be very helpful. 

And finally, I would just like to mention the HUD disaster assistance and voucher and rental assistance program. These programs 

were designed for shorter term recovery periods than is the reality 

for Katrina victims. The maximum assistance amount allowable 

15

per family of $26,200 should be revisited with a view toward lifting 

it to meet present needs, and the deadlines that are being arbitrarily set for the cutoff of rental assistance is further stabilizing 

the already disrupted lives of Katrina survivors. This is a particular problem for the elderly, for the disabled, and for families 

with children. 

I would like to thank this committee for this opportunity, and I 

look forward to having us work on these four discrete issues as we 

work on the larger issues which I think have to do with whether 

or not we actually have met our Federal responsibility overall because I believe this number that we have talked about, this $110 

billion, was a whole lot of money, was simply picked out of the air, 

and was not based on any real assessment of what the needs are 

for a full recovery. So I thank the chairman for this opportunity to 

present to the committee. 

The CHAIRMAN. The gentleman from Louisiana, Mr. Boustany. 

STATEMENT OF THE HON. CHARLES W. BOUSTANY, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. BOUSTANY. Thank you, Mr. Chairman. I appreciate the opportunity to testify before the committee, and I thank the members 

of the committee as well. And I ask unanimous consent that my 

full written statement be— 

The CHAIRMAN. Without objection. 

Dr. BOUSTANY. Mr. Chairman, the official title for this hearing, 

‘‘Federal Housing Response to Hurricane Katrina,’’ suggests that 

there was only one storm that hit the Gulf Coast in 2005. In fact, 

my southwest Louisiana district was directly hit by Hurricane Rita 

on September 24, 2005, a second storm. The total damage from this 

storm is estimated at approximately $10 billion, making Rita the 

third most costly natural disaster in U.S. history. It is also called 

the forgotten storm in my neck of the woods. The southwest Louisiana parishes of Vermilion, Cameron, and Calcasieu are critical 

components of our Nation’s energy security, including oil refineries, 

pipelines, and petrochemical plants. Vermilion Parish is home to 

the Henry Hub, the pricing point for natural gas futures contracts, 

and the West Hackberry Strategic Petroleum Reserve in Cameron 

holds about one-third of the U.S. strategic reserve. Furthermore, 

this area will remain vital in the future as 25 percent of all natural 

gas consumed in the United States will eventually come through 

just one parish in my district, Cameron Parish, in the next few 

years. In Calcasieu Parish, 75 percent of the roofs in the parish 

were damaged or destroyed. About 13 percent of the nearly 20,000 

properties in Vermilion Parish sustained major or severe damage, 

with the remainder incurring roof damage, flooding, or both from 

the storm surge. Cameron Parish was hit the hardest; 3,241 homes 

sustained damage, 90 percent of the homes in Cameron Parish; 

2,000 of those homes were completely destroyed and need to be rebuilt. Based upon percentage, the damage in Cameron Parish exceeds the damage in Hurricane Katrina-hit areas in Louisiana, and 

is about equal to the damage seen in the district of my colleague 

from Mississippi. 

16

I have said from the very beginning of the recovery and rebuilding process that the Federal Government cannot micromanage this 

process, but it must provide support for local decisionmakers to create the environment for vital partners, small business owners, 

homeowners and others to rebuild, to return, and to become success 

stories. The Congress has done a good job of providing money, but 

the second part of our function is oversight, and that is why I am 

pleased to hear that we are having this hearing. We need to see 

why the money that has been appropriated is not getting into the 

hands of those who actually need the money. 

There are three issues that the Federal Government can have an 

impact on, and these will be housing for workers, insurance for 

homeowners and businesses, and looking at the Go Zone legislation. The unemployment rate has been around 3 percent since the 

spring of 2006, coming down from a high of around 16 percent in 

my district. Wages have increased by as much as 25 percent. The 

demand for labor remains high and the shortage has been one of 

the chief factors cited by local leaders as prolonging the rebuilding 

effort. 

I urge my colleagues to consider the impact of the housing shortage on additional workers needed to do the rebuilding, and we need 

to look at policies that will help bring this about. Homeowners and 

small business owners are having difficulty obtaining insurance or 

retaining policies after Rita. Homeowner premiums have increased 

100 percent if they can find the policy to purchase and similarly 

insurance for business owners has increased by as much as 75 percent in 1 year. 

I think the Federal Government can aid homeowners, families, 

and small businesses by looking at ways to enhance the ability of 

insurance companies to obtain reinsurance, which is a significant 

problem, and to allow insurance companies to set aside tax deferred reserves to pay for future large catastrophes like this. 

In December 2006, Congress approved legislation to extend certain Go Zone provisions to the most heavily impacted areas. I want 

to thank my colleagues for their support of this legislation and 

hope that they will continue to support such measures to aid in the 

economic recovery and rebuilding of the region. 

I want to leave the committee with one last thought. After Hurricane Rita I was driving, shortly after the flood waters had receded, 

and I was driving through Vermilion Parish and came across a 

home and there was a gentleman out there cleaning debris. The 

yard was a mud flat with all kinds of debris, it smelled awful, and 

I walked out to talk to this fellow to find out what had happened, 

if this was his home. The fact of the matter was that it was his 

wife’s home and she had returned to work and he was just trying 

to start the recovery process with his sleeves rolled up, on his own. 

I saw where floodwaters had come in 6- to 7 feet high, blew out 

windows in this home, blew out doors, and when we walked into 

the home there was 8 inches of mud and debris everywhere, furniture, large pieces of furniture were thrown about, and you could 

really appreciate the full effect, the full magnitude of what happened. 

But, you know, when I walked into the living room, everything 

was destroyed in that room except for one picture of the family on 

17

the mantlepiece right above. It was splattered with mud but it was 

still there. And that symbolized to me what the strong-willed people of southwest Louisiana are all about. They are not waiting for 

the Federal Government, they are not waiting for the State government. They are rolling up their sleeves and actually trying to get 

the work done and the least we can do at the Federal level, and 

State level is to provide some assistance. 

Again, I thank you for allowing me to testify here and look forward to any questions that might arise. Thank you. 

The CHAIRMAN. The gentleman from Louisiana, Mr. Melancon. 

STATEMENT OF THE HON. CHARLIE MELANCON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. MELANCON. Thank you, Mr. Chairman. I want to thank the 

Congress first of all for the appropriated moneys that they have 

sent to the Gulf Coast region. While it is a good effort, there is still 

a lot to be done. Mr. Chairman, I would like to thank you for holding these hearings. This is one element of a recovery, the housing 

element, and there are many other elements that have to be addressed that have not been addressed. 

I would like to thank the Speaker for allowing the committees to 

begin the process of looking into the problems that we have and 

looking for ways to resolve those problems. I would like to echo also 

the comments made by my colleague, Mr. Boustany, and the fact 

that this is not just Katrina, this is Katrina and Rita, two of the 

most devastating storms to hit the coast of the United States, causing the most damage. And a lot of the people who are outside of 

New Orleans, and we feel for New Orleans, and we want to help 

New Orleans, and we will help New Orleans in spite of it not being 

our district, but we need for people to understand that it is the entire Gulf Coast, from the Mississippi line at Alabama to the Texas 

line at Sabine River and actually somewhat into Texas and somewhat into Alabama. 

It has been 18 months since Hurricane Katrina made landfall, 

and almost 17 months since Hurricane Rita, and it feels good to 

know that my colleagues remain committed and supportive of seeing the Gulf Coast rebuilt. As you are all well aware, Katrina made 

history as one of the most devastating storms our Nation has ever 

witnessed. Rita followed with just as much devastation. 

The destruction wrought by the storms was unprecedented. Hundreds and thousands of homeowners and renters were left without 

a place to live, and sadly so many of the people are still in the 

same position today. I have often heard figures citing a Federal response totaling $118 billion for rebuilding of the Gulf Coast but the 

problem the Gulf Coast residents are facing is that they aren’t seeing this money on the ground back at home. 

This problem persists because of a litany of issues that continues 

to expand. Among some of the most pressing Federal policy needs 

is reform of the Stafford Act, which cannot currently deal with a 

Katrina-sized catastrophe. Insurance policy reform. Private insurance companies have given up on coastal Louisiana and other 

places where it appears that they can’t make an easy buck. An underfunded and behind schedule comprehensive hurricane protection 

18

system. This is critical to defending ourselves from the next big 

storm. SBA disaster loan reform saw small businesses can revive 

an economy that desperately needs the extra staying power. Further extension of the Go Zone tax credits that include all areas severely damaged by the storm. And of course an inadequate housing 

policy, the purpose of this hearing today. 

The current system is failing us. Public housing remains shattered and low income rental housing is next to impossible to find, 

or, for the lucky ones who can find it, they are finding it next to 

impossible to afford. The longer it takes to provide this housing, 

the longer our recovery will take and the more widespread the 

damage to our economy will be. 

I commend you, Chairman Frank and Ms. Waters, for turning 

over the first stone in this recovery process. We have a long journey ahead of us but from what you will all learn from these witnesses today, and from what will continue to reveal itself under 

close scrutiny across-the-board in the recovery process, I am confident that this Congress will allow the Gulf Coast to rebuild, in 

the words of President, bigger and better than ever before. 

I will keep this succinct as you have more important witnesses 

to hear from, but again I appreciate the opportunity to be here and 

I appreciate this Congress taking the necessary steps to help get 

my constituents and other residents of Louisiana back in their 

homes. Thank you. 

The CHAIRMAN. The chairman now recognizes the gentleman 

from Texas, Mr. Green, who has a major interest in this because 

his district has been, and continues to be, a quite gracious host to 

many of those who have been displaced. Let me say to the gentleman, Mr. Boustany, I accept your point, and it is true that we 

did mistitle this hearing, but as you can tell from your presence 

here, we got the casting right, which is important. We did implicitly acknowledge that and we will make sure that in the future we 

correct the title. 

The gentleman from Texas had a unanimous consent request. 

Mr. GREEN. Yes, sir, I would like to submit two letters sent to 

the Director of FEMA concerning the termination of Section 408 

housing assistance, and with unanimous consent, I would like for 

them to be entered into the hearing record. 

The CHAIRMAN. Is there any objection? The Chair hears none. 

The Chair will ask unanimous consent to enter into the record 

a letter just received February 5th from the Chair of the Federal 

Reserve, the Chair of the Federal Deposit Insurance Corporation, 

the Chair of the National Credit Union Administration, and the Director of the Office of Thrift Supervision. Several of us, the gentlewoman from California, the gentleman from North Carolina, the 

gentlemen, Mr. Jefferson and Mr. Melancon, from Louisiana, the 

gentleman from Mr. Mississippi, Mr. Taylor, and the gentlewoman 

from New York, Mrs. Maloney, wrote to these regulators asking 

them to reaffirm their encouragement to financial institutions to 

show forbearance for the people who are trying to pay off mortgages. What we have, I am very pleased to see, is a letter from all 

of the regulators reminding banks that they are encouraged in a 

responsible way to show forbearance and essentially make it clear 

that no financial institution needs to fear being penalized because 

19

they show unusual flexibility as long as they say there is an ultimate target towards loan repayment. They acknowledge your effective loan workout and recovery may involve protracted resolution. 

We appreciate the regulators making that clear, and I ask unanimous consent that this correspondence be put in the record. With 

that we will begin the questioning. I would ask the members to try 

to keep the questioning of our colleagues brief. Let me just ask, to 

begin, and some of you have done this and I don’t ask you to do 

it now, but we plan to legislate, and this committee’s jurisdiction 

is in housing, it is also in insurance, and we will be dealing with 

the insurance matters in separate issues, but we would welcome 

from you specific proposals as to what we can do, partly to make 

more resources available, and partly to free up resources. We have 

been told, for instance, that we need to extend the time when tax 

credits can be used. 

The gentlewoman from California, who has been on top of this, 

raises questions about some of the matching requirements. Are 

they too onerous for governments that are financially burdened? 

We would welcome your recommendations as to that. We have, we 

believe, money that will be coming as part of the bill dealing with 

Fannie Mae and Freddie Mac in the first year that will be money 

available for affordable housing. How we distribute that, that issue 

will be before us. 

I am going to cut off my time right now, but I do invite my colleagues to continue, as they have been, to share with us. We have, 

of course, the gentleman from Louisiana, Mr. Baker, who has 

played a major role and we want to work with him. 

The gentleman, Mr. Jefferson. 

Mr. JEFFERSON. Mr. Chairman, if I might, the first thing that I 

think this committee ought to pay real attention to is the issue of 

public housing. It is so obvious that this is a wrong-headed policy. 

It is keeping people out of town for no good reason, and these are 

people who had their leases paid up, who actually had leases, legal 

agreements to rent and to occupy space, and the Mayor announced 

that the water was on, the lights were on, and they came back to 

town and couldn’t get in the houses. 

I think to the extent this committee can do it, you really ought 

to direct HUD to revisit this whole area and to not engage in demolition that will keep people out of town. Everyone is for improving 

the housing developments down the line, and I think we can do 

that. But we ought not as almost a penalty for folks trying to make 

it back home, to not let them back in until we get everything just 

right. 

The second thing is you mentioned that the Gulf Opportunity 

Zone legislation needs to be extended for the low income housing 

tax credit and the GSA reform program that you talked about so 

much that we want to see done as quickly as possible to provide, 

I think you said, $4- or $5 million in assistance for rental units and 

for the homeowners. 

And the last thing is the HUD disaster voucher and rental assistance programs. As I mentioned, some people, some families are 

approaching the $26,200 cap because it was designed for much 

shorter periods of disaster recovery than we are experiencing now 

and the reality is that it is taking a long time because it has been 

20

such a devastating proposition for people. That needs to be lifted, 

there needs to be some guides as to under what circumstances it 

should be done, but it needs to be done. 

And the other thing is that on the rental assistance program, 

what happens there is that you keep getting these deadlines for 

people who move out, they have nowhere to go, and what is the 

point of that. There ought to be a more humane way to deal with 

this whole set of issues than they are being dealt with now. 

Finally, on the flood insurance issue, we have people penalized 

back home because they had no flood insurance, but it was because 

FEMA said they didn’t need to have it; it was okay. And they are 

being penalized. As the folks back home who make up the Road 

Home Program, they are saying to people, ‘‘You didn’t have flood 

insurance, you get penalized for not having had it’’, when of course 

this doesn’t make any sense because FEMA said that they didn’t 

need it. 

So those specific three or four areas, I think, we can do a lot of 

good in a hurry if the committee will take those up in the next few 

months and get something passed in that regard. 

The CHAIRMAN. Just two points. One, the gentlewoman from 

California and I have talked, and we intend to try to legislate, we 

have spoken to Mr. Thompson from Mississippi, the chairman of 

the Homeland Security Committee. The relationship between HUD 

and FEMA is hopelessly tangled up and we need to straighten that 

out. 

Mr. JEFFERSON. The last thing I forgot to mention was the Community Disaster Loan Program, the forgiveness issue. We did for 

the first time in this Congress require our local governments to pay 

back these community disaster loans. We have never done that before in the history of this Congress. We did it, I don’t know why 

we did it, but it was done. 

The CHAIRMAN. We can undo some of that, and that is one of the 

specifics we will be examining. We plan to sort out the responsibilities between FEMA and HUD, along with the Homeland Security 

Subcommittee. My own initial view is that FEMA ought to be the 

emergency provider, but at some point very soon after that HUD 

ought to be involved because we do agree that there have been 

some problems there. 

Mr. Baker. 

Mr. BAKER. I thank the chairman for this time. Mr. Jefferson, I 

am going to be pretty brief because I want to get to my other two 

Louisiana colleagues, and I don’t mean to intentionally ignore my 

Mississippi friend, but this is so unusual to get the delegation at 

a meeting like this and to talk through where we are. Am I correct 

in assuming Road Home for you in your district is not working 

well? 

Mr. JEFFERSON. That is a correct assumption. 

Mr. BAKER. If you were to look at the Road Home balance, I understand, as of the most recent data, and it can be updated later 

by other witnesses, there are about $31 million worth of awards to 

506 families, averaging $62,000 per home. That means of the $7.5 

billion for Road Home we probably have somewhere around $7.45 

billion not yet actually contractually obligated. 

21

This is the hard part. If we were to take advantage of the chair- man’s kind offer on the GSE bill, which could generate $500 million 

to $1 billion more, given the HUD, FEMA, State government, local 

government, everybody’s problems in communicating with each 

other, would you welcome a more direct line of expenditure coming 

from the Federal Government to identified professional recipients 

to, for example, go build a pilot project in a community which is 

affordable housing somewhere else, maybe a model community 

which would have a grocery story location, or a school location, not 

just housing locations? 

If I am assessing your view correctly, the Road Home, even if it 

were implemented perfectly, is not community restoration, it is 

about helping individual homeowners, and that, my friend, I don’t 

believe will work. Do you agree? 

Mr. JEFFERSON. I agree with you as long as we make the proper 

resources available to do it; I agree that you have to restore communities. 

Mr. BAKER. It is more about getting it done than how we do it 

at this point, isn’t that correct? 

Mr. JEFFERSON. I think—I hate to concede how we do it but I do 

think what is most important now is to get it done. I will agree 

with this also, that there are lots of problems I have with the way 

the Road Home is structured, you may have some too. I don’t know 

if it was a good idea to have the LRA and ICF and all of these 

other people doing things. I don’t know if it wouldn’t have been better to have the money go to parishes and having the four parishes 

that were involved. 

Mr. BAKER. I am not ready to jump to a specific remedy today. 

All I am trying to get is conceptual agreement among us that what 

we have now isn’t working, we still have resources technically 

available, and maybe we can have a different course. May I jump 

to that? 

Mr. JEFFERSON. I agree with that. I go back to the Baker bill, 

which has some of these concepts in it. 

Mr. BAKER. Now you are really cooking. 

Mr. JEFFERSON. I think it was a very good idea and after we all 

negotiated it turned out to be a wonderful program that never got 

implemented. Several of the features in that bill, I think, were good 

features. 

Mr. BAKER. Quickly, Doctor, do you have any comment? Do you 

believe that Road Home is working for Rita? 

Mr. BOUSTANY. I would agree with all the comments that my colleague here just mentioned and we are experiencing the exact same 

thing in my district. 

Mr. BAKER. Mr. Melancon. 

Mr. MELANCON. Obviously the outward appearance is that they 

are struggling with it. There are going to be some representatives 

of LRA and I think they would probably be the best people to address the questions of what the problems really are. 

Mr. BAKER. My last comment. At one point along the way, for the 

rest of our members of this committee, a great deal has been said 

about $110 billion. We have not seen $110 billion. And in fact, 

when you look at some of the FEMA’s own accounting numbers, in 

one-quarter of all money sent to the State for recovery, 24.9 perVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
22

cent in one quarter went to FEMA. I think those numbers are still 

north of 20 percent. 

So when we are haranguing about the inefficiency of Louisiana 

State government, let’s not look past Washington ourselves. We are 

doing a pretty bang-up job of eating up a lot of the money on our 

own. 

Mr. MELANCON. If I could, one of the things, and I think the people with the LRA will be here, and I will be happy to give this to 

the committee to take a look at it. The $110 billion that is being 

touted as spent just in Louisiana has been $59 billion that is allocated to Louisiana. Of that, $18 billion was handled by the government for debris cleanup, housing for the employees, and transportation back and forth or whatever, $14.7 billion was for NFIP flood 

insurance which was for premiums paid by people who had a policy, not because we gave them money. Then the rebuilding effort 

is $26.4 billion. I think roughly $10 billion was to be for the Road 

Home Program. 

The CHAIRMAN. If the gentleman would submit that. Without objection, we will make it a part of the record. 

Mr. TAYLOR. Mr. Chairman, if I may. As you know, I serve on 

the Armed Services Committee, about 100 yards down the hall 

from here. The generals and the admirals all tell us that within 

our lifetimes, we will see a weapon of mass destruction attack on 

the United States, and the thing that really hit me after Katrina, 

in addition to everything else, is that a weapon of mass destruction 

attack on the United States is going to look a lot like south Mississippi looked after that storm; no electricity, no water, and no 

food. The vehicles did not operate either because they had been 

under water; they had no fuel. 

And so it is important, whether it is called the Road Home, 

whether it is through CDBG or Federal flood insurance that we do 

have a national program to try to get people back in their houses, 

that the mistakes that were made in Mississippi and Louisiana are 

not repeated, and that this is the proper forum to correct them. 

The CHAIRMAN. I thank you. I should add, too, that there was a 

reference to the Community Disaster Loan Program; primary jurisdiction of that is in the Small Business Committee. Fortunately, 

the Chair of the Small Business Committee sits on this committee, 

and I know that she is eager to work with people in correcting that. 

We will get to her. 

The gentlewoman from California. 

Ms. WATERS. Let me say that Mr. Baker has left but I agree with 

him that you can’t rebuild communities in the way that is anticipated by the Road Home Program, and I also would like to say to 

our members that despite the fact that oftentimes it is said that 

the Federal Government should not try to administer local programs, I am going to push very, very hard for the feds to redesign 

how to get the money to the homeowners. 

We will not simply sit back and say that—we can’t point fingers 

and let the past bygones be bygones. We are not going to continue 

and cannot continue to allow our CDBG money to be mismanaged 

in the way that it is with the Road Home Program and any other 

program that is supposed to be getting money in the hands of the 

people. 

23

Now, having said that, I think that I have—and the chairman 

has—basically made it very clear that we are very concerned about 

the Road Home Program and we are going to move very aggressively on it. Let me talk about public housing now. This is a serious 

issue that can be resolved. It is my belief that the judge in this 

case is waiting on both sides for us to get together and work this 

out and make it work. And I think we all need to hone in on this 

problem and let the judge and everybody know that we are for returning everybody back to public housing who want to come back. 

And we have to do it immediately and we have to get those units 

rehabbed. 

Secondly, we also have to think about the waiting lists that have 

been there for years with people wanting to come into public housing who have not been able to get into public housing. We also 

have to ask why haven’t the units that were approved for redevelopment been done after all of these years, and why is it now we 

have to take a broad brush and talk about tearing down all of these 

units and redevelopment. 

I would like to know if the four of you and anybody else representing the area could possibly get together in support of the 

public housing residents and sign off on letters that would urge 

precisely what we are talking about in getting people back quickly 

into units that can be rehabbed and use phased redevelopment so 

that you get the rehab units. Then we can get people back and they 

can go on with some kind of redevelopment for the future and not 

wait to tell people you can come back in 5 or 6 years. Will everybody agree to something like that? 

Mr. JEFFERSON. Absolutely. 

Mr. MELANCON. I agree, and my only regret is we are 17 months 

after the fact that we are talking about so I commend you for 

bringing it to the attention not only of the Congress but to the people of America. 

Mr. BOUSTANY. This is an issue in Calcasieu Parish for me in my 

district and I would be happy to work with the committee in any 

way possible to see what we can do to come up with a reasonable 

solution. We are way beyond the time that steps should have been 

taken, but I agree, better late than never. 

Mr. JEFFERSON. Absolutely, it is a great initiative, and I would 

fully support the community’s work in that regard. 

Mr. TAYLOR. The same. 

The CHAIRMAN. She didn’t ask me but I just want to join in on 

that. It is absolutely essential. It is going to be the policy of the 

committee to the extent that those of us in the majority can make 

it, please do not do poor people the favor of tearing down the places 

they now live in so 7 years from now they can have better places 

to live in. It is going to be our policy that it is very nice to promise 

poor people better houses than they now have, and after you have 

built them you can displace them from where they are living, but 

the promise of a nice house by and by is no substitute for a place 

to live right now, and we will be insisting on one-for-one replacement with rare exceptions and the replacement has to precede the 

displacement. 

Ms. WATERS. Mr. Chairman, yes. Let me just say that the onefor-one replacement is extremely important and the reason I ask 

24

our members today if they can agree on basically what I have proposed even though it is not specific yet is because it is going to be 

important to try and get the local elected officials, State elected officials, and the Members of Congress all together on this issue because the people think that there is an underlying effort to get rid 

of poor people and to tear down these units and send them off into 

the wild blue yonder without knowing where they are going to live. 

And I think to the degree that everybody gets together and sends 

this message, that HUD will bend over backwards. I have met with 

the Secretary and I have met with some other representatives of 

HUD and it seems to me that they have been moving and backing 

down a bit the more I propose, and so I think we can work this 

out, yes, sir. 

Mr. BOUSTANY. I would just add, I agree with Mr. Baker’s comments about building communities and I would ask the committee 

to look at my hometown of Lafayette, Louisiana, where we are 

doing some very innovative things with public housing and looking 

at programs that would enhance homeownership, programs that 

help build homeownership for those who are in public housing 

today, and the head of the housing authority is doing a wonderful 

job down there and I would ask the committee to perhaps look at 

that as it moves forward. 

Ms. WATERS. Mr. Chairman, I was in Lafayette and I am aware 

of some of the things going on there, but what we have to focus 

on right now is getting people back into public housing. Most of the 

housing had been taken off the market in terms of being available 

for people, and one of the things we have to be very, very careful 

about with homeownership is reducing the number of units that 

are available to poor people in the interest of homeownership. We 

can have mixed use development, but we have to always have oneon-one replacement. 

The CHAIRMAN. I would just say, too, that the Chair of the Housing Subcommittee has just articulated what will be the policy of 

the majority on this full committee. 

The gentleman from Texas. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman, and I appreciate 

you holding this hearing. What I would like to do for the panel is 

to make a brief statement that these communities that you live in 

and represent so well were built by the private sector; they weren’t 

built by government. I would tell you that your biggest friend, your 

biggest hope quite honestly in rebuilding your communities is not 

FEMA, not HUD. They always cut me off. 

And so what I would hope we would do, and I agree with Ms. 

Waters in the respect that we don’t need to go move people out and 

put them somewhere in a temporary holding pattern until we build 

them a new place, but what I do think we need to do is to be very 

strategic about the housing that we build. 

And so my first question to the panel, and the gentleman from 

Mississippi, I am not going to leave you out, I am going to let you 

also be a part of this, tell me about the housing activity, the rebuilding that is going on in your district right now. 

Mr. TAYLOR. I appreciate the gentleman’s question. Let me start 

by saying that when it came to something incredibly important to 

people, which is insurance, our Nation led the way in being fair 

25

with people. I didn’t have one single complaint from one constituent about not getting paid from their Federal flood insurance 

plan. I have had thousands of complaints of people in the private 

sector. 

And so when you talk about rebuilding, part of the problem with 

rebuilding is that the insurance industry didn’t pay people’s claims. 

So here is a person, I will start with myself, I will start with Senator Trent Lott, I will start with Federal Judge Lou Guirola, your 

house is gone and your insurance agent says that they don’t see 

any wind damage, despite NOAA saying there were 5 hours of hurricane force winds before the water ever showed up. 

So you take a school teacher, retired military, retired policeman, 

under those circumstances, they have just lost their house. They 

still have a mortgage. The insurance didn’t pay it. So part of their 

rebuilding problem is no insurance. 

The second thing that happens is one by one these are small 

communities, your insurance agent finds you and says, ‘‘Oh, by the 

way, when you rebuild we are going to quadruple your rates.’’ That 

has been an incredible hesitancy for people to rebuild because gee, 

I didn’t get paid last time, now you are going to charge me 4 times 

more money and you probably won’t pay me then. 

Again, when you are talking about rebuilding, you cannot ignore 

insurance, and it is the number one issue in south Mississippi right 

now, and again I would remind people it is cool to be down on the 

Federal Government but I want to tell you the only group that was 

fair with the people in south Mississippi was the National Flood Insurance Program. That is a program that needs to be refined but 

preserved. 

Mr. NEUGEBAUER. To get back to my original question, is there 

building going on in your community? 

Mr. TAYLOR. It is painfully slow because people didn’t get paid 

and the second part is just the scale of what happened. No one 

could have imagined 20,000 houses disappearing overnight. And we 

are fortunate enough to be small town America where you know 

your contractor, you know your plumber, and you know your electrician. Well, you are going to wait. 

I finally got a framer after 16 months to show up on my property. Believe me, I really do understand this. So that has been a 

huge part of the problem, but it makes, to Ms. Waters’ point, it 

makes public housing that can be saved and saved quickly an extremely high priority because of the need to get labor in there to 

do the sort of things that need to be done. 

Mr. NEUGEBAUER. I think the question about public housing, I 

have been in the homebuilding business and so one of the things—

and I used to renovate housing. At some point in time, the economics of renovating something don’t make economic sense and so I 

think what we have to be careful there is that we have the stewardship of the American taxpayers’ money and so what I think we 

have to determine is: Is that money better leveraged with the private sector in other kinds of housing initiatives that would have a 

longer economic, long-term life than just going in and throwing 

good money for a quick fix that has very little long-term upside. 

Mr. Jefferson. 

26

Mr. JEFFERSON. Just to the public housing point, as I said in my 

statement, from all the evidence we have, to repair the public housing is $450 million less expensive than to demolish it and rebuild. 

The insurer for the Housing Authority of New Orleans has done its 

own little look-see and it found that 20 buildings in the. C.J. Peete 

public housing development back home would cost less than $5,000 

each to repair most of the units, and a few would cost more than 

$10,000 each. 

So these places were places where families lived before the 

storm. What is perplexing is why they aren’t as good to live in now 

as they were before the storm. Nothing happened. Many of them 

weren’t affected by the water because they are on the second, third, 

or fourth floor, so consequently people could move back in. We don’t 

see why the policy is as it is except they just don’t want to let folks 

back in town. 

On the other part that you mentioned, I think there is a lot of 

self-help going on. People are really trying hard to get back in. 

They are waiting for insurance that doesn’t come through. The SBA 

loan program isn’t working for them properly. But they are still 

nonetheless coming in and trying somehow or other to get back 

home. 

The last thing is the point I made starting out, that we ought 

to look at this in a different way than just an act of God. In our 

case, particularly in New Orleans where the levees broke, where 

the Corps comes back and does a study and concludes that yes, it 

is a reason why, the breaches in the levee that were the fault of 

the Corps in design and construction mainly was the reason why 

the city drowned. 

In any event there is a larger Federal responsibility, it would 

seem to me, than in the ordinary case of just an act of God. So I 

urge the committee to look at it along those lines as well as we go 

through these difficult issues. 

Mr. NEUGEBAUER. Mr. Chairman, I request an additional 30 seconds for microphone malfunction. 

The CHAIRMAN. Mr. Boustany, then we will finish up. 

Mr. BOUSTANY. Just very briefly. It has been important to recognize that you cannot separate the insurance issues from the housing issue and a labor shortage issue. The three are linked. And as 

we go forward in looking at how do we devise policies, we have to 

keep that in mind. 

But secondly, I want to mention how important the GO Zone legislation was. It was tremendous. That was an example of a welldesigned program that really spurred rebuilding in my district and 

it is impossible to underestimate or overestimate how important 

that was. It was a very important program and it is something that 

I think needs to be extended to a certain point in time when we 

know that we have completed this recovery. 

The CHAIRMAN. Thank you. Ms. Velazquez. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. As you know or 

maybe you don’t know this, but the SBA Disaster Loan Program 

is the primary source of long-term financing for homeowners and 

small businesses and the problem that we saw throughout the 

whole Katrina, Rita experience is that SBA response was totally inVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
27

efficient and ineffective, and that is due to the fact that for the last 

5 years the Bush Administration cut SBA’s budget by 50 percent. 

So, given that reality, they didn’t have the manpower to respond 

in an effective way to a disaster of this magnitude. So not only 

didn’t they have the manpower, the computer system was not adequate, and what we found was that more than 50 percent of homeowners’ applications and small business applications were declined, 

and when you compare that to the California earthquake, that was 

extremely high. 

The other problem that we saw with the Disaster Loan Program 

is that out of the $8 billion that they approved in loans for the Gulf 

Coast, only 20 percent a year-and-a-half later has been disbursed. 

We will be conducting a hearing on Thursday and we are working 

on revamping the Disaster Loan Program for SBA, and I invite you 

to either—if you have any witness that could share with us their 

experience or if you want to come and participate in those hearings, you are welcome to do so. But we are going to be working on 

legislation to retool and revamp the whole Disaster Loan Program. 

The other problem that we saw is that when it comes to homeowners and low-income communities their credit score is going to 

be very low so they do not have the collateral that they need. In 

that case a loan might not be the answer for those people; it might 

be a grant program. And we are going to be working in putting together a grant program that we assist the people to get some assistance, some cash to deal with the problems that they are facing 

in the Gulf Coast. 

Mr. BOUSTANY. I would say, first of all, whenever you have a 

major disaster like this it is important not to turn your back on potential public and private partnerships. One of the great things 

that happened early on would have been the use of local talents in 

banks, because a lot of information was lost but there is local information that is still held by those who work in these banks, and 

partnering the SBA with local banks might have helped to get us 

around many of the problems that we experienced. 

Ms. VELAZQUEZ. Since it was proven that they didn’t have the 

manpower or the capacity to effectively respond, we are looking 

into the private sector, financial institutions to work with SBA. 

Mr. JEFFERSON. Your point is exactly correct, back home without 

SBA authority there is no loan director, there is no public information director, and there is no director of technology. Because they 

make cuts, they eliminate these positions and the individual who 

is administering the program is doing these jobs and his job. So it 

is impossible to provide a real comprehensive service where these 

critical areas are left open because of underfunding, as you have 

pointed out, on an ongoing basis. 

The second thing is these turn-downs have really helped to slow 

down this recovery. In our area, the attitude has been that we 

don’t know when this place is going to come back, we don’t know 

when you are going to be up on your feet again, therefore it is a 

turn-down. Somehow or another we have to look through this and 

figure out when a disaster of this magnitude takes place, how do 

we deal with it? Your point about the grants may very well be 

what we will have to look toward. 

28

Ms. VELAZQUEZ. It is a lack of planning on the part of SBA. They 

didn’t have a disaster plan in place. We do have resources out 

there like the small business development centers. They are 

trained, they can process loan applications in a timely manner, but 

they did not have a centralized effort to respond to a disaster of 

this magnitude. 

Mr. MELANCON. If I could, Mr. Chairman, just quickly. Some of 

the problems we have run into, Ms. Velazquez, is that FEMA is 

asking—not asking but telling the homeowners who are getting 

any of the moneys from the insurance company, whether it is flood 

or property or from Road Home, as it comes they have to pay off 

the SBA loan. The Katrina effect has a price of rebuilding at about 

150 percent of what it used to be to build anything. You have totally devastated homes that have to be torn down, which is one of 

the points I wanted to try to make to Mr. Neugebauer. You have 

water that stood for several months up to 20 feet. Those houses are 

uninhabitable. The integrity of those houses is not there. 

But on the SBA situation, and they have programs that they 

could have used to put some businesses back, and I have one specific instance and they did not want to utilize that program. 

The CHAIRMAN. Thank you. The Chair has—we are going to have 

to yield more closely to the 5-minute rule. We do have to move on. 

Now the gentleman from Alabama. 

Mr. BACHUS. Thank you. I am going to direct this question mainly to Congressman Jefferson, representing New Orleans, and Congressman Melancon, you represent the area outside New Orleans. 

This sort of demonstrates to me maybe a problem in what I have 

as a member trying to figure out the true picture. 

I was told, and the figures we got, are that there were 7,379 public housing units in New Orleans prior to Katrina, so about 7,400. 

Now of those, only 5,100 had families in them. So I would suppose 

that meant that 2,300 were vacant, is that correct? 

Mr. JEFFERSON. I think that is correct. I am not quite sure why 

they were vacant, because there was a big waiting list for them, 

but I think that is correct. 

Mr. MELANCON. If I can speak to it. I think the problem with the 

public housing not being occupied has to do with the Section 8 

housing program whereby private owners are—and so the money 

has been taken away from the public housing sector and put into 

the Section 8, and now what has happened too is that the rents are 

driven up so you are expending that money even quicker than it 

was expended before. 

I don’t represent New Orleans, so I don’t profess to know about 

the housing situation, occupancy or otherwise. 

Mr. BACHUS. I am saying at first blush you wonder about that. 

There are 10 major public housing communities other than you are 

talking about the Section 8, there are 770-some units scattered 

elsewhere, Section 8, so that accounts for 700-something, I guess. 

But of the 10 public housing units that were in New Orleans, obviously a large amount of those units were vacant, I would think. 

Mr. JEFFERSON. As I said, I misspoke, there weren’t 18,000, it 

was something like 1,800 on the waiting list. I suppose the units 

may have been in disrepair; I am not quite sure why they weren’t 

open. 

29

Mr. BACHUS. I think that is a wonderful question, why do you 

have a waiting list and a bunch of vacant units? At least that is 

the information we got. 

Secondly, how many of those units were destroyed in Katrina, of 

the 7,400? 

Mr. JEFFERSON. Remember, in some places the units weren’t affected at all. In some places there was no effect. In other places it 

was only the first floor. The second, third, and fourth floors were 

not affected by the floodwaters. So the issue in most cases would 

be you go into the first floor areas, either make them available for 

people to live in right away or at least clear them so people can 

go upstairs. 

Mr. BACHUS. I understand that. I am just trying to weed out, trying to kind of get to a number. 7,400 before the storm, how many 

after the storm that you could have moved someone back into? How 

many were not damaged? Does anybody know? 

Mr. MELANCON. I would think maybe the LRA folks might have 

that statistic. I don’t really know. I do know that in Orleans Parish, HANO runs the housing authority and that probably could be 

gotten from them directly, the exact number. 

Ms. WATERS. Would the gentleman yield? 

Mr. JEFFERSON. I am told by the folks who know that at least 

two of the public housing developments, C.J. Peete and Lafitte, 

largely could have moved in there. 

Mr. BACHUS. How many are we saying? 

Mr. JEFFERSON. I don’t know. 

Mr. BACHUS. Just give me a ballbark figure. 

Mr. JEFFERSON. I am reluctant, but of the 5,000 families that 

were in public housing before, virtually all of them could have 

moved back is what I am being told here by folks who know more 

than I do about it. But I can’t give you the answer. I would be glad 

to try to supply it to you specifically. 

In any case, we are talking only about the ground floor apartments in every instance. That would be a fourth of what we had 

available— 

Mr. BACHUS. Even the ground floor. One figure that I have indicates that maybe 4,300 of them could have been destroyed or damaged. Is that what they have proposed to replace? They say they 

are going to replace all of them. 

Ms. WATERS. The problem is HUD has not agreed that any of 

them were—could be returned to because their decision to tear 

them down did not allow them to agree that any of them could be 

repaired for return. 

Mr. BACHUS. Now they say they don’t—they can’t move back in 

them because they are going to replace them, but does that mean 

the undamaged units or just the damaged units? 

Ms. WATERS. What the residents have done is they have gone 

through the housing developments and identified all of these units 

that are habitable that are not damaged, particularly as Mr. Jefferson said, where you only have minimum damage to the first floor 

and the units above are in perfect condition. 

Mr. BACHUS. Down the line the question I am going to ask is 

why are you replacing units that have minimal damage? But I 

30

guess my first question is I have had nobody that has been able 

to tell me how many units— 

Mr. JEFFERSON. Remember, this is 18 months later so within the 

first 4, 5, or 6 months even those damaged on the first floor could 

have been straightened out. 

The CHAIRMAN. We are going to have HUD in the next panel. 

Mr. BACHUS. Only 1,000 families have returned so I am not sure 

that there is not another 1,000 units they could move back into 

right away. 

The CHAIRMAN. We are going to have HUD and another group 

that might have something to say about this for tenants. So we will 

be getting in a later panel of people who know that. These are very 

important questions and they will be very central there. Let’s move 

on. I would say to the members if members can forego asking questions now, we will give extra time later. We do want to move on. 

But we are not going to cut anybody off. 

Mr. Watt. 

Mr. WATT. Thank you, Mr. Chairman. I think I just want to 

make one point and I should be able to make it briefly by asking 

Mr. Jefferson whether in addition to the public housing that has 

not been occupied, there were several hospitals, I understand, 

where the first floors were substantially damaged. Can you just tell 

us what has happened with allowing or not allowing patients, medical patients to move back into second, third, or fourth floors of 

those hospitals versus what has happened with the public housing 

residents, allowing them to move back in the second, third, or 

fourth floor units? 

Mr. JEFFERSON. I think the gentleman’s question is a point for 

a very powerful argument; that is to say, if we could and we did 

successfully gut out and clean up the ground floor of hospital buildings and we have permitted people to go up on the second floors 

and so on and be treated, people who were actually sick and ailing, 

certainly the argument is profoundly for the notion we can do the 

same thing in public housing, do the first floors and let people live 

upstairs without any threat to them or their families. 

And so we certainly did it back there because it was necessary 

to open up the hospital facility, particularly private ones where it 

didn’t depend upon the Stafford Act to get them going, but they 

had private insurance, they used it, they came in and cleaned everything on the first floor and moved patients up and got back into 

business. Still can do that today. I thank the gentleman for his observation. 

Mr. WATT. 17 or 18 months later has HUD done anything to replace the public housing units that they said they were going to destroy as opposed to allowing people to return? What steps, if any, 

have they made to build any new public housing units? 

Mr. JEFFERSON. None that I know of. They have taken the occasion when people are out of town to talk about demolition, when 

before the storm there was no talk about replacing these units at 

all. One would have to ask why after the storm. I observe that it 

is convenient because people are not there to be at the table to 

fight for themselves and while they are away HUD is taking this 

action without input from the tenants and from the community. It 

31

is a disaster that is happening there now, a second disaster on top 

of what they have already suffered. 

Mr. WATT. Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. The gentlewoman from Illinois. 

Mrs. BIGGERT. Thank you, Mr. Chairman. Dr. Boustany, you 

mentioned that there was some movement or progress since 

Katrina and Rita in moving more families towards permanent 

housing, towards homeownership versus rental of the public housing. Could you expand on that a little bit? 

Mr. BOUSTANY. Actually, it wasn’t since the hurricanes, it has 

been an ongoing program, which I think has some valuable lessons 

to offer. I was urging the committee to look at that as part of a 

comprehensive look at all of this. 

Mrs. BIGGERT. Do you think that is a good goal after this with 

the lack of moneys involved that people would have? 

Mr. BOUSTANY. I think it is an admirable goal and I think we 

have seen some success and also satisfaction upon the part of those 

who have been able to move on to homeownership. So simply I 

think it is part of the equation. It may not be the sole answer, but 

it is part of a comprehensive look at the housing issues. 

Mrs. BIGGERT. Thank you. There is a disturbing AP story from 

today about how there has been so many—I will start out, it says 

that the U.S. Government gave $84.5 million to more than 10,000 

households right after Katrina, but the census figure shows that 

there were fewer than 8,000 homes that existed there at the time, 

and then there is another story about a woman who—she has already been prosecuted, but she had an application over the Internet claiming damage to her home in New Orleans, and come to find 

out, she never lived in Louisiana. She received $65,000 in disaster 

aid, court records show. 

In your areas have you experienced this and do you think that 

the government, whomever is responsible, FEMA, is trying to get 

back $300,000 from people who have fraudulently said they lived 

there. 

Mr. MELANCON. If I could, there was, for example, a sex change 

operation, and Gucci purses paid for with this money by people 

who didn’t live in the disaster zone. Anytime the government is 

handing out checks, there are people who are going to deceive, and 

I hope they get every dime of it back and prosecute those that they 

catch because it is a disservice to the American public and to the 

people who deserve it. 

From a standpoint of what transpired, that was FEMA putting 

those dollars out. They didn’t have a plan, obviously. They put out 

credit cards at first or debit cards and that was a whole other fiasco. People in Houston got them, people in Atlanta didn’t get 

them, Dallas didn’t get them, Alexandria, Lafayette, wherever. So 

there was supposed to have been a plan. 

FEMA is supposed to be emergency response. They should know 

what they should be doing and shouldn’t be doing, and they don’t. 

Mrs. BIGGERT. Do you think this is still a challenge or that there 

has been progress made? Mr. Taylor. 

Mr. TAYLOR. One of the things that I mentioned, again, was that 

we are extremely grateful for the help we have received through 

our Nation. One of the things I hope this committee will pass is 

32

a full public accounting of where the CDBG funds went, just for 

your reason. These are small communities. I think that is wonderful. We all know each other, we know whose houses are gone, we 

know whose houses got clobbered, and we know which houses 

didn’t have any damage at all. The people will be the best judge 

of all as to whether or not these funds were spent properly if there 

is an accounting of where the money went, and I would welcome 

that as one of the things that come out of this committee. 

Mrs. BIGGERT. Thank you. I yield back. 

The CHAIRMAN. The gentleman from New York. 

Mr. MEEKS. Thank you, Mr. Chairman. Let me ask Mr. Jefferson—and first let me join the gentlewoman from California, in that 

to me the public housing issue, and as I heard you testify, as I listened intently in my office, is the number one issue of getting those 

individuals back into their homes. Because it seems to me that 

until they get back, that gives all other excuses for not doing other 

things within those communities like the redevelopment of the 

schools, the businesses, and other businesses coming. They won’t 

be there unless there are schools and other opportunities. 

My question to Mr. Jefferson is: Is there any link that you see 

with reference to the overall economic development of those communities with the lack of individuals coming back to the public 

housing area? 

Mr. JEFFERSON. Absolutely. The people in public housing, some 

would like to suggest, don’t get up and go to work every day, but 

that is, of course, not true. Almost everybody there, there was a requirement, unless you had a child under such and such an age, you 

still had to be either actively looking for work for 20 hours or finding work or whatever, but everybody else had to be on a job, and 

they were. In fact a lot of the folks are working not one but two 

small jobs in hotels and restaurants. In a hospitality community 

like ours, the company cannot be expected to come back without 

the people who are low-income workers back in town, and a lot of 

these folks were in the public housing so it is critical to the recovery of our economy. A lot of business people right now are supporting the public housing tenants who are here for that very reason. They want to see them come back to town because they need 

their workers back in town, people need to be there, and of course 

the other things, a lot of the children who aren’t in school yet, a 

lot of the hospital care that we have been looking to get back, it 

all depends on the low-income workers coming back to town. We 

hope it will be better than it was before, we hope the jobs will pay 

more than they did before, we hope we can create a new economy, 

more diversity and all that, but the truth of it is there is still a 

great demand for the workers who are out of town who lived in 

public housing before to come back, and it is a large number of people, 5,000 families, maybe 20,000 people who are not back and who 

could be back in town. 

The reason we can talk about this so much is because when we 

talk about public, private, and all that, public housing is what it 

is, public housing built by the government, maintained by the government, people pay rent and all of the rest of it. It is the thing 

we can fix most directly, and the folks who are most vulnerable, 

and some of the public housing people are also senior and disabled, 

33

and all of the rest feeds into this, and it is just a disgrace that we 

haven’t fixed this problem yet. 

The CHAIRMAN. The gentleman from New Mexico. 

Mr. PEARCE. Thank you, Mr. Chairman. I will just make a couple 

of comments, and then I will yield back. First of all, it is amazing 

how eventually we all come back to the moral decisions; is it fair, 

is it right, is it just? I hear from your perspective that there are 

many comments of the lack of justice. Those things begin to be not 

quite so clear if we have other considerations. For instance, I heard 

the National Flood Insurance Program was the only program that 

worked properly. I will tell you, if we have a billion dollars a year 

income into that program, the losses were $21 billion we bailed out 

to the National Flood Insurance Program from the last Congress by 

$21 billion, maybe even $23 billion. I suspect if we had given a 

bailout to the private insurers, that they could have been more 

generous. So we have to ask ourselves, was that fair? 

Also, the observation that insurance rates have gone up. I had 

a complaint last week from a guy who had a vehicle accident and 

his insurance went up. Is it fair to charge him a greater rate for 

his insurance or should that responsibility for his location at that 

time be borne by others? 

And, again, I am bringing up the point that when I look through later documents, I see the William J. Fletcher housing, $83 million 

divided by 347 units, $239,000 per low-income unit. We don’t live 

in $239,000 high-income units in New Mexico and yet we are asked 

to pay for these units to be rebuilt, and I ask about the fairness. 

That was not just in that one unit. If we go into the Lafitte section, 

it is $247,000. If we go into the B.W. Cooper units, it is $268,000. 

So these units are extraordinarily high priced for low-income units. 

I am trying to make my comments and yield back to the chairman. You all can then respond if you like. The Section 8 moneys, 

yes, I agree that they are misspent, but I will tell you that last 

week the omnibus money was taken away from New Mexico in a 

rerouting of the Section 8 formula. We lost in one area of my State 

100 people off of low income. That is what we are going to lose of 

low-income assistance. Another area described is going to lose 1 

month of rent for everybody in the system. 

And so yes, it is a question of fairness, but that fairness begins 

to, when you look nationwide, begins to have a different relevance. 

Mr. Chairman, I know that I have prompted many comments, but 

I yield back and if you want people to answer, I am more than 

happy to have the discussion. But it is your time. Thank you. I 

yield back. 

Mr. TAYLOR. Mr. Chairman. 

The CHAIRMAN. The gentleman yielded back. Briefly, the gentleman from Mississippi. 

Mr. TAYLOR. In a question of fairness, I hope I made it very clear 

that I want our Nation to look into the policy that allows the private sector to adjudicate a claim and decide whether a private company is going to pay the claim or the Flood Insurance Program. 

Flood insurance lost $20 billion. The private sector made $45 billion in profits after paying Katrina claims. You want to look into 

fairness, look into that. If you want to look into fairness, should it 

be fair for those insurance companies to be exempt from the antiVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
34

trust laws, to be able to call each other up and say, let’s raise our 

rates. We all do it, nobody gets in trouble. 

Is it fair for insurance companies to be able to say by the way, 

I am not playing my claims, how about you don’t pay your claims 

and you don’t pay your claims, and then there is no peer pressure 

for us to pay our claims. That industry made $45 billion in profits after Katrina. They made $60 billion last year. I really hope this Congress will look 

into the fairness of the insurance industry. 

The CHAIRMAN. Speaking of peer pressure, I will begin to get a 

great deal from my peer committee chairs if we continue to disregard jurisdiction entirely. So we do have to try to stick to the 

question of housing in Katrina. And let me now recognize the gentleman from Massachusetts. 

Mr. CAPUANO. Thank you, Mr. Chairman. Mr. Chairman, I don’t 

have any specific questions for this panel because the truth is over 

the last year-and-a-half these four gentlemen, particularly the 

three whom I have worked with the closest, have driven me absolutely insane with their commentary and pushing and shoving us 

to do the right thing. I will tell you that honestly, gentlemen, I 

would hope some day to be as strong an advocate for my constituents as you have been for yours. 

I will also say—the only thing I have left to say honestly is as 

a Member of this Congress, as an American I am embarrassed by 

what we have done to your constituents or, more importantly, more 

precisely, what we haven’t done for them. I think this entire mess, 

the fact that you are even here today is a black mark on the history of this country, of how little we have done for our fellow Americans when none of them asked for this. This was not a choice by 

anyone; it was a natural disaster. 

The fact that we are here today talking about it, I know it makes 

you gentlemen angry, it makes me angry as well, and I would only 

hope that this Congress does what it can to make your constituents 

whole, so that we can move forward. This issue does raise lots of 

questions of what we should be doing in the future. 

That is separate from what we should have done for people on 

the ground who got hurt. And again, I just want to thank you for 

being such strong advocates for your constituents, and I can only 

tell you your pushing me has prompted me to commit myself again 

to doing what we can to make this right. 

The CHAIRMAN. The gentlewoman from Minnesota, Mrs. 

Bachmann. 

Mrs. BACHMANN. No, Mr. Chairman. Thank you. 

The CHAIRMAN. You were next on the list that I was given. The 

gentlewoman? No? Okay. 

Then did the gentleman from New Jersey wish to be recognized? 

Oh, well, the Chair is pleasantly surprised. 

The gentlewoman from Tennessee. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. 

I just have a couple of quick comments. I want to thank the four 

panelists for their testimony, and I would note for the record that 

my parents live in the Jones County, Mississippi, portion of Mr. 

Taylor’s district, and so I had the opportunity to be down there 

right after Katrina hit. 

35

Just two quick comments. First of all, the four of you have each 

mentioned the importance of public-private partnerships in housing 

initiatives going forward, and my question to you is do you have 

a list of best practices that you would recommend or guidance that 

you would suggest that literally would have to be included? 

And then the second thing you mentioned, the ineffectiveness of 

Road Home, and I wondered if you had—to the gentleman from 

Louisiana—a specific reason for what you thought was the reason 

for that ineffectiveness. 

And, Mr. Chairman, that is the only two questions I have, so I 

will go ahead and yield back and then whatever they would like 

to add to the discussion. 

Mr. BACHUS. Would the gentlewoman yield any additional time 

she has left? 

Mrs. BACHMANN. I yield to the ranking member. Yes, thank you. 

The CHAIRMAN. The gentleman is recognized. The gentlewoman 

yielded. The gentleman from Alabama. 

Mr. BACHUS. If they would answer the question. 

Mr. MELANCON. To the Road Home, I think you will have that 

opportunity in the next panel or the panel after to ask what the 

difficulties and the problems are, to explain why they are not moving any faster. 

From a standpoint of the public-private partnership, I think that 

is where the community that is out there, the bankers, the Fannie 

Maes and whomever else, ought to be bringing it to the people of 

jurisdiction and saying, this is something we can do. I am not a 

banker, I am not a homebuilder, so I don’t know where to start, 

but I do know—and we talked about the cost of units, Mr. Pearce 

did. The cost of units is an element of the Federal Government 

doing it, saying that is what it is going to cost. I don’t have a clue. 

I don’t have jurisdiction on it, but I do know—and I regret to see 

anybody lose housing anywhere in this country for any reason; 

however, if we didn’t have a deficit, we wouldn’t be looking at this 

problem. We would have been able to probably appropriate without 

the need to worry about disadvantaging people in other parts of the 

country. 

This whole thing from the get-go has kind of been backwards. 

The FEMA trailers should have been for the people to live in to go 

back and reconstruct after the water finally got out. Instead, 

FEMA was paying for hotel rooms, apartments, trailers, and anything that was available in the disaster area to put FEMA contractors in, the FEMA people in and everybody who is going to make 

some money or oversee what is going on, while they wanted all the 

disaster victims to live 10, 20, 40, 50, or 60 miles out in these 

makeshift camps that they have put up. And we should have been 

putting those workers there, making them commute in, putting 

trailers in the communities where the people want to get back and 

rebuild. 

You can’t go back and work, you can’t go back and rebuild, unless you have someplace to live. And then, of course, the utilities, 

the law enforcement, the health care, the schools, that is a hindrance to anybody coming back that has a family. There are people 

who want to come back. The living conditions with 5,000 miles of 

sewer lines just in the city of New Orleans that have to be tested 

36

and figured out what is good, what is not good. So if that is the 

case, then that probably equates to gas lines, water lines, telephone 

lines, and power lines, you know. 

So it is very complex, and I wish we could address it all and say, 

yes, we will do it, and we finish. But it is not that way. 

The CHAIRMAN. I thank the gentleman. 

The gentleman from Missouri. 

Mr. CLAY. Thank you, Mr. Chairman. 

Two quick questions, one to Representative Taylor. Representative, what percentage of residents have returned to your district 

since the hurricane? And have the businesses reopened and been 

properly staffed? Does Mississippi have a similar setup as Louisiana, like the Louisiana Recovery Authority, and if so, how does 

that work? 

Mr. TAYLOR. The State of Mississippi—I think it is fair to say 

that in the southernmost part of Mississippi, the Fourth Congressional District, that the population has not changed much. What 

has happened is that people who lived right on the coastline might 

now live 30 miles inland. People who lived 10 miles inland might 

live 40 miles inland. 

In my home county, 90 percent of all the homes were either destroyed or substantially damaged. That is a huge housing deficit to 

accomplish in a short amount of time, and it has not been accomplished. So you still have a heck of a lot of people—starting with 

myself, I am living off the generosity of my brother and his family—a heck of a lot of people living on other people’s couches or in 

a FEMA trailer. 

We had—at the high point we had 35,000 south Mississippi people living in FEMA travel trailers. That number is probably still 

close to 30,000, and it is not their will to rebuild that is the question, it is the ability to rebuild. They didn’t get the insurance 

money. It is hard to find a contractor. Businesses, for example, 

Northrop Grumman shipyard, a major supplier to the Nation, has 

a 1,000-worker deficit at the shipyard, and a lot of it is due to 

housing. People who might be handy might be rebuilding their own 

homes before they go back to work at the yard, or they might take 

a job building homes until they decide to go back to the yard. Another major shipbuilder has brought in 1,000 people from overseas, 

I regret to say, and actually had to put up the housing for them 

onsite because there is no housing in the private sector. 

So to Ms. Waters’ question, housing is just an enormous problem. 

It is going to be a challenge for probably the next decade to get people just back to where they were the day before that storm. 

Mr. CLAY. Thank you for your response. I look forward to working with you on meeting those housing needs. 

Let me ask Mr. Jefferson, and this will be my final question. I 

read recently in the New York Times about the Army Corps of Engineers’ decision to—whether to restore and rebuild the levee that 

protects the east bank versus the west bank. What kind of impact 

will that have on the people who want to resettle both areas? And 

do you agree with the decision of the Army Corps? 

Mr. JEFFERSON. No, I don’t agree with the decision of the Army 

Corps. The Army Corps is talking about a better way—it almost 

sounds like a public housing discussion here—a better way to do 

37

a more comprehensive plan, and some other part down the river, 

that will do away with the need to build the west bank levee, 

whereas before they had plans to do that because they thought it 

was necessary for short-term flood protection. 

There is still a need for that, and there will be a need for it this 

next hurricane season, so we are urging the Corps to finish the job 

where it started the levee system and then go to the more expensive, wonderful thing that will happen down the road 6 or 7 years 

from now. But it shouldn’t leave people unprotected as it goes 

about its work. As it now develops a better idea, we ought not to 

penalize until we wait, because the next hurricane season isn’t 

going to respect that observation of the Army Corps. 

The Corps, as I said to you earlier, has to be held more accountable for what it does here. Anytime—for 84 years the Corps has 

had immunity. I haven’t talked with Chairman Frank, but I know 

it is not in the jurisdiction of this committee, but for 84 years, part 

of that time, it only had to deal with rivers and building levees for 

rivers, which is a lot less of an issue than protecting against hurricanes. And they had that responsibility now since the late 1960’s, 

and they are treating it without the sort of urgency that you need 

to treat this, this situation with, the idea that they can actually 

themselves be the cause of major disasters. And they have now determined that they were the cause of the disaster that drowned our 

city, because the day after the storm, of course, people were willing 

to go back, pick up the branches, and do some other things, and 

get their roofs fixed and go back to work, and then the levees 

broke, and the place was flooded. 

The CHAIRMAN. I do have to—we are having enough trouble covering housing. I need some restraint here. Anything further? 

Mr. CLAY. I yield back. 

The CHAIRMAN. The gentlewoman from New York. I do urge 

Members to stay on our topic. 

Mrs. MCCARTHY. I thank my colleagues for the testimony, but I 

have no questions at this time. A lot of the questions I have will 

actually go to the next panel. 

The CHAIRMAN. Thank you. 

The gentleman from California. 

Mr. BACA. Thank you very much, Mr. Chairman. Thank you for 

holding this hearing. 

First of all, my question is to the general body, and I would like 

to have Congressman Jefferson probably lead off the original question. In light of FEMA’s—I would like to give FEMA credit. I can’t 

help but notice its quick response to the assistance of families who 

were impacted by the recent tornado in Florida. It was a quick response in that area. 

How would you compare FEMA’s response to the recent disaster 

in Florida to its failure to respond to families displaced by Katrina? 

It is a concern that I have. I mean, we immediately jumped on it, 

and it is to their credit that we did, yet we have not responded, 

and that impacts all of us. And it has been 18 months, and we are 

having a hearing right now. We are having you here to testify. Can 

you please get your general feelings and how your constituents feel 

about the lack of response? 

38

Mr. JEFFERSON. Well, there is no comparison about the pace of 

response in Florida and the pace of response that we experienced 

with Katrina. I would hope FEMA figured out something about 

how to do this job better over this period of time. But for us looking 

back, there is a whole lot more that we can do to make this thing 

work better. 

FEMA completely failed us in the rescue and recovery and—rescue and immediate rescue and I guess the debris pickup and all 

that sort of business, and now in the long-term recovery we are experiencing new and different problems. 

If I might just say, one of the big issues now with FEMA on our 

recovery side of it is this—I guess this falls under this committee’s 

jurisdiction because it relates to housing. The infrastructure part 

of it, the facilities part of it, you can’t—as Mr. Baker said, whole 

communities have to be recovered. You have to have a police station and this and that, hospitals up, and libraries. You have to 

have all of those things working. FEMA is fussing with our city 

about what valuations are ours, a huge set of issues. The city says 

it takes $100 million to build back a sewer system. FEMA says it 

takes $10 billion. They never get together on it. And so we are experiencing very different issues now with FEMA, wholly apart from 

the quick response to when folks just get hit by the storm. Down 

the line they are making some very critical, bad decisions now that 

we ought to take a good look at and figure out how we can do a 

better job. Thank you. 

Mr. BACA. I hope race didn’t play a part in part of it. Do you feel 

that race played a part in any of this? It seems like we reacted 

now— 

Mr. JEFFERSON. Race and poverty are always suspect categories 

in this country, and we certainly—as I told you earlier that 94 percent of the people who were displaced in Houston were African 

American, and 64 percent of our folks who were living in affordable 

housing. So you have to kind of look at these things and see whether or not there is some connection. I think it is an important question to ask and an important question to get a real solid answer 

to, response. We don’t have an answer to it yet exactly, but we 

have our suspicions about what happened. 

Mr. BACA. Any other Member want to respond? 

Mr. TAYLOR. I think FEMA treated everybody equally bad. It was 

nondiscriminatory. 

Mr. BACA. Thank you. 

The CHAIRMAN. The gentleman from Georgia. 

Mr. SCOTT. Thank you, Mr. Chairman. 

You know, I represent the Atlanta area in my district, which represents the counties around Atlanta in the metro area, and we are 

home to the second largest group of evacuees from the New Orleans area, next to Houston. So we are very concerned about this 

failure, and it is a failure. It is an astounding catastrophic failure 

of leadership at the national, State, and local levels. 

And there are two things that really symbolize this failure to me. 

One is the fact that in the President’s State of the Union message 

last week, not one time was the word ‘‘Katrina’’ mentioned. That 

is astounding to me. And the other one was that evacuees were 

kicked out of motel rooms when they needed them most while 

39

FEMA had trailers in a cow pasture in a place called Hope, Arkansas. How ironic, Hope. Those two things, very symbolic. 

I just wanted to ask a quick question about housing though. And 

I want to try to get at this issue of getting money down into the 

area, getting additional funds as soon as possible. And many of the 

funds that we have already appropriated here in Congress require, 

for example, significant matching grants to programs such as community development block grants. 

My question is to each of you. Are the requirements for local governments to provide matching funds holding up the projects? And 

if that is the case, should not Congress waive the matching fund 

requirements? And then secondly, I would like to go back and get 

at some assessment of the status of those trailers, manufactured 

housing, that are sitting in those cow pastures in Hope, Arkansas. 

Could either of you respond to just those two issues on the funding and what is going on with those trailers in Hope, Arkansas? 

Mr. TAYLOR. To give you some idea, the trailer contract in Mississippi was let, cost-plus noncompete contract, to an outfit called 

Bechtel. We put a pencil to it, and it turns out Bechtel was paid 

$16,000 per trailer by the time you averaged it out, to haul the 

trailer about 60 miles, plug it into an electrical outlet, hook it up 

to a water hose, and find a sewer tap. People do this every weekend when they go on vacation. $16,000 per trailer. I realize it is 

not the jurisdiction of this committee, but it is the jurisdiction of 

Congress to look into that. 

On the second part, in the case of Waveland, Mississippi, the city 

hall, the fire station, every store in town was gone, and cities live 

on sales tax. And so absolutely, to the greatest extent possible, the 

Federal share has to be waived for these communities on a caseby-case basis. Some cities actually did okay, because if they still 

had stores, they had a lot of revenue from sales tax. But certainly 

there ought to be some flexibility on a case-by-case basis for those 

communities that were absolutely clobbered to have the fee waived. 

Mr. JEFFERSON. There is an exhibit prepared by some of our folks 

from Louisiana which shows that for every major storm in recent 

times, we have had waivers, except you see our block is an empty—

there is no check there. And at a time when it costs more than any 

other case, $6,700 per capita, to try to work on recovery here, there 

has been no waiver. And in our City of New Orleans, we have had 

restored about 25 percent, a little bit more of that, of our tax base. 

And so we have no way on God’s Earth to make this work, and our 

State, of course, has had to carry a lot of new additional burdens. 

I think it is only fair, because of the magnitude of the storm, and 

I said before, I repeat myself, because of the participation of the 

Corps in bringing about this disaster, that it would be a good response now to permit—at least for the time that it will take for our 

city to restore itself to the full taxing authority—to have a waiver 

on the Federal level to make it possible for our recovery to take 

place fully. 

The CHAIRMAN. The gentleman from Texas. 

Mr. GREEN. Thank you, Mr. Chairman. And I would like to, if I 

may, address initially, Mr. Chairman, the question of razing—that 

would be R–A–Z–I–N–G—thousands of units of public housing 

rather than raising, R–A–I–S–I–N–G, these same units at a time 

40

when thousands of persons are in need of housing. A future promise seems to be the carrot. 

Well, we have a saying in my church, ‘‘Pie in the sky by and by 

is fine, but there is nothing wrong with something sound on the 

ground while you still around.’’ A lot of the folks who are in Houston, Texas, some 20,000, I am told, will probably not be around by 

the time we raise, we elevate, and we construct public housing in 

New Orleans. 

With reference to those who contend that free enterprise and morality should be the acid test, let me remind my good friends that 

when 9/11 occurred, we allowed free enterprise and morality to be 

the acid test, but notwithstanding this, we still find that each of 

the families received about $3.1 million. $3.1 million, 42 percent of 

that coming from the Federal Government, pursuant to the RAND 

Institute for Social Justice. 

We cannot treat people in New York better than we treat people 

in New Orleans. People deserve the same treatment when they 

have been hit by a horrific disaster comparable to what happened 

in 9/11, and I support what happened in terms of compensating 

those victims. We have to do a similar thing for the people in New 

Orleans. And I think that this Administration has failed miserably, 

because we had an opportunity to develop a paradigm for going forward, a paradigm for all time, if you will, that would deal with 

when people are displaced, that would deal with resettlement of 

those persons who are on public assistance who have been displaced in terms of their immediate shelter, their long-term shelter, 

their intermediate shelter, health care, and counseling. 

We have students in the schools in HISD who have not had sufficient counseling. They have not been given the assistance that they 

need to adjust to their new environment. Their parents, many of 

them, have not been counseled. 

There must be a way for us to revisit all of this and to develop 

a paradigm that is going to help us in the future because it is my 

belief that this is not the last disaster that we are going to have 

to contend with. We ought to have a national disaster insurance 

program, national disaster insurance, regardless as to whether it 

was a tornado or hurricane or earthquake. When you are hurt and 

you are living in the richest country in the world, there is nothing 

wrong with expecting your friends and neighbors to be of assistance, as was the case with 9/11. We need national disaster insurance. 

And finally, I want to compliment both the chairman and the 

subcommittee chairwoman for the outstanding job done, and I look 

forward to visiting New Orleans again. 

I will just mention this in closing. When we went to Louisiana 

the last time, we had one person from the other side with us, and 

that was the then-chairperson of the Housing Subcommittee. I am 

inviting my colleagues, please, let’s go to Louisiana together, and 

let’s work together to do something to help the survivors of Katrina 

and Rita. 

I yield back, Mr. Chairman. 

The CHAIRMAN. Any witnesses wish to comment? If not, the gentlewoman from Wisconsin. 

41

Ms. MOORE. Thank you, Mr. Chairman. Thank you for this distinguished panel of my colleagues. 

I actually have been perusing the testimony of the other panels 

who are to come before us, and some of the things that they have 

said really do—really are appropriate for me to ask this political 

panel what is their take on that. In particular, I have been reading 

the written testimony of the chairman of the Louisiana Recovery 

Authority, and it is very—the conclusions that I have reached have 

been very disturbing to me, and I am wondering if you all would 

comment on it. And I would appreciate a bipartisan response, perhaps Mr. Boustany as well as Mr. Jefferson or Mr. Taylor. 

The public law authorizing dispensing of some of these housing 

funds that President Bush—Public Law 109–148 was signed by 

President Bush on December 30, 2005, and Mississippi received full 

funding of its program in December, and it was 6 months later before Louisiana received any funding. There was—the legislation 

capped funding for any one State at no more than 54 percent of the 

total appropriated, even though Louisiana received 75 to 80 percent 

of the total damage from both Katrina and Rita. So it would appear 

to me—and it is a conclusion that I would welcome for you all to 

dispel—that assistance was rendered to folks on a partisan basis. 

And we have heard a lot about race being involved and so on, but 

this is clearly—at least I have concluded that there is some partisanship involved, and I would love for any of you to rebut that. 

You know, why would Mississippi get full funding 6 months—I 

mean, right away, right after the storm, and it was 6 months later? 

Why would the funding be capped at 54 percent for any one State, 

even though—I am sorry Mr. Chairman. Okay. 

The CHAIRMAN. No, that was an accident, but if the gentlewoman 

wants to have time to answer the questions, we should— 

Mr. TAYLOR. Number one, Mississippi was hit with a hurricane. 

Ms. MOORE OF WISCONSIN. I am sorry? 

Mr. TAYLOR. Number one, Mississippi was hit with a hurricane. 

As horrible as it was, it was over in 24 hours. We knew how bad 

it was going to be. We knew what had to be done. And, yes, 83 percent of all of the homes that were flooded were in Louisiana, but 

we had a much higher percentage of homes that were destroyed 

outright. So you are comparing a hurricane in my district, a hurricane in Mr. Melancon’s district, to a flood in Mr. Jefferson’s district 

where it took several months just to drain the city. 

Secondly, I cannot begin to thank Senator Cochran enough. One 

of the reasons Mississippi did very well is that, thank goodness, we 

had the chairman of Senate Appropriations on the day this horrible 

thing happened to our State, and I am grateful that he did it. 

Ms. MOORE OF WISCONSIN. He was a Republican chairman. 

Mr. TAYLOR. He is a good guy. I don’t care which party he is in. 

He took care of my people. And we all know that being a chairman, 

it puts a person in a position to help people, and Senator Cochran 

was a hero of Mississippi in this instance. 

But I hope that you would distinguish between the hurricane 

that hit Mississippi where, as horrible as it was, we knew Monday 

afternoon what had to be done. In Louisiana’s case, that flood lingered on for months. 

The CHAIRMAN. Mr. Jefferson. 

42

Mr. JEFFERSON. Thank God for Senator Cochran and Mississippi. 

Two things can’t be right here. If the number in Mississippi was 

right, then the number in Louisiana is way wrong. I mean, I am 

not sure anybody sat down and tried to figure out exactly what it 

would take on a real-dollar basis to restore Mississippi, what it 

would take on a real-dollar basis to restore Louisiana, but if somebody did figure out that it took $5 billion in Mississippi’s case and 

Louisiana had 4 to 5 times the loss of houses and 10 times the loss 

of businesses, then it would take at least another 4 to 5 times more 

then Mississippi’s amount to get Louisiana straight. 

So I don’t begrudge Mississippi’s money. I am sure there was a 

bunch of politics going on there. But I would just hope that right 

now we can revisit this whole matter of what does it really take 

to fund the recovery; that somebody for a minute take a little time 

and make a real application of the scope of our losses as against 

the money provided for our recovery and see whether or not they 

match up right. And they don’t. I can tell you that right now. 

There ought to be in the pipeline for Louisiana without regard 

to how well the local folks are at administering the money, if there 

is such a thing as that. There just isn’t enough money starting out 

to match up to the scope of the damages even though it is a huge 

amount of money that we talk about here. As Mr. Melancon pointed out—I am sorry—the $110 billion, $26 billion goes to rebuild 

public facilities and housing and levees and roads and all that. So 

it is just not—it was never a realistic way to approach this, just 

numbers pulled out of the air, and it wasn’t—sort of politics won 

out at the end of the day. 

The CHAIRMAN. Mr. Boustany. 

Mr. BOUSTANY. Thank you, Mr. Chairman. 

There were two different supplementals that had community development block grant money. The first clearly was not enough for 

Louisiana. I am not sure why it ended up being what it was at that 

stage. After that, after that supplemental, there was an extraordinary degree of cooperation between the Louisiana Recovery Authority and Mr. Powell representing the Administration to come up 

with a figure that was deemed appropriate, and that is what we 

ultimately voted on. So basically, in effect, the LRA got what it 

asked for at the time, using Mr. Powell and his cooperation and the 

work—bipartisan work in Congress. And that is what happened. 

Now, is that figure—I think an appropriate question is to ask at 

this stage, why isn’t the money actually in the hands of the people? 

Because a lot of that money has not gotten into the hands of the 

people, and that is a question you should ask, and we all need to 

find out the answers. Thank you. 

The CHAIRMAN. Does the gentleman from Missouri have questions? 

Mr. CLEAVER. Thank you, Mr. Chairman. 

I would like to thank my colleagues for their willingness to come 

before us. And I have had the opportunity to go into New Orleans 

and, with the committee chaired by the Chair of the Subcommittee 

on Housing, Maxine Waters, we had a chance to discuss some of 

the issues with FEMA. I have a thousand questions, but I will only 

ask one, because maybe some of you have gotten this concern expressed to you. 

43

I received a phone call from Jessica, at Tennessee State, and 

Nora, who is out of a school in Missouri. They were students in 

New Orleans at Dillard University, which was completely covered 

with water. My son had just graduated from Dillard, but stayed 

there to do a play at Tulane, a summer Shakespeare series, so he 

was also there. 

These students received money from FEMA, and most of them 

went out, purchased clothing, laptops, whatever they could, with 

the $2,000 to compensate for what they lost. About 4 months ago, 

students now in schools elsewhere are receiving letters from FEMA 

asking that the money be returned. Do any of you have any idea 

what is going on? 

Mr. MELANCON. I think it is just government at its best. 

The CHAIRMAN. We will have a chance to ask FEMA that question. The Members might not know. 

Mr. CLEAVER. I have one of the letters from FEMA. 

The CHAIRMAN. FEMA will be on the next panel, unless the Director of FEMA has left now. 

Mr. CLEAVER. I can’t wait. Thank you. That is all, Mr. Chairman. 

The CHAIRMAN. I thank the Members. And it is unusual to have 

this degree of questioning with the Members, but it is also unusual 

for Members representing areas to have undergone this devastation. And I am sorry this is taking so long, but I don’t see any way 

around it, and we are now going to proceed to the next panel. We 

will take a 5-minute break. I do ask for people’s indulgence. This 

is worth a day of our lives. We will take a 5-minute break, and 

then we will have the next panel. 

[Brief recess] 

The CHAIRMAN. The committee will come to order. The next 

panel will consist of: Roy Bernardi, Deputy Secretary, Department 

of Housing and Urban Development; David Garratt, Acting Director of Recovery, FEMA; Walter Leger, chairman, Housing and Redevelopment Task Force, Louisiana Recovery Authority; and Gray 

Swoope, executive director, Mississippi Development Authority. We 

will begin with the Deputy Secretary. And you all have unanimous 

consent to submit your entire statements. So you may just proceed 

with your statement. There is no need to thank us for having the 

hearing or tell us what the hearing is about because we already 

know that. Let’s get right to substance. 

STATEMENT OF THE HON. ROY A. BERNARDI, DEPUTY SECRETARY, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Mr. BERNARDI. Okay, Mr. Chairman. Today I want to share with 

you HUD’s recovery efforts in the Gulf Coast following the devastation caused by the 2005 hurricanes. We have made great strides in 

the recovery effort, yet there are still many challenges that lie 

ahead, especially in Louisiana. This testimony focuses on three 

things: The $16 billion, $700 million in Community Development 

Block Grant supplemental funds for long-term recovery; the recovery of New Orleans public housing; and the continuing affordable 

rental housing challenges. 

In response to the disasters, the Federal Government has com- mitted more than $100 billion to help the Gulf Coast, including, as 

44

I mentioned, $16.7 billion for the CDBG program, the legislation 

passed by the Congress for the CDBG program was clear in its intent. The Federal Government would not and should not dictate to 

local communities how to rebuild. Those closest to the ground 

should do that. That is why the Gulf States and their Governors 

were designated with the principal responsibility for the design, the 

implementation, and the performance of their rebuilding efforts, 

with HUD having an oversight role as good stewards of the taxpayer dollar. We understood the importance of approving those 

funds quickly and getting the money into the hands of State leaders as fast and as responsibly as possible. We will continue to offer 

guidance and ensure compliance with the law, including the prevention of waste, fraud, and abuse. 

Recovery is taking time. States have only spent $1 billion, $200 million of the $10.5 billion in emergency CDBG funds that HUD 

has awarded. Leading the way has been Mississippi’s Homeownership Assistance Program, which has disbursed more than 11,000—

I understand 12,000 checks now to families to help compensate 

them for their losses so they can rebuild their lives. Mississippi has 

also used critical CDBG recovery funding to complete a master 

plan for infrastructure that develops long-term regional solutions to 

the water, sewer, and storm drainage needs of Gulf communities. 

While the task before Mississippi is a tremendous one, the task before Louisiana is substantially greater. Its homeownership program 

alone has over 100,000 applicants. Only a handful of loans have 

been closed to date, we believe, and we hope that the State will 

soon achieve a rapid escalation of program implementation over the 

next 6 months. 

I would like to take this opportunity to explain the situation with 

public housing in New Orleans and its history. Mr. Chairman and 

members of the committee, even before the storms hit, public housing in New Orleans was in a difficult state. Some buildings were 

70 years old and had not been kept up, they were crime-ridden, 

and in many circumstances the units were health hazards. In fact, 

the Housing Authority of New Orleans, or HANO, did such a poor 

job of managing their properties that HUD was forced to take them 

over 5 years ago, long before Katrina struck the city. Also before 

Katrina hit, a decision was made to redevelop some of these public 

housing units in favor of mixed income housing. For example, in 

Atlanta, the redeveloped areas there have borne huge social and 

economic improvements such as higher test scores for children in 

schools, less crime, and more livable communities, and we want to 

do the same thing in New Orleans. Despite what some may say, 

it is going to take more than just a little bit of cleanup, some spick 

and span, if you will, to make most of these units livable. That is 

why they were slated for demolition before the storm, and the 

storm made a bad situation even worse. That said, we are committed to bringing back public housing residents, and we are fixing 

units to allow residents to return in a phased-in manner until redevelopment moves forward. 

As Secretary Jackson said in August of 2006 when he visited 

New Orleans, every family who wants to come home should have 

the opportunity to come back. We have always felt that way. We 

always will, and we will work on making sure that happens. We 

45

will continue to work with the local community to redevelop New 

Orleans public housing so families will have an opportunity to return to better and safer neighborhoods. 

We have also been aggressive in our efforts to provide rental 

housing assistance to displaced families and individuals. HUD has 

also worked to provide previously HUD-assisted families and homeless individuals who were displaced by the storm with housing during this period by paying rental subsidies to over 30,000 persons. 

We have also assisted close to 25,000 families in finding affordable 

rental units. 

While New Orleans public housing is an important and viable 

piece to providing affordable rental housing in the region, it represents only a small number of the 112,000 rental units in the fiveState Gulf Coast region that were seriously damaged by the storm. 

In total, 13 percent of the damaged rental stock in the Gulf region 

was subsidized housing. Before the storm, there was moderately affordable shelter in New Orleans but the situation has worsened 

dramatically since the hurricanes, as we all would have imagined. 

Not only are there 112,000 fewer rental units in the five States, 

there is also increased demand for nondamaged units. In response 

to the rent inflation, HUD has increased the fair market rents for 

New Orleans by 45 percent since the storm. In the immediate 

aftermath of the hurricanes, the Department’s goal is to repair, rehabilitate, and rebuild the affordable housing projects to the greatest extent possible to ensure that the residents could return home. 

At this time out of 82,000-plus units in the area impacted by 

Katrina, there has been a permanent loss of only 263 affordable 

rental housing units, and that is for the FHA multi-family portfolio. The path ahead for rebuilding affordable rental housing is 

daunting. The Federal Government has done a lot to help the 

States, and I am confident that the States are working to address 

the many challenges. It is a path, however, that is going to take 

longer than anyone would have anticipated, longer than anyone 

would like. 

Mr. Chairman, members of the committee, people need help now. 

We remain committed to helping these families, using all the resources available to recover and stimulate economic development 

and restore hope to communities throughout the Gulf. 

Thank you. 

[The prepared statement of Secretary Bernardi can be found on 

page 162 of the appendix.] 

The CHAIRMAN. Mr. Garratt. 

STATEMENT OF DAVID GARRATT, ACTING DIRECTOR OF 

RECOVERY, FEDERAL EMERGENCY MANAGEMENT AGENCY 

Mr. GARRATT. Thank you. Chairman Frank and members of the 

committee, I recognize that the committee’s focus today is centered 

on the ongoing efforts to rebuild housing in the Gulf Coast region, 

so I will focus my comments on the FEMA recovery programs and 

initiatives that directly relate to this important and continuing effort. Under Section 408 of the Robert T. Stafford Disaster Relief 

Emergency Assistance Act, FEMA is authorized to provide housing 

assistance to individuals and households, a program which includes 

46

rental assistance, home repair assistance, home replacement assistance, and direct housing. I will discuss each briefly. 

Beginning with rental assistance, FEMA may provide rental assistance for eligible individuals whose homes have been made uninhabitable or inaccessible due to the disaster and whose insurance 

benefits do not cover alternative living expenses. In the case of 

Hurricane Katrina, the majority of this assistance has been provided to evacuees residing outside the damaged area. In total, more 

than $2.1 billion of rental assistance has been distributed to over 

672,000 households. Currently 35,000 households continue to receive a form of rental assistance payment. 

Under home repair assistance, eligible applicants from Hurri- canes Katrina and Rita are authorized to receive up to $5,200 in 

home repair assistance. Repairing a home to make it livable where 

that option exists is a preferred remedy because it keeps people in 

their homes, in their communities, and is cost effective. However, 

in an event as massive and destructive as Hurricane Katrina, this 

is not always a viable option, as many families suffered major damage to or total destruction of their homes. However, for the many 

families that sustained minor or moderate damage to their homes, 

this is often the fastest and best housing assistance remedy. Today 

FEMA has provided over $318 million in home repair payments, 

helping make more than 129,000 homes habitable across the Gulf 

region. 

Home replacement assistance. FEMA is authorized to provide up to $10,500 in home replacement assistance to eligible victims of 

Hurricanes Katrina and Rita. Thus far in the four Gulf States most 

heavily impacted, Alabama, Louisiana, Mississippi and Texas, 

FEMA has provided more than $329 million to over 29,000 households to assist them towards the purchase of replacement housing. 

It is important to note that neither the repair nor replacement assistance that FEMA provides is intended to substitute for insurance, nor can FEMA assistance duplicate any insurance benefits. 

In most disaster settings, temporary housing needs can be adequately addressed by FEMA rental repair replacement assistance. 

However, as we are all acutely aware, Katrina was no typical disaster. Katrina destroyed or significantly damaged tens of thousands of housing resources, greatly limiting our standard temporary housing options. In such a situation where traditional fixed 

housing resources are not available, FEMA can provide direct housing assistance in the form of temporary housing units to eligible 

applicants. Direct housing assistance can be acquired from the Federal Government by purchase or lease, such as apartments, but 

most often through the provision of manufactured housing—travel 

trailers and mobile homes. Following Katrina, both options were 

employed. Direct leases were secured to house evacuees outside the 

impacted area and manufactured housing was provided within the 

heavily damaged areas of Louisiana, Mississippi, and Alabama, 

providing the option for many disaster victims to remain in their 

communities close to their jobs, families, friends, and their childrens’ schools. In some cases families were able to remain on their 

own property. 

At present, more than 91,000 applicants continue to receive a 

form of direct housing. Over the course of the last 17 months, 

47

FEMA housed more than 120,000 households in temporary housing 

units. As a sign of progress, the total number of households currently living in temporary housing has decreased to 91,000 and 96 

percent of the housing requests have been resolved. Eighty percent 

of temporary housing units are on private sites where individuals 

are rebuilding their homes. Direct housing is initially authorized by 

the Stafford Act for up to 18 months from the date of the disaster 

declaration, but the President may extend that period if he determines that due to extraordinary circumstances it would be in the 

public interest to do so. 

President Bush directed FEMA to provide an extension of both 

direct housing and financial housing assistance programs. This new 

extension allows FEMA to continue to provide housing assistance 

through August 31, 2007. It also gives us additional time to continue our work with the disaster victims, Federal, State, and local 

partners, and volunteer organizations to transition victims to more 

permanent housing solutions. 

Congress recently took some important legislative steps to help 

us address the challenges of disaster housing both for those affected by Hurricane Katrina and those who may be faced with 

similar housing needs in the future. In the 2006 supplemental, 

Congress appropriated $400 million to FEMA for a pilot program 

that could identify and evaluate new alternatives for housing disaster victims in the aftermath of a disaster. This legislation required that FEMA target the funding and assistance to these 

States most affected by the hurricanes of 2005. Accordingly, Alabama, Florida, Louisiana, Mississippi, and Texas were invited to 

submit applications as part of a competitive process to identify the 

most innovative and promising alternative disaster housing solutions. This competitive grant process was designed to ensure that 

those proposed projects that met the greatest number of selection 

criteria received first consideration. 

The alternative housing pilot program grant guidance was released on September 15, 2006, and applications from the five Gulf 

Coast States were due on October 20th. Each of the five eligible 

States submitted applications which collectively contained 29 discrete proposals. The 29 proposals totaled almost $1.2 billion in requested grant money, well in excess of the $388 million made available for award, with the remaining $12 million reserved for necessary administrative costs and other costs. The Department of 

Housing and Urban Development, a key partner of ours in this 

pilot program, will lead a formal evaluation of all approved pilot 

projects. Five projects were selected by FEMA for potential grants 

across the four States that submitted competitive applications. 

Each project is being reviewed to ensure viability and upon successful completion of that review will move forward the funding. 

The Fiscal Year 2007 homeland security appropriations bill also 

made broad changes to the Stafford Act, many designed to allow 

FEMA greater flexibility in meeting future disaster housing needs. 

Key changes include the requirement for a pilot program that will 

allow for the repair of pre-existing rental units under FEMA housing assistance as well as the requirement to develop a national disaster housing strategy. There are many other changes, and work 

on all of them is under way. 

48

While finding housing for the many displaced households of Hurricane Katrina has been and will continue to be a challenge, FEMA 

remains committed to providing or coordinating continued assistance to these victims, together with our Federal, State, local, and 

private voluntary agency partners. We will continue to pursue assistance solutions that will effectively and compassionately help individuals and households recover and re-establish their lives in the 

Gulf Coast region. 

Thank you. I am prepared to answer any questions you may 

have. 

[The prepared statement of Mr. Garratt can be found on page 

299 of the appendix.] 

The CHAIRMAN. Thank you, Mr. Garratt. 

Mr. Leger. 

STATEMENT OF WALTER LEGER, CHAIRMAN, HOUSING AND 

REDEVELOPMENT TASK FORCE, LOUISIANA RECOVERY AUTHORITY 

Mr. LEGER. Thank you, Chairman Frank, Congressman Bachus, 

Congresswoman Waters, and members of the committee. Good 

morning. My name is Walter Leger. Before August 29, 2005, I was 

a resident of Saint Bernard Parish. I now live on higher ground in 

New Orleans. My parish, my community, had 27,000 homes, all but 

three severely or substantially damaged. We are still looking for 

those three. A vast majority of our community is gone, has moved 

away, and many will not come back. 

I thank you for allowing me to speak to you today in connection 

with Katrina and Rita, the first and third largest disasters in the 

history of this country. The Louisiana Recovery Authority was created as nonpartisan by Governor Blanco and coordinated recovery 

efforts related to the two storms. I am a volunteer or I should say, 

I guess, a draftee, having been asked by Governor Blanco to serve 

on the board and as chair of the board’s Housing and Redevelopment Task Force. 

Katrina and Rita caused an estimated $100 billion in damages in Louisiana alone. About $40 billion of these losses were covered 

by insurance. We are sincerely thankful for the estimated $26 billion Congress set aside to help us rebuild our homes and infrastructure and levees, but that still leaves a gap of $34 billion, or 

about $20,000 in unrecovered losses for every Louisiana household. 

Your focus today is on how we are reinvesting the generous appropriations from Congress for housing. Like many of the other 

members of the LRA, I lost my home to 14 feet of water. More than 

200,000 homeowners and renters in south Louisiana suffered the 

same, or actually a worse fate. They lost their photographs, their 

family albums, every single belonging, and everything that made 

their house a home. They also lost their dry cleaners, their dentists, their schools, and their churches. 

The LRA developed the broad policies for the Road Home Program. We do not implement or enforce the policies. The State Department of Divisions Administration is involved in that. The Road 

Home Program is the largest single housing program ever created, 

providing eligible homeowners with a grant to cover the gap between insurance and the cost of repairs up to the pre-storm value 

49

of their home with a cap of $150,000 and up to $50,000 in forgivable loans to low-income homeowners. We estimate more than 

120,000 homeowners will benefit from this program funded by $6.4 

billion in CDBG and $1.1 billion in Stafford Act housing mitigation 

funds, whether or not they had some insurance and whether or not 

they resided inside or outside a flood plain. 

Let me outline the action taken since Congress fully funded this 

program in 2006, 71⁄2 months ago. The same week we received program approval, the State’s Department of Administration signed a 

private contract to implement the program. The company set up 10 

housing centers throughout Louisiana and one in Houston, Texas. 

More than 105,000 applications have been received and recorded. 

Housing counselors have conducted over 72,000 in-person appointments with applicants, and nearly 30,000 homeowners have been 

notified of benefit awards, totaling $2.5 billion, a commitment and 

obligation of contractual $2.5 billion. While only 500 homeowners 

have received their actual awards, many more are in the pipeline. 

This is not fast enough. It must move faster. We in Louisiana got 

our full funding for our various programs 101⁄2 months after the 

storm, 71⁄2 months after Mississippi got full funding, but we are 

moving as quickly and as fast as possible, but there have been 

problems. 

The CDBG funds came down to us wrapped in red tape. One particular area that should be addressed immediately is the SBA’s failure to distinguish the difference between a grant and a loan. They 

are requiring homeowners to repay SBA loans with their Road 

Home grants; that is, take the $2 billion that we were given to help 

homeowners and give it right back to the Federal Government. 

Another obstacle is the Federal requirement that we deduct insurance proceeds and FEMA payments from our awards. Verifying 

these deductions is time consuming and, worse, it requires the voluntary cooperation of dozens of insurance companies, of which Congressman Taylor spoke. 

An additional area of concern relates to our use of Hazard Mitigation Grant Program funds as required by Gulf Coast Recovery 

Chairman Powell. The State did not want to use moneys in this 

way, but we were told that the Administration would not support 

additional funding that was negotiated, that was not all we asked 

for, unless we agreed to use these funds. As of today, FEMA has 

been unwilling or unable to approve nearly $1.2 billion of funding 

that is desperately needed for the Road Home Program. We ask for 

your assistance there. 

Let me briefly, if I may, tell you about the rental programs. 

About 82,000 rental units received major or severe damage from 

the storms. In response, we set aside a total of $1.5 billion in 

CDBG funds, which will supplement the estimated $1.7 billion 

worth of private investments triggered by Congress’ expansion of 

the low-income housing tax credit program in the GO Zone legislation. In total, with this $3.2 billion of investments we hope to create an estimated 35,000 units in a broad mix of deeply affordable 

units, mixed income development, and a one-to-four unit programs. 

Using approximately $667 million in CDBG funds, we hope to piggyback with the tax credits, and also while funding developers in 

these projects, we will be funding permanent supportive housing 

50

for the elderly, deeply affordable units, and permanently supportable housing for the disabled and market rate units. 

These projects have enormous potential, yet increased construction, labor, utility, and insurance costs have made some deals 

unfeasible. To ensure that the units at risk are successfully developed, we request that Congress extend the December 31, 2007, 

placed-in-service deadline to December 31, 2009, and extend the 

December 2008 placed-in-service deadline to December 31, 2010. 

Briefly, the small lenders program, the LRA’s small rental prop- erty program, will provide gap financing of $869 million for the repair of about 18,000 small rental units, landlords who own one to 

four unit properties and who owned it before. The incentive will be 

$18,000 or $72,000 no-interest nonrepayable loans, assuming that 

you agree to deep affordability on a competitive basis with others 

applying for the program. The funds aren’t sufficient to comply 

with all of our rental needs, but we are being inventive in that regard. 

One of the Congressmen asked about—and I will wrap up, sir— first-time homeowner program. A $40 million first-time buyers pilot 

program will soon be available to allow low- and moderate-income 

renters to purchase damaged properties. 

One major aspect, you have asked for things that you could do, the cost share issue. $1 billion—we figure our cost share, the State 

cost share, local government’s cost share will be about $1.5 billion. 

Many of the governments, my own in Saint Bernard Parish have 

zero, nada, nothing in terms of ability to repay loans. The CDBG 

funds you gave us will be required to do so. Accordingly, with respect to that 10 percent match, unlike any other major storms or 

disasters in modern history, we take—you send us the $1.5 billion, 

and we send it right back to you. So we lose those funds. 

Gentlemen and ladies, I will be happy and look forward to answering any of your questions. 

[The prepared statement of Mr. Leger can be found on page 327 

of the appendix.] 

The CHAIRMAN. Mr. Swoope. 

STATEMENT OF GRAY SWOOPE, EXECUTIVE DIRECTOR, 

MISSISSIPPI DEVELOPMENT AUTHORITY 

Mr. SWOOPE. Thank you. Good afternoon and thank you for the 

opportunity to come before you today. First of all, I will say thank 

you for your support, your funding and, most of all, your prayers 

for helping Mississippi recover from the worst natural disaster to 

hit the United States. I am Gray Swoope with the Mississippi Development Authority, and as you are aware, Mississippi has been 

allocated $5.48 billion in CDBG funding for disaster recovery. 

Today, I want to give you an update on where the money is being 

spent. 30,000 in 41 owner-occupied homes received flood surge 

damage. 19,787 homes located outside of the 100-year flood plain 

received flood damage. 2,939 of those were uninsured. 10,254 

homes located inside the 100-year flood plain received flood surge 

damage, 4,916 did not have flood insurance. Working with our Federal partners, local governments, and the private sector, the State 

of Mississippi is pursuing a comprehensive approach to rebuilding 

in the south of Mississippi. HUD approved $3.423 billion for the 

51

Mississippi Homeowners Assistance Program Action Plan on April 

1, 2006. The release of funds was approved by HUD on July 10, 

2006, just over 6 months ago. The purpose of this program was to 

provide a one-time grant payment up to a maximum of $150,000 

to eligible homeowners who have suffered flood surge damage to 

the primary residences on August 29 from Hurricane Katrina. Eligible homeowners are those who owned and occupied their home on 

August 29, 2005, maintained homeowners insurance on the property, received flood surge damage, and lived in homes located outside the 100-year flood plain in six Hancock, Harrison, Jackson, or 

Pearl River Counties along the Mississippi coast. To secure the 

grant, the homeowner agreed to place a covenant on the property, 

which provided that the rebuild and repair would be in accordance 

with applicable codes and local ordinance, that during rebuilding 

the home would be elevated in accordance with FEMA advisory 

flood elevations, and that the homeowner would attain and maintain flood insurance on the property. 

MDA opened three service centers on the Mississippi Gulf Coast 

on April 17, 2006. Between April 17, 2006, and May 31, 2006, 

15,850 applications were taken. To date, 17,654 Phase I homeowners applications have been received through these service centers. 84 percent of these applicants have indicated they would repair or rebuild. Of the applications taken, 3,447 have been deemed 

ineligible but will be considered during the second phase of the 

Homeowners Assistance Program. Currently 13,538 applicants 

have been notified that they are eligible to receive a grant and 

12,142 of those have completed their grant closing. As of Friday, 

February 2nd, that was last Friday, 10,247 applicants have been 

paid a total of $681,456,302. That is 72 percent of the potentially 

eligible applicants for the initial Homeowners Assistance Program 

have been issued checks. And again I emphasize that is a little 

over 6 months since HUD released those funds. This also means 

that 10,247 properties located on the Mississippi Gulf Coast now 

have covenants attached providing for repair, rebuild, and accordance with applicable codes and ordinances that the homeowners 

have agreed to and will maintain flood insurance. 

On December 19, 2006, HUD approved a modification to the 

Homeowners Assistance Program to redirect $700 million of the 

original $3 billion initially allocated to homeowners assistance 

grants to the Phase II program. The purpose of the Phase II program is to provide compensation grants up to a maximum of 

$100,000 to homeowners who suffered flood surge, damage to their 

primary residents as of August 29, 2005. Phase II eligible homeowners are those who owned and occupied their home on August 

29th, received flood surge damage, have a household income at or 

below 120 percent of the area median income, and whose home was 

located in Hancock, Harrison, Jackson, or Pearl River Counties. 

MDA began registration for the Phase II Homeowners Program in 

July 2006. There have been 7,011 registrations received as of February 2nd of this year. In addition, 3,447 applicants deemed ineligible for Phase I will be considered in the Phase II program. A significant component of this program will be financial counseling for 

those homeowners to assist with their recovery plans. Applicants in 

both phases of the Homeowners Program may be eligible for a sepVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
52

arate grant of up to $30,000 to defray the cost of elevating their 

homes out of potential danger areas. 

To encourage homeownership, Governor Barbour has allocated $157 million in tax exempt private activity bond authority to the 

Mississippi Home Corporation to issue mortgage revenue bonds. 

Through the sale of these bonds, the Mississippi Home Corporation 

is able to reduce homeownership costs by offering below market interest rates and assistance, with closing costs equal to 3 percent of 

the mortgage amount. With this authority, more than 2,700 families statewide have received assistance since Katrina, with 400 of 

those being on the coast. These bonds are not general obligations 

of the State. Rather, they are repaid as homeowners pay their 

mortgages. Governor Barbour will continue to allocate additional 

tax exempt private activity bond authority to the mortgage revenue 

bond program to help more families achieve their dream of homeownership. 

Hurricane Katrina destroyed or severely damaged 8,600 rental 

units in Mississippi, 95 percent of which were located in Hancock, 

Harrison, and Jackson Counties. The Gulf Opportunities Zone Act 

authorizes the Mississippi Home Corporation to allocate approximately $35 million annually in low-income housing tax credits in 

2006, 2007, and 2008. The Mississippi Home Corporation awards 

these Federal tax credits based on a competitive scoring process, 

conducted according to the qualified allocation plan approved by 

the Governor. 

In August 2006, the Home Corp awarded over $10 million of the 

tax credits that will facilitate the construction of over 1,000 units. 

I will skip on here quickly. 

The other factor on housing that you need to be aware of, in addition to the home tax credit, HUD has approved the action plan 

to amend the needs for public housing. The purpose of the amendment was to provide funding in the amount of up to $100 million 

to the five housing authorities that suffered damage to their families on August 29th. There were 2,695 rental units pre-storm. Of 

that, only 2,534 were damaged. Grant allocations have been made 

based on the percentage of the individual Housing Authority dollar 

damage to the five housing authorities. That program is now awaiting final application approval pending environmental assessments. 

This are other factors that are considered with the business climate—we can talk more about that in a minute—such as insurance 

mitigation, ratepayer mitigation, and other ways that we have used 

the money. 

The CHAIRMAN. Thank you. 

[The prepared statement of Mr. Swoope can be found on page 

374 of the appendix.] 

The CHAIRMAN. Secretary Bernardi, the President, on September 

15th, went to Jackson Square and in his major speech talked about 

his Urban Homesteading Act. He said that under this approach, we 

will identify property in the region owned by the Federal Government, provide sites to low-income citizens free of charge, etc. That 

was the major housing piece. 

What have been the results so far under the Urban Homesteading Act that the President announced? Some of us were skeptical at the time. 

53

Mr. BERNARDI. At the Federal Housing Administration, we have 

recognized a significant number of properties throughout the Gulf 

Coast that were obviously damaged due to the hurricanes. We have 

rehabilitated those properties, and we are offering them at a discount to individuals who have been affected by the storm. 

The CHAIRMAN. How many have been put into the hands of 

homeowners? 

Mr. BERNARDI. I believe there are a few thousand that have 

been, but I will get you the exact number. 

The CHAIRMAN. A few thousand? 

Mr. BERNARDI. We didn’t have that many to start with, sir. 

The CHAIRMAN. We had asked you, hadn’t we—we had asked for 

that information. I am sorry to disappoint you, not to have it, but 

I would think, this being a major program that the President announced, you could give us some figures. This isn’t a trick question. 

That was the President’s major program. You can’t tell us how 

much—somebody may be able to tell you. 

Mr. BERNARDI. The fact of the matter is that the homesteading 

program can deal with raw land or it can deal with housing. As I 

mentioned, there is properties that HUD owns throughout the Gulf 

Coast area. 

The CHAIRMAN. How many homes have resulted from this program? 

Mr. BERNARDI. I will get you that. 

The CHAIRMAN. Mr. Bernardi, frankly, that is very disappointing. 

This is a year-and-a-half after the President made a major speech, 

it is his major piece, and you can’t tell me what, if anything, has 

been done. I think, frankly, that it is partly because very little has 

been done. 

Let me ask you, we have heard a couple of specific proposals 

from the members and from the representatives, one is that we forgive the matching requirement in the CDBG. What is HUD’s position on that specific request? 

Mr. BERNARDI. HUD’s position is that you can use the HUD 

funding to meet the match. 

The CHAIRMAN. That reduces the HUD funding. They proposed 

abolishing the match. What is HUD’s position on not requiring the 

match in this case, which they say is an unusual thing? 

Mr. BERNARDI. It isn’t the HUD match. It is the Stafford Act. 

The CHAIRMAN. I understand that, sir, but we are the Congress, 

and I can vote on it. I am soliciting HUD’s opinion as to whether 

or not we should do away with that matching requirement as a 

matter of public policy. 

Mr. BERNARDI. As you indicated, that reduces, obviously, their 

CDBG dollars to use in other areas. 

The CHAIRMAN. Thank you for restating the obvious, Mr. 

Bernardi. 

Mr. BERNARDI. The position would be, obviously, whatever is in 

the best interest of the redevelopment of the areas. 

The CHAIRMAN. Mr. Bernardi, please, let’s not dance around. It 

is a simple question. We have asked for specifics. Does HUD support the specific proposal that we got from some of the members 

and others from the area that we rescind the requirement for the 

54

match on the CDBG program? What is HUD’s position on that 

matter of public policy? 

Mr. BERNARDI. There is no match on the CDBG program, Congressman. That is not a HUD initiative. We don’t require a match. 

You can use the CDBG dollars for the match. 

The CHAIRMAN. I am not blaming HUD for the fact that it was 

in there. What is your position on whether or not— 

Mr. BERNARDI. I would think it would be the position of the Administration. 

The CHAIRMAN. What is the position of the Administration? 

Mr. BERNARDI. You can talk to others who impose the match. 

The CHAIRMAN. What was that again? 

Mr. BERNARDI. The Stafford Act, where the match comes from, 

is where you would have to correct the situation. 

The CHAIRMAN. Are you in favor or changing it or not? 

Mr. BERNARDI. I am in favor of anything that will help. The answer is yes. 

The CHAIRMAN. You are in favor of abolishing the match requirement in this situation. 

Mr. BERNARDI. I would think, if abolishing the match indeed 

helps the areas—but, on the other hand, as you know, Mr. Chairman, we would like to have, obviously, the local communities participate in the process with other resources. 

The CHAIRMAN. I understand that, Mr. Bernardi, but I am still 

trying to get an answer to the question. Should we abolish the 

matching requirement or should we not? What is HUD’s advice on 

that subject? 

Mr. BERNARDI. HUD’s advice is to do what is in the best interest 

of the people that everyone is trying to serve. 

The CHAIRMAN. That is ‘‘bureaucratese.’’ So I can’t get an answer 

on that one. 

What about extending the tax credits? That shouldn’t be hard. 

Are you in favor of extending the tax credit? 

Mr. BERNARDI. Absolutely. 

The CHAIRMAN. Thank you. What was the ‘‘if?’’ 

Mr. BERNARDI. The answer is yes, absolutely. 

The CHAIRMAN. I thought you had an ‘‘if.’’ I was worried about 

the ‘‘if.’’ 

Mr. BERNARDI. What are we, one for two now? We are doing well. 

The CHAIRMAN. One for two in getting an answer, not necessarily 

the right answer. 

Let me ask you, in your closing comments, as I read them—I had 

to go outside for a bit—you say, even after housing is rebuilt, there 

will be far less affordable housing stock now than before the 

storm—talking about New Orleans now. There needs to be a longterm housing solution for them. 

And here is the conclusion that we get from the Department that 

is in charge of this: The path ahead is daunting. The States are on 

the right path to addressing their challenges. It is a path that is 

going to take longer than we want. 

I am not satisfied at that being the response of the Federal Government. You acknowledge that there is going to be far less affordable housing after the storm than before. You talk about some rental things. What is HUD’s proposal for actually making up this defVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00060 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
55

icit? Do you have any plans for building housing, creating more affordable housing than we would otherwise have so that we won’t 

face what you acknowledge would be far less than before? What is 

HUD’s view about increasing the stock of affordable housing? 

Mr. BERNARDI. With the CDBG program and the moneys that 

are available to the respective States, they have plenty of action 

plans that we have moved on expeditiously and that address affordable housing as well as, obviously, business redevelopment, and 

infrastructure. 

The CHAIRMAN. I am talking about housing now. I can only talk 

about one thing at a time. 

I did hear that less than half of the units were going to be replaced, 82,000 lost, 30 some odd thousand replaced. Does HUD believe we should do something to make up that gap, less than half 

the affordable units being replaced with the use of the CDBG 

funds? 

Mr. BERNARDI. Exactly. The CDBG funds— 

The CHAIRMAN. The CDBG funds, according to Mr. Leger, are 

going to replace less than half of the housing, which will replace 

less than half of the units lost, 30 some odd thousand out of 80 

some odd thousand. Does HUD have any plans for replacing more 

of those units other than the CDBG program which are going to 

replace less than half? 

Mr. BERNARDI. Those units—those affordable housing units are 

coming back on line. 

The CHAIRMAN. Mr. Bernardi, please, let’s not play games. I understand they are coming back on line. There will be 30,000 of 

them, where there had been 80,000. So the question is, what do we 

do about that shortfall of about 50,000 less affordable units than 

before? The CDBG, yes, 30 some odd thousand. There were 80,000 

destroyed. What about the other 50,000? 

Mr. BERNARDI. There will be a need for additional resources. 

The CHAIRMAN. Does HUD have any plans for providing those? 

Mr. BERNARDI. We don’t have the resources in our budget, no. 

The CHAIRMAN. The last question, in the bill that we had voted 

on last year that I hope we will vote on again soon increasing the 

regulation of Fannie Mae and Freddie Mac, we have a proposal 

that would result in about $500 million being available, not in the 

Federal budget, not out of HUD’s budget for affordable housing ongoing, but we have agreed at the initiation of Mr. Baker and others 

to put that all in the Gulf in the first year. Does HUD support a 

fund of about $500 million, assuming we can agree on how it is distributed, to help make up that defect? That would be $500 million 

not on the budget, not out of your allocation, to increase the stock 

of affordable housing and reduce that 50,000 drop. Does HUD support that? 

Mr. BERNARDI. Mr. Chairman, I have read your proposal and 

how you prepare to do that with Fannie Mae and Freddie Mac. If 

you can get the resources, we will do the job. 

The CHAIRMAN. Mr. Bernardi, why don’t you answer questions? 

I don’t understand why you play games. You are telling me if we 

tell you to do something, you will do it. I am asking you, as a matter of public policy, does HUD support putting the bill through in 

a way that makes that $500 million or so available for affordable 

56

housing in the Gulf—does HUD support that as a matter of public 

policy? 

Mr. BERNARDI. When you get it through, then, obviously, we will 

do what we need to do. You are asking me to make policy. I don’t 

make policy. 

The CHAIRMAN. You are the Deputy Secretary of HUD, and I am 

asking you to make housing policy, and you act like I am asking 

you to do something improper. If you don’t make housing policy 

and the Secretary wouldn’t come, who does in this Administration? 

Mr. BERNARDI. The fact of the matter is that you dispose. If you 

go ahead and you can get that through the Congress, then we will 

do it. 

The CHAIRMAN. I am sorry, that is disingenuous. HUD often 

comes up and makes recommendations. The notion that it is somehow inappropriate to ask the Department of Housing and Urban 

Development its opinion as a matter of public policy on an important question—you have acknowledged that we are going to have, 

even after the CDBG funds are spent, a shortfall in affordable 

housing. I am asking HUD’s opinion. You are here as a representative of HUD. 

Mr. BERNARDI. My opinion is yes. If you have the funding for us, 

we will do it. 

The CHAIRMAN. Mr. Bernardi, please don’t play that game. If we 

tell you to do it, you will do it. That is not the question I am asking 

you. As you well know, as a matter of policy HUD makes recommendations to policy all the time. Are you telling me HUD is 

not, for the rest of the years that the Administration is here, going 

to make any recommendations about what policy ought to be? 

Mr. BERNARDI. To bring back affordable housing, we are in favor 

of using the resources. 

The CHAIRMAN. So you would be in favor of including that provi- sion for the $500 million? 

Mr. BERNARDI. Yes. 

The CHAIRMAN. Thank you. 

Mr. BERNARDI. Hopefully, we will have it. 

Mr. BAKER. I thank the chairman. 

Mr. Garratt, I had a series of questions, but I am going to stipulate those in writing for a response later. They will include a comparative analysis of FEMA’s administrative overhead charge certainly in excess of 20 percent in one quarter, 24.9, as contrasted 

with the State of Louisiana’s administrative costs for disposition of 

CDBG grants in the amount of 1.5 percent. I find it very troubling 

that the administrative cost would be so excessive in the administration of public dollars in the face of an emergency response. 

Also, I would like to have a better explanation of FEMA’s 

planned deployment practices going forward for future disasters of 

this magnitude. It was, in fact, an observation that many FEMA 

employees, consultants, and contracting parties did displace evacuees from rental facilities and rental property in order for them to 

acquire a platform from which to work, as opposed to placing them 

in the trailers, which gets me into a question concerning trailer deployment. 

I am not so much concerned about the Hope matter. I think that 

is hopeless. I am now concerned about an article appearing in a 

57

weekend paper talking about the need for additional handicapped 

disabled trailers when we have 4- to 5,000 vacant, not utilized, in 

storage, and we are ordering additional trailers which are outright 

designed for disabled and handicapped, while modifications to the 

quite large inventory in Hope could be done for about $1,000 a 

unit, saving taxpayers considerable dollars. 

Lastly, I will have a question concerning the Katrina cottage allocation, the most recent sort of discussion in the news, and how 

it was possible, given the scope of need represented for permanent 

housing response, that we found the Mississippi allocation to be so 

disproportionately large to the Louisiana settlement. 

I will get those to you in writing. 

Mr. Leger, I wanted to hit the quick high ground as best I can 

in the time available. Knowing that the Road Home is not a community restoration program but a housing recovery program aimed 

at individuals to help them make personal decisions about how to 

go forward, as I understand the technical circumstance we have 

had 506 closings, averaging $62,000, for a total of $31 million, but 

I do note on page 6 of your testimony that you have 30,000 offer 

letters out in some stage of consideration which represent a total 

of $2.49 billion, with an average award, if accepted, close to 

$80,000. 

My point is, even if that is the accurate summation of our current condition and every applicant accepts the offer tendered, we 

still have $5 billion in the bank right now awaiting future action 

or disposition. 

My first question is, has anyone actually received a check of 

$150,000 from the program yet? 

Mr. LEGER. I am not sure who has received exactly what. I know 

that people have been awarded $150,000. I suspect among those 

500 who have actually gotten their disbursals there may be some 

who have gotten $150,000. 

Mr. BAKER. It would be great if you could help us to better understand the operative nature of the deployment of these resources, 

if you could provide to the committee some outline, without, obviously, personal information but just characterizations of classes of 

settlement and how they have been disposed over the most recent 

8 months. 

Has, to your knowledge, there been a decision made by the LRA 

or local government to preclude anybody from redeveloping or rebuilding in any area or has the general approach been if you want 

to rebuild, we will help you? 

Mr. LEGER. Congressman Baker—and, again, thank you for your 

bill, which we all unanimously supported some time ago—the planning process in New Orleans is just completing with recommendations for patterns of redevelopment. 

In Saint Bernard Parish, where I co-chaired the Citizens Recovery Committee appointed by local government, a plan was developed with recommendations with respect to green space and no redevelopment in certain neighborhoods about 10 months ago. Parish 

government unanimously supported that proposal and plan and are 

still working through the process of formally— 

58

Mr. BAKER. The chairman is going to press me here in a minute, 

but has any of the hazard mitigation money been used for buyouts 

of individual homes to preclude redevelopment? 

Mr. LEGER. No, sir. It is my understanding—and that is one of the points I made very quickly—about $1.2 billion of hazard mitigation money was directed to us to be used in this kind of deployment. FEMA has yet to approve our use of those moneys in the 

Road Home program. So, no, sir. 

Mr. BAKER. None of the hazard mitigation money has yet been 

contractually obligated. 

Mr. LEGER. It was always the concept and plan that the money 

would be adjusted in an accounting methodology. 

Mr. BAKER. Let me get to my specific point using your Parish of 

Saint Bernard. There have been 5,105 people, according to your 

data, elect to keep their homes, 4,534 elect to sell but stay in the 

State, and 459 elect to sell and leave. That means 4,993 people 

have elected to take a settlement and leave town, with 5,105 electing to stay within the parish. 

It would seem extraordinarily evident to me that using hazard 

mitigation funds for that purpose and those buyouts would serve 

us well going forward to reduce future flooding exposure. Is that 

something the LRA supports? 

Mr. LEGER. Absolutely. Congressman Baker, that has been the 

concept all along. There will be certain neighborhoods, one right 

near mine, part of mine, which 90, 95 percent of the people will 

choose not to return. 

Mr. BAKER. I will follow up for a little more detailed question 

and explanation on that. 

I am also troubled that if you have half the parish sold out and 

can’t be used for commercial or any other governmental purpose, 

who is responsible for keeping it and what is the future of that 

going forward? As I understand the hazard mit rules, you can’t 

even put a baseball park on it. It is gone. If you have Jack 

O’Lantern sections of land isolated from commerce and the local 

government has no resources, it looks like we have a long-term 

problem going forward. 

Mr. LEGER. Actually, Congressman, the short version of what is 

going to happen is, as properties are purchased by the State by a 

corporation created by the legislature, the local governments are 

notified of the densities of acquisitions and otherwise and the 

local—the property will eventually be passed to the local governments for their planning concepts and for planning development. 

There will be some neighborhoods where one house or one lot is 

purchased, and those may be presented for— 

Mr. BAKER. Let me summarize, because I know my time is limited here, and I assume we have votes pending. 

There is great frustration, Mr. Leger, as you can understandably 

get from the hearing proceedings this morning. I think it is incumbent on us to do a thorough examination. I am also told the LRA 

is getting near the conclusion of its work, that the administration 

of these remaining grant applications is probably about it. Most all 

of the money, at least from your perspective, has been in some form 

or fashion obligated for some purpose and that the resources are 

running out. 

59

My opinion looking in is that we have extraordinary vast regions 

of desolation with—whether it is affordable housing, privately 

owned housing, commercial business enterprises, across the economic landscape, the recovery, it is a great chasm between expectation and reality, and we are going to have to do something differently. 

The CHAIRMAN. The gentlewoman from California. After the gentlewoman from California, we will break for votes. 

Ms. WATERS. Thank you, very much. 

Mr. Chairman, I would like to try and deal with several aspects 

of the Road Home program and the Mississippi Homeowners Grant 

program and, of course, public housing. Let me start with public 

housing. 

Mr. Bernardi, you talked about the state of affairs of public housing and basically supported HUD’s decision to tear them down. C.J. 

Peete, 723 units; in 1997, 202 units were approved for demolition. 

What happened? Why wasn’t it done? 

Mr. BERNARDI. It was slated for demolition in what year again? 

Ms. WATERS. 1997. What happened to the 202 units that were 

approved for demolition back in 1997? 

Mr. BERNARDI. As you know, the history of the Housing Authority, the situation required us to take it into receivership in 2001. 

Ms. WATERS. I know. Who does the approval? 

Mr. BERNARDI. The approval of the demolition? 

Ms. WATERS. The approval of any housing units that are scheduled for demolition. Does HUD do that? Once you do it, what is 

your responsibility for oversight and follow-up? Why didn’t it get 

done? 

Mr. BERNARDI. The responsibility is to try to run—keep the units 

occupied as long as you possibly can, to repair them when you can. 

Ms. WATERS. Since 1997, you had approval. 

Let’s go on to B.W. Cooper. 352 units were approved in 2003. 

Why didn’t those get done? 

Mr. BERNARDI. Pre-Katrina they were all slated to be taken 

down. 

Ms. WATERS. Since 2003—first, 1997, 1996 in Saint Bernard, you 

had 45 units approved. Why didn’t you do that? 

Mr. BERNARDI. They were all slated for demolition. 

Ms. WATERS. What it says to us is that if you wanted to do demolition, if you wanted to do new development—you have given the 

approval to HANO to do this. Nothing happened. And now you are 

telling us that not only do you want to demolish those units but 

you want to do them all. You are telling people you can do all of 

this and they can be back in their places in 5 to 6 years. Why 

would anybody believe that this could be done? 

Mr. BERNARDI. The situation—as I mentioned earlier, preKatrina there were 7,000 units in the New Orleans Housing Authority; 2000 of those were vacant. They were vacant because they 

were uninhabitable. 

Ms. WATERS. They were vacant because they were uninhabitable 

because the maintenance and care of the units was not done by the 

Housing Authority, and HUD didn’t do oversight, didn’t enforce it. 

You boarded them up, and you reduced the number of units that 

60

were available to poor people. They were boarded up, and poor people—you had a waiting list. 

What is HUD’s responsibility when you have a waiting list? You 

have boarded-up units, and you have permission to demolish and 

to redevelop. What are we to think? Are we to trust you to talk 

about redeveloping housing and giving us one-on-one replacement 

and getting people back into their units? 

Mr. BERNARDI. I know you have been on the site, Madam Chairwoman, yourself, and you have seen those units. They are in very, 

very difficult condition. 

Ms. WATERS. They are. 

Mr. BERNARDI. The proposal is to take those four complexes, 

those 3,900 units, to take them down to make a mixed community 

out of that. 

Ms. WATERS. What are you going to do with the people who are 

waiting to come home in Dallas and Houston? 

Mr. BERNARDI. Right now, there are 1,150 people who have been 

placed back into public housing. 

Ms. WATERS. What are you going to do with the people who want 

to come back right now? 

Mr. BERNARDI. We are right now contacting folks wherever they 

are located. We made 800 calls and contacted 200 people. It is very 

difficult to get ahold of many of the individuals. 150— 

Ms. WATERS. Do they know they have transportation costs? 

Many of them left. All of their furnishings are still in those units 

just as they were when they were evacuated. They have nothing. 

What are they supposed to do? They are waiting to hear from you. 

You have money for transportation. You have units, and money to 

replace the household items and goods that were lost. You have all 

this down and you are ready to do it, is that right? 

Mr. BERNARDI. They have a disaster voucher which they are utilizing right now. No one is without shelter. We are trying to bring 

them back. 

Here is the response we are getting from many of them: We will 

talk to you in 60 days, maybe 120 days. Some don’t want to come 

back. 

The fact of the matter is, outside of those four complexes and 

even in one of those we are repairing units as we speak. 1,150 have 

come back, we have another 4- or 500 who are in the process and 

they should be back any time. And when we complete the demolition of these four complexes we will be adding not only 3,000 public 

housing units but 800 affordable units and also some individual 

housing within those complexes. We need to make that— 

Ms. WATERS. I know about the plan, but there is a philosophical 

disagreement here, and it is this: If you have habitable units that 

could be repaired in a cost-effective way, and people who want to 

return to them, why should they be demolished? 

Mr. BERNARDI. The inspections were done by the real estate and 

assessment section and they were deemed uninhabitable. I have 

heard other speakers here, folks indicate the only damage was on 

the first floor. The second and third floors are okay. Quite honestly, 

from a personal perspective and from also a policy perspective, we 

don’t want to put anyone in harm’s way. What kind of health concerns are there? What kind of safety concerns are there? 

61

Ms. WATERS. There have been other assessments that have been 

done that talk about a cost-effective way to take some of those 

units at the first floor level that have minimal damage, clean them 

up, deal with mold or whatever problems that you have, and some 

of the units above that were not damaged, that they can be replaced, they can be repaired. 

Mr. BERNARDI. I would respectfully say that is a stop-gap measure. What we would like to do here is everyone has a voucher they 

are utilizing. If we get the go-ahead to rebuild, they will have a 

tenant protection voucher that will take them to the day when they 

open and they will have— 

Ms. WATERS. Why don’t you just take the units that you have 

been approved of for all of these years and show us that you can 

do those. Let the people come back to all of the other units that 

we perhaps will not agree with you on demolishing and maybe take 

one like Lafitte, where you have enterprise with the demonstration 

project with all of the social services not only for Lafitte but for the 

entire community and see if that model can provide extended support and services just for Lafitte, the units that you already approved? Everything else gets rehabbed. 

Mr. BERNARDI. Madam Chairwoman, as you know, you have met 

with Secretary Jackson, we are willing to listen and go over any 

ideas and proposals that you have. 

The CHAIRMAN. We have to go vote. I would ask that we get answers to these questions in writing. I think these are very important questions. I know other members will have questions, but we 

really are going to need some answers in writing to the very specific questions the gentlewoman was asking. 

We will now break to vote. 

[Recess] 

The CHAIRMAN. The hearing will reconvene. There will be no further votes today, so we will be able to proceed without further 

interruption. 

The Chair now recognizes the ranking member of the Housing 

Subcommittee, the gentlewoman from Illinois, Mrs. Biggert. 

I am sorry. We don’t have everybody back yet. The gentlewoman 

will suspend. 

Mr. WATT. Mr. Chairman, I am told there was a heated discussion in our absence. Maybe the residents of the Gulf chased the 

HUD representative away. 

The CHAIRMAN. I trust that was not the case. 

Mr. WATT. He is missing in action. 

The CHAIRMAN. We should remind the participants that rudeness 

towards witnesses is the prerogative of Members of Congress. 

Mr. WATT. I am joking, of course. 

The CHAIRMAN. We will wait. 

Mr. WATT. If he didn’t answer questions any better for them than 

he answers them for the committee, maybe we will get better answers if he is not here, Mr. Chairman. 

The CHAIRMAN. I appreciate the witnesses having spent a long 

time here. I know they were supposed to be up earlier, and so I 

appreciate them bearing with us, and I realize we didn’t give a lot 

of notice. 

The hearing will now resume with the gentlewoman from Illinois. 

62

Mrs. BIGGERT. Thank you, Mr. Chairman. 

Secretary Bernardi, in your statement, on page 2, you say that 

HUD has and will continue its role in offering guidance and assurance and assure compliance with the law, including the prevention 

of waste, fraud, and abuse. Could you elaborate a little bit on that, 

particularly in light of the AP story that talks about—and I would 

like to know how you connect with FEMA and HUD. FEMA has 

asked for 300 some thousand dollars back from those in housing 

where it has been shown that they received money that they were 

not entitled to, with fraud involved. 

Mr. BERNARDI. When it comes to the monitoring of the resources, 

we have conducted monitoring in Mississippi and we are beginning 

monitoring in Louisiana. I think it was said earlier that just a little 

over a billion dollars has been actually spent, with almost a billion 

dollars in Mississippi and about a hundred some odd million dollars in Louisiana. 

We monitor for oversight and compliance to the applicable Federal statutory and regulatory requirements, and we also include 

the oversight for waste, fraud, and abuse. We have people not only 

at headquarters but people in the respective Federal offices in New 

Orleans and in Mississippi, and whenever the action plan is approved and the money is being expended, we make sure that each 

entity abides by the regulations and rules that they have. 

For example, I think the States have opted when it comes to procurement that they would follow, instead of the Federal guidelines, 

the State guidelines. So we just monitor to make sure the money 

goes to the people it is intended to and is spent for those purposes. 

Mrs. BIGGERT. And then how do you work with FEMA? 

Mr. BERNARDI. We work very well with FEMA. I am not really 

familiar with the $300 million. Is that what you mentioned? 

Mrs. BIGGERT. Well, I will now go to Mr. Garratt. 

The article in the paper, the AP story this morning, that you want $300 million in Katrina aid back, are you aware of the article 

that— 

Mr. GARRATT. Yes, ma’am, I am. 

Mrs. BIGGERT. Could you comment on that? 

Mr. GARRATT. Certainly. As a standard part of any disaster, an 

unfortunate but standard part of any disaster, we inevitably need 

to recoup money that was provided improperly for a host of reasons 

to individuals who were not eligible for that assistance. That is the 

case here as well. 

In this particular case, it was complicated or the amount of 

recoupment that we are going to have to end up doing was complicated by the circumstances of the event, both the scale of the 

event and by the fact that we implemented expedited assistance at 

the beginning of that event. We have identified just shy of $350 

million that we expect to recoup. 

Mrs. BIGGERT. I suppose you couldn’t say that this was much 

more major, because this has been a major disaster that has occurred, but do you work with local authorities? Have you worked 

with HUD on this? 

Mr. GARRATT. We don’t typically work with HUD as part of the 

recoupment effort. That is done by our own disaster finance folks 

in conjunction with the Department of Treasury. 

63

Mrs. BIGGERT. Why would you think you have the recoup, other 

than the fact that it was checked out before the money was given? 

Mr. GARRATT. Again, back to the circumstance of this particular 

event, we implemented expedited assistance very early on into this, 

and expedited assistance, by its very nature, means that we are expediting assistance without going through the normal checks and 

balances and controls that we typically go through when we issue 

assistance. 

Those typical checks and balances include sending an inspector 

out to someone’s house and that inspector then verifies the damage, reports the damage that the individual is eligible for, ensures 

that the individual is, in fact, the homeowner, and then issues assistance. We have that. That exists in a normal disaster environment. 

When we expedite it, we do that in advance of doing inspections. 

So we are basically taking the word of the individual who is calling 

up that they are who they say they are and they need the money 

that they say they need, and we issue that money. We then will 

go back at the end of that process and begin validating those payments. We do not want to validate them at the front end or we did 

not want to validate them at the front end and slow down getting 

assistance to victims who urgently needed it. 

Since then, we have put protocols in place that now enable us to 

do identity verifications on all disaster applicants when they either 

call us or when they register online. Last year, we only had the 

ability to do that for individuals who registered online. We were 

setting up the ability to be able to do that for individuals who 

called us, but it wasn’t ready to go yet. That is ready now, so we 

can now do identity verification. So in the future if we are faced 

with an expedited assistance situation, you will not see this level 

of recoupment activity. 

Mrs. BIGGERT. Have you ever considered working with regional 

coalitions, preparedness coalitions? In Chicago, there is a financial 

preparedness coalition called Chicago First. 

Mr. GARRATT. I am not personally familiar with Chicago First, 

ma’am. I cannot authoritatively say that FEMA or parts of FEMA 

are not working with Chicago First or potentially parts of DHS preparedness are not working with Chicago First, but I can’t confirm 

that. 

Mrs. BIGGERT. Thank you. I yield back. 

The CHAIRMAN. I thank the gentlewoman. 

The gentlemen from North Carolina, the Chair of the Oversight 

Subcommittee, which will be holding a hearing on the insurance 

aspects of this in a couple of weeks. 

The gentleman from North Carolina. 

Mr. WATT. Thank you, Mr. Chairman. 

Mr. Leger, at one point, in response to a question of one of the 

members—I can’t remember who—you said that none of the Road 

Home funds had been disbursed, is that correct? 

Mr. LEGER. Oh, no, sir. Actually, we have obligated and made offers—I say ‘‘we’’, the State of Louisiana—to 30,000 homeowners totaling $2.49 billion. Five hundred grants or so this week have actually been disbursed. 

64

Mr. WATT. What was it that you were saying that FEMA was 

holding up? I am trying to get that. I thought that was Road Home. 

Was it something else? 

Mr. LEGER. There are several issues with FEMA, but particularly 

with respect to Road Home. The budgetary process involved our 

use of $6.3 billion of CDBG moneys, another $1.1-, $1.2 billion in 

hazard mitigation funds through FEMA, Stafford Act funds. However, FEMA has yet to—either been unwilling or unable to approve 

the use of those hazard mitigation funds to assist us in the Road 

Home program. 

Don’t misunderstand, though, sir. That is not slowing up the 

process at this point. But until those funds are allocated and approved—or rather approved by FEMA for us to use in the Road 

Home program, the financial viability of the program is severely at 

stake. 

We didn’t ask to do that. In the negotiations with the White 

House, we asked for a lot more. We got a disproportionate allocation of assistance in December of 2005 capped at 54 percent, and 

we got $6.2 billion. We were told by the White House, use $1.2 billion of hazard money. 

Mr. WATT. I am trying to deal with what has been authorized. 

Mr. Garratt, what do you say in response to Mr. Leger on this 

issue? 

Mr. GARRATT. Mr. Leger is entirely accurate, sir. 

Mr. WATT. What is the hold-up? 

Mr. GARRATT. The issue—and we are working with LRA to try 

and resolve this issue—is a legal issue. 

Mr. WATT. What is the issue? 

Mr. GARRATT. Under HMGP, the funding has to be distributed 

impartially and equitably, and that is—FEMA believes that the 

protocols that they have in place to distribute that money and some 

of the restrictions that they have in place call into question both 

the impartiality and equitably as well as potentially raise issues of 

discrimination. Until we can resolve those issues— 

Mr. WATT. How long has this money been authorized for this 

purpose? 

Mr. GARRATT. Well, sir, we were— 

Mr. LEGER. Seven, eight months. 

Mr. WATT. This is not a trick question. I am just trying to figure 

out how it takes 7 months to resolve something that—I mean, you 

have people sitting there waiting on this to happen. Why does it 

take 7 months to resolve what is characterized as a legal issue? 

Mr. LEGER. We have been asking for 7 months to help resolve 

this issue. HUD has no problem in using CDBG moneys with these 

issues. We have made an exception to help senior citizens get additional funding in the program. There seems to be some obstacle 

there. 

Mr. WATT. How close are you to resolving this issue so that this 

money could be released, Mr. Garratt? 

Mr. GARRETT. My understanding is we are not necessarily particularly close to resolving this issue, sir. 

Mr. WATT. So FEMA and the local authorities and HUD have 

three different positions on this issue, is that what I am hearing, 

and it can’t be resolved? 

65

Mr. LEGER. It seems like there are two positions. 

Mr. WATT. HUD and the local authorities on one side and FEMA 

on the other side, and you can’t resolve it and not even close to it. 

It has been 6 months, and you are telling me you are not even close 

to resolving it. Is that what I am hearing? Is that correct, Mr. 

Garratt? 

Mr. GARRATT. I would say we have issues that we have yet to 

resolve and still need to resolve and have no assurances at this 

point that they will be resolved. 

The CHAIRMAN. Ever? 

Mr. GARRETT. In the very near future, sir. 

Mr. LEGER. We plead with this Congress for resolution. 

Mr. WATT. Mr. Bernardi, I am looking here at a statement from 

the local Housing Authority which describes the damage at the C.J. 

Peete public housing project as minor flooding. I noticed that C.J. 

Peete is one of the public housing developments at the bottom of 

page 2 and the top of page 3 of your testimony which you indicate 

is in the process of being redeveloped to make way for a mixture 

of public housing, affordable rental housing, and single family 

homes. 

Two questions arise from that. Number one, why would you be 

redeveloping something, a public housing community that had only 

minor flooding as described by the local Housing Authority; and, 

number two, in the redevelopment plan, assuming that it makes 

sense to redevelop as opposed to renovating and restoring, have 

you proposed one-for-one replacement of the low-income housing 

units in that particular development? 

Mr. BERNARDI. The four developments— 

Mr. WATT. I don’t want to know about the four developments. I 

asked you only about one development, Mr. Bernardi. 

Mr. BERNARDI. We are looking to do one-for-one replacement 

with those four developments. 

Mr. WATT. I didn’t ask you about four developments, Mr. 

Bernardi. I asked you about the Peete public housing redevelopment that you are proposing. That is the only one I asked you 

about. 

Mr. BERNARDI. The answer is yes. One-for-one redevelopment. 

Mr. WATT. This question—in your redevelopment plan, you propose one-for-one redevelopment of the Peete public housing. Is that 

correct? 

Mr. BERNARDI. That is correct. 

Mr. WATT. One-for-one replacement. 

Mr. BERNARDI. That is correct. 

Mr. WATT. Why are you proposing to redevelop, as opposed to 

renovate, when there has been only minor damage? 

Mr. BERNARDI. Well, the inspectors from the Real Estate Action 

Center inspected those properties and the decision was made—redevelopment was scheduled prior to the hurricane and a decision 

was made to redevelop not only Peete but the three other entities 

as well to create 3,900—to create 3,000 new additional public housing units. 

Mr. WATT. Thank you. 

The CHAIRMAN. I would not only thank the gentleman for yielding back, but the decision was made, and no one appears to have 

66

made it. When decisions are made impersonally, there are often 

some questions. 

The gentleman from Alabama, the ranking member. 

Mr. WATT. Can I just thank the chairman for saving me from 

myself? 

The CHAIRMAN. The gentleman from North Carolina and his wife 

can both thank me for that. 

Mr. BACHUS. Mr.—is it Leger? Can I call you Walter? 

Mr. LEGER. You can call me Walter, yes, sir. 

Mr. BACHUS. The Blanco Road Home program, that was—it will eventually make $7.5 billion available to property owners whose 

homes were damaged. 

Mr. LEGER. That is correct. 

Mr. BACHUS. There have been, I think, 100,000 applications for 

funding under the program. Can you tell me to date how many 

grants have been distributed out of that 100,000? 

Mr. LEGER. Yes, sir. There have been offers and obligations of 

$2.49 billion, actual disbursements of 500 persons. There have been 

offers to 30,000 people, 30,000 accepted, 500 actual disbursements. 

But, if I may, Congressman, we had a late start. We were delayed by the fact that we needed to seek additional funding to fully 

fund our program because of the disproportionate share we were 

given in December of 2005 relative to our needs. And the program 

has had— 

Mr. BACHUS. You are talking about getting the program off the 

ground. 

Mr. LEGER. To even be fully funded. 

Mr. BACHUS. Now the first funding came in December after the 

hurricane. 

Mr. LEGER. That is correct. 

Mr. BACHUS. When were the first funds distributed? 

Mr. LEGER. We were allocated about $6.25 billion; Mississippi 

was allocated $5.2 billion. We had to rapidly make a decision 

whether or not we would try to offer half of our people all of the 

benefits of the program or all of our people half of the benefits. Our 

legislature requires that it be approved by the legislature. They 

said, let’s wait. 

Mr. BACHUS. The legislature? The Louisiana legislature? 

Mr. LEGER. The Republicans and Democrats alike. 

Mr. BACHUS. That is what I was wondering. It wasn’t a lack of 

Federal funding. 

Mr. LEGER. It was a lack of Federal funding because we feel like 

we didn’t get funded proportionately enough in December. 

Mr. BACHUS. But you had billions of dollars of funding that you 

didn’t turn loose in grants. 

Mr. LEGER. We had billions obligated, but it was insufficient to 

meet our needs, and we thought it was most appropriate to attempt 

to get as much funding as we could get to meet the needs. 

Mr. BACHUS. I understand you are seeking more funding, but 

there are hundreds of millions of dollars that you weren’t distributing. 

Mr. LEGER. That is right. As you may know, it takes time. What 

we were saddled with—and so was Mississippi—is what I call federalism with strings. The money was appropriated— 

67

Mr. BACHUS. I understand. 

Mr. LEGER. It was tied and red tape and strings back to Washington. We were told, and we designed, and when the White House 

agreed to support an additional $4.2 billion, we immediately released this full program. It took us until June to get funded. We 

could not move forward. Our legislature would not authorize us to 

move forward. We didn’t think it was good policy to move forward 

until we knew we had the money. 

Mr. BACHUS. You resubmitted the program, is that right? 

Mr. LEGER. That is a good point. We submitted the program, but 

because of HUD regulations, which would have required on CDBG 

money, which would have required us to do an environmental impact study on every single one of the 124,000 properties, which 

would have taken 3 to 6 months and been very expensive, we had 

to redesign the program into what has been called the compensation program. 

Mr. BACHUS. That wasn’t anything new. 

Mr. LEGER. It was new to us, that we were going to have to do 

an environmental impact statement on 124,000 individual properties. 

Mr. BACHUS. To change that you had to have a Congressional fix, 

I think, right? 

Mr. LEGER. No, actually, we didn’t get a Congressional fix. Jan 

Opra and others at HUD worked very closely with us to maneuver 

around the regulations that required the complications and adjusted the program accordingly. That caused other difficulties. 

Mr. BACHUS. How long did the inaction or whatever with the 

Louisiana legislature hold up funding? 

Mr. LEGER. I don’t think there was any inaction by anybody. We 

were waiting to be funded. The legislature and in our meetings 

with the Black Caucus, the Rural Caucus, Republican Caucus, the 

idea was that it might be irresponsible for us to offer a program 

that wasn’t fully funded. Honestly, I think we also were concerned 

with that Congress—that if we started offering half of the money 

to people, they might—Congress might say, you guys have enough 

money. 

Mr. BACHUS. Let me just—you received first funding in December, and then in February, the President submitted the request to 

Congress for additional funding. 

Mr. LEGER. Yes, sir. 

Mr. BACHUS. It was for the amount—at the time, you said it was 

sufficient. 

Mr. LEGER. No, sir. We asked for more. That was a negotiated 

amount. 

Mr. BACHUS. But you didn’t move forward with what you had. 

Mr. LEGER. Sir, we didn’t ask for more? 

Mr. BACHUS. You didn’t spend the money you had. 

Mr. LEGER. We are spending the money we have. 

Mr. BACHUS. Now, but you didn’t then. 

Mr. LEGER. We put everything in motion to spend the money 

that we were allocated. 

Mr. BACHUS. When did the first moneys get to Louisiana? 

68

Mr. LEGER. The first moneys get to Louisiana? I understand 

most of the moneys are still here in Washington. That the moneys 

get to Louisiana after they are approved by the various programs. 

Mr. BACHUS. It took HUD just a week or two to approve your 

second plan that you submitted. 

Mr. LEGER. We were working with HUD for 6 or 7 months on 

this program. We unveiled the program on February 20, 2006, 5 

days after the White House said they would support it. We put it 

out in the public domain, and, honestly, those months gave us some 

clarity. With all due respect to Mississippi— 

Mr. BACHUS. I know you had mentioned that you are not getting 

as much as Mississippi, and there is a dispute over what you are 

getting. The money that got there was held up by State and local 

restraints. 

Mr. LEGER. The money didn’t get there. It was in Washington 

until the programs are approved. We didn’t feel like and I still 

think it would be—in fact, I understand HUD would not approve 

a program that wasn’t funded. So until—we could have offered a 

half program, a program for only half of our people, or we could 

have offered a program for all the people for half the money. We 

thought that was unwise. 

Mr. BACHUS. Let me ask you about this. This will be my last 

question. This is Governor Blanco on February 15th when $4.2 billion— 

Mr. LEGER. We were delighted. 

Mr. BACHUS. You were delighted. It was a dark and almost 

frightful evening that evening in September in Jackson Square. It 

was a very quiet, eerie feeling in a place that had only known life 

and vitality until Katrina rolled through. But when the President 

of the United States stood there that night with lights beaming on 

him and I sat on a warm bench watching him commit to the Nation—and here is the key part—his making a commitment to Louisiana and the Gulf Coast region for its redevelopment, I sat there 

wondering and hoping this promise would become a reality. 

Today, I know that he is fully committed to helping our people, 

and so, on behalf of the people of Louisiana, I have to say a very 

special thank you. Mr. President, you are committed. We know you 

are there. We know you care. You sent us Don Powell, who we 

have come to know, to say that these numbers didn’t just come out 

of the sky, the $4.2 billion. They were carefully crafted, legitimate 

numbers analyzed after—analyst after analyst, evidence after evidence. We took it seriously. We didn’t just make up a number. We 

know that just doesn’t fly here in Washington. 

So she said it was sufficient. 

Mr. LEGER. No, sir. What she said was that we were thrilled to 

get the additional $4.2 billion—and we were—and it was carefully 

crafted based on mathematics and estimates of loss. It wasn’t 

enough, but we were thrilled. Because that first allocation in December of 2005, we are not sure what it was crafted on, but it certainly wasn’t relative to proportion of damage. We had 4 times 

more damage than Mississippi, and we were capped at 54 percent 

of the allocation. That $4.2 billion was welcome, and an additional 

$1.2 billion was assured to us and, by the way, we are thankful. 

69

Mr. BACHUS. But you thought $4.2 billion was sufficient. I know 

you found out that Mississippi got a different amount. 

Mr. LEGER. We already knew that. That is why we went after the 

additional $4.2 million. And we are thankful to the President and 

Don Powell and his office, but, again, that $1.2 billion of hazard 

mitigation money still has not been—and by the way, I correct myself. It was not 7 months ago. It was from February 20th that we 

announced we needed to use that $1.2 billion of hazard mitigation 

money, so it is 11 months. 

Mr. BACHUS. Okay. Thank you. 

Mr. LEGER. Thank you, sir. 

The CHAIRMAN. The gentleman from Texas, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. Chairman, if I may, I would like to talk for just a moment 

about Houston. In the 19th Congressional District, we have approximately 20,000, I am told, survivors. And we have gone from 

deadline to extension to deadline to extension. 

My question, Mr. Garratt, sir, is: With the 130,000-plus persons 

approximately, households, has the assistance for them been extended, Mr. Garratt? 

Mr. GARRATT. Yes, sir. All of the evacuees in Houston who are 

eligible for assistance, rental assistance, and were receiving that at 

the end of the 18-month period will be extended—are for another 

6 months. 

Mr. GREEN. And have they been notified? 

Mr. GARRATT. They have been. 

Mr. GREEN. And of those persons, there is a cap of $26,200. Has 

that cap been reached by some of the these persons? 

Mr. GARRATT. It has been, sir. 

Mr. GREEN. Do you have some idea as to what percentage, 

please, sir? 

Mr. GARRATT. It is a relatively low percentage at this point, sir. 

I do not have the exact percentage, but I can tell you that FEMA 

is continuing to assist those personnel through our direct assistance program. 

Mr. GREEN. We are talking now about the persons who have exceeded the cap? 

Mr. GARRATT. Yes, sir. 

Mr. GREEN. And is there some longer term housing solution 

available to these persons, sir? 

Mr. GARRATT. After the extension? 

Mr. GREEN. Yes, sir. 

Mr. GARRATT. Well, we are actually working on trying to craft 

just such a housing solution right now, and we are working with 

our partners in the Federal Government. We are working with our 

partners in the volunteer agency communities, and we have been 

working closely with Mayor White as well, to look at not only coming up with a long-term solution for that but improving our case 

management and making that more aggressive so that we can do 

better hands-on, door-to-door, face-to-face case management with 

those households and families who are finding it most difficult to 

make the transition from Federal assistance to self-sufficiency. 

70

Mr. GREEN. In Houston, Mr. Garratt, sir, we, I think, performed 

fairly well. We entered into an agreement—and when I say ‘‘we,’’ 

I mean the City of Houston—with, I believe, FEMA. 

We entered into the agreement, we meaning the City of Houston, 

as a co-signer, if you will, of lease agreements with the understanding that this arrangement would have a duration of about 1 

year. Shortly after entering into the agreement, there was an effort 

to set aside the agreement, if you will, and move from 403 to 408 

housing. In so doing, this would leave a lot of the Houston apartment owners with tenants that they did not vet because they assumed that, by entering into a 1-year lease, they would have the 

opportunity to cover themselves, and without that 1-year lease, 

they felt that they might not have the opportunity to recuperate 

the emoluments necessary by virtue of entering into their arrangement. 

So the question becomes: Why was there an effort after the 

agreement to diminish the time, the 1-year time frame? 

Mr. GARRATT. You have characterized that quite accurately, sir. 

Immediately after Hurricane Katrina struck—I think it was on 

September 7th—we issued a disaster-specific guidance that authorized 403 funding, which is public assistance funding, to be used to 

shelter individuals and place them in hotels, motels or apartments. 

Further, recognizing that it would be difficult to secure short-term 

leases, we authorized States to enter into up to 12-month leases, 

under 403 funding, with every intention of funding those apartments to the end of that 12-month period in those cities where they 

elected to do so. 

However, it was subsequently determined that our use of 403 authority for that period of time was not legal. We, therefore, had to 

come up with the best method of transitioning individuals into 

what was an eligible, longer term housing program. The only program available to us was under the 408 program for individuals 

and households assistance programs. That program, unlike the 403 

program, has eligibility requirements. So, as a result of that, we 

had to—or those individuals, those households who were in apartments under 403 and were not meeting any eligibility requirements 

other than they were legitimate evacuees, now had to meet certain 

eligibility requirements. They had to be the owners—it had to be 

their primary residence. They had to be U.S. citizens. As to those 

individuals or households who did not meet that eligibility criteria, 

we ended their assistance under the 403 program. 

We began that process in February of 2006, and those individuals who remained eligible or were eligible under 408 were 

transitioned to that program, and many of them remain eligible 

and continue to receive assistance to this day. 

Mr. GREEN. Thank you, Mr. Chairman. 

The CHAIRMAN. I would like to ask one question. You said, Mr. 

Garratt, that it was determined that 403 use was illegal. Who determined it? 

Mr. GARRATT. The General Counsel. 

The CHAIRMAN. Of your agency? Of FEMA? 

Mr. GARRATT. [Nods in the affirmative] 

The CHAIRMAN. Nods do not make it into the record, Mr. Garratt. 

You must speak. 

71

Mr. GARRATT. It was a Department decision. 

The CHAIRMAN. It was the General Counsel of FEMA who made 

the ruling? 

Mr. GARRATT. Officially, the General Counsel or Chief Counsel of 

FEMA made that decision. That is correct, sir. 

The CHAIRMAN. How long after FEMA had been running the program did FEMA decide that it was running it in an illegal fashion? 

Mr. GARRATT. We implemented that program in September, and 

I believe that concerns were raised either in late November or December. We worked through those concerns or tried to work 

through those concerns, were unsuccessful, and began trying to 

come up with a transition replacement solution for that. 

The CHAIRMAN. Okay. The gentleman from Texas. 

Mr. GREEN. Thank you for yielding, Mr. Chairman. 

Just one additional question, sir. With reference to the apartment owners, have you made any overtures with reference to making them whole for having to have their leases terminated early? 

Mr. GARRATT. Well, what we agreed to do was honor the early 

termination requirements of any contract that we terminated. So, 

as a result, if an apartment owner had—if we had a 12-month 

lease with an apartment owner and the termination clause said 

that we had to pay them 30- or 60-days’ worth of rent as part of 

that termination, we did that. 

Mr. GREEN. And I applaud you for doing that, but many of these 

owners entered into the agreement assuming that it would be for 

1 year since they were dealing with the Federal Government, an 

honorable institution. And when it was terminated, the 3 months 

or the 1 month was not enough to compensate them for much of 

the damages that they suffered, and they are still complaining 

about this. 

Mr. GARRATT. Noted, sir. 

The CHAIRMAN. The gentleman from New Jersey, I believe, is 

going to be next, Mr. Garrett. 

Mr. GARRETT. Thank you, Mr. Chairman, and I appreciate your 

holding this hearing today, and I thank the members of the panel 

as well. 

You know, recently, I had the opportunity to travel to New Orleans and personally view the destruction and also the recovery in 

certain areas and the lack thereof in other areas; I walked the 

area; I rode in a bus; I had the opportunity to take a helicopter 

tour of the area; and I also had the chance to sit down with the 

people who lived there and, actually, the people who are no longer 

living there—some business people, some civic people and also contractors as well—to discuss with them what problems they are experiencing. And one of their comments was, as we have already 

laid out today, there are certainly problems on the Federal level—

and I will be getting into that as well—but they also were frustrated with the red tape that they were experiencing, even at the 

early stage, both from a local level, whether you want to define 

that as ‘‘city’’ or ‘‘local,’’ and at the State level as well. 

To one of those points, following up the ranking member’s comment, Mr. Leger, when I was there your organization was still in 

the founding process, and I think you said—correct me if I am 

72

wrong—it took 10 months from the date of the disaster to the time 

that, actually, the legislation and everything was established. 

Is that the correct period of time? 

Mr. LEGER. Well, we were actually created and appointed by the 

Governor in October of 2005, 2 months after the storm. 

Mr. GARRETT. Okay. 

Mr. LEGER. It took 10 months for us to get full funding after the 

storm— 

Mr. GARRETT. Okay. 

Mr. LEGER. —or, you know, what was said to be full funding. 

Mr. GARRETT. Was everything up and running, though, during 

that period of time as well? Because when I was talking to local 

folks, they got the idea that all of the appointments and everything 

necessary from the political nature of it had not yet been completed, even when I was down there going into it. 

Mr. LEGER. Well, you have to understand. I was a rookie in government, I guess, and I was a volunteer to begin with, but I appreciate there were like two or three special sessions in the fall, and 

at some point, the legislature confirmed the creation and the appointment by the Governor, but nonetheless, we were functioning 

pretty much full time, without staff, for many months until we 

were fully funded. That is why many of us volunteers became like 

staff. 

Mr. GARRETT. I guess you can appreciate, maybe, where the 

ranking member was questioning and where there was probably 

frustration from the folks who lived there when they probably 

turned on the TV and said, ‘‘Hey, there is $4.2 billion that is coming down from Washington. We are going to start getting relief, if 

not tomorrow, then next week or next month,’’ and then from your 

point of view, you wanted—or from the legislative point of view, not 

your point of view—you can understand the frustration of the people not seeing the dollars there. 

Mr. LEGER. I am one of those people— 

Mr. GARRETT. Yes. 

Mr. LEGER. —and we were delighted in February—that is what 

I was telling Mr. Bachus—about the name we know well in New 

Orleans—but I was telling Mr. Bachus we were delighted to hear 

of the additional $4.2 billion that would be supported by the White 

House and are grateful for it, but it took until June for it to be confirmed. And I have to admit I was reminded, as I was thinking 

about it afterwards, we were defending that $4.2 billion the whole 

time. You know, surrounding States were trying to get a little piece 

of that $4.2 billion of additional moneys during that time. That is 

another reason why, you know, we were reticent to develop the program, but we did. 

Mr. GARRETT. I appreciate that. 

Now, I was one of the few who held off my vote initially, right 

after this, and said that before we start allocating any dollars to 

this program—we initially allocated $10 million. I think it was in 

a Thursday session, if I am not mistaken, and then there was an 

additional $53 million. I was the one who withheld the additional 

$53 million because I said that there did not seem to be all of the 

checks and balances in place on the Federal level and on the State 

level in order to get these things done. And now we seem to find 

73

out that—we are finding that both on the local level, State level, 

and the Federal level, there were no checks and balances because, 

you know, my point of view is that a dollar does not do anybody 

any good that we appropriate up here if it does not actually land 

in the pocket of somebody, actually, to build their house, or for the 

Federal Government to make sure that the State level gets the job 

done. 

It sounds to me, from the testimony we have had so far today, 

that we see a mix of responsibilities there. 

Mr. LEGER. Yes, sir. And I would suggest to you, having become, 

I guess, a veteran now in government after a year, that what we 

saw initially was maybe not fear that there were not enough checks 

and balances and hearing of $1.6 billion being lost to fraud by 

FEMA. We thought every $1 billion of ours was very precious, and 

we could not afford to lose any. We built a lot of checks and balances in, and now we found the checks and balances to the Federal, 

State, and local levels are often at cross purposes. We have tried 

to eliminate some of them. 

Mr. GARRETT. I just have limited time. I thank you. I have just 

two final questions—one for Mr. Garratt and one for Secretary 

Bernardi. 

If you could, just fill me in a little bit more so I get a better picture of what the existing housing stock in that area was. My understanding, if I heard the testimony right, is that you are looking 

at 50- or 60-year-old housing stock that, if I heard you right, went 

into receivership basically, and HUD had to step in to deal with it. 

So, if you can, just give me a little more information on the picture of what the situation was there beforehand. It sounds to me 

from your testimony, if I heard you right, that there was not a directed, concerted effort to make sure that the folks in town actually 

had adequate housing before the disaster came and that HUD was 

responsible a year or so before you stepped in. So, if you could answer that. 

Also, Mr. Garratt, my final question is with regard to—if I may, 

my final question is—well, I see my time is up. 

So, Mr. Bernardi, if you can answer that. 

Mr. BERNARDI. Pre-Katrina, of the New Orleans Housing Authority, there were 7,000 units; 5,000 of those were occupied, 5,100. The 

fact of the matter is that the New Orleans Housing Authority has 

been a troubled authority for a considerable period of time, and in 

2001, HUD took over the Housing Authority of New Orleans’ receivership. And what we are looking to do, and what we have been 

doing is, outside of the four complexes that I mentioned, we have 

been able to rehabilitate and restore close to 2,000 units, and folks 

are coming back to those. We are in the process of putting forth 

a plan. Right now, it is in legal limbo, if you will, to redevelop 

those four complexes—about 3,900 units—and take them and make 

them a better situation. 

I just chatted with some of the good folks who reside in public 

housing here during your vote, and I sympathize with them, and 

I understand the feelings that they have. That is home. They feel 

they can claim them. 

The fact of the matter is that our inspectors tell us that those 

should be displaced, and new housing should be constructed, and 

74

within 18 to 24 months, they would have a voucher to continue to 

reside, and then they would have the first choice of those units, the 

people who actually had a unit. And then after that has been exhausted, the people who came from those complexes would utilize 

those vouchers, and then it would be open to people who need assistance. It is a very difficult thing to put forth, but we feel strongly that we want to—you know, you do not want to have it the way 

it was. I mean the way it was was not good, and there are a lot 

of reasons as to why it was not good. Some people are going to say, 

well, HUD did not take care of it in the previous Administration 

or this Administration. 

The fact of the matter is, you know, in all of this dire circumstance, there is an opportunity to do something better, and all 

it takes is cooperation. And we at HUD plan to cooperate not only 

with HANO but with the good folks and, hopefully, this committee 

to be able to bring some conclusion to this, not add a moratorium 

on the demolition. That would just set things back even further. 

The CHAIRMAN. The gentleman’s time has expired. 

I will note that Mr. Leger noted the familiarity of the name of 

the ranking member, but having known the ranking member for 

some time, please do not expect him to throw you any beads. 

Next, we will go back to the regular order, but the gentleman 

from Missouri has been faithfully here all day, so I recognize the 

gentleman from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

I am hoping this is not televised on C–SPAN, because I can 

imagine the frustration of people all around the country when they 

hear that two Federal agencies have an issue and that a representative of one of the agencies says that we do not think we will ever 

resolve the differences. That is why people hate their own government, because they get frustrated with the inability of us to just 

make things move. That is my editorial comment. 

To Mr. Garratt, I raised the question earlier about the students 

in the schools, in the colleges, in New Orleans who were given 

$2,000 immediately after the flood, and now those students are receiving letters asking that they repay the $2,000. Can you shed any 

light on that? 

Mr. GARRATT. Yes, sir, I can. Before I do that, however, I need 

to address two issues. 

One, if I suggested that I thought we would never resolve this 

issue with our partners in the LAA, that was not my intent at all. 

I think we will resolve this issue. We are at a difficult impasse 

right now, but we will continue to work with them, and we are just 

as anxious to solve this problem as they are. 

Secondly, I may have left the impression in my discussion of 403 

that our using 403 to shelter individuals was illegal. It was not the 

case at all. Using 403 for that purpose was perfectly legal. Using 

it for the extended period of time that we wanted to do it was 

where the legal issues came in. 

Back to your question, sir, regarding the students in dormitories. 

Indeed, letters have been going out to a number of students in dormitories, advising them that expedited assistance and other forms 

of assistance that they may receive they need to return in some instances; and I want to make the point they all have an appeal caVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00080 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
75

pability with this, and we recognize that there are going to be circumstances and special circumstances for a number of these. But 

let me just give you an example of the sorts of situations that 

would drive us to want to recoup money from a student who is in 

a dormitory. 

We do not typically regard dormitories as a primary residence. 

If a student were in a dormitory when this struck and they went 

home and they registered for assistance, we sent them $2,000 expedited assistance, and then they went home to live with their parents. Their father may have also received, or their mother, a $2,000 

expedited assistance payment. We are not authorized to duplicate 

payments to a household. One expedited assistance payment per 

household. That is an example of a case where a student may have 

received expedited assistance, and we may be asking for that expedited assistance back. 

On the other hand, these students are authorized to receive other 

needs assistance for personal property and other forms of property 

that—in other words, we are not going to be asking for all of the 

assistance that we necessarily provided any student back, but if it 

appears that we have a duplication, that we have multiple individuals receiving assistance and that they are living in the same 

household, then we will be asking for some of that funding back. 

Mr. CLEAVER. And that sounds fair. 

The problem is that there are students who are receiving letters 

who live in various parts of the country whose parents did not get 

the $2,000, and they are receiving a letter, and they are wondering 

now when FEMA will ask the U.S. Attorney or the FBI to close in 

on them. 

Mr. GARRATT. We are dealing with all of these students on a 

case-by-case basis because we recognize that it is not a one-sizefits-all solution for the— 

Mr. CLEAVER. But there was no means test in the first place? 

Mr. GARRATT. Not for expedited assistance. 

Mr. CLEAVER. Okay. Let me move on. My time is running out. 

Now, if it is cheaper in terms of saving money to put people back 

into public housing instead of using the expensive vouchers which 

are approximately $1,100 a month, why are we not doing that? 

Vouchers versus repairs of units in each development; what are the 

pros and cons? 

Mr. BERNARDI. What we have are vouchers for everyone who was 

displaced because of the storm. 

Mr. CLEAVER. But doesn’t it cost more—I mean am I right about 

the $1,100? Isn’t that about what it averages? 

Mr. BERNARDI. Well, whether it costs more than what it costs us 

to have them in a subsidized unit or in a public housing unit, I am 

not quite sure if it is or it is not, but the fact of the matter is that 

we cannot place people in the units that are uninhabitable. 

Mr. CLEAVER. Okay. But isn’t it cheaper to make the repairs? 

Mr. BERNARDI. Well, many people will tell you, if you put a dollar 

into repairs, that takes a dollar away from development. And you 

know, quite honestly, the situation is that inspectors have looked 

at it and have deemed that many of these units—perhaps not every 

single unit in each development, but many of these units are beyond repair. It would be prohibitive, and the best thing to do would 

76

be to take these units, to raze them and to develop mixed-income 

housing. We would do public housing there, affordable housing, 

some homeownership, a bigger footprint, if you will, so maybe we 

could even do more than one-for-one replacement. 

Mr. CLEAVER. Okay. Thank you. 

I have lived in public housing, and I have gone into the public 

housing units in New Orleans, and is it possible for you to understand that the people do not trust HUD? I mean they are absolutely convinced that when you say, you know, ‘‘Instead of repair, 

we are going to rebuild,’’ that next year they will be sitting over 

here in this front row, and then the next year and the next year. 

That is the history. That is the history. 

So I mean, when you tell them, ‘‘Do not worry about it. We are 

not going to repair it, we are going to tear these babies down, and 

we are going to build, you know, some Hollywood-style units for 

you. Just wait,’’ do you understand the paranoia— 

Mr. BERNARDI. I understand that, sir. I was mayor of the city of 

Syracuse, New York, and our housing authority—I worked hand in 

glove with our folks that ran the authority and, obviously, residents who lived there, and I spoke to these folks. When you all 

went to vote, I spoke to a number of them. 

Mr. CLEAVER. I heard it all the way over at the Capitol. 

Mr. BERNARDI. Well, it probably was not yelling. It was not an 

exchange like that. It was a good exchange, and I understand, and 

what we are trying to do—like I heard here, it is going to take 5 

to 7 years. It is not going to take 5 to 7 years. 

Mr. CLEAVER. How long? 

Mr. BERNARDI. It will take 18 months to 2 years once we have 

the necessary approvals, and you know, the developers—the request for proposals are out there. The developers have been meeting with HANO and with HUD, and the people are ready to build. 

The financing is being put in place, the low-income housing tax 

credits, and we are going to need an extension of that, as the 

Chairman and others have indicated. We can do this, and we would 

not do it—the decision would not be made by Secretary Jackson or 

all of us at HUD if we did not feel in the final analysis at the end 

of the day that we would have people in safe, clean housing. 

Mr. CLEAVER. It is the end of the day that they are concerned 

about. 

Mr. BERNARDI. I understand that. But that is why we have the 

vouchers that we have out there. That is why the disaster voucher 

program which started with— 

The CHAIRMAN. Would the gentleman yield? 

The problem, Mr. Bernardi, is that the disaster vouchers are 

vouchers for existing housing, which is in very short supply. As Mr. 

Melancon said, the price is going up. When the number of affordable units has been cut from 80,000 to 30,000, the trouble with 

vouchers is they add to the demand for housing in a way that does 

not help the supply, and vouchers in this case are very problematic 

when there is a physical shortage of housing. 

Mr. BERNARDI. That is true, but these vouchers are not just 

being used in Louisiana. They are being used all over the country. 

People have been displaced, and what we would really like to accomplish here is—those 25,000 vouchers are now down to 12,000 

77

disaster vouchers that are out there. Some people have made their 

way and have been able to return home, wherever home was initially. 

Now we need to ensure—of that 12,000 that are out there still 

on disaster vouchers, a significant number of that is public housing 

but also some Section 8 vouchers, some housing that we deal with, 

the FHA, 202, 811, our senior citizen programs or disabled programs—we need to continue to make sure that we bring everyone 

home but that we place them in a situation. The same thing with 

the Road Home program, I think. Some of the difficulties— 

The CHAIRMAN. Do not get diverted or we will never get out of 

here. 

Mr. BERNARDI. The fact is that it is taking time. It is taking 

more time than anyone would like, but we really want to make 

sure that we utilize all of the resources we have in cooperation 

with the Louisiana Recovery Authority, and Mississippi and the 

other States as well, to put something down at the end of the day 

that people can be proud of, that they can live in and feel safe in 

and that will be a house that they can be proud of in a community. 

I have been down there just as you have, sir, and I can tell you 

the situation. Housing, by itself, is not going to do it. That is why 

we passed action plan after action plan at HUD. With the amount 

of money that these gentlemen have talked about, you know, there 

needs to be infrastructure work. I mean, you need to rebuild these 

neighborhoods. You cannot just rebuild some public housing and 

put it up there without any amenities or anything around it. This 

is a daunting process, and we are proud of what we have done with 

our disaster voucher program. The IG gave us tremendous grades 

for it. Imagine that. 

The CHAIRMAN. We are off the—does the gentleman have any 

further comment? 

Mr. CLEAVER. I just want to know what approvals you need. I 

mean what do you want us to do? What do you want us to do to 

help make this happen as quickly as possible? 

Mr. BERNARDI. I know Chairwoman Waters has been meeting 

with Secretary Jackson, looking to see if we can come to some sort 

of resolution with the proponents and opponents of this and take 

it out of the hands of the judiciary and go ahead and give us the 

opportunity to proceed with the redevelopment. 

The CHAIRMAN. The Chair will submit statements from Habitat 

for Humanity, the American Association of Homes and Services for 

the Aging, the National Association of Housing Redevelopment Officials, the National Association of Realtors, the Financial Services 

Roundtable, Volunteers of America from Greater New Orleans, and 

the National Association of Home Builders. 

Is there any objection? 

Hearing none, they are included. 

I just have an announcement. The gentlewoman from California, 

the chairwoman of the subcommittee, has of course been very diligent in her attention to this. She is now in a meeting with the 

Speaker on probably the only issue that could have taken her away 

from this hearing, namely, what we should be doing about the war 

in Iraq. So I assume people will understand her temporary absence. 

She is monitoring this through her staff, and she will be back soon. 

78

The gentleman from Louisiana. 

Mr. BAKER. I thank the Chairman. I shall be very brief. 

I want to turn for a minute to Mr. Garratt about emergency response deployment. We just recently acted in the last Congress to 

adopt a provision requiring the agency to evaluate the most effective taxpayer remedy to the emergency shelter provision, which has 

led to a discussion for what is now called ‘‘Katrina cottages.’’ 

As I understand the deployments made in the early months of 

the storm and continuing today, there were on average about 

$70,000 of expenditure for each siting and occupancy of trailers deployed to meet the needs of displaced individuals. We have a study 

indicating that modular housing on slabs could have been constructed for much less money in about the same timeline that it 

took to find the sites, get the infrastructure in place and prepare 

the units for occupancy. 

Has the agency in the interim, since the passage of the bill until 

now, given thought to moving toward this permanent remedy? Because the legislation removed the obstacle that previously barred 

the enterprise from doing permanent solutions. You were mandated 

to waste money. In this case, you now have the option to evaluate 

and to decide the best course of action. 

The reason for asking this is as follow-up as there has been a recent announcement of additional trailers being purchased when it 

appears that we have a very significant problem in finding acceptable sites on which to put the trailers. They are not being decidedly 

helpful in the face of another storm coming on land. It would seem 

moving to a modular structure would be safer for the occupants. 

Has there been discussion, evaluation, any consideration of moving toward a permanent remedy as opposed to the trailer solution? 

Mr. GARRATT. Yes, sir, and thanks for asking the question. 

We stood up a number of months ago an entity called the Joint 

Housing Solutions Group, and that Joint Housing Solutions Group 

was charged specifically with going out and looking at the universe 

of potential replacement structures for the standard travel trailer/

mobile home response that we have had in the past. We have 

money that we assigned to that project. Then we got some contractors supporting that activity, and they also linked up with the $400 

million alternative housing pilot project. They are going to be involved in the evaluation portion of that, working with HUD, to help 

evaluate the effectiveness of the projects that were preliminarily 

approved for that project. 

Mr. BAKER. Let me make this a little simpler. This thing keeps 

jumping in and out. 

Have you stopped the acquisition of new trailers at this point? 

Mr. GARRATT. No, sir. We are still procuring new UFAS compliance trailers in accordance with the settlement that we reached 

under the Brown litigation. 

Mr. BAKER. But why is it necessary to purchase additional if we 

have significant numbers not deployed and not occupied and not 

even ready for occupancy? Modifications could be made to the existing inventory much less expensively than acquiring new property 

and storing it not to be used. 

Mr. GARRATT. Sir, I heard you mention that before. You mentioned a figure. You thought that it would cost about $1,000 to retVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00084 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
79

rofit those mobile homes to make them UFAS-compliant. If that is 

true, then you have a really good point. I am not familiar with that 

figure or where that came from, but I made a note that I want to 

go find out. 

Mr. BAKER. I got that from an industry person. 

Mr. GARRATT. If that is in fact true and we can retrofit those for 

$1,000, then, yes, we have no business going out and ordering new 

trailers under new specs to replace them. 

Mr. BAKER. And can you just speak briefly, because I know we 

have been here forever, as to the outrageously high administrative 

costs associated with the administration of these programs, not any 

particular one? 

In the course of evaluating the money sent to the State, from a 

Louisiana perspective only, there was one quarter in which the administrative cost—and this was early on. I guess maybe there was 

some ramp-up expenses that could justify it possibly, but anything 

over 3, 4, 5 percent in the business world of administrative cost to 

administer a pot of money starts raising flags. And when you get 

over 20, something has to be wrong, and this goes to travel. I even 

found a category I did not know existed before. It was a category 

for the transport of things. Apparently, if it is something that has 

a shelf life of longer than 12 months and it is an expensive item 

in Dubai, you buy an airplane transport ticket to fly it as opposed 

to renting one locally. It was something that was an anomaly to 

me. I never knew we had the transport of things as a budget category, but it was in there. 

What can we do going forward? Not to be so much concerned 

about what has transpired. You cannot get that money back. Can’t 

we develop a better model for emergency response and getting 

housing to people who need it without that level of administrative 

expense? 

Mr. GARRATT. I agree, sir. I am not familiar with the specific programs to which you refer that we are paying 20 percent in an administrative fee. 

Mr. BAKER. I am at the end of my time, but I got it off the Web 

page where it says ‘‘administrative expense,’’ and they have a 

bunch of subcategories, and down at the bottom, they give you the 

numbers. 

Mr. GARRATT. Can I follow up with you on that analysis? 

Mr. BAKER. Absolutely. I will give you my data. 

Mr. GARRATT. Can I also add just one clarification? 

Regarding the $70,000 for installing trailers, that does not apply 

to the 80 percent of travel trailers that we place on individuals’ private sites. 

Mr. BAKER. In broad definition, what I really was talking about 

is the acquisition, transport, and preparation of sites. Getting the 

lot ready for a person to take the key and walking into his trailer, 

I am told, averages in excess of $70,000. 

Mr. GARRATT. I would say, for a number of group sites that we 

had to develop from scratch, that there were some pretty high costs 

associated with them. Yes, sir. 

Mr. BAKER. I yield back. 

Mrs. MALONEY. [presiding] Thank you. 

My colleague from Massachusetts, Mr. Lynch. 

80

Mr. LYNCH. Thank you, Madam Chairwoman. 

I also want to thank—I know she is in another meeting with the 

Speaker—Ms. Waters for holding this hearing and also the ranking 

member. 

Like my colleague from Missouri, I grew up in public housing—

for me, the housing project in South Boston, Massachusetts—but I 

lived there for 15 years, and while it was a very tough neighborhood, the one thing that could strike fear into the hearts of anyone 

in public housing was to hear the words, ‘‘Hello, I am from the government, and I am here to help.’’ I think that for some of my 

friends in Louisiana and Mississippi that their feelings must be 

pretty much the same. 

I guess my questions are more for Mr. Bernardi and Mr. Garratt. 

I know that the current disaster voucher program—I gather the 

money comes out of FEMA, but it is administered by HUD. That 

is scheduled, as I understand it, to expire sometime in the fall, so 

we have about 6 or 7 months left, and at the same time—I think 

it is section 408—the rental assistance program run by FEMA is 

also scheduled to phase out in a few months. 

What assurances do we have for a lot of the families who are relying on that right now? And this includes some of the poorest families, some of the families who are in the toughest situations. They 

are homeless. What are we doing right now, because that is not a 

long way off? What are we doing right now to make sure that those 

families who really are in a tough spot will continue to get some 

type of support? 

Mr. BERNARDI. Mr. Lynch, in the disaster voucher program, you 

are correct, it is due to expire, I believe, September 30th of this 

year. And I mentioned earlier that we started with 30,000 families. 

We are down to about 12,000 families who are still using the disaster voucher program. 

At that time, the resources that we received were approximately $390 million for that program. If they are expended, those individuals would go back to the voucher that they had, the tenant-based 

voucher. They would not be without a voucher. We had that in reserve. The HANO, New Orleans Housing Authority, when that 

went down, the vouchers followed the people, and so HANO is still 

being funded year after year, as are our other public housing authorities in Mississippi where those vouchers are available and will 

be given to those individuals when the disaster voucher program 

sunsets. 

Mr. LYNCH. And, just so I understand, a lot of these people were 

wiped out completely in terms of their homes, where they were living, their belongings. I understand there has been some difficulty 

in their verifying their previous voucher. Are you telling me that 

has been taken care of at this point? 

Mr. BERNARDI. Well, our responsibility which we met—and I 

think we did it very well—was for everyone who was part of our 

program prior to the disasters that struck that we were responsible 

for, and we have been using the disaster voucher program for that. 

But as I just mentioned a moment ago, those funds—there is a reserve fund there, and those people will go back to their regular 

voucher program. 

Mr. LYNCH. Okay. Thank you. 

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Thank you, Madam Chairwoman. 

Mrs. MALONEY. Mr. Ross, would you like to ask any questions? 

Mr. ROSS. Yes. Thank you, Madam Chairwoman. 

You know, I have a confession to make. Sometimes this problem 

seems a long way away for me. I did not grow up in public housing. 

I have not visited Katrina. I have read about it, saw it and so forth. 

But I guess the question just from somebody who has been sitting 

here today is: Is anybody who is trying to wrestle with this whole 

problem taking the 30,000-foot viewpoint of this and saying where 

is the—I have heard a lot of advocates sort of defending public 

housing today, and I have never really had a high view of it. It 

seems in the Chicago area there have been people trying desperately to get out of a trap of public housing. 

Could you offer any insight to a suburban Chicago district like 

I represent—where is the creativity and the opportunity to change 

the dynamic for people who got dealt a pretty difficult set of cards, 

because it strikes me that the way the debate is being framed right 

now it is simply to put it back the way it was. 

Well, isn’t there an opportunity there to change this to make it 

better? And where is the opportunity for folks to come out of a 

very, very difficult situation and not just go back into a public 

housing situation but into something that is actually transforming 

and into something that creates far more opportunity? 

I have not heard—and I have been in and out, admittedly, which 

is why I was a little bit sheepish in asking questions because 

maybe you discussed this earlier, but I have not sensed that in the 

time that I have been here, maybe just kind of casting a bigger picture. 

Mr. BERNARDI. With public housing, I did indicate that in New 

Orleans, there are four complexes there that HANO has indicated 

would be demolished and rebuilt pretty much to make it simplistic, 

but it is the fact that it would be rebuilt in a different way. It 

would be rebuilt so that it would not just be public housing. There 

would be affordable housing. There would be market rent housing 

there. There would be homeownership, making that footprint bigger as to where they are right now, to expand it, to put amenities 

nearby it. 

I mentioned earlier this is going to take—it is not just housing. 

To realize what you talked about—to provide more opportunity, a 

better quality of life—we need to improve neighborhoods, not just 

a particular housing complex but everything that is around it. And 

we have approved action plans for all States, but especially Mississippi and Louisiana, where I believe I have faith. I believe—and 

I am a positive person—that it will come together, the infrastructure, the infrastructure that is going to be needed to develop these 

communities, to redevelop them and to take out the traditional 

three-, four-stories high of public housing. You are isolated. 

You know, in real estate, they say location, location, location. 

Well, folks in public housing, they deserve a good location as well. 

And we can make all of this happen if we just all coordinate together. Coordination, coordination, coordination, and that is what 

we do with our Federal partners. That is what we are doing with 

the folks who are sitting here at this table. I mean, they will tell 

you that we are in constant communication with them. 

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There has been some talk about Louisiana, if I may, that they 

were late in receiving their resources, but they had amendments to 

their proposal, and those amendments were to try to make it better, and then they had difficulty—not difficulty, but they had to 

have the approval of their legislature. So you cannot really compare Mississippi with Louisiana. 

To answer the question on public housing, we used HOPE VI 

moneys in Chicago and in Atlanta. And you build communities, you 

do not build back just public housing. You have seen enough, and 

I have as well, where you go through a community. You can spot 

the public housing right away. Oh, that is public housing. We do 

not want to do that. We want those people, like everyone in this 

country, to be part of a neighborhood, to be part of a community. 

The CHAIRMAN. I thank the gentleman. 

I am about to recognize the gentlewoman from New York, but I 

did want to say, Mr. Garratt, before you leave, that I have consulted with a few Members on this dispute between the Louisiana 

Recovery Authority and FEMA, and I do not take much hope when 

you use words like ‘‘impasse,’’ and so I will tell you it is highly likely in my view—and I have talked to some Members on the other 

side—that we may just pass a bill on suspension, directing FEMA 

to comply. The notion that this money should be held up by this 

kind of dispute over the rules is very frustrating to us, and I hope 

it can get resolved. But if it is not resolved very soon, you can expect a bill to come to the Floor from this committee, I think overwhelmingly supported, that would simply direct FEMA to withdraw its objections. I am sure if you can work something out, we 

would be glad to do that, but I do want to put you on notice that 

we are very frustrated by this. 

Mr. GARRATT. Thank you, Mr. Chairman. 

The CHAIRMAN. If you want to say something, you may. 

Mr. GARRATT. We are also very frustrated, and we are also interested in getting this resolved, but all I would suggest is that you 

take a look at FEMA’s reasons for this issue. Again we are talking 

about, from our perspective, issues of potential discrimination, age 

discrimination, of equity and impartiality, and the delivery of that. 

We think— 

The CHAIRMAN. We would be glad to look at it. 

Mr. GARRATT. —those are important issues. 

The CHAIRMAN. We would be glad to look at it, and we would be 

interested to see what people in the area thought as well, but we 

do urge you to get it resolved, because if it is not resolved, somebody has to resolve this and we would appear to be the only ones 

who can. 

The gentlewoman from New York. 

Mrs. MALONEY. Thank you, Mr. Chairman. 

I want to go back to one of the things that Mr. Frank was talking 

to Mr. Garratt about, and that was, I believe, if I wrote it down 

correctly, the 408 funds that you could not use because it was considered illegal to use those funds. 

Mr. GARRATT. Are you referring to the 403-to-408 conversion discussion that we had, ma’am? 

Mrs. MALONEY. Yes. 

Mr. GARRATT. Okay. 

83

Mrs. MALONEY. I wanted to ask you, when you say it was illegal 

to use them, was it illegal because we in Congress had written it 

that way, going back whenever it was enacted, or was it because 

that is the way the Justice Department told you it was illegal? 

Mr. GARRATT. I think it was a combination of the interpretation 

of the Stafford Act and the regulations that we have to support the 

Stafford Act. 

Again, I need to make the case that using 403 and the purpose 

for which we began to use it as creatively expanding the sheltering 

to include hotels, motels and apartments was creative, but it was 

not illegal to use it for that purpose. When we did our disaster-specific guidance, I said that we were going to do this for 12 months, 

or we authorized States to sign apartments up for 12-month leases. 

Subsequent to that, it was determined you cannot do that for that 

length of time under that authority. 

So it was not that the use of that was the problem. It was the 

length of time that we were going to employ that. It was essentially 

an emergency protective measures authority for an extended period 

of time. You can only do that for 6 months. And as a result, it was 

the determination that was made. We had to look for ways to transition those individuals out of that program into another one. Because we only had the 408 program available to us, some of the individuals receiving 403 assistance fell out of that because they 

were not eligible for 408. 

Mrs. MALONEY. Well, I was just wondering. Being that it was obviously, you know, a collective bargaining of where the rules came 

from, did you come to any of the chairmen to see if you could do 

a technical change for a while? Because we were reacting very fast 

here in Congress in getting the funds that needed to be done, I was 

just wondering if you had come to us to see if, you know, we could 

have changed the wording around so you would not have had to go 

through everything and then cause, you know, some hardships on 

some of the families. I am just curious about that. 

Mr. GARRATT. Ma’am, I am not personally aware that any of the 

chairmen were approached. 

Mrs. MALONEY. In hindsight now, do you think that might have 

been a good idea, being that Congress was willing to do whatever 

we could to help you out? 

Mr. GARRATT. Yes, ma’am, I would agree. In hindsight, that 

would have been a good idea. 

Mrs. MALONEY. Well, hopefully, you will, you know, remember 

that. If you have a problem, come to us. You know, we are trying 

to help everybody. 

Just one quick question. I know going back—and I know some 

of the activists, you know, were talking about it. With FEMA as 

lead Federal agency on housing response to Hurricane Katrina, I 

know that there was here in Congress some debate about that. But 

I know that a lot of the activists had basically asked if HUD could 

come up—they urged HUD throughout the process for HUD to play 

a more active role in the housing response to Katrina. 

Has HUD actually developed a long-term plan for recovering permanent affordable housing in the Gulf? 

Mr. BERNARDI. We have had conversations in the planning stage 

with FEMA to look toward the future, unfortunately with other disVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00089 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
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asters, where we would take responsibility after the initial 30- or 

60-day emergency to look at the temporary housing that FEMA 

presently is responsible for. There are about 34,000 families who 

are located throughout the country who are using FEMA vouchers. 

The majority of them, many of them are in Houston and in other 

parts of Texas. 

Mrs. MALONEY. Are you going to try the new plan with what just 

happened in Florida to see if that actually works, you know, with 

all of the homes there that were knocked down and gone? 

Mr. BERNARDI. The plan is to look at the possibility of handing 

that off to HUD where we would, obviously, have the expertise and 

we have the administration in place. It would take additional resources, and it would take a funding level, aside from our appropriation, to do that into the future, but yes, we are looking at that. 

Mrs. MALONEY. And I think one of the things, you know, that 

you were talking about earlier on looking at a sustainable community—I mean, I think that is the term. We have a project like that 

back on Long Island where I live. But with that being said—and 

I think here is where a lot of us get nervous about it. 

I think all of us agree that you have to have a sustainable community, but we are concerned about how you are getting there, 

where those who need housing are going to go. Because I know in 

my area, they want to knock down several HUD buildings. Where 

are the people supposed to go until these new buildings are built? 

That is our concern. 

Mr. BERNARDI. Anytime there is a demolition that HUD is involved in, those tenants all receive a voucher. It is a voucher that 

they utilize until they can either be back into that particular building, if it is being rebuilt or redeveloped, or they use that voucher. 

It is portable, they can use it anywhere—and also in the area 

where they are from, of course. 

Mrs. MALONEY. But here is the problem, and I take it this is 

what we are hearing on New Orleans. Prices are going up. On Long 

Island, someone who might be in a Section 8 building, getting 

help—if they were kicked out I can guarantee you, because we 

have such a short supply of apartments anyhow, that they would 

not be able to find an apartment to live in. We found that with our 

military. They went to tear down the housing in Mitchel Field, by 

me, and they were going to give each family $1,500 a month. 

Now, most of the military families had two to three children. I 

invited the admiral to come to Long Island and try to find any 

housing with three bedrooms or even two bedrooms for $1,500. 

They could not find any. We have rebuilt the area for the military. 

With that, I yield back the balance of my time. 

The CHAIRMAN. I thank the gentlewoman. 

I just want to again mention something that people should know 

about. I was very pleased to hear of the conversation between HUD 

and FEMA on sorting out the housing responsibility. I frankly was 

a little surprised to learn that FEMA was still in the housing business 18 months forward, instead of claiming that is not what they 

are set up for. 

I have already spoken to Ms. Waters. We spoke to Chairman 

Thompson of Homeland Security. It is our intention to look—and 

I think it probably needs some legislation here, and we would be 

85

glad to work with you to effectuate what you were talking about, 

Secretary Bernardi; namely, to put FEMA firmly in charge in the 

emergency phase and then have HUD do the housing going forward 

with appropriate additional financing, since we do not want to put 

other housing at a disadvantage. 

That is something in the longer term, later this year, we will be 

looking at, and we will be glad to work with you on that. 

That appears to conclude— 

Mr. BACHUS. Well, Mr. Chairman, as opposed to asking a question, I would just like to offer a quote from our third panel if I 

could, and I can ask Mr. Bernardi how it affects what they are 

doing. But on our third panel, we have the testimony of Sheila 

Crowley, who is president of the National Low Income Housing Coalition, and I found it interesting that she makes this statement in 

her testimony: ‘‘The Housing Authority of New Orleans has long 

had the reputation as a dysfunctional and corrupt institution, 

plagued by mismanagement, rapid leadership turnover, and interference in its operation by local officials. The HANO authority has 

allowed its properties to deteriorate into seriously substandard condition or allowed its properties to deteriorate into seriously substandard condition due to the poor quality of its stock, and its 

many management deficiencies of housing authority was taken 

over by HUD.’’ 

You have been criticized for your plan to replace the 7,500 units, 

about 2,000 of them which were vacant before the hurricane. I 

guess, did your decision to replace these units, as opposed to repair 

them, have something to do with what she says, that a lot of the 

properties have deteriorated into seriously substandard condition 

and were of poor quality to begin with? 

The CHAIRMAN. The gentleman can take a minute or two to answer, and then we have to move on. 

Mr. BERNARDI. Yes. The short answer is yes. 

What I would like to say is that a housing authority, when it is 

not managed correctly—there are 2,400 housing authorities in the 

United States. Of those that are managed correctly, of those that 

have people that have good boards, you find that they run as well 

as they possibly can. There is no way that we at HUD and myself, 

that I want to place anyone in a situation. 

In talking to the tenants here from HANO, they complained an 

awful lot about the housing authority and how they were not paying attention. What does that lead to? That leads to deterioration 

of structure. That leads to less enforcement of the law. That leads 

to people not caring. 

We can provide all of the resources here, but at the local level—

excuse me—it has to be done there, and we are always willing to 

help and provide all the assistance that we can. We want to place 

these folks in a better living condition. 

The CHAIRMAN. I thank the witnesses, and we will move on to 

the next panel. I will ask people to move quickly, please. Speed will 

have to take precedence over graciousness at this hour. We need 

people to leave quickly, sit down and get started. 

I will recognize the gentleman from Texas who wanted to make 

one introduction. 

86

Mr. GREEN. Thank you, Mr. Chairman. I do have the privilege 

pursuant to— 

The CHAIRMAN. The gentleman will suspend. 

The people will take their seats and be quiet, and please close 

that door. Close the door, please. 

The gentleman from Texas. 

Mr. GREEN. Thank you, Mr. Chairman, for according me the 

honor of introducing Mr. Kirk Tate. 

Mr. Tate is the chief executive officer of Orion Real Estate Services. This is a Houston company, and Orion manages over 16,000 

apartments throughout Texas and Colorado. Mr. Tate has over 30 

years of experience in the apartment industry, and is a past president of the Houston Apartment Association as well as of the Texas 

Apartment Association. Mr. Tate served on Mayor Bill White’s 

Hurricane Task Force for the City of Houston, and he has acted as 

a liaison between the apartment owners and the operators and the 

City of Houston. And Mr. Tate is in a position, Mr. Chairman, to 

address and discuss the damages suffered by Houston landlords as 

a result of the lease arrangement between the city and FEMA, and 

FEMA’s being negated prematurely. 

The CHAIRMAN. I thank the gentleman. 

We also have the aforementioned and widely quoted Ms. Sheila 

Crowley, president of the National Low Income Housing Coalition, 

who will not have to give her whole statement now since we already have part of it; Mr. Ghebre Selassie Mehreteab of the National Housing Partnership, with whose work I am very directly, 

personally, and favorably familiar; Mr. James Perry, executive director for the Greater New Orleans Fair Housing Action Center; 

Mr. Edgar Bright, who is president of Standard Mortgage Corporation of New Orleans and is here on behalf of the Mortgage Bankers 

Association; and Dr. James Richardson, who is a John Rhea professor of economics at the E.J. Ourso College of Business at Louisiana State University. 

The CHAIRMAN. We will begin with Ms. Crowley. 

STATEMENT OF SHEILA CROWLEY, PRESIDENT, NATIONAL 

LOW INCOME HOUSING COALITION 

Ms. CROWLEY. Thank you, Mr. Chairman. I am happy to be here 

today, and I appreciate the invitation. 

A year-and-a-half after the storms hit the Gulf Coast, we do not 

really know how many people are still displaced, but certainly it is 

no less than 150,000 families, and the many problems we are having getting rebuilding funds into the hands of middle-class homeowners pale in comparison to what has and has not happened for 

low-income people. It is important to distinguish between the temporary housing response and the housing building response, and to 

understand how they are related, to attempt to further comprehend 

the complexity of what faces us. 

In the interest of time, my oral testimony will cover the rebuilding issues, and I hope to discuss the temporary housing issues in 

the question period. 

In regard to the public and assisted housing damaged or destroyed on the Gulf Coast, it was HUD’s responsibility to determine 

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ing and request whatever amount was not covered by insurance 

from Congress. That did not happen. Rather, HUD has relied on 

the community development block grant funds and the low-income 

housing tax credits that were allocated to the States for the purpose of meeting the housing needs of the vast numbers of families 

who did not live in federally subsidized housing. That was wrong, 

and it has delayed the reopening of public and assisted housing. 

We recommend the following principles in determining the future 

of public housing developments on the Gulf Coast: 

One, any public housing that was evacuated but can be reoccupied with repairs only should be repaired and reopened as soon as 

possible. 

Two, there should be a moratorium on any demolition and redevelopment of public housing on the Gulf Coast for the foreseeable 

future—any that is currently occupied, for the foreseeable future. 

Three, in those cases where an independent evaluation determines that the public housing is beyond repair and must be partially or completely redeveloped, HUD must assure one-for-one replacement of all units, the absolute right to return for all tenants 

in good standing, and authentic participation in the redevelopment 

planning by displaced residents who desire to be involved. 

A word about the situation of public housing in New Orleans. 

HANO has long had the reputation of a dysfunctional institution, 

and Mr. Bachus went on with a broader description of that. Due 

to the poor quality of its stock and its management deficiencies, 

HANO has been in partial receivership, and I do want to correct 

my written testimony. It has been in partial receivership since 

1996. It has been a troubled housing authority since 1979 and has 

been in full administrative receivership since 2002. Please note 

that of all of the public housing agencies nationwide, only 15 have 

ever gone into receivership since 1979. So these are the most seriously dysfunctional agencies. 

If a troubled agency is taken into administrative receivership 

under the statute, HUD is required, after 2 years, if it has not been 

able to restore it to a nontroubled status, HUD is required to turn 

it over to a judicial receiver. That is the law that was passed in 

1998 with the Public Housing Reform Act. HUD has long overstayed its time as the receiver for HANO, and we think that a very 

immediate resolution to many of these concerns would be to move 

it into the hands of a judicial receiver. 

There is no discernible difference between HANO and HUD at 

the moment as decisionmaking authorities, and the conflicts of interest of HUD as the HANO receiver are quite problematic. HUD 

has to review demolition applications from public housing agencies 

and warrant that the necessary engagement of resident and community input has occurred. HUD and the public housing agency 

are one and the same, as are HUD and HANO. There is no one to 

protect the interests of the residents or the community. 

Now, a very troubling situation has arisen in this particular situation. HUD, as HANO, has applied to the State of Louisiana for 

both GO-ZONE low-income housing tax credits and CDBG disaster 

recovery funds for the redevelopment of four public housing complexes in New Orleans. As the Federal agency responsible for overVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00093 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
88

sight of the CDBG funds, HUD should not be competing for these 

funds as a local grantee. It is simply inappropriate. 

Recommendations. Congress should direct HUD to immediately 

appoint a judicial receiver for HANO. HUD should adopt the rules 

and regulations for all public housing in the affected areas that reflect the principles outlined above, and HUD should immediately 

issue an RFP for independent contractors to assess the current condition of all public and assisted housing and estimate what additional resources are needed to complete repairs on reconstruction, 

and Congress should appropriate those funds. We have no comprehensive understanding about what the repair needs are. 

Turning to the rest of the affordable housing needs on the Gulf 

Coast, the major Federal resource for rental housing was the allocation of low-income housing tax credits. The initial estimate was 

that these tax credits would produce 54,000 units of public housing 

in Mississippi and Louisiana. I will note that in Louisiana alone, 

they report the loss of 82,000 rental housing units. Because of construction costs that have skyrocketed, the number that will be produced for these tax credits may be as low as 25,000, and many of 

those will be lost if Congress does not extend the placed-in-service 

dates of tax credits as you have been requested to. I will now turn to Mississippi. Of Mississippi’s $5.6 billion in CDBG’s, $3.2 billion was dedicated to a homeownership program; 

$100 million was set aside for public housing, and $125 million for 

a rental repair program. Mississippi still has $1.5 billion for which 

it has no plans at this point, and meanwhile, 30,000 households in 

Mississippi remain in FEMA trailers. In a recent study done by the 

Columbia University National Center on Disaster Preparedness, 

HUD assessed a serious deteriorating quality of the mental and 

physical health of the folks there. 

I realize that I am running out of time. Let me close with a 

statement about the need for additional resources going into the 

Gulf and that it should be resources that are dedicated to the rental housing needs of the lowest income population. To date, no resources have been dedicated to producing rental housing for people 

with incomes below 30 percent of the area median. In New Orleans— 

Ms. WATERS. [presiding] Ms. Crowley, you will have to wrap it 

up and move forward so we can make sure our other panel gets up 

here sometime today. 

[The prepared statement of Ms. Crowley can be found on page 

267 of the appendix.] 

Ms. WATERS. Next, we will have Mr. Tate. 

STATEMENT OF KIRK H. TATE, CHIEF EXECUTIVE OFFICER, 

ORION REAL ESTATE SERVICES, ON BEHALF OF NATIONAL 

MULTI HOUSING COUNCIL 

Mr. TATE. Chairman Frank, Ranking Member Bachus, and distinguished members of the committee, my name is Kirk Tate, and 

I am the chief executive officer for Orion Real Estate Services 

based in Houston, Texas. 

In the days, weeks, and months following both Hurricanes 

Katrina and Rita, I acted as the liaison between apartment owners 

and operators and the City of Houston. I am here today on behalf 

89

of the National Multi Housing Council and the National Apartment 

Association. I will focus my statement on the lessons we learned 

with regard to the Federal response to providing rental housing assistance to displaced families and the recommendations we have for 

housing long-term disaster evacuees. 

Since I am from Houston and my firm manages 48 properties 

throughout the Houston area, I thought my own insight would be 

helpful as we began to plan for future disasters. At the onset of any 

disaster, FEMA should have a process to quickly determine whether the need for post-disaster housing will be a short-term or a longterm event. Apartments are not an appropriate response for disasters where evacuees will be moving home to rebuild within a matter of days or weeks. 

Hotels are not cost efficient to house people in the long term. 

Apartments are a much better solution. The inappropriate response 

to what was clearly a long-term housing crisis resulted in millions 

of wasted Federal dollars. The average hotel/motel rate at $59 per 

day works out to $1,770 a month, which exceeds the median cost 

of rental housing, even in some of the Nation’s most expensive 

housing markets. 

In order to provide shelter quickly, many apartment owners lowered rents, waived security deposits and application fees and offered flexible lease terms. Although the apartment industry 

stepped forward to do what was asked of them when Katrina 

struck, our industry would not be as eager to assist in future disasters unless we all learned from the many mistakes that were made 

at the Federal level. 

I would like to first highlight our concerns and then provide recommendations for housing evacuees in the future. We are concerned that the local fair market rent did not provide for an adequate number of apartments. We are concerned that with the payment of utilities for the evacuees, the 403 program did not allow 

for us. We were concerned with the rental payment process and 

program. It was a disaster from both an evacuee and an owner perspective. And finally, we did the right thing and housed people 

without a security deposit, which has left owners with no recourse 

for damages or lost rents. 

The future recommendations are as follows: FEMA housing programs were not designed to handle long-term housing needs for the 

future. A single entity should administer the housing response to 

any disaster. While FEMA set no limits on the hotel rates, they 

would reimburse its housing program set a rent ceiling based on 

HUD’s fair market rents, which, in many cases, are below the true 

market rates. HUD’s FMR’s are not sufficient to cover the rent in 

the majority of housing located in any American city, so rent levels 

should be established that more closely reflect the average rental 

costs in the affected cities. By limiting FEMA’s payments to Houston, they restricted the number of apartments available to evacuees 

leaving more evacuees than eligible to apartment units. The Stafford Act should be permanently amended to allow utility payments 

for all housing-related programs. It could also allow for utility payments sufficient to cover the actual cost of the utilities. 

It took way too long for FEMA to process rental payments to 

apartment owners. In the future, money should flow through the 

90

government through a corporate lodging consultant type entity to 

ensure the evacuee has housing and the owner gets paid. And because FEMA’s housing program did not provide evacuees with 

funding to cover security deposits, owners are now left without recourse for damages. Future Federal housing efforts should ensure 

that mechanisms exist to cover a security deposit. 

In conclusion, when Katrina struck, the Nation’s apartment owners did everything right. They stepped up and they worked with 

local communities to provide housing and other services to those in 

need. 

As an industry, we are very proud of our actions during a time 

of unprecedented national need. We took on business risks and potential costs inherent in solving such a massive housing crisis. 

Would we do it again? We would certainly like to, but after the 

Katrina experience, many apartment owners will be reluctant to 

accept a sizable number of evacuees unless they are convinced that 

the government has learned from its mistakes and has created a 

better disaster housing program. 

We look forward to working with Congress to ensure that future 

evacuees and the cities that help them are not burdened with confusion, debt, and heartache. 

I thank you for the opportunity to testify on behalf of the National Multihousing Council and the National Apartment Association and wish to offer our assistance to this committee as you continue your important work. 

[The prepared statement of Mr. Tate can be found on page 379 

of the appendix.] 

Ms. WATERS. [presiding] Thank you very much. 

Next we will have Mr. Mehreteab. 

STATEMENT OF GHEBRE SELASSIE MEHRETEAB, COCHAIRMAN AND CEO, NHP FOUNDATION 

Mr. MEHRETEAB. Congresswoman Waters, Ranking Member 

Bachus, and committee members, I thank you for inviting me to 

speak today. I am the chief executive officer of the NHP Foundation headquartered in Washington, D.C., with a regional office in 

Baton Rouge, Louisiana. In 1989, the National Housing Partnership, a chartered corporation, established the NHP Foundation, a 

nonprofit organization to address America’s affordable housing crisis. Since 1994, the NHP Foundation has preserved 44 properties 

totaling approximately 9,000 units in 14 States. Included in this 

portfolio are four properties damaged as a result of Hurricane 

Katrina amounting to 952 units in New Orleans and the vicinity. 

As many of you know, one of the challenges in the production of 

affordable housing is a financing gap primarily due to the increased cost of construction and the cost of insurance premiums. 

Despite the government’s attention and the commitments of the reconstruction efforts, this financing gap is real and has significantly 

impeded the rebuilding efforts. There is now a significant need for 

grant funds from financial institutions and corporations. We believe private sector institutions, especially those that have an interest in housing, can provide grant funds and close this financing 

gap. 

91

To the extent of this capacity, the NHP Foundation has met the 

financing challenge through an innovative strategy combining public and private funding. The NHP Foundation plans to build 3,000 

affordable housing units serving approximately 12,000 people in 

the Gulf Coast region. The total cost of this rebuilding effort is estimated to be approximately $300 million. As a result of implementing our financial material, the NHP Foundation has made 

some modest progress on the ground. To date, I am very happy to 

report that we have 1,000 housing units under development and 

2,000 units in the pipeline in the State of Louisiana. 

The total cost of the development of the first 1,000 units is esti- mated to be $100 million. Towards this $100 million, we have implemented a financial structure composed of three funding streams: 

Low-interest, low-income house tax credit equity amounting to 45 

percent of our total funding; community development grant and 

private grants amounting to 25 percent of our total funding; and 

the remaining 30 percent was raised from conventional loans from 

Bank of America and tax-exempted bonds from the Bank of Louisiana. 

Our generous private sector donors included the Freddie Mac 

Foundation, the Ford Foundation, the MacArthur Foundation, the 

Bush/Clinton Katrina Fund, JP Morgan Foundation, and 

NeighborWorks America. The NHP Foundation’s modest progress 

does, in fact, prove that it is possible. Rebuilding is happening very 

slowly at this very moment. Our financial strategy could also serve 

as a model for either for-profit or nonprofit organizations. 

We believe that the mere construction of affordable housing is 

not enough. The NHP Foundation empowers residents to break the 

cycle of poverty by providing supplemental education programs for 

school-aged children and access to health and wellness opportunities. In short, we must work to build America’s next generation. 

It is imperative that all of the people displaced by Hurricane 

Katrina are placed again as soon as possible. We ask that financial 

institutions and corporations increase their grant contributions and 

combine their resources with the private sector and help us close 

the financing gap. This approach will ensure that the Gulf Coast 

is rebuilt and our fellow citizens have the housing they need. 

Thank you for your time. 

The CHAIRMAN. Thank you for your time, namely for 41⁄2 minutes. You are a role model, and not just in housing. 

[The prepared statement of Mr. Mehreteab can be found on page 

352 of the appendix.] 

The CHAIRMAN. Next is Mr. Perry. 

STATEMENT OF JAMES H. PERRY, EXECUTIVE DIRECTOR, 

GREATER NEW ORLEANS FAIR HOUSING ACTION CENTER 

Mr. PERRY. Thank you, Chairman Frank, and Ranking Member 

Bachus, for allowing me to speak today. I regret to inform you that 

housing discrimination persists as a problem in New Orleans and 

Louisiana. I testified before this committee 1 year ago and talked 

about many, many problems that we face. Many of those issues 

persist and new issues have come up, the first issue in zoning and 

policy and discrimination by local governments. What has happened is that local governments have sought to prevent minorities 

92

from moving in through zoning. In 2006, Saint Bernard Parish 

passed an ordinance which restricted the rental of single-family 

homes to blood relatives of the property owners. Because 93 percent of the popululation in the Parish are white, African Americans 

and other minorities will be virtually excluded from renting homes 

in the Parish. The message was that no minorities were allowed. 

In order to fix the problem, my organization filed a lawsuit seeking 

a preliminary injunction prohibiting the Parish from enforcing the 

blood relative ordinance. We were granted that injunction, and we 

are still pushing in that fight. 

Both in the City of Slidell, Louisiana, and Jefferson Parish have 

engaged in comparable discriminatory efforts to restrict housing 

within their borders. Of significant concern for the Fair Housing 

Action Center are actions with regard to public housing. Prior to 

be Hurricane Katrina, the Housing Authority of New Orleans provided housing for approximately 23,400 New Orleans families. In 

addition, there were 10,873 families who were on waiting lists for 

public housing. That demonstrates a need for public housing for 

34,273 families. Well, today, HUD has talked consistently about 

the disaster voucher program and about getting people back into 

public housing but their numbers show only 13,300 families are 

back in public housing, only about 38,000 of the people who needed 

public housing before the storm and even after the storm. This 

means there are 20,973 families who still need public housing and 

who are not being provided that public housing by HUD. We have 

seen that problem in our own work. 

I would add that one of the things that HUD has said is vouchers; we are giving vouchers on top of vouchers. There are two problems. The first is that there aren’t enough vouchers and the numbers indicate that. The second is that landlords consistently deny 

people who show up and say they have a voucher. We have a client 

who is a perfect example of that, a woman named Dasher Corner 

who had a disaster voucher, but ended up living in a car with her 

daughter after the storm because she couldn’t find a landlord who 

would accept a voucher. 

The most difficult thing about Ms. Corner’s case is that she had 

a preference to housing at the renovated St. Thomas housing development in New Orleans. But she was denied that housing because 

HANO had moved its own employees into the housing that was set 

up for her and for other residents of public housing. We ended up 

filing a lawsuit on behalf of Ms. Corner on that case to enforce this 

right to public housing that she and other residents had. 

The CHAIRMAN. When did this happen with HANO? 

Mr. PERRY. We filed the lawsuit in the fall of 2006. The issue 

with their employees moving into the public housing complex was 

right after the storm. 

Mr. BAKER. That was when HANO was under Federal administration. So it wasn’t under HUD, not the old HANO. 

Mr. PERRY. That is the case. So we have advocated on behalf of 

our public housing residents. 

My concerns about public housing are far too excessive for me to 

discuss in 5 minutes. I have included many of them in my written 

comments, but I would invite the committee to talk with me about 

other concerns that we have. 

93

Another issue is one that we talked to this committee about last 

year is discriminatory advertising on the Internet. I opened my 

comments that year and I quoted some of the ads. The first ad that 

I quoted to the committee was, ‘‘I would love to house a single mom 

with one child. I’m not racist but white only.’’ That was an ad that 

appeared on the Net trying to assist people looking for housing 

after the hurricane. We met with staffers of members of this committee and we worked in order to figure out an answer. 

So we said that we would try to see if the lawsuits and so forth 

in that area would work out. Well, so far, those lawsuits haven’t 

worked out, there was a lawsuit against craigslist.com and 

craigslist actually won the lawsuit. It was ruled that they are not 

liable when people post discriminatory advertisements on their 

Web site. 

So I called upon the members of the committee to help to change 

the Communications Decency Act so discriminatory ads cannot be 

posted on the Net. If such ads were posted in The New York Post 

or The Washington Post, they would be held liable and they would 

be illegal. But just because it is an Internet ad, they are given an 

exception. And it is not fair. 

We have specific concerns about issues concerning people with 

disabilities. FEMA has worked to ensure that people are able to 

raise their homes by getting funding through FEMA and other 

sources. The problem is that none of the programs through FEMA 

or anywhere else provide a way for people who use wheelchairs to 

get up into a house after it has been raised. If a house is 10 feet 

tall and you use a wheelchair, you can’t get into it. 

Another concern for people who use wheelchairs or are otherwise 

disabled is that our State adopted a new building code. The building code was a safe harbor. That means that it was okay enough 

so that it passed the test for the Americans With Disabilities Act 

and the Fair Housing Act so that people with disabilities would be 

able to use the buildings that were built under that code. Well, unfortunately, our State gutted those provisions from the building 

code. So we need your help to urge the State to put those provisions back in to make sure that buildings in the city and in the 

State are accessible. 

These are some of our concerns and we have many more, but we 

thank you for the time, and we invite your questions. 

[The prepared statement of Mr. Perry can be found on page 358 

of the appendix.] 

The CHAIRMAN. Thank you, Mr. Perry. 

Before I forget, I want to note the issue of the immunity for the 

Internet is actually not, I think, within our jurisdiction. It is within 

the jurisdiction of the Committees on the Judiciary and Energy and 

Commerce. There is an effort to hold them responsible for content, 

and we will be talking to our colleagues about that fix. 

Mr. Bright. 

94

STATEMENT OF EDGAR BRIGHT, III, PRESIDENT, STANDARD 

MORTGAGE CORPORATION, ON BEHALF OF MORTGAGE 

BANKERS ASSOCIATION 

Mr. BRIGHT. Thank you, Chairman Frank, Congressman Baker, 

Congressman Jefferson, and the rest of the Financial Services 

Committee who are here in attendance. 

After the storm, I was faced with the immediate task of accounting for my staff. All of them and their immediate families were 

safe, but many of their homes were under water, including mine. 

This is a picture of me in a boat coming from my home. 

Shortly after Katrina, we met in Dallas with our data processing 

company in Fannie Mae and began executing our disaster recovery 

plan. Our headquarters were flooded and we could not go back to 

our building for 6 weeks. We moved temporarily to Baton Rouge 

while a Standard Mortgage SWAT team pulled all essential data 

files from our headquarters. We instituted forbearance on all loans 

in the Katrina area. This caused major capital shortages for us. We 

borrowed significant funds to make investor payments and to meet 

payroll. 

We also made sure that our customers had access to their loan 

and insurance information. And we reassigned 75 percent of our 

staff to process the thousands of insurance loss drafts in the ensuing months. 

Of the 28,000 loans we served pre-Katrina, 20,000 were in a 

FEMA-declared disaster area. Of those 20,000 loans, 8,000 were in 

the highest impacted areas. The industry and our regulators also 

responded. The entire industry instituted broad forbearance and 

began to try to contact customers who had been evacuated and who 

were out across the country. The initial period of forbearance was 

critical in the short term, but it was granted at a price. Whoever 

services the loan has a contractual obligation to make payments to 

the investor, whether or not a borrower is making payments. 

The mortgage industry created a working group made up of leaders, servicers, and their trade associations to help work on immediate and longer term public and private sector problems and solutions. 

One of the problems we faced was the end of the first 90 days 

of forbearance when foreclosures usually begin on loans that are 

overdue. Working with all of the stakeholders, we were able to 

avoid disaster, and the industry practice was established that forbearance in the worst impacted areas was continued and should be 

revisited every 90 days. This was a watershed event. Despite predictions of mass foreclosures, virtually nobody impacted by the 

storm has been foreclosed upon. 

Our forbearance policies have worked immediately after the 

storm with almost 5,000 loans that were over 90 days past due. By 

September 2006, that number had fallen to fewer than 17,000, but 

foreclosures were begun on fewer than 4,000 properties, and most 

of these were outside the storm area. The fact that so many loans 

in these States are over 90 days past due, yet foreclosure rates are 

low, shows that there are thousands of people who continue to receive forbearance, about 10,000 people in Louisiana and 4,000 in 

Mississippi. 

95

The cost to the mortgage industry to offer forbearance on this 

scale is enormous. The interest payments that services must advance to investors amount to an average of $10,000 per home per 

year. A reasonable estimate of the total out-of-pocket costs for lenders of these policies is $258 million. 

Congress and the President put the region on the path to recovery by funding the CDBG program. There are important lessons for 

future action, which I discuss at length in my written testimony. 

The National Environmental Policy Act or NEPA, hamstrung the 

States in how they could design their grant distribution program. 

The President should be able to activate the NEPA exemptions for 

the purpose of rebuilding housing. Second, Federal agencies are not 

permitted to give recipients of Federal assistance duplicate benefits. While in theory this makes sense, in practice it is causing deficiencies in funding. 

Third, valuations of damaged properties are often conducted numerous times by numerous agencies. And there should be some 

mechanism to share this information. 

Next, FHA generally pays an insurance claim when it takes title 

to a property as a result of foreclosure. To convey a property and 

convey insurance benefits, FHA requires that the property be 

picked up so it can be sold again. Obviously, events such as 

Katrina causes problems. 

Finally, VA should have the authority to waive requirement and 

declare no bids. The mortgage industry responded admirably to the 

many challenges of Katrina and Rita despite significant costs. We 

will do all we can to ensure that the region is better than ever. We 

have shown our willingness to sacrifice but that will not be enough. 

This is a national problem and national solutions need to continue 

to ensure that the region returns better than it ever was. 

[The prepared statement of Mr. Bright can be found on page 167 

of the appendix.] 

The CHAIRMAN. Thank you. 

Professor Richardson. 

STATEMENT OF JAMES A. RICHARDSON, JOHN RHEA PROFESSOR OF ECONOMICS, E.J. OURSO COLLEGE OF BUSINESS, 

LOUISIANA STATE UNIVERSITY 

Mr. RICHARDSON. Thank you, Mr. Chairman, and members of the 

Committee on Financial Services. I am James A. Richardson, professor of economics in Baton Rouge, LSU. 

One of the items in the call of this committee is to connect the 

housing problems with the economic recovery issues, and I have 

tried to shed some light on that in my testimony. 

Prior to Katrina, there were about 620,000 people working in the 

New Orleans metropolitan area, which is a 7th Parish area. There 

were about 550,000 homes at that time. There was not a housing 

deficiency. 

After Katrina, and in 2006, we had about 450,000 people working 

in that metropolitan area, a reduction of over 30 percent. But in 

terms of housing, housing had declined by over 40 percent. There 

was a deficiency of housing of over 70,000 homes, which was made 

up by trailers, people living with friends and relatives, and by commuting from areas outside the metropolitan area. 

96

Now in the process, one of the results, obviously, is you have a 

shortage of housing, a deficiency of housing. You had price increases. The allowance for military housing in the New Orleans 

area jumped by 44 percent in 1 year. 

The Brookings Institution put out a Katrina index in which they 

surveyed apartment rents and over a 1-year period, they noted that 

apartment rents had jumped by about 44 percent. The New Orleans Picayune Times did a survey of housing from October just before Katrina to October 2006. Apartments jumped by 70 percent. 

Obviously, this has an impact on lower middle income people more 

than it does on other income groups. 

But the other element we need to be aware of is that the housing 

deficiency over the next several years is not going to get any better. 

It is actually going to get a little bit worse if the economy grows. 

If you are able to increase employment over the next several years 

to about 500,000 people working, again, that is only 80 percent of 

what was there before Katrina. The housing deficiency would grow, 

even accounting for the fact that there will be some new buildings. 

And in addition, we assumed that the building would be twice as 

fast as had normally been done in New Orleans before Katrina. So 

housing deficiencies will grow. By 2008, the projection is housing 

deficiencies will be 130,000 homes. 

The question, is how do you make it up? Well, people could still 

be living in trailers 3 or 4 years after Katrina. That is a possibility. 

They have had other homes, as Congressman Baker talked about, 

Katrina cottages. You would have more commuting, or alternatively the recovery just wouldn’t occur. It would be plateaued 

out, flattened out much earlier because there simply is not shelter 

for the workers and their families. 

You know, the question is how can we accelerate that and be upfront. One of my points is we have to have very realistic expectations. We are dealing with a supply issue here. You don’t rebuild 

200,000 homes overnight. In fact, if you are to rebuild them at the 

rate that Louisiana built new homes over the last 10 years, it 

would take 15 years to replace all of those homes. 

So you are talking about not trying to be pessimistic, but trying 

to be realistic and we are talking about a long-term issue. It is not 

going to be over within a year or two. 

Now there are a couple of things that can be done. For example, 

I think it was mentioned several times today about extending the 

tax credits associated with Go Zone. There are about 17,000 units 

that are now underplanned based on tax credits that are supposed 

to expire by December 31, 2008, and that can be moved to 2009 

and 2010. That will permit those 17,000 new units to come online 

in an appropriate way. 

Another element is that they have the Road Home program. It 

has implemented a rental policy or rental program for lower income homes that have connected, they have price controls built in 

based on loans that they give out that will be given—become 

grants after a certain period of time if they maintain that low rent. 

It is going to be a long time process. But I appreciate your interest, 

your commitment, and your concerns. 

Thank you. 

97

[The prepared statement of Mr. Richardson can be found on page 

363 of the appendix.] 

The CHAIRMAN. Let me begin with you, Professor, and that is we 

would throw in the—we think we have maybe $5- or $600 million 

to contribute from the DSE’s. But let me ask you this way. Looking 

at the current branch, forget about any new resources. What we 

heard was uncontested—82,000 rental units were destroyed and 

there is a maximum number, about 32 or 33,000, that can be rebuilt using the CDBG. Do you see any other source under current 

proposals from HUD and elsewhere for making up that deficiency? 

Mr. RICHARDSON. There are no other sources from the government that I can see. Only the private sector decided that it was 

something for them to do. 

The CHAIRMAN. That the private sector would decide that building housing for low-income people from New Orleans was profitable. And the likelihood of that, Professor? 

Mr. RICHARDSON. Well, it is not a very likely thing right now unless there are other things to do. 

The CHAIRMAN. And the private sector is a valuable participant, 

but only with the right kind of incentives, and I think you help us 

make the case for other ways to supplement the resources. 

We ought to be very clear. This is uncontested. Under the current set of public policies in place, the result will be a reduction 

by more than half of the number of rental units available in the 

City of New Orleans. That makes it a very different City; a City 

much harder for low-income people. It will have negative economic 

consequences, as you point out, because of the destruction of rental 

housing and the failure to replace it means you don’t have that 

work force. So then the question is how do we replace it, and to 

Mr. Mehreteab, whose work I am familiar with, obviously we are 

not going to make it all up with the Federal funding, but we talked 

in my office. 

Do I remember correctly, Mr. Mehreteab, that I believe that if we 

put some public resources in there was kind of a gap filler along 

with the extension of the tax credit? Nobody has to waste any time 

talking about that again. That is done. I spoke with Mr. Rangel 

when I went over to vote. He is the chairman of the Ways and 

Means Committee. We will extend those tax credits. I can’t believe 

there were many opponents to that. I would even venture to say 

that it might even pass the United States Senate quickly, although 

I don’t want to bet on it. 

But Mr. Mehreteab and any others, what else can we do in terms 

of resources and what kind of multipliers could we expect if we 

make some resources available? 

Mr. MEHRETEAB. You are right, Congressman. I don’t believe the 

issue is extension of the low-income housing tax credit; one way or 

another it will be extended. As you and I discussed in your office, 

there is approximately $160 million of annual tax credit which 

should generate $15 billion. With that much money, if you take my 

formula of 45 percent, we are talking about, we might be able to 

raise another $10 billion or so. But there is a gap of approximately 

$500- to $800 million. That money is not available in the community. That money is not available to the tax credits. It has to come 

98

from some other institutions that have good reason to believe that 

they ought to do it. 

What we have covered in the—what I presented to you is that 

we were short 10 to 20 percent per project. We went to the Ford 

Foundation, which I happened to have worked there so it was 

much harder to get money, and we went to the Bush and Clinton 

Administrations, and the others, but that is a very, very small 

amount of money. So as you have suggested— 

The CHAIRMAN. I appreciate that, and you said we should find 

some institutions that think they ought to—two that come to my 

mind are Freddie Mac and Fannie Mae, and what they think they 

ought to be able to do ought to be in law. I hope we will go forward 

with that. 

The numbers you give, reassure me that is money that can be 

strategically—that it would leverage the money and we will be 

looking for input from many of you because the gentleman from 

California has correctly said that we now have to focus on how it 

is spent and how it is done appropriately. We will be looking at 

that. 

I am going to yield at this time and recognize the ranking member. 

Mr. BACHUS. I thank the chairman. 

What the chairman is talking about is a housing fund that he 

has proposed under the GSE bill, the funding for the first 2 or 21⁄2

years would go to Katrina rebuilding; Katrina housing is what he 

is referring to. 

Let me just say one thing. Reading your testimony, it was all 

very interesting. 

Ms. Crowley, one thing I noticed is that we have heard a lot 

about practice, the parity of funding between Mississippi and Louisiana, but one thing you mentioned, I don’t know if you mentioned 

this in your oral or written testimony, you said that Texas sustained direct damage from Hurricane Rita and sustained more 

Katrina evacuees than any other State. So far, Texas has received 

only 3 percent of housing funds. So in your estimate, Texas was not 

treated fairly. 

Ms. CROWLEY. I don’t think Texas was treated fairly at all. I 

think that both the damage that was done by Rita but also the 

enormous burden that Texans took on as the result of the evacuation was extremely expensive and the reality is that many of 

those folks who evacuated to Texas are going to stay there. The 

polling data that has been done with evacuees in Texas generally 

show that about half of the folks want to stay and the other half 

want to return home. That may or may not be their sentiment 

today; it was at the moment of the instance. 

And housing needs in Texas need to be dealt with as well. One 

of the things about—the important things about the affordable 

funds in the housing bill, in the GSE bill, is that it would go directly to States whose housing markets were impacted by Hurricane Katrina. So some of that money could go to Texas, and I think 

that would be an important part of whatever distribution system 

was developed for that. 

Mr. BACHUS. Thank you. I would say the only response I would 

give is that the magnitude in Louisiana just engulfs all. In AlaVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00104 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
99

bama, we lost homes, but when it is a small hurricane, the economy bounces back fairly quickly and this just in Louisiana, and I 

think Dr. Richardson, your testimony, this is something that occurs 

about once every 100 years. That we are dealing with a totally different animal, not only in size but in character. 

Mr. RICHARDSON. Katrina was not your normal everyday hurricane, and I am not sure we have ever had to respond to one, at 

least in our lifetimes. It has been probably 100 years since we have 

had a storm like this, and there is no doubt that, to a certain extent, it overwhelmed our institutions, Federal, State, and local. 

And we are now trying to learn from it. This was not a catastrophe; 

it was a megacatastrophe. I think, as a country, we need to know 

how to learn how to deal with it more appropriately, more quickly, 

and more effectively. 

Mr. BACHUS. You mentioned the refugees—I am sorry, the evacuees, still in Texas, some may want to return, some may not; of 

course it depends on their job situation. They may want to return 

but there are no jobs in New Orleans. So do they want to return 

or do they not? I mean it is a—I’m not sure how you would categorize someone who has a job in Texas and not in New Orleans 

so they don’t want to return. 

Mr. RICHARDSON. In New Orleans right now, you find ‘‘help 

wanted’’ signs every place. In Baton Rouge, throughout the south 

part of Louisiana, there is not an issue of jobs that are available. 

The issue is that workers are not available simply because of the 

shortage of housing, and shortage of other things, too. Other people 

live in other cities and they have accepted that. 

Mr. BACHUS. That leads to another point. I have heard the question posed, is it the chicken or the egg? You know, did the—is it 

housing or is it jobs? So actually what you are saying is that it is 

housing. 

Mr. RICHARDSON. The jobs are there. It may not be the job that 

they had exactly, but the jobs are there in terms of, we talked to 

the people, and talked to the businesses; they need workers. 

Mr. BACHUS. I will ask the whole panel. Has there been any survey or study done of the number of residents who were displaced 

and have not returned? What percentage of them want to come 

back and how many of them have made a decision to permanently 

relocate? 

Mr. MEHRETEAB. My answer is not scientific, but as I have indicated to the committee, we had 952 units that were destroyed. Our 

property management informs me at least 85 percent of our residents would like to come back. Again, that is not a scientific answer, but based on the 952 units we own, and they were all destroyed in New Orleans and Jefferson Parish, 85 percent of the 

people continue to call and want to return. We have not heard from 

the other 15 percent, and today, 5 percent of the people are all over 

the country. Again, that is not scientific. 

Mr. BACHUS. Mr. Bright. 

Mr. BRIGHT. This was in response to an earlier question on the 

multiplier effect. I think one thing is that they have these housing 

agencies around the country, and in Louisiana there is NOMA, as 

a multiplier effect. There is an institution that is a government institution that works with the private sector. So, for instance, anyVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00105 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
100

body can originate their loans, and if as a multiplier effect, you 

could direct some extra money to that institution that is already 

working that deals with big numbers, I think that would be something that would give you a multiplier effect and it goes for lowto moderate-income. 

Mr. BACHUS. You say if we directed funding or if we decided to 

address the lack of affordable housing or the lack of homes, housing in the New Orleans metropolitan area, that that would be a 

way to approach it? 

Mr. BRIGHT. If the interest rate on a 30-year mortgage is 6 percent, the LFHA might be 5 percent. So you could maybe do something where you put some of these CBDG moneys where you could 

address the high percentage rates possibly or go towards construction loans or something like that, and then maybe offer even a 5 

percent or a 4 percent and it would not cost, in the grand scheme 

of the numbers that I am hearing around here, it would not be as 

costly. I mean, $100 million, that is a big number to do a lot of 

work. 

Ms. CROWLEY. On your question about polls. I just—there have 

been some policies and I have here, a Zogby poll that was done for 

the City of Houston and in 2006— 

The CHAIRMAN. How did Mr. Green do in that poll? 

Ms. CROWLEY. And at this point they were talking to evacuees 

from both Katrina and Rita and 58 percent intended to stay in the 

Houston area. Now having said that, I think that it would be 

money well spent if we did two things. One is do a representative 

survey of all of the HUD-assisted households who have been displaced, and HUD says there are 32,000 of them. I am concerned 

that Mr. Bernardi is saying only 12,000 are still getting disaster 

vouchers. I don’t know what else they are getting. The last we were 

told was that 22,000 were getting disaster vouchers. So they know 

where they are. 

And all of this notion about the future of public and assisted 

housing needs to be done with some scientific understanding about 

what it is that the residents’ intentions are, and we could do—very 

easily do a good survey that would represent those folks. 

In terms of the broader population, we have no good data about 

what their intentions are and what their current situations are, 

how they are faring, and it is a real lack in terms of being able 

to do effective planning. 

The CHAIRMAN. I did want to say this. Frankly, I think the likelihood of our being able to get nearly back to where we used to be 

is so slight that we are not going to run out of people who want 

to come back. I mean, sadly, the percentage of people who want to 

come back, I am afraid, may be academic. We will be doing well 

to allow even half of them to return. We are going to work very 

hard to do that. And I think that is the reality that we will almost 

certainly wind up with—more people who want to return than we 

can accommodate. 

The gentlewoman from California. 

Ms. WATERS. Thank you very much. I have several questions 

here. 

Let me start with Ms. Crowley. Ms. Crowley, you had some very 

direct suggestions about what to do with public housing. Have you 

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been in interaction with the advocacy project, the lawyers who are 

representing the tenants? Has there been any discussion with them 

about some of this things you see, and do they make good sense? 

Ms. CROWLEY. I had a discussion with Judith Browne about it 

several months ago, but have not had a discussion with her recently. I have been following what they have been doing with reports from other folks but not direct discussions. 

Ms. WATERS. In your recommendations, you did not recommend 

phased development at any of these public housing projects; is that 

correct? 

Ms. CROWLEY. We have recommendations about New Orleans 

public housing, in particular it is about all public housing in the 

Gulf. The recommendations are that if it can be repaired, it should 

be reopened. If it cannot be repaired, then it must be redeveloped. 

We should do it on a one-for-one replacement basis, and there 

should be an absolute right to return. 

The rub is who determines what is repair and what is redevelopment, and I am not sure that we will know the truth about that 

because there are competing experts, now, with opinions about 

that. 

Ms. WATERS. When you are talking about a development, say, 

like Saint Bernard with all of the units, I don’t know how many, 

in their 1,400 units or so, are you talking about some parts of it, 

or are you talking about all of it? Obviously, there may be different 

levels of disrepair. Are you suggesting that some of it should be 

saved if it can be, if other units cannot because they are in terrible 

disrepair, or are you talking about if there are enough units that 

are in good repair that you save the whole project? 

Ms. CROWLEY. I think it depends on the particular building. But 

let me just say that I think it is a mistake to say well, there are 

30 units in a building and 5 of them are habitable. So I am going 

to let folks move into those 5 because then you have 25 vacant 

apartments that are serious problems. So I don’t think that is a 

community. I don’t think that is an answer. 

I think it has to do with the configuration, and if you can—you 

can pick a particular building that is not as damaged as another 

and bring that back and move folks into that, the notion that people can go back to their own units, if the units are scattered all 

over the place, I think, is not realistic. 

Ms. WATERS. You mentioned a moratorium. That kind of conflicts 

with what you are describing now. 

Ms. CROWLEY. No. The moratorium is on demolition of the public 

housing in the Gulf that is currently occupied. Anything that is occupied should be continued to be occupied until we have solved the 

other problems. We don’t need to do any demolition plans on anything that is occupied. There is discussion about— 

Ms. WATERS. We have public housing developments where you 

have partial occupation. You have units that were boarded up before Hurricane Katrina and Rita and you have units that have 

been vacated, and you have units where you may have a few people. What do you do with that? 

Ms. CROWLEY. I think that is a very dangerous situation for the 

people who are there. And I think that it is really important to figure out what the best choice is for those folks. 

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On the issue of the moratorium, let me say that part of the impetus for that is the discussion for public housing in Mississippi that 

was not even damaged in the hurricane which—where people never 

even evacuated, where those housing authorities were proceeding 

with demolition plans as if the hurricane had never happened. So 

we don’t want that to be the case. 

When it comes to New Orleans, and I have been to all of the public housing in New Orleans; I have been to visit all of it. And I 

think you have to answer it on a case-by-case basis. 

Ms. WATERS. Mr. Mehreteab, you are developing 1,000 units in 

Louisiana, is it? 

Mr. MEHRETEAB. Yes. In New Orleans—Jefferson Parish and a 

place called Saint Charles. 

Ms. WATERS. Did you have a difficult time doing the land packaging on that to be able to develop those units? 

Mr. MEHRETEAB. Some of those we already owned that were destroyed. Some years we had some putting the one acquisition in the 

new places. 

What we did, Congresswoman, I mentioned to you that we had 

four properties that were destroyed. One was in New Orleans off 

I–10, and we decided to completely demolish that building, so we 

are starting from scratch. Another was in Algiers. That one was 

100 percent destroyed, but we were able to maintain the structure. 

And the last one was in Jefferson County. But we did have difficulties; I don’t want to give the impression that this was an easy process. 

Ms. WATERS. No. You have indicated pretty well that the financing is complicated and you seem to suggest that no private contractor coming in to build low- and moderate-income housing can 

do it without subsidies and grants, and the mix that you put together seemed pretty extensive and complicated. And are you basically saying that is the way it has to be done? 

Mr. MEHRETEAB. Well, our trip objective is to provide quality 

housing, but also to maintain our rents. Our rents range between 

$130 to $820 a month, and the average cost to buy is $100,000. Tax 

credit alone and community development grants alone would not 

cover those costs. So, as I have indicated, we went to at least six 

or seven different financing sources. 

You may recall, Congresswoman, I came to your district with 

Mrs. Shockley many years ago. 

Ms. WATERS. I can’t remember those things, I am so old. Were 

you there? 

Mr. MEHRETEAB. Yes, I was. 

Ms. WATERS. How many years ago? 

Mr. MEHRETEAB. Right after you took office. 

Ms. WATERS. In 1991? 

Mr. MEHRETEAB. 1987 or so. 

Ms. WATERS. I don’t remember. 

Mr. Perry, your work has not been unnoticed, and I was just 

talking with my staff, as I did recall your testimony about the zoning and the disabled and other kinds of issues that you have 

brought to our attention, and I am asking my staff as we look toward developing comprehensive legislation to deal with some of 

these problems, how can we can we make sure that Federal money 

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cannot be used in jurisdictions that are proven to be discriminatory? Some of the issues that you have raised, like the zoning, we 

may not have the answers for, but we are listening. We do have 

an opportunity to provide leadership on these issues now, and I 

will certainly pay attention. 

Mr. PERRY. I didn’t mean to imply that you weren’t paying attention. As a matter of fact, when the issue came up with Saint Bernard Parish, I was immediately contacted by members of your and 

Representative Frank’s staff, and they worked with us on that 

issue. So we know that the commitment is there, and we look forward to working with you in the future to ensure fair housing on 

the Gulf Coast. 

Ms. WATERS. Thank you very much. 

Let us see who is next. Mr. Green. 

Mr. GREEN. Thank you, Madam Chairwoman. 

Mr. Tate, you indicated in your testimony that the landlords had 

no recourse for damages suffered. Could you please give us the categories of damage? You might not be able to give us a dollar 

amount, but give us a category of damages and indicate whether 

or not there can be computed some estimate as to what the amount 

of damages are, whether you can give me that number now or not. 

I am just curious as to whether there is a methodology at which 

you can arrive at a number. 

Mr. TATE. There are different types of damages that apartment 

owners sustained. Actual damages done to the sheetrock, carpet, 

etc. Damages of appliances being taken. And then the actual rent 

loss damage. How did we have rent loss damage? Let me explain 

that as we go through the course of the termination notices coming 

from FEMA that we are going to stop paying and recertify violation. 

There were a lot of people who failed to recertify. Whether they 

were eligible to recertify or not are two different questions. But the 

fact is that rent stopped being paid for those people. 

And those folks had really nowhere to go. They remained in the 

apartment. And after trying to work with these folks, trying to 

communicate with FEMA, and communicate with the City of Houston, once it was determined that no rent would be coming to these 

folks, apartment owners were then forced to do something they 

really didn’t want to do and that was to file an eviction in the local 

JB court, and they would file the eviction. Eventually the day 

would come and they would appear in court and either be granted 

an eviction some weeks later, or that particular resident would be 

represented by free legal aid that would then file either an appeal 

or file a property affidavit again extending the period of time another 30 days before another hearing and attempt to have the 

apartment vacated. 

So in many instances, the apartment remained occupied with no 

rent being paid on it for as much as 90 days after the rent ceased. 

Mr. GREEN. Having been president of the Houston Apartment 

Association, is there a means by which you can calculate some estimate of what these damages are? 

Mr. TATE. Most apartment management companies and operators, when an apartment finally is vacated, they will complete what 

is done as a security deposit disposition report. Because normally 

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we have 30 days in which to refund a security deposit or apply 

charges against it. 

Mr. GREEN. Is the answer yes to this one because I— 

Mr. TATE. Yes. 

Mr. GREEN. Mr. Perry, sir, you indicated that housing discrimination still exists. What about with reference to language in terms 

of the Asian community? Did you encounter housing discrimination 

not only with the ethnicity but also with the language, and if you 

could be brief with that. I have one follow-up. 

Mr. PERRY. You know, I think it is happening, but I will be quite 

honest that our organization was not as prepared as we would have 

liked to have been for people who don’t speak English. That is one 

of the ways that our organization has had to grow over the last 

several months post-hurricane. For example, we have had a great 

influx of Latinos in New Orleans, so we have to grow to learn how 

to assist that population. 

Mr. GREEN. Would it assist you in acquiring empirical data to 

have access to what is called testing? Are you familiar with testing? 

Mr. PERRY. You know, it is the most important thing that we 

use. I would say in a few months, we are probably going to have 

a press release about several big cases where we found cases discriminated based on race and the fact that they have children. The 

only way we were able to find discrimination was through testing. 

And we did about 30 tests last week, and in the majority of those 

tests, we found discrimination. 

Mr. GREEN. Mr. Chairman, if I may, I have before me a report 

from Fair Housing, the National Low Income Housing Coalition, 

that addresses the deficit of affordable housing units available in 

the Gulf Coast area. May I submit this for the record please, if 

there is no objection? 

The CHAIRMAN. Without objection. 

Mr. GREEN. I yield back the balance of my time. 

Thank you. 

The CHAIRMAN. Mr. Baker. 

Mr. BAKER. I would like to address this to you, Professor. Relative to your commission’s observations and the necessity of housing first, as I understood your presentation, the average home, 

number of homes constructed in the State over the past decade has 

averaged something in excess of 13,000 but that is a statewide 

number. Do you have any tab that tells you what that number 

looked like in the New Orleans metro area before the storm? 

Mr. RICHARDSON. In the New Orleans area, it would be 30 to 35 

percent of that. 

Mr. BAKER. In your normal recovery efforts, that would take 

using the 15,000 figure, you are really looking at decades if you 

take the traditional historic construction norm pre-Katrina for the 

Orleans metro area. 

Mr. RICHARDSON. If you take that number, you are looking at 40 

years. 

Mr. BAKER. Obviously a time horizon which is not acceptable to 

most us of us. 

I am also correct that there are speculators in the market who 

are buying up distressed properties where they can get a particuVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00110 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
105

larly attractive price on a good corner or a very nice private residence. I spoke with a fellow in the Baton Rouge Airport just this 

week who was a former New Orleanean, and who lived in Lake 

View, who had not only relocated his residence but his significant 

business to the Baton Rouge area and did not have an intent to go 

back. He had sold his home to such a speculator. And he is a very 

sophisticated smart business person, but he had bailed out. My 

concern going forward is not just the slow pace of recovery if we 

resume the normal historic development rate but that, with the advent of speculative interests now in the market who don’t have any 

particular interest in doing anything but holding, that is also going 

to be an additional drag on the recovery. 

Further, in talking with business communities’ leaders in the Orleans area, there are several prominent restaurants which are having trouble because they don’t have customers. It is no longer a 

question of not having staff. They don’t have people coming 

through the front doors to pay the bills. So we really do have a 

need for the restoration of affordable housing, but we need to have 

a more economically broadbased plan than just addressing the 

shortfall and affordable housing if the historic nature of this city 

is ever going to recover. It really needs to be a small businesshomeowner-affordable housing endeavor with the addition of essential public services. You are not going to move into a new subdivision if there are no policemen or firemen or schools. 

To date, I don’t think there has been any plan developed or 

talked about on any scale, whether it is a single community or a 

stormwide imprint that encompasses all of those elements. Isn’t 

that really what is needed now rather than the Road Home alone? 

Mr. RICHARDSON. Yes. Congressman Baker, you mentioned a 

number of items that are all very important. In an ideal world, we 

would solve all of these issues simultaneously. Unfortunately, our 

world is not ideal all the time. We have to start someplace, and 

housing is a place to start. 

But you are absolutely correct. In New Orleans right now, if you 

look at the employment base and what can come back, certainly 

the tourist base, but if they don’t come back, those restaurants you 

are talking about, the ones that have complained to you, and complained to me about not having enough customers throughout the 

day, they are thinking about closing down. It would be an enormous shock to that community if certain restaurants closed down. 

Mr. BAKER. I think it is across-the-board. I have talked with a 

guy who is in a radiator and brake repair business. All of his employees were back. His house was fine. He didn’t have anybody in 

his business, and I don’t know where he is now. That was about 

4 months ago, but he was at the point of having some difficulty 

with his lender over the status of his business loan. I know you 

can’t do all of it at once, but we at least ought to be talking about 

it. 

Mr. RICHARDSON. You have to have all of these elements if you 

are going to come back to New Orleans. For example, if you walk 

around New Orleans, you see different things happening in different neighborhoods. Gintilly, which is a neighborhood right by 

Dillard University, old fashioned New Orleans homes, middle income, lower-middle income families, you see more trailers per block 

106

in that neighborhood because those people are back working on 

their homes themselves. 

You go to Big City, which is down from Canal Street— 

Mr. BAKER. If I may, I don’t mean to cut you off. I am out of 

time, but one other further observation, if we were to select an area 

and go in and do the kind of multi-family mixed use development 

where we brought in the affordable housing, some commercial sites 

reserved for the bakery, the dry-cleaner, some middle income housing, that is the kind of mixed use pilot that would offer a great deal 

of hope for people out of all of this despair to see a few city blocks 

to recover would be enormously helpful. 

Mr. RICHARDSON. I think that would be one of the barometers we 

are moving. Right now, it doesn’t look like we are moving. We need 

a barometer. 

The CHAIRMAN. I thank the gentleman, and because we had we 

had two Democrats in a row, we will now go to Mr. Roskam. 

Mr. ROSKAM. Thank you, Mr. Chairman. 

Mr. Tate, just a quick question. The membership that you represent, you raise the issue of concern about damages. But has your 

membership made money off of the rents and so forth? I mean, the 

bottom line figure, are you in the black or in the red based on— 

Mr. TATE. Certainly, some apartment communities may have 

fared well; at least two corporations came and took lots of apartments. I know of a property that went through the court of appeals 

and that worked out okay. But the majority of the apartments that 

were leased by the City of Houston are contracted, so no, they did 

not fare well. They spent millions of dollars. I understand that 

right before the folks arrived in Houston, they were coming from 

Louisiana. 

We had to prepare almost 40,000 units. We spent millions of dollars on vendors—painters, carpet shampooers, and cleaners. We 

had to get all of these apartments ready for these folks to move in 

because they are not always ready sitting there vacant and ready. 

So we spent a lot of money getting them ready. We moved people 

in, and in some cases, they were there a short period of time, 

maybe 2 months, maybe 3 months, maybe they were there for a 

longer period of time. But then they left, and we still have about 

14,000 left. 

So about 22,000 have vacated. I dare say that of the 22,000, very 

few of them were left in a condition that we could lease them again 

without spending a lot of money to have those apartments prepared 

again for another move-in. 

Mr. ROSKAM. Was it primarily the damage issue, or was there 

something else, or is the difficulty really the damage situation? 

Mr. TATE. The difficulty is the damage and the amount of time 

that it took to receive the rent. When we first started moving people in, in September and October, rental payments did not start 

coming to these properties until December or January. 

Mr. ROSKAM. Did they make it? In other words, did the right 

amount eventually arrive so you lost the value of that money? 

Mr. TATE. Right. Lost. 

Mr. ROSKAM. So you lost the value of the money in the interim. 

In other words, you lost the value of those dollars, your control 

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over those dollars in the interim but eventually the right amount 

showed up? 

Mr. TATE. In most cases, the right amount showed up and we 

were finally able to pay all of the shampooers and the painters and 

the folks who cleaned the apartments back in September and October. We weren’t able to pay them until almost January or February. They were small business owners that operate. 

Mr. ROSKAM. Mr. Bright, just a quick question. 

Well, what you described was really fascinating to me. The idea 

that very low default rates in this whole situation, was that intentional? I mean, did everybody—is this like the scene in, ‘‘It’s a 

Wonderful Life’’, you know, when George Bailey gets what is going 

on and nobody panics and everybody says, ‘‘Okay, let’s not sell to 

Mr. Potter.’’ Did everybody in the industry say, ‘‘Look, if this all 

goes, this implodes into a financial sinkhole and we are all losers 

here, so let us be good to one another and go very, very slowly.’’ 

Is that essentially what happened or was there something—in 

other words, are you guys this good? 

Mr. BRIGHT. Well, it is a terrible disaster, so you don’t want to 

say that. 

Mr. ROSKAM. In terms of the response. 

Mr. BRIGHT. I believe that it really did work well. By us giving 

this foreclosure, by not having any foreclosures it did two things: 

Number one, if you had foreclosed on all of these properties, it 

probably would have driven the values of properties down. It could 

have gotten into a vicious circle of property values going down, 

down, down. 

And then secondly, it gave people a chance to get back on their 

feet, namely there is this thing called forbearance, and really, government officials or whatever people said let us give mortgage holders forbearance. 

Mr. ROSKAM. Is forbearance a term of art? 

The CHAIRMAN. Yes. 

Mr. BRIGHT. It is a term of art. 

The CHAIRMAN. Yes, in the sense that it is a specific weak term 

with legal meaning, and in fact earlier today I released a letter 

that we received yesterday from the five bank regulators, the credit 

union, the Federal Reserve that controls the currency, and the 

FDIC and OTS, reiterating their encouragement to the lenders to 

show forbearance. 

Mr. ROSKAM. So they will not hammer— 

The CHAIRMAN. Right. As long as we talk about an ultimate path 

to repayment, they will not in any way penalize people who go out, 

stretch out, and forbearance in that specific— 

Mr. ROSKAM. Okay. 

Mr. BRIGHT. If you will, I would like to go down that road a little 

bit. What it means is, what was done is, people were told that they 

did not have to make their mortgage payments, so it first went on 

for 90 days. We still have people who are not making their mortgage payments, 18 months later, or whatever it is. Now, for the financial system in the United States to work, there are bondholders 

that own these bonds, and those people have to get their payments. 

So it is like we are a private company and you had certain people 

say don’t charge—don’t make people make their payments, but we 

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have to forward the tax and interest to the bondholders, specifically 

in the FHA program. We were required to do that. 

So in our case, we are having to front, you know, on a $100,000 

loan which we make $250 a year on, we are having to front about 

$10,000, I think is what we figured—$12,000 say a year to—now, 

we eventually hopefully will get the money back, but in the case 

of FHA loans—now this only occurs when you foreclose on someone, and you can see there has practically been no foreclosures taking place in Louisiana for the reasons that I was just talking about. 

But at some point you are going to have to foreclose on people; 

namely, you have to dispose of the property. You have to come up 

with something to do with the property. Right now the borrower 

still owns it. So in the case of FHA—and this is just something 

that does not work in the case of Fannie Mae and Freddie Mac. 

They do things a little bit differently. But in the case of FHA, when 

we foreclose on the borrower, and the borrower may not have applied for the Road Home money. They would have been eligible for 

the Road Home money, but they didn’t apply for it for whatever 

reason, so they are distraught, for whatever reason. A lender can’t 

apply for the Road Home money, but we now need to foreclose, in 

the FHA case. We have to bring the property value back up to its 

usable condition before you can convey that property to the FHA, 

and in order to do that—you have heard all this description of how 

the properties have laid fallow and things like that, it will take just 

it is—you could lose—if the house was worth $100,000, it might be 

worth, you know, Congressman Baker would know, but maybe it 

is only worth $20,000 for the lot. So the lender would have to take 

a hit. 

The CHAIRMAN. We are running out of time. I just will say two 

things. I believe it may have been Mr. Miller of California who 

brought that particular FHA issue to our attention, and that is 

something fixable by us and it is statutory, you understand. We 

make the laws. So that is a law, and if the FHA is imposing a requirement that is not right, we can change that requirement. You 

are shaking your head. 

Mr. BRIGHT. It would be a huge benefit. 

The CHAIRMAN. But I need to encourage people—it is true, if you 

are in court, or you are elsewhere, the law is a fact of life that you 

have to confront. We change laws, that is our job, so if there is a 

rigidity in the FHA, and in fact I believe we are already talking 

about that issue, we can give authority—not as a blanket matter 

but in these kinds of situations to deal with it. So the other thing 

I would say is this, with regard to Fannie Mae and Freddie Mac, 

and it is part of another argument that Fannie Mae and Freddie 

Mac have been able to show some forbearance if they haven’t 

securitized the mortgage. That is, for mortgages that are still held 

in Fannie Mae and Freddie Mac’s portfolio, we have asked them to 

show some forbearance. If they have sold it into the secondary market, they are in the same shape you are in, where they have obligations and therefore that can’t be done. 

Mr. BRIGHT. At least in that case, it is Fannie Mae and Freddie 

Mac’s obligation, and not my obligation. 

109

The CHAIRMAN. I don’t mean to—but that particular perspective 

is not the one we take in public policy. I understand your concern. 

We have to look a little bit more broadly. 

Mr. Perry, and then we will move on. 

Mr. PERRY. Just really quickly, I agree for the most part with 

Mr. Bright, but I would note that there is one segment of the lending population that hasn’t done as good of a job, and that is with 

respect to subprime lenders. My organization has a hurricane relief 

project where we work with people who have difficulty with their 

loans and we have seen significant problems in the subprime market, particularly people who have predatory loans, and there is one 

loan in particular, it is the 228 loan. 

The CHAIRMAN. We appreciate that. We will be dealing separately with the question of predatory loans. 

The gentlewoman from Wisconsin. If you want to talk, go ahead. 

Ms. MOORE OF WISCONSIN. I am stunned that I get a chance to 

talk. How are you? This is such a distinguished panel. I just want 

to thank the chairman and the subcommittee chairwoman for 

amassing this particular panel because I think it really has given 

me a picture, a complete picture of some things that are happening 

in New Orleans. I have listened very carefully and what the picture 

that is emerging—I guess I just want to throw this out and ask you 

what you think of it. It seems to me that we are looking at—one 

of the 800-pound gorilla that is in the room is—and I don’t see it 

reflected in any of the testimony, is the actual environment and 

what portions of New Orleans can actually be rebuilt. 

Secondly, you have talked about the high labor costs that exist 

for rebuilding New Orleans and of course that provides a difficulty 

in financing for the creation of low-income housing—I think Mr. 

Mehreteab—I am sorry if I mispronounce your name—that you 

have had to use a lot of creative financing to pull together more 

financing. I think Ms. Crowley talked about the fact that there is 

so much deferred maintenance on public housing in the first place, 

hidden in there with public housing, and there is a question about 

what you can rebuild and what you can’t rebuild and what the 

costs of that will be. I think Mr. Bright talked about the tremendous effort that has been made on the part of the mortgage bankers to forbear and their touting a pristine record of really not that 

many foreclosures, which I think speaks of the particular class of 

people. These are homeowners that you are dealing with, and I 

think Mr. Perry made the distinction that these are not homeowners at the lower end of the income spectrum necessarily. Dr. 

Richardson’s research talked about the economic factors, the fact 

that you were attracting a different kind of labor force to New Orleans, and of course I am so sorry that the gentleman from the 

rental organization had to leave, but I do think that we have seen 

rents in the New Orleans area skyrocket, and I guess I say all that 

to say, are we looking at rebuilding a New Orleans that is going 

to be populated by the survival of the fittest? Are we going to build 

a New Orleans that really is going to be a middle class population? 

I am concerned. That is a question that I have pondered previously, but after hearing this panel I just want, I guess, your reaction to what we could do to make sure that there is some economic 

and class mixture in a rebuilt New Orleans. Thank you for your— 

110

Mr. MEHRETEAB. May I make a comment? Congresswoman, you 

asked me a question, and I probably didn’t give you a full answer. 

Sure, we can build housing for $100,000 very easily, actually the 

cost ranges between $80,000 to $150,000, depending on the location. The question becomes how much of that money can we finance if we are to serve low- and moderate-income families. That 

is the key. The higher subsidy we have, the lesser rate we could 

charge. Exactly what you said, Congresswoman, you are right. I 

felt the way community development broke down in the low-income 

housing tax credit structure right now is simply to serve people 

who make below 60 percent of the median income. However, how 

that translates in New Orleans is that will be an average of $600 

a year. That is a lot of money. What we are shooting for or what 

we are hoping to do is to decrease that to $400 or $300. In order 

to do that, one needs to close the financing gap, either from what 

the chairman has suggested, we need a huge capital infusion from 

the two big entities or others or we have to come out with something. But as it stands right now, if everything is to be the way 

it is with low-income housing tax credit and the community development programs, will only be serving a higher income of families. 

But the goal of the NHP Foundation is not simply to serve what 

had been called the moderate income. We really want to serve 

lower income people. If we want to do that, we are going to need 

what I have referred to as the financing gap, the infusion that Congressman Frank has been talking about. 

I don’t think there is anybody—well, there might be very few 

people, the way that lid is very clearly understood by the chairman. 

When he talks about $500- or $700 million he is absolutely right. 

That difference, which could represent anywhere between 5 to 10 

percent, will make a tremendous impact in lowering the rents from 

$600 to $400, or from $400 to $200 a month. 

The CHAIRMAN. Ms. Crowley will be the last one. 

Ms. CROWLEY. I think your question is absolutely imperative for 

us to get to the bottom of, and that the resources that have been 

dedicated to date to housing for the Gulf Coast, in New Orleans in 

particular, do not in any way, shape, or form provide enough to, or 

any for that matter, to get to the lowest-income people. The tax 

credit income targeting is higher. The CDBG income targeting is 

pretty high and the Secretary can waive the income targeting requirements if the State of Louisiana asks for it. He has already 

waived the income targeting requirements in Mississippi. And the 

design of the Road Home Program for what they call the piggyback 

program was to put CDBG dollars into subsidizing and operating 

or capitalizing an operating subsidy for tax credit properties going 

forward at and doing some of those at 20 percent, 30 percent 

through some mix of that. The reality is that a lot of the CDBG 

money has had to now be spent on gap financing because the cost 

of construction is so much higher. 

So even that program, which we think was very ill-conceived, 

will not have the funds that is required to be able to create the operating subsidy. It is essential that we put more project-based Section 8 vouchers into New Orleans and into the Gulf Coast. We 

urged that in the first go-around in the supplemental. We looked 

at it in the second go-around of the supplemental. It is still within 

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your power to do that, and that is the single most important tool 

to make sure that any housing that is developed is affordable to 

the people that you are talking about. 

The second thing is that the affordable housing fund in the GSE 

bill will provide money that will be for the construction of housing 

that is affordable to that income group. The project Section 8 

vouchers will provide the operating subsidy. 

And the third thing I want to say is that the importance of public 

housing in New Orleans, with all, with complete respect for how 

people feel about their individual buildings, is that going forward 

for the future of New Orleans and for the future of low-income people in that community is that we not lose the subsidy that is attached to each one of those units, and that the subsidy continues 

so that eventually when one family is moving out of public housing, 

there is still a subsidy there so another low-income family can 

move in. And that is—we need to keep our eye on that ball as we 

move forward on redevelopment, and as important as the structures are, that is the essential thing that we need to understand 

about the future of housing in New Orleans for very-low-income 

people. 

The CHAIRMAN. The gentleman from Missouri. 

Mr. CLAY. Thank you, Mr. Chairman. I will be brief. I have one 

question for the entire panel, for anyone who wants to give me a 

reaction, you are welcome to. I am just curious as to the response 

you have gotten from State and local elected officials in Louisiana 

as far as Governor Blanco, I understand, was here today, went and 

had a meeting with our caucus but felt—did not want to come here. 

Tell me about your experiences with the City of New Orleans, with 

the Mayor in particular, with the State legislators, and with the 

City Council people. Does anybody have a reaction to that? Could 

you share with us what kind of cooperation you have gotten? 

Mr. Perry, you look like you may want to start off. 

Mr. PERRY. You know, one of the most difficult barriers that we 

have had is dealing with local government, particularly in Jefferson 

Parish. After there were so many tax credits allotted to the Louisiana area, a councilman in the Jefferson Parish said all low-income people were ignorant and lazy and therefore we don’t want 

tax credits in Jefferson Parish, and so as courageous as it was for 

the money to have been allotted in the form of the credits it made 

it almost impossible to use the credits in the parish, and so he, 

working with the Council, passed a resolution asking for the credits 

to not be used in the parish, and I think that is a great example. 

The second example is in Saint Bernard Parish where, as I mentioned before, the Parish passed an ordinance that said that you 

cannot rent your single family home to someone that you are not 

related to. As I mentioned earlier, 93 percent of the people in the 

Parish are white, so it made it almost impossible for minorities to 

rent homes in the parish. And we see this kind of—and I can give 

you a very long list of circumstances where in parishes the government has worked I think, in a way, that makes it very difficult, if 

not impossible, for low-income people to return, and I would add 

that it has made it very difficult, if not impossible, for minorities 

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ment has played a very big role, particularly local and State government have played a very big role. 

Mr. CLAY. Thank you. 

Mr. BRIGHT. I would like to relay a story and try to do it quickly. 

I was flooded, and lots of people were flooded, and I evacuated to 

Atlanta, and took my family there. We went to a school, and my 

kids go to a private school, so I was going to pay some money—

and I sent my youngest to a public school and my two oldest to a 

private school, but anyway, as we moved back to New Orleans, we 

wanted to pay—give something to the Atlanta people because they 

took us in, didn’t charge us anything, were so nice to us, so we 

come back and we gave a little gift to that school. Two weeks ago 

these Atlanta people came down, they brought 16 kids and 4 teachers, including the head of the school, the head of the school got up 

at 4:00 in the morning— 

The CHAIRMAN. You have to move this quicker. 

Mr. BRIGHT. —4:00 in the morning Friday, worked alongside us 

in Lakewood and we helped build houses, okay, only one out of six 

homes, one out of five homes in Lakewood, which is a nice neighborhood and all, are people moving back there, and it is because 

they don’t have—I think the government—they still need to get 

electricity in there. They still need to get services in there and 

stuff. I think people want to help us. And I appreciate that all of 

you are here, but we need the government to just do its job. 

The CHAIRMAN. The gentleman yields back. I thank the panel. I 

really appreciate everybody’s patience. We will take our last panel 

now. 

Oh, Mrs. Biggert, did you have any questions? I apologize. Mrs. 

Biggert, please be seated. The Chair was in error. Mrs. Biggert has 

questions. 

Mrs. BIGGERT. Sorry. I will be brief, and this is really, I think, 

to address to— 

The CHAIRMAN. The gentlewoman is entitled to her time. Please 

don’t feel rushed. 

Mrs. BIGGERT. Okay. When you are planning for rebuilding, 

sometimes it seems like the chicken and the egg scenario. You can’t 

rebuild the housing communities without jobs and services but the 

jobs and services won’t come until there is adequate housing. So 

how would you solve this problem, and with balancing the need for 

a solid middle class and the desire for lower income families to return? 

Mr. MEHRETEAB. Is that question addressed to me? 

Mrs. BIGGERT. Yes. 

Mr. MEHRETEAB. I guess I am the only person here who is building housing. Out of our 1,000 units, we are trying to be as diverse 

as possible. One of our properties, which is off I–10, Walnut 

Square, used to be 284 units, but we had to destroy it because of 

damage from Katrina. We are rebuilding it and converting it into 

208 units of mixed income, one-third very-low-income, one-third 

moderate-income and one-third market rate. 

The other 600 units are what we call, ‘‘below 60 percent of median income.’’ Two of our properties, totaling 126 units outside of 

Lake Charles and Ponchatoula, are single family homes that will 

be converted to homeownership. 

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So Congresswoman, our strategy is to have housing that is as diverse as possible; A, it is good for our portfolio and, B, we will also 

be responding to the demands of the community. 

Mrs. BIGGERT. And how long will this take? 

Mr. MEHRETEAB. The first occupancy for our property address in 

New Orleans will be in May, this May, and it will be, I would say, 

between 12 to 18 months from where we are today. 

Mrs. BIGGERT. Okay. So then would the jobs and the services follow? 

Mr. MEHRETEAB. Well, when you are a developer, be it a nonprofit like us, or a for-profit, there is a sense of having to be optimistic, so we have to be optimistic. The fact that there is so much 

demand and the fact that there are so many people commuting 

from outside New Orleans, and I am sure the Congressman will 

know better, gives me the optimism that in fact we will not have 

people filling our units. 

Mrs. BIGGERT. Thank you. I yield back. 

The CHAIRMAN. We will call the next panel. We will now excuse 

the panel, and I appreciate it. And as the next panel comes in, I 

am sorry this is taking a lot of time, people, but I have to tell you, 

we have been talking amongst ourselves. You can leave. I won’t be 

offended. And you should leave. I want to make sure everybody 

that has been here—seriously, get out of here because the next 

panel has to sit there, evacuate. Mr. Green will take you home to 

Houston. But I do want to be—we have been talking amongst ourselves. This has been extremely useful in our formulating some 

very specific things we think we can do to aid this process. So I 

do really appreciate what everybody has been doing here. 

The next panel, please be seated. Let’s move quickly here, people. 

We will begin, and I will just call on people as we get settled. 

Doris Koo is president and CEO of the Enterprise Community 

Partners. Please, Ms. Koo. 

STATEMENT OF DORIS W. KOO, PRESIDENT AND CEO, 

ENTERPRISE COMMUNITY PARTNERS 

Ms. KOO. Thank you, Chairman Frank, Subcommittee Chairwoman Waters, Ranking Member Biggert, and distinguished members of the Financial Services Committee, for the opportunity to 

speak before you today. My name is Doris Koo, and I am president 

and CEO of Enterprise Community Partners. 

Enterprise is a national organization founded in 1982. We have 

worked with thousands of nonprofit partners, local governments, financial institutions, and private corporations to develop over 

200,000 affordable homes and invested $7 billion in communities 

across the Nation. Right after the storms of 2005, Enterprise made 

a long-term commitment to help the residents of the Gulf Coast rebuild. We committed to providing $200 million in investment to 

create 10,000 affordable homes. 

It has been a long day, so I want to quickly jump to some principles that will help guide the rebuilding effort in the Gulf Coast, 

followed by several policy recommendations. First it is our experience that affordable housing must never be built in isolation. We 

have learned that residents are most successful in communities 

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with support services, access to jobs, quality health care, and education and support services. 

Second, we have learned that large scale rebuilding such as that 

in the Gulf Coast requires public-private partnership. There is not 

enough government money to do it all or to do it right. 

Third, time is of the essence. We must maintain the sense of urgency to meet the compelling needs of our fellow citizens in the 

Gulf Coast. Let me give you an example. Before I joined Enterprise 

6 years ago, I was deputy director of the Seattle Housing Authority, leading four public housing redevelopments. We relocated thousands of residents but we gave them choices in support services 

and guaranteed them the absolute opportunity to return. We demolished thousands of obsolete public housing apartments, but we 

replaced them all, one-for-one, with quality new affordable homes 

in thriving mixed income communities. We leveraged $135 million 

in Federal grants 5 times over and attracted more than $600 million in private investments. We made sure public housing residents 

got jobs in construction, groundskeeping, and maintenance 

throughout the redevelopment, and helped many of them become 

homeowners through family self-sufficiency programs. 

Success stories like these have been repeated around the country, 

including in HOPE VI communities built or financed by Enterprise. 

There is a way to do it right and to do it now, but it requires all 

of us working together. This is what we hope to do at the Lafitte 

Public Housing Development in New Orleans via phased development together with our partner, Providence Community Housing. So far, we have raised over $12.8 million in low-income tax credits, which will roughly translate into $100 million in investment 

equity for Lafitte, $27 million in CDBG grants, we conducted 

charettes and planning sessions with former Lafitte residents, including meeting with them in Houston. We secured over 200 offsite 

properties that can be committed as replacement homes, and Providence has pledged $2.5 million in case management support. And 

through phased redevelopment, using on- and off-site, we are prepared to build replacement homes for the Lafitte redevelopment in 

the Treme neighborhood, with replacement housing possibly coming online in as early as within 9 months. 

So we have three policy recommendations. First, we must adopt 

the principle of comprehensive community development in the longterm rebuilding of the Gulf Coast region. People can’t and won’t return to communities that don’t offer quality education, health care, 

mental health assistance, recreation, and out-of-school support for 

children to keep them safe. This is true not only for low-income 

people, but for attracting back the workforce of teachers, health 

care professionals, librarians, carpenters, plumbers, and so many 

others that the Gulf Coast needs to rebuild. That is why we work 

not just to rebuild or repair what was lost, but to create economically diverse, healthy, and environmentally sound communities. 

Second, we must make affordable housing finance work in the 

Gulf Coast by drawing on the best practices from the last 30 years 

to remove barriers and to solve problems. Many of the State’s policies, including those in the Road Home Program, to use CDBG for 

renters and small landlords are sound policies, we just need to cut 

the red tape and simplify implementation. We need to address the 

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very real issues, the rise in insurance costs, construction, operating 

costs, aging infrastructure, and certain needs for Federal subsidies 

and flood elevation guidelines. We need to extend the placed-inservice date for the GO Zone tax credits. We need your leadership 

to pass affordable housing fund legislation and target the first resources to the Gulf Coast, to set up an insurance pool or other risk 

mitigation measures to solve some of these very difficult problems. 

Finally, we need to make a commitment to help our most vulnerable citizens, including the elderly and those living in public housing, to return. We recommend that HUD and all housing authorities in the Gulf Coast region, if they have not yet done so, conduct 

immediate relocation counseling to every displaced public housing 

resident, enabling them to make choices and offering them the absolute opportunity to come home to comparable or better housing, 

paying comparable rents, consistent with the Federal Uniform Relocation Act. We recommend that HUD and housing authorities 

commit to one-for-one replacement of public and all HUD subsidized housing in the Gulf Coast region, preserving affordability 

even if we can’t physically preserve existing housing units. This 

will take special allocation of resources beyond what we might have 

already, but it absolutely can and must be done. And Enterprise is 

prepared with our resources and expertise to be part of the solution 

to partner with you and all of the good people on the ground with 

our collective will to make it so. 

Thank you very much. 

[The prepared statement of Ms. Koo can be found on page 320 

of the appendix.] 

The CHAIRMAN. Thank you. Next, our return witness Mr. Derrick 

Johnson, from the Mississippi Conference of the NAACP, who had 

previously testified, I believe, before Ms. Waters. Mr. Johnson. 

STATEMENT OF DERRICK JOHNSON, PRESIDENT, MISSISSIPPI 

STATE CONFERENCE NAACP 

Mr. JOHNSON. Good afternoon, and thank you, Chairman Frank 

and members of this body, for allowing me to come before you. My 

name is Derrick Johnson, and I am the state president for Mississippi NAACP. I will abbreviate my comments, as you have my 

written statement. 

NAACP was founded in 1909, and the Mississippi State Conference NAACP has been active for over 62 years. One of the things 

that I want to make clear today is that Mississippi in many ways 

is just like New Orleans, we simply have three things that are different: One, we don’t have the large media that the New Orleans 

media market have; two, we did not have the residual flooding; 

and, three, our Governor had a better public relations firm than 

Louisiana’s Governor. But otherwise, many of the issues that exist 

in New Orleans also exist in Mississippi. 

I am sure you heard of the damage that has taken place, not only 

in Mississippi but across the coast, and by every means, Hurricane 

Katrina is by far the worst natural disaster in the State’s history. 

Shortly after Hurricane Katrina made landfall, the Governor of 

Mississippi announced the formation of the Governor’s Commission 

on Recovery, Rebuilding, and Renewal, of which I was later invited 

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ernor found among many things that they recognized the role of 

personal assets that enabled people to survive, that recovery is important, and that the presence or absence of assets and insurance 

on those assets would determine who can participate in the longterm building in south Mississippi. Unfortunately, many individuals who were most vulnerable before the hurricane are still left 

out of the recovery effort in Mississippi. Many of the findings of the 

Governor’s Commission report fell on deaf ears from the Executive 

Branch. The Federal Government appropriated just under $5.1 billion in CDBG funds, which is an amount that is greater than the 

total State budget of the State of Mississippi. However, those funds 

were completely administered by the Executive Branch with no 

provision for a State or Federal—under State or Federal law for 

any oversight or input from our State legislators. 

As a result, there have been numerous concerns raised about 

contracts awarded to private companies to administer the CDBG 

funds, including questions about a lucrative contract that a current 

sitting State Senator received to administrate the CDBG funds. 

With the requirements that 70 percent of CDBG funds be used to 

benefit primarily low- and moderate-income persons being waived 

by the Federal Government, Mississippi additionally instituted a 

plan that provided no provision for home renters and other low-income victims of the storm. The Executive Branch designed the Hurricane Katrina grant program exclusively for Gulf Coast homeowners and excluding home rentals. The program was highly 

undersubscribed and only about half of those expected to apply did. 

Today approximately 10,000 people have received checks amounting to just under $680 million out of the $5.1 billion allocated to 

the State. Through ongoing community pressures, however, the 

Governor, after the November elections, mind you, decided to implement a Phase II program that would include more people under 

the plan, but still today home renters are completely left out of the 

recovery process. 

Affordability has emerged as the most prominent threat to the 

rebuilding efforts on the Mississippi Gulf Coast. Insurance is undermining the ability of individuals to rebuild. That has had an effect of monthly insurance payments increasing some $200 to $300 

per month. Property values have also risen significantly since the 

storm, making homeownership less attainable than prior to the 

storm. All policies renewed, all insurance policies renewed and new 

policies written by the Mississippi Windstorm Underwriting Association have experienced a 90 percent increase since October 2006, 

and I will say, this is not an insurance committee hearing but this 

is drastically affecting the ability for home renters and other lowincome individuals to rebuild because they can no longer afford the 

insurance. In fact, even rental units cannot be rebuilt or repaired 

because they cannot afford to carry the insurance for those rental 

units. And homes valued at $100,000 with $40,000 in contract 

would jump and yearly premium payments from just over $1,000 

a year to $1,924 in insurance premium payments. Additionally, 

homeowners are expected to have hazard insurance and flood insurance to go on top of that. Renters also face a unique set of circumstances considering affordable rental units may not be replaced 

117

one-for-one, as this requirement was waived by the supplemental 

bill and the 2005 supplemental bill passed by Congress. 

According to FEMA, estimates of nearly 6,000 rental units were 

either severely damaged or destroyed, and there is no plan currently to replace those units. In fact, we have a unit in Gulfport, 

Mississippi, that is currently being utilized that the Section 8 authority that is overseeing it is slated to demolish those units in 

which 400 individuals currently reside and redevelop as a mixedincome development. According to a 2004 apartment survey conducted by the Gulf Coast Regional Planning Committee, the average rent for a two-bedroom apartment in Gulfport and in Biloxi 

was just under $600. Recent information collected from that same 

body put those figures now close to $700 and in many situations 

out of the range of Section 8 vouchers so the working poor on the 

Gulf Coast do not qualify if they do not have the additional amount 

to go with the voucher. 

In addition to that, there are very few incentives to rebuild affordable rental units on the coast. While significant levels of lowincome housing tax credits have been made available, there are 

limited efforts to create units that are affordable for a family of 

four with annual incomes below $37,500. 

In closing, many of the situations that are highlighted in the four 

panels that have come up today exist in Mississippi. And we are 

asking this body that there needs to be a real investigation into 

how CDBG funds were used, who received those private contracts 

and the price gouging that the insurance industries are able to 

have, to charge victims of the hurricane. 

Thank you. 

[The prepared statement of Mr. Johnson can be found on page 

306 of the appendix.] 

The CHAIRMAN. Thank you. Next is Mr. James Kelly, who is the 

chief executive officer of the Catholic Charities Archdiocese of New 

Orleans. 

STATEMENT OF JAMES R. KELLY, CHIEF EXECUTIVE OFFICER, 

CATHOLIC CHARITIES ARCHDIOCESE OF NEW ORLEANS 

Mr. KELLY. Thank you, Chairman Frank, Subcommittee Chairwoman Waters, Ranking Member Biggert, and all of the other 

members of the committee. I am Jim Kelly from New Orleans, CEO 

of Catholic Charities, and CEO of the new Independent Catholic 

housing initiative, Providence Community Housing. 

In the past 17 months Catholic Charities has reached out and 

served over 700,000 people. We have delivered 70 million pounds 

of food and water, provided counseling and information to over 

500,000 people and, through our emergency service centers, distributed millions of dollars in direct assistance to families in need. 

Shortly after the storm, I attended the first trailer planning 

meeting with FEMA. It became very clear to me that these FEMA 

trailers were not going to be the answer to our housing crisis. A 

group of Catholic organizations, charities, and CDC’s therefore 

came together to see how we might bring people of all races, cultures, faiths, incomes, and backgrounds home. Providence Community Housing was formed with the mission of bringing home 20,000 

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victims of Katrina by repairing, rebuilding, or developing 7,000 

homes and apartments. 

In partnership with Catholic Charities, and with the assistance 

of 9,000 volunteers, we have since gutted over 800 homes and 800 

apartments. Now we are assisting these low-income seniors to navigate the Road Home Program. The system is painfully slow and 

filled with legalese. Providence has taken to repairing the homes 

and fronting the money to some of our elderly friends. 

Whether you are staying in an overcrowded home with family or 

in a trailer or in an apartment 80 miles from the job, the stress 

and strain cannot be imagined. My friend Connie’s house flooded 

on Banks Street in mid-city. She and her husband bounced around 

until they moved in with her sister, sleeping on the two couches in 

the living room. Finally, they got a trailer. These trailers are unbelievably small and unbelievably cramped. Three months ago, 

Connie’s husband had a heart attack. He recovered on his sisterin-law’s couches. He won’t go back in the trailer. 

In partnership with UJAMAA CDC, Mary Queen of Vietnam 

CDC, Tulane/Canal CDC and a new Hispanic CDC, we have recently launched a host of housing initiatives for families like 

Connie’s in need of real housing. We are constantly exploring any 

and all options to rebuild our homes and our neighborhoods. With 

a recent award of GO Zone housing tax credits, we hope to soon 

begin rebuilding 902 apartments for low-income seniors who desperately want to come home. 

Insurance quotes are coming in at 400 to 600 percent over preKatrina rates. We are hoping a special insurance fund can be established. We are also hoping that HUD will award supplemental 

income to project-based Section 8 contracts for properties like 

these. If not, we will lack ample operating funds to open. 

I thank you for your commitment to extend the placed-in-service 

date of the tax credits. It will make the market less skittish, increasing the possibility that many of our seniors and their children 

and their grandchildren can come home. Providence, with our partner Enterprise, is working on a plan that would phase the redevelopment of the Lafitte Public Housing Complex. We are anxious to 

have residents return as soon as possible. 

Last Thursday night, I attended a public meeting on the historical value of these buildings. Miss Johnson, a member of the Lafitte 

Resident Council, asked if I would call her the next day, and so I 

did. She asked me who all the people were at the meeting. She had 

never seen many of them. I explained that many of them were 

preservationists, and she said that they did not represent her. She 

wanted to come home as soon as possible, but she also wanted new 

homes and apartments for her family and friends like the ones 

voted on in September at our week-long home planning charette 

with 200 of her fellow residents. She did not want old obsolete 

apartment buildings, but instead new singles and shotgun doubles 

that were both apartments and homes. She wanted new apartments that were larger and had more bedrooms and space for the 

children. 

I was shocked when a leading local preservationist told me recently that a resident’s view or a resident’s vote should not matter 

since they were only renters. 

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I further explained to Miss Johnson that we were advocating for 

a phased redevelopment where a large number of apartments 

would be open immediately for those who wanted to come home 

right now. Redevelopment of the new homes would then begin on 

the other unoccupied blocks. I reminded her that when complete, 

there would be a one-to-one replacement of all 900 subsidized units 

plus 600 new homes for first-time homeowners on the site and in 

the surrounding neighborhood. 

I asked Miss Johnson, based on her knowledge, how many families wanted to come home today. She thought between 300 and 

400—‘‘It is probably closer to 300.’’ This is the same number that 

our resident outreach staff has estimated. The Times Picayune, our 

local paper, has said it is a question of building it right or building 

it fast. I do not believe that it is an either/or proposition. I believe 

a phased redevelopment with full replacement is not the middle 

ground but rather the right ground. It allows residents to come 

home today while also allowing the building of healthy, diverse, vibrant communities where families and children are safe to dream 

dreams that can come true. 

Since my early days in the Superdome, we have been blessed by 

so many across the country who have reached out to assist us. We 

are most grateful for the support and funding received from Congress. Sadly, the clear majority of these billions have not gone to 

the rebuilding of our homes. A Gulf Coast Housing Trust Fund, additional low-income housing tax credits, increased CDBG moneys, 

a large supply of project-based Section 8, permanent supportive 

housing vouchers and more funds for public housing will all be 

needed if we are going to truly provide the opportunity, the right 

for all our citizens to return. 

Katrina has taught us that to be successful, we will need a spirit 

of humility and collaboration. If we focus on the suffering victims 

of Katrina whom we have been called to serve, then God, who loves 

these families infinitely more than we do, will bless our efforts together. My gratitude to this committee for all you have done, and 

will do, for the good and brave people of Louisiana. 

Thank you. 

[The prepared statement of Mr. Kelly can be found on page 316 

of the appendix.] 

The CHAIRMAN. Next, we have someone whose voice does count 

here no matter what your preservationist friend thinks because she 

is a resident, and had been a resident of public housing, and we 

are grateful to her for sharing her views with us. Ms. Julie Andrews, who is a spokesperson for Residents United, and a public 

housing resident. Ms. Andrews. 

STATEMENT OF JULIE M. ANDREWS, SPOKESPERSON FOR 

RESIDENTS UNITED AND A PUBLIC HOUSING RESIDENT 

Ms. ANDREWS. Thank you, Chairman Frank, Subcommittee 

Chairwoman Waters, and everyone who is here today to hear our 

testimony. We are Residents United—the residents of New Orleans 

public housing. We need to come home in order to rebuild our cities, to embrace our communities, and to raise our children who are 

being victimized in other cities. 

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As displaced people, other poor and oppressed communities feel 

we are taking something away from them. Their actions toward us 

show this daily. We need to come home. When Mayor Ray Nagin 

said, ‘‘Citizens, come home’’, we thought we were citizens also. 

Many people who were shipped across the country came from far 

away with what little they had when they heard the Mayor’s message, and we are again displaced. 

Over 60 percent of the city properties remain damaged from Hurricane Katrina. However, the majority of the livable units are in 

public housing, and yet these units remain fenced off and boarded 

up by the Housing Authority of New Orleans and HUD. While 

other citizens were allowed to salvage their personal belongings, 

our possessions were stolen and vandalized because we were not allowed back. 

Citizenship is not based, and should not be based, on homeownership. We are citizens, too. Employment opportunities right 

now are very great in New Orleans. It is very hard to work in a 

city where you don’t have a home to live. While billions of dollars 

are given to contractors to pay employees who come from other 

States and to house them in hotels, the Sheraton, the Marriott, all 

over New Orleans, we, the working poor of New Orleans, are unable to come home, yet we are willing, we are ready, and we are 

able to come home so we can rebuild our cities and our lives just 

as our ancestors did years ago. 

When opportunists come to New Orleans to exploit our livelihoods with their visions of what the new post-Katrina city should 

be like, and should look like, they ‘‘sour the gumbo.’’ We make New 

Orleans what it is. The housing developments—the B.W. Coopers, 

the C.J. Peetes, the Guste, the Iberville, the St. Thomas, the Florida, Fischer, Saint Bernard, the Lafitte, the Desire, and the scattered sites all across New Orleans—we make New Orleans what it 

is. We house over 5,100 families, and that is after the continued 

failure of the Housing Authority of New Orleans. Today, many of 

these units are livable, yet we are still locked out. 

We would like to work with you to bring our residents home. We 

are organized and we are asking that you join us to open all public 

housing units. At this time the rich are getting richer and the poor 

are becoming more oppressed and victimized by the vicious plot to 

eliminate low-income people in New Orleans. Most of us are people 

of color and we don’t appreciate this at all. It is discrimination, it 

is an abomination, it is a sin for this to be happening to people in 

this country that most people call great. 

It is also an abomination to attempt to replace one race of people 

with another for the sake of economic gain. The housing developments have been a safety net, protecting us against hurricanes, 

and providing us with a community when no one else wanted us 

in theirs. When they say, ‘‘We don’t want those project people here, 

don’t give them Section 8; we don’t want them to live next to us’’, 

that means they don’t want our little Pontiac next to their Cadillac. 

We know the hurt of that because we lived it there. Our people 

want to come back to our communities, and we need this now more 

than ever. 

As displaced victims, our seniors are being denied a full range of 

medical services, our children are being denied a safe haven for 

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education, and we are being denied jobs. We want to come home. 

Without this population of people, our communities remain desolate, our schools remain closed, and our businesses suffer, as so 

many people have testified here today before you. 

The cause and the cries of our people are deafening. We need to 

come home. To be displaced in this wealthy country is an embarrassment to our government. The message that we are getting is 

that America does not care about us. While the war in Iraq is going 

on and billions of dollars are being spent there to restore the damage that this country caused, how can we not take care of what is 

going on right here in our home in this country? 

We, as citizens of the United States of America, deserve the right 

to return to our homes in New Orleans, to our culture, to our heritage, to our communities, to our families, and to our jobs. We want 

to come home. We have been working diligently to stay in contact 

with our residents and to contact even more residents on a daily 

basis. As I must reiterate, their cries are—it is just—it is hard to 

bear; every day people are calling and talking about the discrimination and the rejection and the things that are happening to them 

in these other cities. It is just really—it is really hard. We pray 

that you will work with us to provide a venue for our people to return to their homes. Our people have a dream that one day they 

will say, ‘‘Home at last, home at last, thank God almighty, we are 

home at last.’’ 

HUD testified that they want to make things better for us. This 

is not the time. We have people who are suffering, and this is not 

the time. Help us bring our people home. Thank you. 

[The prepared statement of Ms. Andrews can be found on page 

160 of the appendix.] 

The CHAIRMAN. Thank you, Ms. Andrews. 

And next Ms. Margery Austin Turner, who is director of metropolitan housing and communities for the Urban Institute. 

STATEMENT OF MARGERY AUSTIN TURNER, DIRECTOR, METROPOLITAN HOUSING AND COMMUNITIES, THE URBAN INSTITUTE 

Ms. AUSTIN TURNER. Thank you for the opportunity to be here. 

New Orleans urgently needs to rebuild affordable rental housing or 

its redevelopment as a city will be stunted and it will be inequitable. However, neither low-income families nor the communities in 

which they live will be well served if affordable housing is rebuilt 

exactly according to the patterns of the past. 

Before Katrina, New Orleans exemplified some of the worst failures of Federal housing policy, isolating too many low-income families in big projects that were earmarked exclusively for the poor 

and were mismanaged by a dysfunctional housing authority. These 

projects exacerbated racial segregation and isolation, they helped 

create concentrations of minority poverty and distress and they polarized communities along lines of race and class. Going forward, 

housing policies for the greater New Orleans region need to incorporate affordable housing in healthy mixed income neighborhoods 

and redevelop the distressed neighborhoods into opportunity-rich 

communities that welcome a mix of incomes, including families at 

the lowest income levels. These income mixing strategies cannot be 

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an excuse simply to displace low-income residents or to discard the 

communities that they have built. 

In that context, I would like to highlight five broad recommendations that are specific to Federal programs and policy. My written 

testimony also includes some recommendations for State and local 

action. 

First, the Low Income Housing Tax Credit Program should be 

used to expand affordable housing in healthy, opportunity-rich 

neighborhoods, not concentrated in poor or distressed communities, 

and as others have said, to ensure that a substantial share of the 

LIHTC units are affordable to households with very low incomes, 

the Housing Authority of New Orleans and other housing agencies 

in the region should project base a portion of their vouchers in 

these new developments. 

Second, additional block grant funds and public housing resources should be used to start acquiring and rehabbing small rental properties and vacant single-family homes, bringing them back 

into active use, and making them available for occupancy by lower 

income households. This kind of scattered site approach has 

worked in other cities. It has the potential to spur neighborhood renewal while making homes available for low-income families who 

so desperately want to come back. 

Third, the Housing Choice Voucher Program should be substantially expanded, potentially with higher payment standards to reflect current rent levels. Clearly New Orleans needs more rental 

housing production, but at the same time, even in the short term, 

vouchers can help. They can provide the resources many low-income families need to pay for housing that is at least closer to 

where they want to be than they are now, bringing them back into 

the greater New Orleans area to begin rebuilding their lives. From 

this perspective, a new administrator of the voucher program, independent of the housing authority, could substantially strengthen its 

impact, especially if it is ready to fight those fair housing violations 

that we heard about in the previous panel and convince more landlords about the need to participate in the program. 

Fourth, public housing can and should be playing a much more 

constructive role in the city’s recovery than it has been. We have 

heard what a troubled reputation public housing has in New Orleans, and residents are understandably distrustful of both the housing authority and HUD. Alternative receivership models offer the 

promise of bringing in an administrator for the Public Housing Program that is trustworthy, independent, and can be relied on to 

start bringing the salvageable public housing units back online 

quickly while also pursuing longer-term redevelopment strategies. 

In that framework, HOPE VI and other public housing development funds could ultimately be used according to the best practices 

that are emerging in other places across the country. HOPE VI is 

very controversial. It has not always been implemented well and it 

hasn’t always been implemented in a way that protects the interests of the original residents, but it can do better. We are getting 

experience from other places around the country about how effective leadership and respectful genuine resident involvement can 

produce mixed income communities that really provide choices for 

low-income families and protect their interests. 

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Rebuilding New Orleans is the housing and urban development 

challenge of a generation. No city operating on its own could tackle 

this kind of challenge that New Orleans faces today. In his September 2005 address from Jackson Square, President Bush promised that we would do what it takes to help citizens rebuild their 

communities and their lives. If this pledge is to be any more than 

empty rhetoric, the Federal Government must show much greater 

ingenuity and leadership than it has to date. 

Thank you. 

[The prepared statement of Ms. Austin Turner can be found on 

page 385 of the appendix.] 

The CHAIRMAN. Thank you. Next Ms. Judith Browne-Dianis, who 

is the co-director of the Advancement Project. 

STATEMENT OF JUDITH A. BROWNE-DIANIS, CO-DIRECTOR, 

ADVANCEMENT PROJECT 

Ms. BROWNE-DIANIS. Thank you, Chairman Frank, for the opportunity to speak, and I would also like to specially acknowledge Ms. 

Waters for all of the wonderful work she has done to try to reach 

a resolution around the public housing issue. My name is Judith 

Browne-Dianis, and I am co-director of the Advancement Project, 

as well as counsel for the public housing residents in New Orleans 

in their lawsuit against HUD and HANO. 

I am here on behalf of my clients, the more than 4,000 African 

American families who remain displaced from New Orleans more 

than 17 months after the storm because of the Federal housing response which was to lock them out of their homes and prevent 

their return to New Orleans. Today joining me are residents of 

New Orleans’s public housing who are wearing orange shirts that 

represent the bricks that are sturdy and strong and still standing 

in New Orleans. They traveled here as representatives of their 

families, neighbors, and friends, in urging you to support their immediate right to return. 

Prior to Katrina, there were 5,100 families living in public housing. On August 29, 2005, these families were ordered to evacuate. 

Like thousands of other evacuees, they expected to return when the 

mandatory evacuation was lifted. Their expectation was reasonable; most of their homes sustained little damage. Today most of 

these families are still waiting to come home and they want to return. 

Congress recognized that this is a crisis, not an opportunity. Congress directed HUD to preserve to the extent possible all public 

housing in areas affected by Hurricanes Katrina and Rita. Moreover, Congress appropriated funds for this mandate, permitting 

fungibility between public housing and voucher funds through Section 901 of the December 2005 supplemental bill. HUD has, for the 

most part, ignored Congress and, in fact, has done the exact opposite. 

In its initial assessment after Hurricane Katrina, HANO determined that Iberville, C.J. Peete, Lafitte, and B.W. Cooper experienced minor to moderate damage. Saint Bernard, Florida, and Desire sustained some severe damage. HANO announced that they intended to clean, repair, and open Iberville, C.J. Peete, B.W. Cooper, 

and Lafitte. That was their first assessment, but it has been a movVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00129 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
124

ing target. As the one-year anniversary of Katrina approached, the 

promises remained unfulfilled and appeared to be retracted. During 

the following months, HANO boarded up and fenced off several developments. These were developments that they had no plan to redevelop prior to Hurricane Katrina. 

Then, HUD made known its objective. On June 14, 2006, Secretary Jackson announced a plan to demolish four of New Orleans’ 

largest developments with more than 5,000 units among them. The 

plan would constitute the largest demolition in the City’s history, 

destroying 70 percent of New Orleans public housing stock, which 

totaled 7,100 units. 

HUD said now that, in fact, the damage was moderate to severe, 

despite the prior acknowledgment that there was only minor water 

damage and many could have been habitable again once repaired. 

Today, I heard them say that they are beyond repair, again a moving target of excuses. 

Further, HUD and HANO moved forward with plans of redevelopment, despite the fact it is much cheaper to repair units than demolish and rebuild them. The justification proffered for the demolition is questionable. Documents obtained from HANO indicate that 

HUD and HANO misled the public to justify their plans. 

Officials drafting talking points for their plan about Lafitte, William Thorson, who is the receiver of HANO, a HUD employee, recommended that the staff take photos of the worst of the worst, pictures are worth a thousand words, and to check the presence of 

lead, apparently not to evaluate safety but to justify its demolition 

plans, even though they knew that the per unit cost of repairs is 

relatively low. This is in their documents. 

Thorson also directed staff to use scare tactics by using news articles about murders at another development, with the idea that reopening Lafitte as before would create another Arborville. 

In another instance, HUD admits that the interior damage to 

C.J. Peete was minimal, and overall it was moderate to the building, but makes note that the vacant property has become a prime 

location for retail and residential development. 

HUD’s plan is clearly not about the habitability and the cost of 

repairs, nor is HUD concerned about the immediate affordable 

housing crisis or the despair of displaced survivors of Hurricane 

Katrina. Many observers believe this is about race, class, and 

prime land. 

At the anniversary of Hurricane Katrina, they announced that 

they would open 2,000 units. They moved that—by August, they 

moved that date back to September. They moved that date back to 

December. Here we are in February, 2007, and only 1,100 units 

have been opened. 

By law, they are required to consult with residents of public 

housing. To date, they did not do what they were required. What 

they did was hold one public meeting with all residents of public 

housing, and, in fact, the documents show that they didn’t want to 

do that. 

Our experts say these buildings are habitable. Our experts say 

that replacement with contemporary construction would yield 

buildings of lower quality and shorter lifetime duration. The original construction methods and materials of these projects are far suVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00130 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
125

perior in their resistance to hurricane conditions than typical new 

construction. 

We ask that you help us to return our clients to their homes. 

Right now is not a time for redeveloping. There is no housing available, the vouchers can’t be used, there are no vacancies, the rents 

are sky high, and the people want to return. 

[The prepared statement of Ms. Browne-Dianis can be found on 

page 180 of the appendix.] 

The CHAIRMAN. Mr. Baker, who had been very diligent, did have 

a 5:30 appointment he had to go to. 

Next, the final witness is Martha Kegel, the executive director of 

UNITY of Greater New Orleans. 

STATEMENT OF MARTHA J. KEGEL, EXECUTIVE DIRECTOR, 

UNITY OF GREATER ORLEANS 

Ms. KEGEL. Thank you very much, Chairman Frank, and members of the committee. Thank you for inviting me to testify today 

on behalf of the most vulnerable victims of these disaster. 

I represent a collaborative of 60 nonprofit and governmental 

agencies that provide housing and services to people experiencing 

homelessness in New Orleans and neighboring Jefferson Parish. 

Almost 18 months after the catastrophic levee failures, the housing situation for the most vulnerable, poorest people in New Orleans is bleak and indeed desperate. We estimate, based on accounts 

from our agencies as well as outreach workers, that there are a 

minimum of 12,000 people who are literally homeless on any given 

night in New Orleans. Those people are living in abandoned housing, on the street, in cars, and in housing designated for the homeless. Many of them are elderly, and many of them are people with 

severe mental and physical disabilities. 

Before Katrina, we did not see people over the age of 65 living 

literally on the streets or in abandoned housing. Now it is a very 

common instance for our outreach workers to find people in their 

70’s and 80’s living in abandoned housing in New Orleans because 

of the extreme lack of affordable housing. 

There has been a crisis of mental illness overtaking the city as 

people are struggling with depression. There has been a crisis of 

substance abuse taking over the city as people cope with the very 

uncertain, anxiety-producing conditions, and those conditions are 

affecting the homeless population in particular. 

So you are dealing with a very vulnerable population of homeless, and I am not even counting the untold thousands of people 

who are at great risk of homelessness because they are paying 

unaffordable rents. Rents have skyrocketed in the tight housing 

market since Katrina. 

We have families now not just doubled up, but tripled and quadrupled up, because of the scarce housing. We have people who are 

living in housing that has no utilities, no kitchen, and no bathroom. 

So I am not even counting those people in the 12,000, nor am I 

counting the people living in FEMA trailers, and I am not counting 

the people who are calling our agencies on a daily basis begging to 

come home, but that cannot find affordable housing. 

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We decided very early on that the most vulnerable people must 

not be left behind in the recovery of New Orleans, and we have 

dedicated ourselves to that cause. And so for that reason we joined 

together with the National Alliance to End Homelessness and 

many partner local, State, and national organizations to create the 

Louisiana Supportive Housing Initiative, specifically for the most 

vulnerable victims of this disaster. 

To the State’s credit, they have included a 3,000-unit goal for 

permanent supportive housing in the Louisiana Road Home plan. 

That is one of the most progressive policies embodied in that program, and we are very proud of that and proud that it is a central 

feature of that program. 

As you know, permanent supportive housing is an evidence-based 

practice for people with disabilities who are homeless or at risk of 

homelessness. It combines affordable apartments with supportive 

services right onsite so that people can become stable tenants and 

productive members of the community again. But in order to make 

this initiative a reality, we are going to need Congress’s additional 

help. 

First of all—I am going to be very specific—we need 3,000 tenant—I am sorry, 3,000 project-based rental vouchers. Because without those rental vouchers we have no permanent supportive housing. Without those rental subsidies the very people for whom this 

initiative was intended will not be able to get access to these units. 

Secondly, we need more GO-Zone low-income housing tax credits. 

As you have heard, the number of affordable apartments that are 

going to be created by the GO-Zone low-income housing tax credits 

in Louisiana is only half of what was anticipated, and that is because HUD has taken a lot of those units for redevelopment of 

their own projects. It is also because the construction and insurance costs have skyrocketed far beyond anyone’s anticipation. 

We also are going to need additional acquisition funds earmarked 

for nonprofits and additional gap financing earmark for nonprofits 

so that nonprofits can develop some of this permanent supportive 

housing. If we want the most vulnerable people, particularly the 

chronically homeless and people with severe mental illness, substance addiction, other severe problems, to be able to have access 

to these units, we need the nonprofit organizations that are most 

dedicated to these populations to be able to build the housing. 

So I thank you so much as a New Orleanian for your commitment to rebuilding our city and to make it a more inclusive place 

that provides a home for everyone. 

Thank you. 

[The prepared statement of Ms. Kegel can be found on page 312 

of the appendix.] 

The CHAIRMAN. I thank the panel. This again has continued to 

be of great use, and I guarantee you that we are writing a bill as 

we listen to you. 

I am going to turn now to the gentlewoman from California. I am 

going to waive my 5 minutes and turn to the gentlewoman, who 

is correctly identified by Ms. Browne for the leadership role she has 

been playing. 

Ms. WATERS. I have so many questions, but let me start with 

that first witness from Enterprise, who testified about Lafitte. 

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You have been advancing the idea that you could do phased redevelopment at Lafitte and that you have acquired some 200 properties in the area and that you can provide the kind of social services of a model type program that will assist residents in getting 

jobs, job training, health care, and all of that. Some people are asking why you chose Lafitte. That is the best of the housing project 

properties and with the least damage and that is the one where we 

could return the most people at this time. Why did you choose Lafitte? 

Ms. KOO. Thank you, Chairwoman Waters. 

Development is place-based and you have in this situation a very 

important first experiment, where the success will show that it is 

workable, restore hope and people will continue to invest in New 

Orleans, and if you fail, will forever doom the development community and investor confidence. 

We chose Treme as the community to put our attention to partly 

because it is the historic neighborhood of African Americans. It is 

located outside of the French Quarter, with easy access to employment opportunities, and it is on relatively high ground. It took 

water, but it didn’t take 12 feet of water. 

Ms. WATERS. How many units would you lose in this phased redevelopment in the actual housing project boundaries as we know 

it, not counting the 200 units that you are talking about outside 

of the project area? 

Ms. KOO. We are proposing to reduce the density so that there 

will be about 600 units, 5- or 600 units back on site; and then we 

would have about— 

Mr. WATERS. How many are there now? 

Ms. KOO. 856. 

Ms. WATERS. How many would— 

Ms. KOO. Then the offsite will take on all the one-for-one replacement plus 600 new additional first-time homebuyers’ homes using 

a lot of the blighted lots currently existing in the neighborhood of 

Treme. 

Ms. WATERS. You stated that you had talked with residents. You 

went to Dallas? Houston? Where did you talk to these residents? 

Ms. KOO. I will defer to Jim, but we held week-long trips back 

in September, I believe, and then subsequently took a trip to Houston. 

Mr. KELLY. That is correct. We have reached by phone, by survey, and by direct contact, approximately 700 of the residents. 

Ms. WATERS. You are saying that these are predominantly African American residents— 

Mr. KELLY. Absolutely. 

Ms. WATERS. —who have—in what is a historical area where 

they are saying they are willing to support a project like Enterprise 

is proposing? 

Ms. KOO. Yes. 

Mr. KELLY. As I mentioned in my remarks, in a phased development where people can come home first and then you can do development after that. So it is a both/and, it is not an either/or. Let 

the residents come home—if there is 3-, 400, let them come home 

and then do phased development on the other properties. 

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Ms. WATERS. Let me ask our resident who testified, Julie Andrews, about the development that is being described by Enterprise 

where they are representing that they have talked to residents, 

that they will make it a better community with all the services to 

go along with it, etc., what is wrong with that? 

Ms. ANDREWS. This company came in by night. If they have a 

real interest in bringing the residents home, not just 2-, 3- or 400, 

let all of them come home and let them continue to work with each 

other to plan their own communities. 

Ms. WATERS. So what you are saying is that you don’t support 

phased development. You would allow everybody at Lafitte who 

wanted to return—even if it was beyond 3- or 400, 500, 600, everybody who wants to come home should be able to come home and 

return. And what do you say about development, period? Are you 

saying that there should be no development on the Lafitte site? 

Ms. ANDREWS. There should be no demolition. Development, we 

need our people home now before they die. After the residents come 

home and we have exhausted the lengthy waiting list with the 

Housing Authority who have been there for over 10 years, then we 

can talk about de-densifying the developments. But there is an urgent need for housing in New Orleans, and until you open up the 

housing developments, you are going to constantly hear the cries 

of just renters who cannot afford housing because the vouchers are 

demanding high rents in New Orleans. We need the developments 

open. 

Ms. WATERS. Let me ask our representative Ms. Browne from the 

Advancement Project, has HUD cooperated with you in helping you 

to know where all of the residents are so that you can talk with 

them? They claim that they are contacting them and that they are 

coming up with the numbers who want to return, who don’t want 

to return. You have no way of verifying that. What do you need 

from HUD in order to do that? 

Ms. BROWNE-DIANIS. In order for us to speak with our clients, we 

need the information about where our clients are to get their current contact information. 

We also would like to do a survey that would be a survey by a 

third party that would be agreed upon, that would be trusted by 

residents so that they could be contacted to find out whether or not 

people want to come home and when they would come home. But 

we have not received any cooperation from them in providing information about the clients’ whereabouts. 

Ms. WATERS. Finally, do you agree that bringing everybody home 

who wants to come home, and not moving forward with any phased 

development until you have an opportunity to talk with the residents, to get them involved and see what their ideas are about the 

future of these public housing developments, is that what you are 

recommending? 

Ms. BROWNE-DIANIS. That is what we are recommending. That is 

how it is done in other cities. They don’t use a disaster as an excuse, but the residents have to be at the table so they can figure 

out what their future is going to look like. 

Ms. WATERS. Would you include in the definition of the residents 

not only those people who are returning but those people who are 

on the waiting list, who have been waiting to get into public housVerDate 0ct 09 2002 15:30 Apr 27, 2007 Jkt 034671 PO 00000 Frm 00134 Fmt 6633 Sfmt 6633 K:\DOCS\34671.TXT HFIN PsN: TERRIE
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ing that has been boarded up and not in use? Would you consider 

that it would make good sense to open up—repair those units, open 

it up, reduce that waiting list, and then let’s talk? 

Ms. BROWN-DIANIS. Yes. There are, I think, about 6,900 families 

who were on the waiting list for public housing units, another 

about 11,000 that were on the list for Section 8 vouchers, and they 

should be given places, in addition to which we can’t ignore the fact 

there may be more families who are in need of affordable housing 

than there were pre-Katrina. 

Ms. WATERS. Thank you very much. 

The CHAIRMAN. The gentleman from North Carolina. 

Mr. WATT. Thank you, Mr. Chairman. 

Ms. Browne-Dianis— 

Ms. BROWNE-DIANIS. Browne is fine, Mr. Watt. 

Mr. WATT. I am looking at page 4 of your testimony and just 

want to get the source of the information. Actually, I guess you indicate that the source is HUD. 

Ms. BROWNE-DIANIS. HUD, yes. 

Mr. WATT. HUD has estimated that the cost to repair Lafitte is 

$20 million. The cost to completely overhaul the development is 

$85 million. The estimated cost for demolishing and rebuilding Lafitte is $100 million. 

Ms. BROWNE-DIANIS. Yes. Those are all HUD’s numbers. 

Mr. WATT. That is their numbers. 

Ms. Koo. 

Ms. KOO. Yes, sir. 

Mr. WATT. What is the projected cost of your development? 

Ms. KOO. Our development includes more than replacing one-forone but introducing— 

Mr. WATT. I didn’t ask that. I just asked you what the cost of 

whatever it is you are proposing. 

Ms. KOO. It would be around $180 million in all. 

Mr. WATT. The minimum cost to HUD would be $20 million, and 

if they did—your plan would be $180 million. 

Ms. KOO. HUD would only contribute about $15 million into the 

development because of the leveraging factor. 

Mr. WATT. What would be the development timeframe for your 

development? 

Ms. KOO. With phased development, our proposal is to bring residents home to a section of the site and then leave some room for 

staging and immediately begin building on half of the site. The infrastructure underground is— 

Mr. WATT. Ms. Koo, you are following the HUD theory of answering now. 

Ms. KOO. Okay. 

Mr. WATT. Please just answer the question that I ask you, if you 

don’t mind, because I don’t have time, understand? 

Ms. KOO. Yes, sir, I understand. 

Mr. WATT. What would be the timeframe for your development? 

Ms. KOO. Within 9 months, there will be off-site replacement 

housing available; within 12 to 15 months, we would see the first 

beginnings of the permanent new units onsite. 

Mr. WATT. Ms. Browne, how long would it take to do the $20 million repair? 

130

Ms. BROWNE-DIANIS. Although I am not a developer or an architect, our architect has said that basically what needs to be done in 

Lafitte, especially, since the first floor units were the only ones 

that received flooding, is to get the baseboards done, and get new 

flooring, paint jobs, and mold removal. They say that for each 

unit—I can’t give you the estimate, but it probably would take 

them 3 months to do it. 

Mr. WATT. Ms. Koo, have you included in your development cost, 

the cost, $180 million, the cost of continuing to pay for all of these 

residents wherever they are scattered throughout, or is this development cost that you are talking about? 

Ms. KOO. No, that would be HUD’s responsibility. 

Mr. WATT. So that is not included in the $180 million that is 

your development cost. That cost of continuing to pay for hotel 

rooms or other things would be in addition to the $180 million. 

Ms. KOO. That is correct. 

Mr. WATT. All right. I am just trying to get a better feel for—

so we have 3 months rehab time versus—well, I don’t know, what 

would it take? You have a phased development. What is the—over 

what period is the entire phasing going to take place to get the 

400-some residents back, as opposed to 600-some residents back? 

Ms. KOO. The entire phase will include 1,600 units that would 

cost $180 million, and we project completion by 2010 and— 

Mr. WATT. So 21⁄2 more years. 

Ms. KOO. For the whole 1,600 units. But because the phased development— 

Mr. WATT. When you have done all of that, how many of the public housing residents are back in this facility if they choose to do 

that? 

Ms. KOO. There will be one-for-one replacement. Up to 900 public 

housing units will be rebuilt as part of the 1,600. 

Mr. WATT. Some off-site. 

Ms. KOO. Some off-site on single family lots. 

Mr. WATT. How many off-site and how many on the Lafitte site? 

Ms. KOO. Perhaps half-and-half. 

The CHAIRMAN. I thank the gentleman. 

I am just going to ask a question but also make a plea to all my 

friends who are developers—I work with them—but when we talk 

about replacement housing and phasing, can we see a project in 

which Phase I is new housing and then start moving people? I am 

waiting for where the first phase is the creation of additional units. 

Because we can talk about minimizing the displacement, but I will 

give a prize, within the ethics rules, which will make it pretty 

cheesy, to anybody who will come up with a plan for phased development in which Phase I is additional housing for low-income people and then we can start doing the other staff. 

Yes, Ms. Andrews. 

Ms. ANDREWS. Chairman, currently, we have several housing developments that have space already leveled to build that additional 

housing. We need additional public housing units on Desire, on 

Peete, and on Guste, which is under construction, Imperial Drive. 

Of course, some of the others, because of Housing Authority neglect, are gone. 

131

But what I hear today, when you talk about leveraging moneys 

to build developments, you start getting into private management. 

It does not work. It is not effective for the people. It only makes 

the rich richer and the poor more dependent. 

The CHAIRMAN. I think we need a mix. I do want to— 

One of the things that ought to come out of this is that public 

housing is a good thing. People live there voluntarily because it is 

better than anything else they can get, and we should reverse the 

tendency that we have seen, including the President’s current 

budget, which makes severe cuts in public housing. 

We build these units—society built units that were too dense in 

the first place, and then it didn’t provide any services for people 

who live there, and then they gave too little money to the people 

running the place. So—big surprise—they became run down. Then 

we blame people for living in rundown places that we built and 

helped run down. Let me get in the spirit of New Orleans: Quelle 

surprise. 

What we have to do now is to recognize that we can do public 

housing well. I think it would be a mistake to rule out some private 

housing. We have the people at NHP here. Mr. Mehreteab and his 

organization maintain some very good units in my area. There is 

a mix. 

When we talk about leverage, we talk about finding ways that 

we can make the public money go further by combining it with 

some private money; and I think that can be—if it is done right—

be beneficial. 

Yes. 

Ms. ANDREWS. I am sorry to hog the microphone, but the Guste 

highrise in New Orleans is a perfect example of how resident management works. We have worked hard over decades of time to have 

this happen, only to have these people take it away. 

The CHAIRMAN. Ms. Andrews, first of all, I may be older than I 

look, but the first resident management public housing, I believe, 

in the United States was Bromley Heath in the City of Boston in 

1969. I was the assistant to the mayor of Boston, and I continue 

to be in touch with the people where we did that. 

I agree with that, but I think you can go along with it with other 

factors. But I just—you say that there is vacant land now to build 

some housing. I agree with that, and we should build some housing, and I want to tell everybody, let’s build the additional units 

we need as the first phase of this before we start moving everybody 

else out. 

I will now go to the gentleman from Missouri. 

Mr. CLAY. Ms. Koo, I am familiar with Enterprise’s good work in 

my district to build strong, healthy communities. How will you 

bring this expertise there in rebuilding the Gulf Coast community 

and can you give me some examples of what a new development 

would look like? And please explain why you would use phased development. 

Ms. KOO. Thank you, Congressman Clay. 

Our approach is very simple. We look for local partners who 

could be on the ground caring for those units, perhaps working 

with residents to develop alternative management efforts involving 

132

residents, as well bringing investors into supporting those developments. 

I think Chairman Frank is right. If you want to build everything 

on Federal dollars, there is not ever going to be enough money to 

do it. Our success has been the leveraging factor, and the 

leveraging factor does not need to mean giving up mission. We 

have done it in many communities, in St. Louis, for example, where 

the very-low-income get to return and live in a better community 

than ever before because of support services. 

The phased development approach is forced by the issue of not 

having enough money to do everything that we feel is the right 

thing to do. It will take a lot more resources, Chairman Frank, to 

build new units on the vacant land, to fix up existing units and to 

replace everything, and that can be done with your help, with resources, with leverage fund legislation, but in the spirit of doing 

the best with what we have using low-income tax credit, using 

foundation funding, which we raised $5 million from the get-go to 

increase the capacity of low-income housing providers and helping 

housing authorities like in Biloxi, Mississippi, and elsewhere to buy 

land and plan affordable housing. 

We have a pipeline now of about 2,500 units that will come into 

service within the next 9 to 12 months. So we are encouraged by 

that kind of response and want to get your support to do more. 

Mr. CLAY. You are actually talking about programs that you 

have tried, that have worked, that have been a collaboration of different interest groups that have come together. 

Ms. KOO. Absolutely. 

Mr. CLAY. Thank you for that response. 

Let me ask, Ms. Andrews, Ms. Dianis, and Ms. Kegel, what has 

been the cooperation of local and State elected officials in New Orleans with your groups? Real quickly, if you could give me a description of what has happened. 

Ms. ANDREWS. The Housing Authority of New Orleans is being, 

in their words, nonresponsive. The other agencies are being—they 

are ghosts. They are not there. 

The CHAIRMAN. Ms. Andrews, am I correct that the Housing Authority of New Orleans is not a locally elected body? It is run by 

HUD, am I correct? 

Ms. ANDREWS. Yes, it is. 

The CHAIRMAN. The Housing Authority is a HUD agency. 

Ms. ANDREWS. They are being also non-responsive. 

The CHAIRMAN. Once again, quelle surprise. 

Mr. CLAY. Ms. Turner, you may answer if you have an experience 

and go down the line. 

Ms. TURNER. Clearly, the Housing Authority is HUD, and they 

are completely lacking in credibility among residents and other 

low-income households. 

In addition, I think, the discriminatory responses of some of the 

parishes in the greater New Orleans area is another serious issue 

raised in the last panel that is undermining the ability of the region to recover and low-income families to return. 

Ms. BROWNE-DIANIS. Locally, I think the thing that is happening 

is that this is a political hot potato. No one is talking about it. The 

mayor doesn’t want to talk about it. The city council doesn’t want 

133

to talk about it. Local elected officials at the State level do not 

want to talk about this. Because this is a battle between their constituents and their money. So no one is addressing the issue. The 

silence has been deafening. 

Mr. CLAY. Thank you for that response. 

Ms. Kegel. 

Ms. KEGEL. We were created as a public-private partnership so 

we have a good working relationship with Neighborhood One, 

which is the city government housing agency; and, also, in recent 

years, we have had a very good relationship with HANO, and we 

have enjoyed support from the LRA. But, having said all that, I can 

say that the population that I represent never seems to rise to the 

top of anyone’s priorities. There are always competing interests and 

it is hard to get the resources that we need for the most vulnerable 

people. 

Mr. CLAY. I thank you all for your responses, and I yield back 

my time. 

The CHAIRMAN. The gentleman from Texas. 

Mr. GREEN. Thank you, Mr. Chairman. 

Let’s talk for just a moment, if we may, about the 66,000 Asian 

Americans who are impacted by Katrina and Rita, 17,000 of whom 

are limited English proficient. My assumption is that there are 

some unique problems associated with trying to service this constituency, and I would like for some of you, if you would, to please 

comment on the problems that you have encountered. 

I mention this because I am proud to see that the NAACP is 

here. I am a former branch president. But I now serve as a Chair 

of the Congressional Asian Pacific American Caucus Katrina Committee Task Force, if you will, and one of the things that we have 

noticed is that we have to really make it clear to people that Asian 

Americans have been adversely impacted by these devastating hurricanes. 

So let’s start, if we can, with Ms. Koo. 

Ms. KOO. Thank you, Congressman Green, and we really appreciate your sensitivity on that question. 

Asian Americans represent a largely immigrant community 

where language is a hardship. What is on their side is motivation 

and a determination to succeed. When I talked to some of the displaced members, they said, a hurricane is nothing new; we ran 

away from war and we rebuilt. In a sense, they were the least dependent on government and the least expecting government to help 

them. 

In the instance of the Vietnamese American community in east 

New Orleans, within 6 months of the hurricane the entire community was back because they gutted their own homes and each others’ homes. Through the work of Providence Community Housing 

and Enterprise we assisted them in filing an application for lowincome housing tax credits to plan the first retirement community 

to serve the elderly in their communities. 

But they do need a lot of help. They do not understand tax laws. 

They do not understand funding complexities. And in Biloxi, Mississippi, east Biloxi, displaced Vietnamese fishermen continue to 

search for a means of livelihood. 

134

I personally understand, because there is a big Vietnamese community based in Houston, Texas, who are opening their homes and 

their hearts to displaced residents. 

So, very quickly, it would be incumbent on all of us and government officials to make sure that language does not become yet another burden to the recovery efforts of these communities. We need 

to be very sensitive to small business loans and to help the small 

venture capitalists to start up, whether it is growing vegetables in 

the market, or opening their restaurants back up, and housing is 

fundamental and key. 

So our effort in New Orleans will include working with that community. Thank you for your inquiry. 

Mr. GREEN. Thank you. 

Mr. Kelly, would you like to respond. 

Mr. KELLY. I would add that we provided a tremendous amount 

of case management support services to and with the Vietnamese 

community, and we have also helped them form their own CDC as 

they try to ratchet up and do more housing in the future. 

Mr. GREEN. One final question, and this one will be for Mr. Johnson. Mr. Johnson, you referenced a city that has an ordinance that 

requires persons to lease only to relatives. Is this correct? Who is 

it— 

The CHAIRMAN. Mr. Perry in the previous panel. That was Mr. 

Perry in the town of Saint Bernard Parish. 

Mr. GREEN. As he is not here, I will yield back my time. 

The CHAIRMAN. Next is the gentleman from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Mr. Johnson, one of the requirements of Federal 

statutes with regard to community development block grant is that 

HUD is to hold public hearings in areas prior to spending of CDBG 

dollars, and I am curious, based on some of the comments I have 

heard from some of the activists, whether or not those hearings 

have in fact taken place. 

Mr. JOHNSON. The requirement to hold public hearings was relaxed when the 2005 supplemental bill was passed. It allowed the 

State officials to create a public comment period to determine and 

allow the community to have input. 

During the first public comment period, we were able to organize 

individuals, sending over 3,000 letters objecting to Phase I of the 

use of the CDBG funds, which completely excluded home renters, 

senior citizens on fixed incomes, and the disabled community. That 

was completely ignored. 

We followed that up with a meeting with HUD and also providing them with those same letters suggesting that they should 

not waive the requirement that funds be used for low- to moderateincome individuals, and that was also ignored. 

It was not until the anniversary of Katrina and with the media 

frenzy that came to the State that it was recognized that only 75 

checks had been issued from the State of Mississippi and contracts 

had gone to lawmakers, a particular State Senator, that they began 

to expedite the process and increase the amount of money awarded 

to homeowners and they finally began to get checks out of the door. 

And it wasn’t until after the election that they created a Phase II. 

Mr. CLEAVER. So there were no public hearings. 

135

Mr. JOHNSON. There were no public hearings. 

Mr. CLEAVER. I don’t recall—I will check when I get back to the 

office—that when we approved the money for Katrina that there 

was—I don’t remember anything related to a relaxation of the requirements for a public hearing, which I will check, and in cities 

there has to be a major public hearing before the annual community development dollars are voted on by any city council. I remember specifically asking the question of the Secretary of HUD, sitting 

in the exact chair where you are sitting, whether or not we were 

going to have a public hearing. I was assured that we were. 

When Chairwoman Maxine Waters took her committee to New 

Orleans and Louisiana, I asked the question of the HUD representative at the meeting whether or not there were going to be public 

hearings. He told me yes. And, as I suspected, you are saying that 

didn’t happen. 

Mr. JOHNSON. Only a public comment period, not a hearing. 

Mr. CLEAVER. Thank you. 

My other concern—the gentleman isn’t here. He raised a question today about public housing, and he didn’t live in it, and he 

didn’t understand why people wanted to go back to the way it was, 

and he failed—and I am talking to myself now—he didn’t understand that people don’t trust HUD, and it has nothing to do with 

going back to things the way they were. People don’t trust HUD, 

and I don’t think they should trust—I mean, the Federal Government is not trusted. 

In 1991, there was a decision made to build a Capitol Visitors 

Center, and the cost was $79 million, and there was a $200,000 initial allocation to study the project. That was in 1991. In 2000, the 

construction started. At that time, it was about $300 million, and 

today it is still not finished, and the cost is $560 million. 

So when somebody tells me, as I was told by the gentleman 

today from HUD, that we will have the new development in 2 

years, I don’t put my tooth under the pillow anymore, because I 

don’t think the tooth fairy will deliver, and I don’t think that HUD 

is going to deliver, either. 

I am speaking out of frustration. The gentleman is gone who 

raised the issue, but I understand your frustration as well. 

And it seems to me, Ms. Browne-Dianis—anybody can answer 

this question—the problem with HUD running the Housing Authority has to be addressed, because you can’t expect the agency 

that has failed, to unfail. And it seems to me that if we are going 

to try to really address this problem that one of the things that 

must be fixed quickly is either a receivership or the Housing Authority—and you probably won’t like this part—will have to be 

turned over, as it is in most cities, to the mayor. Because— 

Listen, I am just telling you the way it happens. But the problem 

is, if you are saying that HUD—that you don’t trust HUD, which 

I don’t either, especially under the current arrangements, then we 

have almost an insolvable problem expecting somebody to fix the 

problem who helped break it. 

I am finished. 

The CHAIRMAN. As we move on, the gentleman from Minnesota, 

one of our new members has been patient. 

136

I will just make two comments. His analogy to the Capitol Visitors Center is not complete to what we are talking about here because, for that to be complete, the people building the Capitol Visitors Center would have had to first move Congress to another location and promise us that we could move back when it was finished. 

We were smart enough not to subject ourselves to the promise that 

you will be able to come back when it is finished, that we think 

it is okay for poor people, but we don’t buy that ourselves. That is 

one thing. 

The other thing I would say is that when people cast doubt on 

why people would want to live in public housing—and we know we 

have waiting lists. I have always thought the greatest political wisdom, given the world of limited choices, was expressed by a philosopher named Henny Youngman in his very famous line, ‘‘How is 

your wife?’’ ‘‘Compared to what?’’ People are living in public housing and other people don’t like it, well, compared to what? 

I will say, to update that in recognition of my State of Massachusetts, I now personally say, ‘‘How is your husband?’’ ‘‘Compared to 

what?’’ 

With that, I will now turn to my colleague, the gentleman from 

Minnesota. I do want to say we appreciate you staying. Frankly, 

it is somewhat unusual, 81⁄2 hours after we started this, you still 

have a large number of Members of Congress here, and that is a 

promise to you that you have reached the top of our agenda. And 

this subcommittee, before the spring is over, will be bringing forward legislation responsive to what we have heard today. The gentlewoman from California will be chairing that in our subcommittee, so this is time that you will find is well spent. 

The gentlemen from Minnesota. 

Mr. ELLISON. Mr. Chairman, today my mission was to listen 

much more than talk. I really don’t have any questions. I just want 

to express my appreciation to you and the gentlelady from California for your leadership in this area, but mostly I want to express 

my admiration and respect for all of you who have come here today 

to tell us what we really need to be thinking about in terms of addressing this situation involving Katrina. 

I have said consistently that what started out at as a national 

disaster has ripened into a political disaster, and it shouldn’t be 

that way. So stick to it. 

I was in and out a lot today, but I was listening to every word, 

even when I was back in the other room, and I look forward to 

working constructively with you. 

But I guess the one question I would have is, Ms. Andrews, I 

mean, I heard you say that HUD has been non-responsive. We 

have seen testimony today from HUD and other agencies. Do you 

have any suggestion as to—this might be a bizarre question, but 

you have been eloquent and thoughtful, and I thought I would ask 

you your opinion. Do you have any ideas as to what you might recommend to us to help break the logjam? 

Ms. ANDREWS. Thank you, sir. I most certainly do. We need to 

again—well, I don’t think it has ever happened, but we need to put 

in place a majority resident board of commissioners to run the 

Housing Authority of New Orleans. We need to put in place resident management across that City. We need to put in place other 

137

CDC’s and other venues where residents can do what they need to 

do without having other people come in and tell us what they want 

to do. We need that, and we needed that before Hurricane Katrina. 

And also now is not the time to tear down public housing. It is not 

the time. Let us go home, and then we will talk. 

Mr. ELLISON. Mr. Chairman, I guess that raises another question 

for me. What would it take in order to achieve that which you propose, Ms. Andrews, in order to have that grassroots residence control over the matter? I suppose that would be a statutory change 

or could that be done— 

The CHAIRMAN. That would be—the way it works, I believe, 

would be in the State law of Louisiana. There is a Federal law that 

creates public housing, but the composition of the various housing 

authorities is left to State law, with some Federal sort of overall 

guidelines. But, essentially, it a State law question. 

Ms. ANDREWS. We have undergone many resident management 

trainings. I personally have two certifications for resident management. We have other people who are doing this as we speak. We 

didn’t dedicate all our years to take these trainings to become dormant, to be managed by private management. Our people need, 

and our people need now. I know you heard my testimony. The peoples’ cries are deafening. We can’t survive like this. We need to 

come home. New Orleans can’t survive. There will be no schools 

and no businesses if we don’t go home. 

Ms. WATERS. Mr. Chairman, if I may, I would like to make a 

comment here. We are going to come to New Orleans—we are 

going to be in the Gulf Coast region, and we are going to do Mississippi, also, but we are going to be in New Orleans, and we are 

going to visit public housing developments, and what I would like 

to have you participate in is the identification of units in the public 

housing developments that you consider the least costly to renovate. 

I am asking you this because, normally, we would rely on HANO 

to take us around to the units. They are going to show us the worst 

ones. So I would like to have my colleagues, when they come, take 

a look at a fair representation of what is there. We know some are 

worse than others, and we know some are in better condition than 

others, and I just want to make sure that we are looking at it. 

Also, I would like you to work with my staff to make sure we are 

looking at everything.

138

The CHAIRMAN. The staff of both the subcommittee and the committee will be in touch, and I just want to reiterate to all of you 

that you have our commitment that we plan now to act legislatively. Sometimes, you are not sure what can be done. A number 

of very important specifics have come in. Not everything is under 

our control. But a number of specifics are, and there are other 

areas where we can exercise influence, and I want to assure you 

that I think you can count on legislation coming out of this committee that will be responsive to many, although certainly not all, 

of your concerns, and we hope—we are pretty optimistic we will be 

able to get it through the House and work on it. 

So we thank you all very much for giving us all of this time. It 

has been, I believe, to our mutual benefit. 

And this hearing is, at long last, adjourned. 

[Whereupon, at 6:30 p.m., the hearing was adjourned.] 

(139)

A P P E N D I X

February 6, 2007

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