U.S. GOVERNMENT PRINTING OFFICE

73–165 PS WASHINGTON : 2001

INSPECTOR GENERAL’S REPORT ON THE

HOUSING AUTHORITY OF NEW ORLEANS

FIELD HEARING

BEFORE THE

SUBCOMMITTEE ON

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

JUNE 4, 2001

Printed for the use of the Committee on Financial Services

Serial No. 107–21

(

For sale by the Superintendent of Documents, U.S. Government Printing Office

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Mail: Stop SSOP, Washington DC 20402–0001
(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa

MARGE ROUKEMA, New Jersey, Vice Chair

DOUG BEREUTER, Nebraska

RICHARD H. BAKER, Louisiana

SPENCER BACHUS, Alabama

MICHAEL N. CASTLE, Delaware

PETER T. KING, New York

EDWARD R. ROYCE, California

FRANK D. LUCAS, Oklahoma

ROBERT W. NEY, Texas

BOB BARR, Georgia

SUE W. KELLY, New York

RON PAUL, Texas

PAUL E. GILLMOR, Ohio

CHRISTOPHER COX, California

DAVE WELDON, Florida

JIM RYUN, Kansas

BOB RILEY, Alabama

STEVEN C. LATOURETTE, Ohio

DONALD A. MANZULLO, Illinois

WALTER B. JONES, North Carolina

DOUG OSE, California

JUDY BIGGERT, Illinois

MARK GREEN, Wisconsin

PATRICK J. TOOMEY, Pennsylvania

CHRISTOPHER SHAYS, Connecticut

JOHN B. SHADEGG, Arizona

VITO FOSSELLA, New York

GARY G. MILLER, California

ERIC CANTOR, Virginia

FELIX J. GRUCCI, JR., New York

MELISSA A. HART, Pennsylvania

SHELLEY MOORE CAPITO, West Virginia

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

PATRICK J. TIBERI, Ohio

JOHN J. LAFALCE, New York

BARNEY FRANK, Massachusetts

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

KEN BENTSEN, Texas

JAMES H. MALONEY, Connecticut

DARLENE HOOLEY, Oregon

JULIA CARSON, Indiana

BRAD SHERMAN, California

MAX SANDLIN, Texas

GREGORY W. MEEKS, New York

BARBARA LEE, California

FRANK MASCARA, Pennsylvania

JAY INSLEE, Washington

JANICE D. SCHAKOWSKY, Illinois

DENNIS MOORE, Kansas

CHARLES A. GONZALEZ, Texas

STEPHANIE TUBBS JONES, Ohio

MICHAEL E. CAPUANO, Massachusetts

HAROLD E. FORD JR., Tennessee

RUBE ́ N HINOJOSA, Texas

KEN LUCAS, Kentucky

RONNIE SHOWS, Mississippi

JOSEPH CROWLEY, New York

WILLIAM LACY CLAY, Missouri

STEVE ISRAEL, New York

MIKE ROSS, Arizona

BERNARD SANDERS, Vermont

Terry Haines, Chief Counsel and Staff Director

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

SUE W. KELLY, New York, Chair

RON PAUL, Ohio, Vice Chairman

PETER T. KING, New York

ROBERT W. NEY, Texas

CHRISTOPHER COX, California

DAVE WELDON, Florida

WALTER B. JONES, North Carolina

JOHN B. SHADEGG, Arizona

VITO FOSSELLA, New York

ERIC CANTOR, Virginia

PATRICK J. TIBERI, Ohio

LUIS V. GUTIERREZ, Illinois

JAY INSLEE, Washington

JANICE D. SCHAKOWSKY, Illinois

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

MICHAEL CAPUANO, Massachusetts

RONNIE SHOWS, Mississippi

JOSEPH CROWLEY, New York

WILLIAM LACY CLAY, Missouri
(III)

C O N T E N T S

Page

Hearing held on:

June 4, 2001 ...................................................................................................... 1

Appendix:

June 4, 2001 ...................................................................................................... 49

WITNESSES

MONDAY, JUNE 4, 2001

Beard, D. Michael, Southwest District Inspector General, Office of the

Inspector General, HUD ...................................................................................... 20

Davis, Deborah, Chairwoman, Desire Resident Council Association, New

Orleans, LA ........................................................................................................... 5

Drozdowski, Chester J., Director, HUD Office of Public Housing, New

Orleans, LA ........................................................................................................... 17

French, Laura, Resident, St. Bernard Apartments, New Orleans, LA ............... 8

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

of Louisiana .......................................................................................................... 34

Morial, Hon. Marc, Mayor, City of New Orleans, LA ........................................... 31

Nicotera, Frank, Executive Monitor, Housing Authority of New Orleans .......... 35

Solomon, Rod, Deputy Assistant Secretary for Policy, Program and Legislative

Initiatives, Office of Public and Indian Housing, HUD .................................... 19

APPENDIX

Prepared statements:

Kelly, Hon. Sue W. ........................................................................................... 50

Baker, Hon. Richard ......................................................................................... 75

Beard, D. Michael (with attachments) ............................................................ 88

Davis, Deborah ................................................................................................. 76

Drozdowski, Chester J. .................................................................................... 80

Nicotera, Frank (with attachments) ............................................................... 177

Solomon, Rod .................................................................................................... 85

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Kelly, Hon. Sue W.:

‘‘$860,000 Program Promoted Aroma and Color Therapy,’’ The

Washington Post, June 1, 2001 .................................................................... 52

Guste Homes Resident Management Corp. letter, May 29, 2001 ................ 57

Lafitte Economic Development Corp. letter, June 14, 2001 ......................... 56

‘‘Tenants at Odds with HANO Revitalization,’’ The Times-Picayune, June

14, 2001 .......................................................................................................... 54

The National Advisory Council of The Housing Authority of New Orleans,

policy statement ................................................................................................... 227

(1)

INSPECTOR GENERAL’S REPORT ON THE

HOUSING AUTHORITY OF NEW ORLEANS

MONDAY, JUNE 4, 2001

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON FINANCIAL SERVICES, Washington, DC.

The subcommittee met, pursuant to call, at 1:30 p.m., in room

C-501, Ceremonial Courtroom, Hale Boggs Federal Office Building,

New Orleans, Louisiana, Hon. Sue W. Kelly, [chairwoman of the

subcommittee], presiding.

Present: Chairwoman Kelly.

Also Present: Representatives Baker, Vitter and Jefferson.

Chairwoman KELLY. This hearing of the House Financial

Services Subcommittee on Oversight and Investigations will come

to order. Without objection, all Members’ opening statements and

questions will be made part of the record.

For the information of the people who are testifying and those in

the audience, there will be a period of time in which your testimony will be recorded. You have 5 minutes to testify, at which

point, 4 minutes into it, if you’re getting close, I’m going to tap the

end of this gavel. Don’t get alarmed. It just means you’re coming

close toward the end. A minute is still a pretty long time, so keep

talking. I’ll let you know. I’ll really bang the gavel if you go way

over. But, we really are here to hear what you have to say, so feel

comfortable about saying it, because that’s why you’re here and

we’re glad you’re here.

This afternoon, we’re going to discuss the report issued last

month by the Inspector General of HUD on the Housing Authority

of New Orleans and the distressing problems that were disclosed

in that report.

In 1996, the subcommittee held a hearing here chaired by a different subcommittee chairman, but in this same building, on the

problems that HANO has had in providing a safe, decent, and sanitary housing. The Inspector General’s report calls into question

claims of improvements made by the HANO under the Cooperative

Endeavor Agreement.

It’s my hope that we will identify how HANO’s problems have affected the lives of the thousands of residents who depend on it for

housing and to search for ways to improve their living conditions.

All of us, regardless of where we live, want to make a better life

for our families. We need a place where our children can grow

without fear, without danger. We need an open, clean, peaceful

neighborhood. HANO residents deserve management that quickly
2

responds to maintenance requests, keeps its promises to make

long-term neighborhood improvements, and wisely spends its

funds.

I want to begin by thanking my colleague on the Financial Services Committee, Congressman Richard Baker, a deeply concerned

Representative from nearby who both brought this situation to my

attention and asked me to convene this hearing. We’re grateful for

his support and his expertise on this issue. Also later this afternoon, we will welcome Congressman William Jefferson, who represents this area. For his hospitality, we welcome him and thank

him for welcoming us to this great city and we welcome Congressman David Vitter, a strong advocate for the people of Louisiana.

Both Congressman Baker and Jefferson were here 5 years ago,

and I can understand the passion and frustration that they must

feel for trying again to get a handle on the problems at HANO and

see some real improvements. We also want to thank Chief Judge

A.J. McNamara of the Eastern District of Louisiana and his staff

for their cooperation in using this courtroom.

The Inspector General’s recent report on HANO raises some really troubling questions about events over the past 5 years. The report states that after spending over $139 million of the $243 million it received for modernization of the units in these past 8 years,

HANO has not revitalized even one of its conventional sites. The

report also states that management at HANO has constantly

changed without improvement in results. In fact, HUD’s own staff

wrote that HANO can plan, but not implement, and that whatever

progress has been touted as ‘‘all’’—and I’m quoting from the report—‘‘smoke and mirrors’’ end of quote.

HANO’s most recent scores on HUD’s public housing assessment

system are, once again, failing, after claiming they made improvements for the last 2 years. That claim might have been shaky at

best, according to the report, since HUD management in Washington wouldn’t even allow its own New Orleans Housing Office to

verify the earlier report.

The bottom line is that hundreds of millions of dollars have been

spent by HANO in the last 10 years, but apparently without a lot

of positive result. Five years ago, the HUD Investigator General

testified that, and I’m quoting: ‘‘The best path for HUD is a total

takeover of the authority.’’

Last month, the same IG official concluded that HANO cannot

renovate, demolish, build, or manage its units. That is where

HANO was 5 years ago, and 5 years of operating under a cooperative endeavor agreement hasn’t changed that fact. I do not doubt

that there have been some positive actions taken in the last year

to stop the bleeding, but it might be time for some more drastic action to help HANO’s residents finally get the housing and management that they’re entitled to.

At this point, I’d like to let Members of the subcommittee and

their staff know that it’s my intention to enforce the 5-minute rule

and I will hope that we will cooperate with this. I want to advise

everyone here, we have plenty of time to hear everyone’s viewpoints, but I also want to remind you that we need to maintain decorum that is required in all congressional hearings and in Federal
3

courtrooms. So please do not applaud or comment loudly for a particular witness or a subcommittee Member.

At this time, I’d like to turn to Congressman Baker for his formal

opening statement. Thank you, Congressman Baker.

[The prepared statement of Hon. Sue W. Kelly can be found on

page 50 in the appendix.]

Mr. BAKER. Thank you, Chairwoman. I certainly appreciate your

willingness to travel from New York to come to this great city and

to be of help to us in this most difficult problem.

I must first confess to those who are today though, Madam

Chairwoman, I have a difficult mission ahead of me. I’m an LSU

graduate and I have to say you Tulane Greenway supporters, congratulations. That doesn’t flow off my lips very easily, but I’ve said

it. My dad is a Tulane grad and my daughter is a Tulane grad.

They often refer to me as the only illiterate in the family, so I hope

you carry the Louisiana banner proudly to the World Series and

bring back home that title for us one more time.

This is a very difficult problem, Madam Chairwoman, Congressman Vitter. Unfortunately, it is a frustrating, long-standing problem. I have been involved in these discussions with prior secretaries of HUD, with other folks within the Inspector General’s office, with all levels of HUD officials. When I first began this effort

some years ago and traveled through many of the projects and

spoke to the residents, I left this city with a very heavy heart, realizing that the United States Government was the largest slum

landlord operator in the United States. And it has been a continuing haunting realization that we are simply not making the

progress that any reasonable person should expect for the quality

of lives for the individuals affected.

It’s my hope that the subcommittee, after listening to the testimony today, will explore any and all alternatives and spare no effort in pursuit of an appropriate resolution.

This time, for the first time, I’m hoping that this subcommittee

with this committee’s leadership, working with the officials at

HUD, that we can make changes that residents will see as being

real. This is not just about a waste of taxpayer dollars. It’s not just

about Government inefficiency. It is, however, about the quality of

people’s lives. I don’t want to go through another 5 year window

and sit in this courtroom again with other Members of Congress

and read another Inspector General’s report that tells us that no

matter how many dollars we spend, no matter how hard we try,

that people still continue to live in the worst abysmal conditions

one can imagine.

So, I thank Congressman Vitter for his willingness to participate.

I am appreciative that Congressman Jefferson will be here later

this afternoon. And Chairwoman Kelly, I am extremely appreciative for your willingness to come to the city, take the necessary

report back to Chairman Oxley, and let’s all join hands together.

This is not a partisan issue. It’s not a Federal/State battle. It is a

problem for all of us that we ought to be able to join hands and

get this fixed this time the right way. Thank you very much.

[The prepared statement of Hon. Richard Baker can be found on

page 75 in the appendix.]
4

Chairwoman KELLY. Thank you very much, Mr. Baker. We’ll now

go to Congressman Vitter for his opening statement.

Mr. VITTER. Thank you very much, Chairwoman Kelly, for your

leadership for coming to our part of the world to address this important issue and thank you, Richard, for your leadership over

many years on this troubling matter. The last time this subcommittee met here to discuss the issue was 1996. I was not a

Member of Congress then and really, I’m coming to the issue in a

fairly new and fresh way as a Member of Congress.

But I did grow up in the area. I have continued to read about

the news accounts of this very troubling matter and so, just as a

citizen looking from afar, I’ve long been concerned about this decay

of the housing stock of New Orleans that has not only a remedy

has failed to be found by the housing leadership, actually the decay

has been led by HANO and mismanagement there. And so I’m very

interested in the issue as a resident of the region of southeast Louisiana and, pending what we hear at this hearing, I certainly fully

support the idea that we now need to do something fundamentally

dramatically different. We have been talking about this problem

and we have been negotiating interim stop gap measures for well

over 5 years and nothing fundamental has apparently changed. So

I’m very, very eager to hear from residents and hear from anyone

interested in what we should do differently so that we can move

beyond these recurring themes and recurring problems with some

more dramatic action. And I thank you for letting me be a part of

this hearing. I’m not a Member of the committee or the subcommittee but, as a local representative, I’m certainly very interested in and I appreciate the invitation to be here.

Chairwoman KELLY. Well, I thank you very much. There are no

more opening statements from the congressional Members here, so

we’re going to begin with our first panel. Before us today we have

Ms. Deborah Davis who’s the Chairwoman of the Desire Resident

Council Association and she’s a 44-year resident. In addition, we

have Ms. Laura French, former Chairwoman of the Residents’

Council and a resident of the St. Bernard Apartments who’s lived

in HANO facilities for 55 years.

You’re both aware that this subcommittee is holding an investigative hearing and, when doing so, that the Chair may decide to

take testimony under oath. Do either of you have any objection to

testifying under oath? The response is no. That’s fine. The Chair

advises you that under the rules of the House and the rules of this

subcommittee, you’re entitled to be advised by counsel. Do any of

you desire to be advised by counsel during your testimony today?

The response is no. Thank you very much.

In that case, if you would please rise and raise your right hand,

I’m going to swear both of you in.

[Witnesses sworn.]

Chairwoman KELLY. Thank you very much. Each of you is now

under oath. Without objection, your written statements will be

made part of the record. You’re each now going to be recognized in

turn to give a 5-minute summary of that testimony.

Ms. Davis, we’d like to begin with you.
5

STATEMENT OF DEBORAH DAVIS, CHAIRWOMAN, DESIRE

RESIDENT COUNCIL ASSOCIATION, NEW ORLEANS, LA

Ms. DAVIS. Thank you. I want to thank everybody for the opportunity to sit before Representatives of the House and also Congressmen and allowing us the opportunity to vent as we discuss

some of the experiences of redeveloping Desire. One of the things

I’d like to touch upon at this time is the living conditions. Desire,

though it may have been built with brick veneer, was built very

strong. It lasted 44-plus years. And we are content that even in

this leased state, it’s still a home to us. It’s still strong and it’s still

a neighborhood to residents who still reside in Desire.

In 1992, the National Committee for Distressed Housing paid

New Orleans a visit and found that there was some discrepancy in

the way of management and how they would appropriate the funding, and they found that Desire was distressed because of poor

management and the lack of funding being invested in the public

housing. So they allowed, by the grace of God, we were blessed

with a HOPE VI grant. This HOPE VI grant is supposed to create

opportunity of home ownership for people everywhere and not only

for people everywhere, the economic development, the counseling

necessary for residents who’ve been through distressed conditions,

de facto demolition. Mismanagement at that time was at its worst.

And at this time we’re still waiting on the remedies that this good

initiative was supposed to bring to our neighborhood and our community.

One of the problems was that, because of the fact that we were granted a HOPE VI grant to the tune of $44 million, some of the

funding and comp which was directed to stabilize the community

until all agreements were signed, until all approvement from HUD

was adhered to, was drawn back. So we experienced the lack of

maintenance. On the bad side, we experienced a tremendous

amount of lack of maintenance.

To this day, the monies have not been let other than to hire a

program manager and to allow some planning and contract negotiation to take place with developers, and we’re still at this point

still waiting. The only difference with that is that although it may

be the process to handle good business, we find that this process

does not take care of the human side, which was very necessary,

was more necessary to us than the brick and mortar itself, because

when a community goes through de facto demolition, it leaves a

tremendous amount of scars on the individual lives, the children

who live there, the seniors who live there and also the young

adults. They bear the scars of no one caring.

So as a result of that, one of the initiatives that was supposed

to be was the community support services, which would allow residents to get the proper counseling, having gone through this distress. Oh, lord. It would allow residents also to be trained and

placed in job training opportunities so that when Desire, in all its

opportunity and all of the great wisdom that was going to be applied, residents would be ready to meet the opportunity. We find

that we are not. We’re not advocating taking the funds away, because it doesn’t take away the problems or the experience that we

bear in our bodies and in our emotions. We’re saying we’re still

waiting. It’s a good program. It was, even though HOPE VI was de-
6

signed by a Republican, we found at that time and were elated that

somebody cared enough to really come in and look into the problems that residents had been facing for years and that we—and

also that they would look at us as human beings, not as the problem, because residents did not tear Desire down. Residents did not

cause the lack of economic development not to be afforded in our

community or residents didn’t cause the fact that we are not able

to become a tax file base or have experienced all the amenities that

normal Americans would have in their lives.

In fact, we’ve been penalized and we’re just afraid that as we

speak we’re experiencing the slow wheel of slavery all over again

just because we’re not being able to transition and to mainstream

America through economic development. We’re not lazy people.

Very creative people. God has kept us with the dignity of being

called a race of people, of being called humans. He’s reserved that

in us. And now they’re ready to take back and steal HOPE against

hope that someone would undo the—that prohibit us from moving

forward because this was not a complicated process. This is not. In

fact, residents believe they can do it themselves with the necessary

experience behind some professionalism, consultants and developers. We can do it ourselves.

The other broken promise. One of the other things I’d like to

touch upon is that the MOU design, because the grant agreement

didn’t allow the residents enough participation to help design their

future. So the Housing Authority established a grant agreement in

which we find that at this time they’re not adhering to it, because

the process of setting forth developers’ agreements and having

input into developing those agreements and implementing those

agreements was taken away from us. But we are hopeful that

through discussion and those things we’ll get back on track.

Also, one of the broken promises was that the amount of money

afforded Desire community and its neighborhood, we had hoped

that the Section 3 component, which allowed Federal dollars to be

contracted out and that these contractors, developers, would come

back in turn, you know, relinquish some of the funding so that we

are able to get the proper training, even some secondary schooling,

jobs creation, business creation, with the amount of money. That’s

one of the broken promises that has not been kept.

Another one is that we had hoped the amount of units, we find

ourselves now, because of all of the revisions that have taken place,

the amount of units that has been decided to be replaced, I think

when the dust cover, there’s something like 260 some odd units

whereas you had over 1,100 people who transitioned out of Desire

to relocate somewhere else in some minority community. What we

find ourselves now is that, because of the housing stock in New Orleans that were not adequate, we do not have enough housing that

would adequately satisfy the waiting list necessarily, the people

who trust this process to come back online. We need more units in

the tune of some 800 subsidized units. In fact, the whole agency

ought to be looking more at adding rather than tearing it down, because we experienced a type of hopelessness now.

[The prepared statement of Deborah Davis can be found on page

76 in the appendix.]
7

Chairwoman KELLY. Ms. Davis, I thank you very, very much for

your testimony. I want you to know that this morning I went out

with some of the people from HANO. I went to Desire and what

you’re bringing up is a question I asked them. I saw the buildings

had been demolished and I said, what’s happened to the people and

are there enough units available for these people to be housed in?

And I have to say that the response I got from a couple of them

was exactly the thing you just did. They shook their head. They’ve

been tracking as many people as they possibly can, but you know

and I know there are people who we don’t know where they went,

because the units were knocked down and there was no track that

got to follow them, because it’s been happening for some time.

The other thing I saw there that just broke my heart. I’m the

mother of four children and grandmother of six. I saw two little

boys coming back from the store. They had a bag. Each of them

was carrying a bag. They’d gone probably to the store for their

mama, and they were standing on the street corner waiting to cross

that street. Two little boys about 4, 6, 7 years old. What a place

to have to raise children. What a terrible thing to raise children in

a situation like that where they grow up. How can they have hope?

How can they know something that goes beyond and know that

their lives can reach beyond?

I think that it’s wonderful that you’re here to testify. I just want

to say one more thing. The first trip I made to New Orleans, I got

here in 1947. I was with my parents and my family. We got on a

banana boat, because my dad was very adventuresome. We took

that banana boat down to pick up bananas in Honduras, Guatemala, and some other places. We stopped off in Cuba. And it was

there I had an experience where we slept in a place where there

were rats scratching in the walls and I was afraid and I was afraid

to get out of bed and get my mama and I was afraid when I heard

the rats running under my bed that if I fell asleep and my hand

fell over the bed, the rat would bite me and you know and I know

a rat will get a piece out of you before you even wake up.

We can not have children growing up in that kind of a situation.

I felt that fear. I don’t want to see any child in America grow up

like that. So I really do thank you so much, because this is about

the mothers and the children in those projects. That’s why I came

down here. Thank you for your testimony. Let’s move now to Ms.

French.

Ms. Davis, you have something you want to say?

Ms. DAVIS. Yes, if you could permit me. Desire, although look

hopeful at this time, but there are residents that is there now, if

you move them, I’m not saying that things shouldn’t change. I’m

saying bring the necessary remedy in to alleviate some of the problems that’s going on. If we move some of those seniors now, they

will die in the process. And ma’am, they’ve just been through too

much and we love them, we love our neighborhood. We take care

of one another. All we’re asking is that the necessary funding and

wisdom be applied to alleviate more—because somebody prep—you

know, if we leave it now, it’s prepped to be sold. It’s our neighborhood, and there is not another neighborhood in the City of New Orleans besides the rich and famous neighborhood that we would
8

rather live in, because Desire allows us to love one another and to

be neighbors. That’s what I want to say.

Chairwoman KELLY. That’s beautiful. Thank you, Ms. Davis.

Ms. French, let’s go to your testimony now, please.

STATEMENT OF LAURA FRENCH, RESIDENT, ST. BERNARD

APARTMENTS, NEW ORLEANS, LA

Ms. FRENCH. First I would like to say good evening to the panel.

If I may, I would like to say to Congressman Baker, I heard of this

hearing 5 years ago the day of the hearing, when it was over, because I would imagine I would have been here and begged someone

to hear, because it’s the same cry. But I would like to start, if I

may, by reading a letter that I started writing to Mr. Cochran on

behalf of our problems at St. Bernard.

My name is Laura French. I live at 4090 Gibson Street, Apartment 8, northern Louisiana. I’m located in the St. Bernard housing

development. To Mr. Andy Cochran, U.S. House of Representatives,

HOB, Washington, DC. Dear Mr. Cochran, this letter is to follow

up our telephone conversation. As I stated on the telephone, residents of the St. Bernard housing development are experiencing discrimination. Our civil rights are being violated and we are being

held hostage in our too small apartments for our family size.

Mr. Cochran, I’ve lived in the St. Bernard for a long, long time.

I’ve been on the resident council for over 20 years. For the past 10

to 15 years we’ve had to live under dictatorship, being forced to live

by rules and regulations that are not applied to persons in prison

or the penitentiary systems. As I said before, we need someone to

help turn this situation around, not someone who is just going to

listen. I’ve been singing this tune for the past 5 years to congressmen, Senators, city council persons. We made the front page of the

Times-Picayune for having residents living in overcrowded conditions, yet all of this fell upon deaf ears.

I would hope something positive comes out of this trial. I know

the residents need something positive to happen in their lives during this crisis. As I stated on the telephone, we need someone to

take action on these matters. Attachments are a page with some

of the problems and a page with names of persons living in overcrowded apartments. Overcrowded families, families living in overcrowded apartments. There are families with up to four or more

persons living in 1-bedroom units. Some of these families have been

in these apartments for over 10 years. Some households have teenage sons and daughters. Even though these families have been living under these conditions for years, they have to live like this

even longer since the U.S. Congress has mandated the demolishing

of housing developments and placing the people here in the St. Bernard development community center. In April of 1998, like thieves

in the night, HANO set the wrecking ball to the 1400 block of Milton Street, 1412 through 1450. Three buildings, consisting of 24 1-

, 2-, 3- and 4-bedroom apartments were demolished. The Housing

Authority was supposed to build a community center on that property. In January, 1999, in an ANROC meeting, Mr. Ron Mason, executive monitor for HANO at that time stated he had bad news for

some of the leaders. There wasn’t any money to build community
9

centers and the St. Bernard development was one of the sites that

would not get a community center.

Demolition process. The Imperial Drive site was demolished. Desire, Florida, St. Thomas and C.J. Peete are in the process of being

demolished. St. Bernard is the home site for all of the residents

from these sites. That is fine, because we feel that it could have

been St. Bernard up for demolition. HANO and HUD are placing

families from these sites in St. Bernard. The only problem I have

with this is they’re all still giving these families 3- and 4-bedroom

apartments with two and three people on the lease while forcing

our residents to move out of their apartments into smaller units.

Example: HANO placed a lady and three small boys from the Imperial Drive site into a 4-bedroom apartment. The oldest brother is

not 7 years old yet. HANO forced a family with four dogs and a

2-year-old out of a 4-bedroom apartment and placed a family with

two people from Imperial Drive in that 4-bedroom apartment.

Housing Authority’s waiting list. There are people who left their

apartments to drug activity, did time in jail, they return from jail

and they receive apartments before persons who were on the waiting list before these people ever applied for a project in the first

place.

Rodents. Over the years some apartments in the St. Bernard

apartments have always had problems with mice from time to

time. In 1997 HANO had the vents of the concrete base of the

building welded closed and the iron gates locked. When they did,

cats were locked under the buildings and all the cats died. The

poor cats cried until they died under these buildings. After this

happened, the rats started coming into the apartments any way

they could. They ate their way through the walls, air conditioner

closures, clothes dryer vents, through toilet commodes, up the bathtub drain, through holes in the floor that contractors left open after

renovation in the 1980s. The rats had full run of these apartments.

When finally a few cats did begin to come around, the rats pulled

switchblades on the cats and most of them fled.

Roaches are a problem in a development simply because some of

the residents don’t fight them and the HANO has nothing to give

us to help to combat the roach problem. In these apartments, everyone has to fight the roaches together or the roaches run from

apartment to apartment and no one will get rid of the roaches.

Dogs. HUD and HANO have given permission for residents to

have dogs. The residents have to pay a $75 fee and register the dog

as a live-in. There are too many pit bulls, Dobermans, Rotweilers

and every dog you can possibly name. There are too many people

living on the site for people to be allowed to have dogs. Most of the

seniors don’t want dogs as pets or companions. Besides, the dogs

mess all over the place and we step in poops daily because the dogs

don’t wear Pampers. They are trained only to mess outside. HANO

will let you pay $75 to have a dog in your own zero rent.

I’m sorry. I have to apologize. I had to stop it because our summer program was coming in and I had to start writing for the summer program. But I just want to say to the panel. It hurts. We are

people living in 1- and 2-bedroom apartments. I mean large families. Mothers with three to maybe five children. Even in 2-bedroom

apartments. You have teenagers sleeping together, 14, 15, boys and
10

girls. They’ve been living like this for a long time. Now that the

demolition is being done, they have to stay here because HUD said

demolition comes first. So if you’ve been living like this, you’re

going to continue living like this, because they have to get the residents who are coming from the sites who are having demolition settled. It’s unfair. We all are people. We all are human. I don’t think

we should have to live like this.

Chairwoman KELLY. Thank you very much, Ms. French.

There is one correction I’d like to make. You said that the U.S.

Congress had demanded that the units be demolished. This is not

true. Congress serves a function of appropriating money. It is the

Housing and Urban Development agency, which comes under the

Executive Branch of the Government that allows HANO to demolish these apartments. So I wanted to clear that up. Congress can

make laws that govern the amount of money that goes to these

agencies. We can also make some other laws, too, but in this particular instance, it was not the Congress that caused the demolition

of any of these units.

Ms. French, you wanted to say something.

Ms. FRENCH. I’d just like to say, Ms. Kelly, whenever we question the Housing Authority about something and it’s always ‘‘HUD

did it’’ or ‘‘the Congress mandated it.’’ I asked, ‘‘Let me see this.

Where is this?’’ ‘‘Oh, we’re going to get it for you. We’re going to

get it to you.’’ Whatever. I haven’t seen anything yet. The only

thing I remember is in 1995, I believe, then-President Clinton did

the one strike policy on television. But I haven’t seen anything. But

when they tell you ‘‘HUD mandated it’’ or Congress, those two entities. I’ve asked over the years, ‘‘Let me see where HUD has said

this.’’ ‘‘Oh, we’re going to get it for you. So-and-so, you find it. You

get it for her and give it to her.’’ And it just goes on and on.

But, I would like to ask you, Ms. Kelly, also. You said about your

visit to Desire. Did you visit St. Bernard?

Chairwoman KELLY. We did not. We didn’t have enough time.

We managed to get to B.W. Cooper, St. Thomas, Fisher, Florida

and Desire. That was all we were able to fit in this morning. We

had a pretty busy morning, because I kept popping out of the van

and going into some of these places. I felt it was important that

we actually look at what the conditions are. So we didn’t get a

chance, but I promise you, Ms. French, that if I get back down

here, if you’ll let me, I’ll come and you can take me for a walk. Will

you do that for me?

Ms. FRENCH. Yes, I would. And if you can’t come, if you can send

someone, I would appreciate that very much. We need someone to

see what we’re saying about our living conditions at the St. Bernard development.

Chairwoman KELLY. That’s what I tried to do as much as possible this morning. We will continue to try to work with you. I’m

just so saddened by the conditions. As Ms. Davis pointed out, we

know that these are neighborhoods. We know that you love each

other, you support each other. We know you know your neighborhoods and it’s important that we keep that neighborhood going if

we possibly can. So I wanted to say to you, I don’t know who told

you that they would get back to you about these mandates from

HUD and so forth, but HUD can mandate. Congress doesn’t do
11

that, but HUD does. Congress can dry up the money, Congress can

do some other things. But if they promised you that, you keep on

them and, if they don’t get back to you, you’ve got Mr. Cochran’s

address now. You write to him. All right? That goes for you, too,

Ms. Davis. You write to him. You write to me. Write to any one

of us. Mr. Baker here is a Representative, Mr. Vitter. You write to

Mr. Jefferson. We’ll get back to you.

Ms. FRENCH. I’ve written to Mr. Jefferson on a couple of occasions.

Chairwoman KELLY. Well, we’ll talk to him about that. Right

now, I just have a couple of questions if I can find them here.

There’s a couple of questions. One, have either one of you ever seen

any results from something called the Institute for Resident Initiatives?

Ms. DAVIS. Well, Desire opted not to use the Institute for Resident Initiative, because of the fact that we realized that HUD was

not going to duplicate programs and we needed TA. We needed

somebody to come in and at least help us expand on the program

that residents are already running. So we opted not to take the

funding or to use the Institute of Resident Initiatives.

Chairwoman KELLY. That was an election you made?

Ms. DAVIS. Yes.

Chairwoman KELLY. OK. What about you, Ms. French? Have you

seen anything?

Ms. FRENCH. Frankly, the Institute for Resident Initiatives is

now National Center for the Urban Communities.

Chairwoman KELLY. I’m sorry. I didn’t hear that clearly.

Ms. FRENCH. The Institute for Resident Initiatives is now the

National Center for the Urban Communities. Is that the same program? That’s what I’m trying to say.

Chairwoman KELLY. No. It’s at Tulane.

Ms. FRENCH. Yes. Tulane University.

Chairwoman KELLY. Have you ever seen any results, anything

from it?

Ms. FRENCH. Ms. Kelly, I don’t know if I have to raise my hand

or raise my feet. I would like to take the 5th on that.

Chairwoman KELLY. Well, OK. I just wondered, because they’ve

been getting about $2 million a year and I wondered if either one

of you have seen any results from the programs?

Yes, Ms. Davis.

Ms. DAVIS. Just one. After the revision in 1999, Desire Revitalization Revision, they did a campaign to go out and sell the idea

of Section 8 to residents and we lost hundreds of residents, because

of the grass is greener on the other side theory. So that’s about all.

Also we compete against their basketball team.

Chairwoman KELLY. They took the Section 8. They got people on

Section 8?

Ms. DAVIS. Well, they encouraged some of our residents to take

it and now they’re having problems, because the income does not

support the Section 8 theory.

Chairwoman KELLY. Thank you. Are either one of you aware of

the use of Drug Elimination grants in the Housing Authority and,

if so, I’d like to know how effective they have been. Yes, ma’am.
12

Ms. FRENCH. We were getting about $25,000 Drug Elimination

funds to run a 36-week after-school program and that wasn’t so

successful. Our program is successful, but it could be even more.

For the—program trying to spend $25,000 for 36 weeks on about

60 to 80 children. And I don’t find that as enough funds to run it,

but we don’t know who you go to to ask for more.

Chairwoman KELLY. Perhaps this hearing will—— Ms. FRENCH. We have a beautiful program at St. Bernard, because we feed them hot meals and we have TOW tour and we just

have arts and crafts. We have good programs, but you get what you

pay for, and when you have to pay people little money, you get a

little service. And we tried to ask for raises, but they say HUD and

the Congress don’t allow you to get more than whatever.

Chairwoman KELLY. HUD, Ms. French, not Congress.

Ms. FRENCH. I’m only saying what they told me. I can only say what they tell me. Yes, we received $25,000 for 1998-1999 and

2000 and maybe for 2001. But they say it’s the last year for it.

Chairwoman KELLY. Thank you very much. I’ve run out of time,

so I’m going to move on and ask my colleagues to ask questions.

Mr. Baker, will you please.

Mr. BAKER. Thank you, Madam Chairwoman.

Ms. French, you commented that there was a fellow who got convicted over a drug problem and got access to a unit before people

who had been on the waiting list for some time.

Ms. FRENCH. OK. Let me say this. For instance, and I want to

say it all. I’m not about putting anybody out. Everyone needs somewhere to live. If you committed a crime and you did your time or

whatever, I don’t think that should take away from you having another chance.

Mr. BAKER. No. Sure.

Ms. FRENCH. OK. There are persons who are on the waiting lists

for an apartment with the Housing Authority and this guy, he received an apartment. He was on the waiting list also, I would assume. Somewhere in there, I don’t know how long he had that

apartment, a year, a month, or whatever, something happened

with drug activity. I don’t think it was on the site. But, by the

same token, he had to move. He went to jail. So lo and behold, he

got out of jail and had an apartment. I didn’t know this, just

through another tenant. Tenants come and talk to me. They see

things. How did he get another apartment? My daughter has been

waiting. My daughter was waiting for an apartment when he had

an apartment. So anyway, it wasn’t about him not having an apartment. I was wondering about this speedy process.

Mr. BAKER. Right. That’s my question. What do you think went

on in making that decision?

Ms. FRENCH. I think it was who you knew.

Mr. BAKER. OK. That’s what I wanted to know. Because my time

is limited, I’ve got a couple more. Other than this fellow being

caught by the police and taken to jail, that got him out of the facility for some time while he was paying his dues.

Ms. FRENCH. Yes.

Mr. BAKER. Do you feel that there’s a method that’s good today

where if you have a problem resident, understanding that you don’t

want to see anybody without a place to live, but if you’ve got that
13

fellow behind the door with that big Rotweiler who’s doing things

you didn’t want to have done around your family, is there a way

to get that person out of that unit today?

Ms. FRENCH. Well, they more or less put them out for drug activity, if the door is kicked in or if you’re caught with drugs. If you’re

on a lease, you don’t even have to be in St. Bernard, you can be

in St. Rose. If you’re caught with drugs and you’re on the lease in

the development, you’re put out.

But let me say this, Mr. Baker. The guy is back and he’s not a

problem. The only problem is how he got back before. People are

still waiting when he was there before. The Rotweilers and all the

big dogs from time to time, they fight. Sometimes they are so big

or so strong when they be walking with the owner on the leash,

they get away from the person walking them or what-have-you.

In St. Bernard we may be listed as 1400 units and that’s what

we have there, 1436 units, but you would think that’s 1436 families. No, sir. We’re about 5,000 or more strong, because a lot of

these people are doubling up also. But it’s too large a place for

dogs, especially vicious dogs, and they are all vicious, because when

you raise them in the house, people get them as puppies and raise

them in a house, then they go to eating up their furniture, their

shoes or what-have-you, then they put them out. It’s not my dog

any longer. Then he’s biting and running behind everybody in the

neighborhood.

Mr. BAKER. Let me ask a follow-up of both of you before my time

is up. Is it your opinion today—and both of you are long-term residents of two different projects. I believe you, Ms. French, serve on

a resident council and Ms. Davis, you’ve been very active in public

housing issues. Do you have confidence today that the Housing Authority of New Orleans can fix the problems you have or do you

think it’s time to make some significant change?

Ms. DAVIS. I have confidence that they are able to fix what it is

that’s necessary, providing they have the proper leadership, both

from the persons who appropriate the funding and HUD.

Mr. BAKER. Well, if you knew there was $84 million in the bank

account they haven’t spent, what would your opinion be then?

Ms. FRENCH. $84 million for Desire. $84 million for the sites in

general?

Mr. BAKER. For the operation. I mean it’s not enough to solve the

problem. My point is that there are resources that have been made

available by the Congress to the Authority, which haven’t been

spent and that was when I was here 5 years ago, Ms. French, it

was the same explanation then. ‘‘If we had the resources, we could

fix it.’’ Well, what I’m telling you is there’s a lot of resources that

haven’t been spent during this 5-year period while we’ve been saying ‘‘fix it or else.’’ Is it time for ‘‘or else’’?

Ms. FRENCH. Does that mean you all will take the $84 million

back?

Mr. BAKER. No, ma’am. What it would mean is we’d have a different set of people. We’d take the switchblades from the rats, we’d

make smaller dogs or no dogs, we’d put paint on the walls, we’d

put screens on the door, we’d put glass in the windows. We’d have

people come down and make a difference tomorrow instead of telling you that Congress hasn’t given us the money. We’d make folks
14

do what should have been done already. I’ve never met a Government operation that couldn’t spend the money we sent them.

Ms. FRENCH. That’s right.

Mr. BAKER. And I’m just saying if that’s what’s going on here,

wouldn’t you, as representatives of the residents, be willing to accept a new effort, a new way of doing it?

Ms. FRENCH. Yes, sir. By all means.

Ms. DAVIS. Yes.

Chairwoman KELLY. Thank you very much, Mr. Baker.

Mr. Vitter.

Mr. VITTER. Thank you very much, Ms. Davis and Ms. French.

I really appreciate your being here. Really appreciate your testimony. And I was not able to go on the tour this morning, but I will

absolutely take you up on your offer and I’m here every weekend,

so I will do it within the next 2 weeks and I’ll get your name and

contact information from the staff and I’ll be at St. Bernard and

then I’ll be at Desire and personally I’ll look forward to that.

As was mentioned, this subcommittee was here 5 years ago trying to kick off a new effort at the local level, trying to make sure

things were really changing. I just want to get a sense of what’s

changed on the ground in those 5 years. We’ve heard about a lot

of demolition. There’s obviously been a lot of demolition. What’s

changed in terms of safety or gas problems, fire hazards, electrical

problems? What’s life been like on the ground in those 5 years?

Ms. FRENCH. It hasn’t been good. Life hasn’t been good, especially to—I keep stating about people. To live overcrowded. Let me

say it to the panel. I raised six children in St. Bernard. I had four

in a 1-bedroom apartment. No one told me to lay down and make

all those babies, but, by the same token, I had them. There were

larger apartments. But I had four children in a 1-bedroom apartment. I had six in a 2-bedroom apartment. So I know by experience

of having to live overcrowded.

And this is more or less what I’m asking that they relieve the

overcrowdedness of our people. You can take a little paint brush

and put a little mortar and everything on the walls and they’ll look

nice. But if people are living in overcrowded conditions, that apartment is about to bust, so that little paint and what-have-you is not

going to last long.

Mr. VITTER. Ms. French, in the 1996 hearing, the subcommittee

heard from another resident, Mrs. Demery, a former resident, and

she spoke about how her son had fallen from a third floor window

which had long since lost its glass and frame and her son suffered

very serious permanent brain damage, physical disability. She also

said two others had recently fallen from similar windows to their

death. Do you know if these third story windows have all been

fixed in St. Bernard?

Ms. FRENCH. I would assume some of them have been fixed at

the St. Bernard. I remember the Demery case.

Mr. VITTER. I’d like to assume all of them have been fixed. Do

we know the answer to that one way or the other?

Ms. FRENCH. May I also say this here. I remember the Demery

case, but right now the Housing Authority is in the process of removing the windows in LA113. That’s something I don’t know if

you all are familiar with. One-eight means the older unit at St.
15

Bernard, 113 means the newer units. They’re in the process of taking—they want to remove our old windows and replace them with

the newer storm windows or what-have-you. Somewhere in the

early 1980s, they removed the old windows from 18 and put these

storm windows in and we don’t want them at 113 because the

storm windows are no good. It’s nothing but aluminum snap-in,

and when bricks or stones is coming, the windows leave before you.

We don’t need them. Not that we don’t want them. We don’t need

them. We are satisfied with our old windows. They may need a little trim to stop them from squeaking or whatever like that. We

don’t need those new windows.

Mr. VITTER. Do you know if all those broken out windows, particularly on higher floors, third floor, have been closed up?

Ms. FRENCH. There are some third floor windows that are still

broken out where people live. Yes.

Mr. VITTER. Mrs. Demery, again 5 years ago, also testified about

the loss of her 8-year-old niece.

Ms. FRENCH. That’s Aquinetta Demery.

Mr. VITTER. Due to a fire.

Ms. FRENCH. Is that Aquinetta Demery?

Mr. VITTER. Judy.

Ms. FRENCH. Aquinetta.

Mr. VITTER. I’m being told this is a Judy Demery. But anyway,

she talked about the loss of her 8-year-old niece from a fire due to

faulty wiring. In your opinion, your observation, what’s gone on

with electrical problems and wiring in those 5 years?

Ms. FRENCH. Well, it was wired too fast back in 1979-80. It was

wired too fast. When they wired our apartments, they was rolling.

They was wired too fast, and no one really came around and

checked it. We did have a lot of faulty wiring and it’s sad to say

that a lot of people who had fires back then got put out because

they said they was the tenants’ fault.

Mr. VITTER. And just in the last 5 years, what do you think has

happened with that wiring? Has it been fixed? Has it been corrected?

Ms. FRENCH. No indeed. No, it hasn’t. No, it hasn’t.

Mr. VITTER. And also the subcommittee, at that time 5 years ago,

heard that fire alarms had been installed during the so-called renovation, but the residents said they’ve never been checked, they’ve

never been really inspected. What do you think the state of the fire

alarms is?

Ms. FRENCH. They were checked. I would say they all were

checked in some way, inspected, what-have-you. But from time to

time I guess—I don’t know if they’re run by battery, but sometimes

they go off just from a little smoke from your apartment. But, I

would say that you would need, in a site that big, that large, why

would you just let the whole maintenance contractor that come out

every so often check for fire. You should have someone hired to

check this daily, just go around to the apartments for to be checking now and then, every so many years or what-have-you. Check

them and make sure they’re working.

Mr. VITTER. Ms. Davis, what about Desire? We’ve heard about

demolition and then overcrowding which has gotten worse because

of that. What about basic conditions? Public safety, electrical wire,
16

windows, these sorts of things we’re talking about? What do you

think has happened to the condition of that in the last 5 years?

Ms. DAVIS. Well, in the last 5 years, preventive maintenance implementation has—we haven’t experienced that and that’s what

we’re lacking. Someone, after they do HQS inspection and you find

a problem with the apartment, will come back and remedy the

apartment. And so in the last 5 years, I believe that even in the

last 5 years, maintenance was kept up. Residents would be more

stabilized and not relocate under duress because many of them relocated because nothing was being repaired.

Mr. VITTER. So again, besides the demolition and the increased

overcrowding, has anything significant happened on the ground in

these last 5 years?

Ms. DAVIS. Besides demolition?

Mr. VITTER. Yes.

Ms. DAVIS. Nothing. I mean we’re still waiting on units to come

online so we can transition to this newer safe and decent and sanitary units.

Mr. VITTER. I appreciate hearing from both of you and I’ll look

forward to meeting you at St. Bernard and Desire within, say, a

couple of weeks. I’ll look forward to that visit.

Chairwoman KELLY. Thank you very much, Mr. Vitter.

The Chairwoman notes that Members may have additional questions for this panel which they may wish to submit in writing so,

without objection, the hearing record is going to remain open for

30 days for Members to submit written questions to the witnesses,

all witnesses, and place their responses in the record. This first

panel is excused with our great thanks and appreciation for your

time, and we will now empanel the second panel. Thank you both

very, very much for wonderful testimony today.

Ms. FRENCH. Thank you.

Chairwoman KELLY. Gentlemen, are you ready? For our second

panel, we’re very thankful that Mr. Chet Drozdowski, the Director

of the Office of Public Housing here in New Orleans, has joined us.

Next to him we have Mr. Rod Solomon. Mr. Solomon is the Deputy

Assistant Secretary for the Policy, Program and Legislative Initiatives Assistant in HUD’s Office of the Public and Indian Housing.

He is testifying in the stead of Paula Blunt who was originally

scheduled to be here with us today. She is the Acting General Assistant Secretary for HUD’s Office of Public and Indian Housing.

But she was unable to be here because of a medical emergency in

the family. So Mr. Solomon, we do welcome you and thank you for

being willing to step in and speak with us here today.

After Mr. Solomon, then we’re going to hear from Mr. D. Michael

Beard, the District Inspector General for the HUD Office of Inspector General. Mr. Beard testified at the 1996 hearing on HANO.

Gentlemen, you are all aware that this subcommittee is holding an

investigative hearing. When doing so, the Chair may decide to take

your testimony under oath. Do any of you have any objection to testifying under oath? The Chair then advises each of you that under

the rules of the House and the rules of the subcommittee, you’re

entitled to be advised by counsel. Do any of you desire to be advised by counsel during your testimony today? In that case, would

you please rise and raise your right hand and I’ll swear you in.
17

[Witnesses sworn.]

Chairwoman KELLY. Thank you very much. All of you are now

under oath. Without objection, your written statements are going

to be made part of the record. You will each now be recognized to

give a 5-minute summary of your testimony, and we’ll begin with

you, Mr. Drozdowski.

STATEMENT OF CHESTER J. DROZDOWSKI, DIRECTOR, HUD

OFFICE OF PUBLIC HOUSING, NEW ORLEANS, LA

Mr. DROZDOWSKI. Good afternoon, ladies and gentlemen. I would

like to take the opportunity to thank the subcommittee for the opportunity to testify this afternoon. It is very rare indeed that the

director of a field office has the opportunity to present his perspective on a particular issue.

The ARD report issued by the Office of the Inspector General on

11 May 2001 is, in my opinion, a highly accurate representation of

what has happened at the Housing Authority of New Orleans for

the period beginning just after the Cooperative Endeavor Agreement was signed in February, 1996 to a period which ends just

about December, 1999.

My comments this afternoon will touch on the four questions

from a director’s perspective that have been posed by the committee in its letter to Secretary Martinez and will also look at a

number of issues raised by the Office of the Inspector General including the Field Office’s attempt to verify the Housing Authority’s

public management assessment scores in 1998 and to correlate the

1998 scores with the HANO’s current advisory scores under the

public housing assessment system. The comments made are relative to the period of time covered by the Inspector General’s report.

During that time, the Cooperative Endeavor Agreement had

minimal impact on the quality of housing for the residents of the

Housing Authority of New Orleans. During that period of time, no

major relocation took place at the two HOPE VI construction sites

of Desire and St. Thomas. Only minimal demolition took place at

either of the two HOPE VI sites during the 31⁄2 year period. However, during the latter part of 1998, there were some modernization

projects that were started at selected sites throughout the Housing

Authority.

During the same period of time, some internal improvements of

the Housing Authorities were noted. While there were recruitment

of key management employees and some restructuring of the Housing Authorities organizational operations which all had a positive

effect at the time, HANO began to experience major difficulties in

its Section 8 department. This key department, the major component in its relocation program, would subsequently collapse in the

mid-year 2000.

From the field office perspective, the Cooperative Endeavor

Agreement was expected to get new management and direction into

the Housing Authority of New Orleans. It was further expected to

apply aggressive action to: One, relocate the residents from the

HOPE VI construction sites; Two, demolish units which had been

approved by the department as part of HOPE VI; Three, engage

the HOPE VI construction program; Four, improve the mainte-
18

nance of the Housing Authority; Five, develop plans of action for

the demolition of units identified as no longer viable to be maintained by the Housing Authority; and Six, to reorganize its internal

operating structure. The Housing Authority made little progress in

any of the aforementioned.

During the first 21⁄2 years of the Cooperative Endeavor Agreement, there appeared to be an all-out effort to achieve a passing

score of at least 60 percent on the department’s PHMAP assessment program. It appeared to be the ultimate end game strategy

of the Cooperative Endeavor Agreement. To the casual observer,

getting off the trouble list might have appeared to be a major accomplishment, but for those who knew the ins and outs of the program, getting a passing score was not an accomplishment at all.

There was very little correlation between the self-certified assessment program and the public housing inventory stock that is safe,

sanitary and decent.

HANO crossed the mystical management trouble threshold in

1997 when an appeal was granted by HUD headquarters. Later in

the year, in July of 1999, HANO subsequently appealed their troubled modernization status. After a review of the information, my

staff recommended to me to deny the appeal as the Housing Authority had not provided sufficient justification. HANO was advised

of their appeal status. Under the PHMAP regulation, an appeal denied by field officer director may be appealed directly to the assistant secretary.

In November, 1998, HUD headquarters reversed my decision and

in December, 1998 I was instructed to inform HANO that they had

successfully appealed their PHMAP score. The Housing Authority

was given a passing score effectively taking them off of the modernization troubled list.

The following calendar year in 1998, HANO certified to a management score of 85.16 and an overall modernization score of 64.70.

A review of my staff certified that the information provided once

again raised a number of skeptical concerns. It is at this point that

I requested necessary travel and per diem funds to bring a team

together from my Mississippi Program Office to perform a confirmatory review of HANO’s documentation and verify, among other

things, the quality of maintenance and accuracy and timeliness of

the required inspection of units.

A series of email followed my initial email request. Headquarters

did not provide necessary funds of approximately $5,500 to bring

a team to examine the Housing Authority’s documentation and

housing stock citing that I had failed to lay out a sufficient case

for the confirmatory review.

The PHMAP program has been replaced by the assessment system. The management component of the PHMAP program is still

self-certified and, to this date, the Housing Authority has still received failing scores. Since 1981, the Department of Housing and

Urban Development has provided for the Housing Authority slightly over $1,100,000,000, $800 million of which has been provided in

the last 10 years. It is difficult to explain to the residents living

in HANO properties or to the citizens of New Orleans or Louisiana

or someone living in upstate New York or Des Moines what the im-
19

pact of $1 billion has made to the quality of life or the sustainability of the housing program in New Orleans.

[The prepared statement of Chester J. Drozdowski can be found

on page 80 in the appendix.]

Chairwoman KELLY. Thank you very, very much.

Next we have Mr. Rod Solomon. Mr. Solomon, thank you very

much. I apologize for the fact that we don’t have a name tag in

front of you, but we know who you are.

STATEMENT OF ROD SOLOMON, DEPUTY ASSISTANT SECRETARY FOR POLICY, PROGRAM AND LEGISLATIVE INITIATIVES, OFFICE OF PUBLIC AND INDIAN HOUSING, HUD

Mr. SOLOMON. Thank you, Congresswoman, and I’m very pleased

to have the opportunity, even without a name tag, to appear before

the subcommittee on behalf of Secretary Martinez. On his behalf,

I want to thank the Congresswoman, Congressman Baker, Congressman Vitter, and Congressman Jefferson, for holding this critical hearing on providing the tenants of the Housing Authority of

New Orleans decent, safe and sanitary housing. That is the most

basic mission of the Housing Authority, and the new Administration is committed to taking every reasonable step to see that that

mission is carried out as well as possible.

In coming in and looking at this situation, HUD’s actions will be

based on its own prior experience and evaluations such as that of

Mr. Drozdowski who, of course, has been here on the ground seeing

this firsthand, and other evaluations. In that regard, we will be

considering carefully the audit report that you are just about to

discuss and the work of the congressionally-mandated National Advisory Council with which you, Mr. Baker and others of you have

been closely involved.

HUD will promptly take any actions to implement remedies that

clearly and permanently promise to improve the living situation of

the residents. I also want to note the compelling testimony that

you just heard from Ms. French and Ms. Davis. That will also certainly be reported promptly to headquarters and HUD’s leadership

will be made aware of it.

Secretary Martinez is committed to improving the living conditions at HANO, as he is with public housing nationwide. We have

a new Deputy Secretary, Alfonzo Jackson, who has been confirmed

but not sworn in yet, who has administrative experience running

three large and formerly troubled housing authorities across the

Nation. The Secretary has asked him personally and immediately

to work on this matter directly and to look over what we have and

propose remedies.

Madam Chairwoman, the subcommittee asked a number of specific questions. My written statement responds to them, and I will

be glad to answer any questions you have on them, but in the interest of moving the hearing along, I would thank you now and

wait for questions later.

[The prepared statement of Rod Solomon can be found on page

85 in the appendix.]

Chairwoman KELLY. Thank you very much, Mr. Solomon.

Next we have Mr. Michael Beard.
20

STATEMENT OF D. MICHAEL BEARD, SOUTHWEST DISTRICT

INSPECTOR GENERAL, OFFICE OF THE INSPECTOR GENERAL, HUD

Mr. BEARD. Thank you, Chairwoman Kelly. I’m very pleased to

be invited back to testify again.

Our most recent report, published in May, deals with three major

topics: the status of the Cooperative Endeavor Agreement; the

authority’s progress on its modernization; and how HUD itself had

reacted to Congress’s request for an advisory council. I’d like to get

right to the bottom line here.

Over to my right I have a chart up for the subcommittee to see.

It is funding provided to HANO since 1992. I picked 1992, because

that’s the year where HUD really first started to try to turn HANO

around. Since 1996 when the Cooperative Endeavor came in, it

runs about $440 million, but I want you to know since 1992, $832

million made available to the Housing Authority of New Orleans.

Over here is Tracy Edwards. She’s a member of my staff. Last

week, Tracy and some of her compatriots from our office went out

and took 100 photographs for the purposes of coming to this hearing. The first photograph that she is going to show you is of an occupied building at the corner of Senate and Hamburg Street at St.

Bernard. You will notice that half the building is occupied and the

other half is under active construction. The resident who lives in

the occupied half told us that the construction has been going on

since around 1998 or 1999 off and on. So they’ve lived in this building under construction looking like that since 1998 or 1999 off and

on.

The second picture that she will show you is an abandoned building at C.J. Peete. Now there are abandoned buildings all over in

all the projects. I want you to note that this one has lots of broken

windows, easy access for any kids to get in there and play around

and fall out these windows. There’s boards up there hanging off the

top of the roof that any good wind would bring down. This is somewhat typical. There’s vacant buildings all over the place.

The third picture she’s going to show you is of a building in St.

Thomas. That woman standing up there on the balcony, she is the

single tenant in that building. She’s 70 years old. She has to climb

three flights of stairs that are filled with trash and debris to get

up to her apartment. See the broken windows that are in the building that she lives in?

The next picture Tracy is going to show you is a picture of a ceiling in a stairwell in a building in Arborville on Conte Street. The

stairwell reeks of mildew. I mean it literally bowls you over when

you walk into the stairwell. A resident told us that dirty bath

water leaks from that pipe that’s in the ceiling any time someone

takes a bath. The leak has damaged the ceiling and walls. The

water now collects in the stairs causing a safety hazard.

Tracy, being the nice lady that she is, was able to talk herself

into several apartments. I’ve got a few highlighted photos from

some of the apartments that she got into. This is a stove that’s in

a unit at Fisher on Whitney Avenue. The resident told us that only

two burners work and she has reported this problem repeatedly to

HANO and yet she’s still having to cook her family suppers on that

stove.
21

We have plenty of internal photographs to show you that literally, my staff members said tears came to their eyes when they

were in these places. And this next one is gross. We’re going to

show you a bathroom at another unit at Fischer on Whitney Avenue. I want you to take a look at that table that’s sitting in the

bathtub. The lady took that table away from the hole in the wall

and set it in the tub to show the auditors the hole in the wall. The

smell drove the auditors out of the bathroom. The bugs that came

crawling out of the wall grossed them out. She told them she has

had this bathroom looking like that for 3 years. Tracy has just a

couple more photos of that same bathroom. The tenant told Tracy

that the smell often makes her ill. You can certainly see why. $832

million over the last 5 years for the Cooperative Endeavor Agreement, $400 million, this is the way the place looks.

HUD removed HANO from their troubled list back in 1998. That

took care of two of the three conditions for the Cooperative Endeavor Agreement to go out of existence and yet it is still in existence.

Five years ago, I testified here in this very room talking about the

troubles then and we heard plenty of testimony that said things

are going to be fixed. They’re not.

[The prepared statement of D. Michael Beard can be found on

page 88 in the appendix.]

Chairwoman KELLY. Thank you very much, Mr. Beard. Those are

amazing, just amazing pictures. Tracy, thank you very much for

your help.

I’d like to just ask you, Mr. Drozdowski, and Mr. Beard repeated

also, the fact that HUD allowed HANO to manipulate itself off of

the troubled list in 1998. Specifically, then-Secretary Cuomo prohibited you from performing a confirmatory review, according to

your testimony. Do you believe that that may be the reason that

HANO was removed from the list?

Mr. DROZDOWSKI. Yes, indeed. A confirmatory review would have

done a number of things. First of all, it would have checked the

work orders to make sure that we could have followed that trail of

work to be done to prevent this sort of thing from happening at the

Housing Authority. It was certainly within the best interest of the

department to make sure that there was increased department surveillance at the Housing Authority of New Orleans. It had been

troubled for a number of years, 20 years to be exact, and the history showed that very little got done at any given time in its past.

Chairwoman KELLY. Mr. Solomon, do you think HUD would

allow that to happen again?

Mr. SOLOMON. No.

Chairwoman KELLY. That was a succinct answer.

In your opinion, Mr. Drozdowski, what was former Secretary

Cuomo’s motivation for stopping you from performing that confirmatory review in 1998?

Mr. DROZDOWSKI. Well, I couldn’t say Secretary Cuomo specifically. It certainly went up our chain of command through field operations and the person that I was dealing with was out of the office of the Deputy Assistant Secretary for Assisted Housing, Ms.

Cousar. We certainly made a case, we thought we made a case,

that justified a few thousand dollars to go out and look at the conditions of the Housing Authority and to verify their scores.
22

Chairwoman KELLY. I’m looking for a quote where I thought I

saw his name. I wish that Secretary Cuomo were here better able

to explain the actions of HUD at this time. There was a decision

made in June by Secretary Cuomo to extend the CEA and continue

to placate, according to you, the mayor. I think placating the mayor

may have been good party politics in an election year, but it’s pretty awful public policy when you see what has resulted with thousands of people living in squalor, pictures just as we’ve seen. I wish

that the Secretary were here. I think it’s very disappointing that

thousands of residents in this public housing might be used as political pawns. I think it’s clear that perhaps by extending that

CEA, Secretary Cuomo may very well have been trying to help

someone, possibly Vice President Gore, but it wasn’t the people

who were living in public housing that he was trying to help, and

I think that’s a real shame.

I have another question of you, Mr. Solomon. I have here in my

hand a news story saying that this Administration is eliminating

an $860,000 housing program that used to counsel public housing

tenants on kicking drugs and it was a drug program. This program

I’m talking about now has been eliminated, because this program

just barely got started. The program is called Creative Wellness

and what it basically did was trying to use applied kinesthesiology.

They had a wellness trainer. For instance, she mentioned that sun

and earth tones are good and pink and blue drain energy. I assume

that the Administration decided to eliminate this particular program because it’s more interested in eliminating rats and roaches

than it is looking at whether or not pink and blue are particularly

good colors for residents to wear. Is this true?

Mr. SOLOMON. Yes. We felt that that program was not a proper

use of Federal money, and that the money should be used for activities that were more clearly accepted to be on point for drug

elimination.

Chairwoman KELLY. I see I’ve run out of time, so I’m going to

go on to Mr. Baker.

Mr. BAKER. Thank you, Ms. Kelly.

Mr. Drozdowski, I read somewhere, either in a written statement

or in other documents, that since 1983, it’s your opinion, about a

billion dollars or so in funds have been allocated to HANO. Is that

correct?

Mr. DROZDOWSKI. That’s correct, sir. We did a survey just last

week. We went back to 1981, as that was actually one of the first

reports that the IG had issued regarding the Housing Authority of

New Orleans. Our analysis showed $1,149,000,000 to be exact.

Mr. BAKER. So that from 1983 to the present moment,

$1,100,000,000 in round numbers has been made available to the

Authority.

Mr. DROZDOWSKI. That’s correct.

Mr. BAKER. Is it your opinion that it’s a lack of funding that’s

prevented the Authority from making substantive changes in the

quality of housing?

Mr. DROZDOWSKI. No, sir. A billion dollars is a lot of money. It

can certainly build and repair a lot of units and take down a lot

of units. This is just mismanagement of the funds and the inability

to get the program off.
23

Mr. BAKER. So after spending a billion one, your opinion is that

the prior Administrations involved in the conduct of the Housing

Authority in New Orleans, perhaps officials within HUD, have resulted in inept management of taxpayer dollars for this purpose.

Mr. DROZDOWSKI. I would agree with that statement, Mr. Baker.

Mr. BAKER. Was it your opinion that when you wanted to engage

in the confirmatory audit of HANO’s scoring that some official at

a higher level than your office in DC perhaps engaged in this decisionmaking process and, for some unknown reason, reversed your

professional inquiry?

Mr. DROZDOWSKI. Yes, sir. That’s correct.

Mr. BAKER. I would want for the record to note that at that time

I was engaging in conversations with Secretary Cisneros asking

specifically that appropriate action be taken to remedy this problem. In that window, Madam Chairwoman, I requested the Secretary to explore the possibility of a receivership, given the long

history of the HANO’s under-performance. I received similar treatment, if it’s any concern, and my request was not acted upon.

Do you think that a receivership would be an adequate remedy

for the problems we face?

Mr. DROZDOWSKI. Yes, sir. In my written statement I do say that

the receivership must be put on the table again to revive the Housing Authority of New Orleans.

Mr. BAKER. What other items might be put on that table besides

receivership?

Mr. DROZDOWSKI. Well, we’ve look at, as an organization, as a

HUD organization, public housing organization, the possibility of

separating the Housing Authority into smaller units. That’s a distinct possibility.

Mr. BAKER. So you’re suggesting that big mismanagement be

made into little mismanagement.

Mr. DROZDOWSKI. Well, it’s easier to correct perhaps.

Mr. BAKER. So you would have different people engaged in

project by project responsibility. Would that be fair?

Mr. DROZDOWSKI. That would be a fair statement. Yes, sir.

Mr. BAKER. One of the things which the proponents of HANO

have made me aware of, and I tend to agree with them, is that the

current body of law under which they operate is restricted with regard to making sweeping management decisions and, for that reason, a receivership might be the more advisable, because it would

unleash the ability of whoever would be given the responsibility to

make changes in a dramatic fashion. Is that view one that has

merit?

Mr. DROZDOWSKI. Yes, sir. It does.

Mr. BAKER. Thank you.

Mr. Beard, you’ve been engaged in this business for some time.

It appears that your report of this year is not significantly different

than your report of 1996 except that we have a lot more money in

this report compared to the 1996 report. Are you basically telling

me that conditions have remained the same, gotten worse, or has

there been minor improvement, in your view?

Mr. BEARD. Oh, there’s been minor improvement, but the conditions are still the same for the tenants.

Mr. BAKER. Is the manner of improvement the demolition of——
24

Mr. BEARD. There’s been some demolition, some new windows,

some new doors but, generally speaking, there has been no

progress at all during the 5 years on any one of the 10 conventional

sites getting any of them turned around.

Mr. BAKER. When the buildings have been demolished, I’ve read

that there is a lack of 4-bedroom units within the market, that the

2- and 3-bedroom units are located on the west bank. There are

concentration concerns with relocating families continually to that

area. What has happened to the tenants who occupied public housing that’s been demolished?

Mr. BEARD. I honestly don’t know. I mean we’re talking several

thousand that have been removed from these projects as they’re

targeted and demolished. I don’t know where they go.

Mr. BAKER. Mr. Solomon, I really don’t have a question. I just

have a statement, because I understand the Administration’s position on this matter. I just wish to state for the record concluding

my remarks that these circumstances are intolerable. This is a

public embarrassment. People’s lives have been ruined. We’ve had

young people falling out of windows, as Mr. Vitter has stated. Permanently injured or killed. This is not something we can stand by

and tolerate any longer, and I don’t know what action I can take

more aggressively than I’ve taken in the past, but I assure Madam

Chairwoman, Mr. Vitter and Mr. Jefferson that whatever it is, I

don’t care how radical. I would leave the word reasonable on the

edge. If it takes tearing things upside down to get this fixed, we

have got to start doing it.

Thank you, Madam Chairwoman.

Mr. SOLOMON. Thank you. Perhaps this is unnecessary, but in

case I do need to repeat it, I think the Administration understands

the urgency of the situation. Again, its leadership will hear your

comments directly.

Mr. BAKER. Well, thank you. I just think the Inspector General’s

report and the comments of the field officer have such enormous

credibility for the need for change. There is just not an adequate

explanation that can be given. Certainly over the decade we have

got to have earned the honor of being the worst in the country, and

that is something for which we all share a great degree of shame.

Chairwoman KELLY. Thank you very much, Mr. Baker.

Mr. Vitter.

Mr. VITTER. Thank you, Madam Chairwoman. I just have a couple of comments, probably no questions, but I just find this figure,

any of the figures we’re talking about, astounding. Since 1992,

$832 million. Madam Chairwoman, in southeast Louisiana we’re

debating a couple of big potential public construction projects now.

One is the new phase of the Convention Center, which is very important for economic development. That would take about $4- to

$450 million dollars. Another possible project that the New Orleans

Saints have been pushing is a brand new stadium for the New Orleans Saints. That would take about $450 million, $350 million of

which would be public. You could do both of those things immediately at the same time with that amount of money and have

change left over and yet we, as taxpayers, have spent that amount

of money on HANO since 1992 and we have virtually nothing to

show for it. It is just mind-boggling. Like I say, it is the budget for
25

what would be the two biggest public construction projects in Louisiana history with change left over.

My other comment is to Mr. Solomon, as a representative of the

new Administration. I urge you to take this sense of outrage and

urgency back to your leadership in Washington. Sometimes I think

there is a problem. A new Administration comes to town and is

only hearing this hard story for the first time and has not lived

through these three and four and five failed reform efforts over the

last decade. But you need to read the history and you need to communicate the history, because there have been all of these failed

reform efforts. There has been over $1 billion of spending with virtually no results. So I hope the new Administration digests all that

and takes it to heart before it gives HANO just another pass at just

another band-aid approach to limping along for the next few years.

I really urge you to take that bit of history and that sense of urgency back to your leadership in Washington.

Mr. SOLOMON. Thank you. I will do that.

Chairwoman KELLY. Thank you very much, Mr. Vitter.

I’d like to go back for one minute to the Cooperative Endeavor

Agreement. I was running out of time and really didn’t get a

chance to explore that a little bit. Mr. Drozdowski, how many years

do you think it’s going to take to bring all the HANO facilities up

to code, if ever?

Mr. DROZDOWSKI. I’ve given some thought to that just over this

past week. Given what they’re doing now, it would probably be, at

the rate they’re moving, probably the year 2030 or 2031 to get anything moving.

Chairwoman KELLY. Thirty to 31 years?

Mr. DROZDOWSKI. I would say that, and here’s why I’m saying

this. It’s taken—we’ve given—it’s been 1994 since the HOPE VI for

Desire was awarded to the Housing Authority of New Orleans and

we still haven’t knocked the buildings down. We still have families

living at Desire. Construction is scheduled to start probably in the

next 16 to 18 months. It’s going to take another 3 or 4 years to

complete that project. It’s a long, involved process and, of course,

it also deals with how fast can you move with the funding that is

available with the department. It’s a long, drawn out process, and

we’ve watched literally, at least since the Cooperative Endeavor

was signed, probably 5 years.

Chairwoman KELLY. Do you think that—assuming that it might

be continued, when do you think that HANO might just complete

even one for the revitalization? I mean just take one.

Mr. DROZDOWSKI. The report that the Inspector General put out

is quite accurate for a period of about the beginning to about 1999.

Since February of 2000, a lot has started to happen. Buildings have

started to come down at St. Thomas, for instance. Some buildings

have started to come down at Desire. St. Thomas will probably be

the first project that will be completed, and we’re looking at a completion date of some time around the year 2003, beginning 2004.

Chairwoman KELLY. So you’re thinking that St. Thomas may

be—we were out this morning.

Mr. DROZDOWSKI. A lot of work has been done there.

Chairwoman KELLY. Yes. We saw a number of things that have

been deconstructed. We saw some flat land. But the question is
26

what about the permitting process and so on? Do you think we’re

still looking at 2004 to get some units there?

Mr. DROZDOWSKI. St. Thomas is a very visible and interesting

project, and I think there’s a lot of support for the St. Thomas

project. I think when you go further, the Desire project has less appeal. As you start working on the conventional projects, C.J. Peete

and Bernard and the other projects, there’s less of an appeal. I

think St. Thomas will be completed on time. I think we’ll have

problems with the rest of the projects.

Chairwoman KELLY. Mr. Beard, would you agree with that?

Mr. BEARD. I’d like to make a couple of points. Ms. French told

you very clearly there’s no maintenance. That’s how that bathroom

gets created. I agree St. Thomas might be up around 2003-2004,

and that’s going to be handed over to a housing authority that

doesn’t maintain anything. It won’t be too long before that building

looks like that again. Until they fix the management here, particularly the maintenance, I don’t care how many new buildings you

build. The problem isn’t going to go away.

Chairwoman KELLY. One of the things I’d like to ask you about,

gentlemen, is that there’s a projected income mix at St. Thomas.

Sixty seven percent of the units are going to be market rate. Only

33 percent are scheduled to be public housing eligible units. So

they’re not all going to be returned to the kinds of people that were

removed from those units. Would you care to comment on that?

Mr. BEARD. We did a report a few years ago on the HOPE VI

program nationwide, and this was one of the problems that we

identified in that report, that HOPE VI comes in and revitalizes a

neighborhood and puts in an income mix. But what really happens

is the people at the bottom of the scale literally disappear. We did

some stories just recently, particularly one in Atlanta. We don’t

know where those people went that used to live in the Techwood

Homes in Atlanta. HOPE VI came in, really made that place a

beautiful, livable neighborhood, but where did those people go that

used to live there? I think that will happen to a lot of the residents

at St. Thomas. They’ll be moved out. They will not fit into this mix

that we have to make this nice St. Thomas neighborhood. You’ll

ask me and I’ll tell you, I don’t know where they’re going to.

They’re just going to disappear.

Chairwoman KELLY. Sounded like Ms. Davis was trying to plead

for that neighborhood to stay, and I’m just concerned that the

neighborhoods will somehow come back if we’re down to bare earth

and we come up with a mix like that. It’s not bad to have a mix.

It’s a good thing. But my concern is when we’re moving people out

and we’re talking about thousands of people being moved out while

their units get destroyed, where do they go when Ms. Davis pointed

out there’s not enough housing stock in New Orleans to house

those people. Where are they supposed to go if we’re tearing down

the units? I don’t know the answers to these questions. I’m simply

raising them and hope that perhaps you have some thoughts that

you’d care to share with us. Any one of you may answer that.

Mr. SOLOMON. Well, just generally for these redevelopment efforts everywhere in the country, the basic alternatives for the short

run and the longer run are other public housing or Section 8. The

Housing Authorities have a responsibility to the residents, as long
27

as they adhere to their leases and do what they are supposed to

do, to house them somewhere. The Government’s efforts are supposed to be making this situation better. That means it is incumbent, if we are going to use Section 8, that the Section 8 program

be working, and that Housing Authorities—and again, I mean generally—track these families and that this be a coordinated effort.

We need to make sure that those responsibilities are carried out.

Chairwoman KELLY. In the testimony of one of you—in a report,

I should say, of one of you, I believe it was the HUD IG, Mr. Beard,

was it you? You said that the Section 8 housing program is really

dysfunctional or non-functioning at all. Is that still the truth?

Mr. BEARD. That’s the truth here in New Orleans in that it’s the

place that they could use to help relocate tenants if it were operating smoothly and efficiently, which it’s not. I think the lease rate

is somewhere around 60 percent of what they’ve got available.

Mr. DROZDOWSKI. Sixty eight percent.

Mr. BEARD. Sixty eight percent of what they’ve got available

they’ve got leased up. So there’s a lot of room there they could be

using and they’re just not operating effectively enough to do it.

Chairwoman KELLY. You have the vouchers available?

Mr. BEARD. Yes, they have vouchers available.

Chairwoman KELLY. Is it the fact that there’s no housing available for people who will accept those vouchers and accept those

families? Where’s the rub here?

Mr. DROZDOWSKI. The Section 8 program has to be worked on a

regular basis. The issue, of course, is where do you find the units

that are available and suitable for Section 8 rental? What our assessment is in the field office is that the Section 8 program has

never been worked effectively. I’ve talked to my counterparts in

Chicago, for instance, where they had the same sort of problem.

They brought in a private contractor, contracted out the entire Section 8 program, and the Section 8 program in Chicago is working

very well. So I think he’s right. The point we should be making is

that, at least during the period that we are looking at during the

Cooperative Endeavor Agreement, the Section 8 program literally

did not function properly and is now suffering the consequences of

that mismanagement.

Chairwoman KELLY. Thank you very much. That gives us at

least some kind of a picture.

Mr. Drozdowski, do you think the CEA ought to end?

Mr. DROZDOWSKI. Yes, ma’am.

Chairwoman KELLY. Mr. Beard, do you?

Mr. BEARD. Yes, ma’am.

Chairwoman KELLY. Mr. Solomon, will you take that, please,

back to the Secretary?

Mr. SOLOMON. Yes, ma’am.

Chairwoman KELLY. Thank you very much.

Mr. Baker, have you further questions?

Mr. BAKER. Yes, Madam Chairwoman. Thank you.

Mr. Beard, I didn’t get to ask the question last time that I asked

of Mr. Drozdowski as to the remedies in response to we should end

the CEA. Do you think receivership is now the appropriate step,

and perhaps before you answer let me give you this advisory. I

spoke with Ms. Gaffney last week and she has expressed some level
28

of support for this. So maybe that helps with your decisionmaking

on that point.

Mr. BEARD. I think it’s the best thing since sliced bread.

Mr. BAKER. Great. I didn’t think you needed that other piece of

information, but I just wanted to make sure.

As to administrative or judicial, do you have a preference? Receivership.

Mr. BEARD. Judicial.

Mr. BAKER. And what would be your reasoning for that approach?

Mr. BEARD. Complete independence from the political process

and the town.

Mr. BAKER. Based on the comments of Mr. Drozdowski concerning Secretary Cisneros, Under Secretary Cuomo’s actions with

regard to the certification by HUD of the HANO scoring, it would

seem to be fairly evident to people that political considerations

have driven the expenditures, or the lack thereof, I would say in

this case. And again, given the observation that 68 percent of the

Section 8 certificates have been used leaving 32 and we still have

people in dilapidated housing, there really is no excuse for our current condition.

Before I ask this next question of you, I need to make a preface.

The current Executive Monitor, Mr. Nicotera, who I believe will be

on our next panel, I believe has done good work since his appointment to this responsibility, but we’ve taken an intolerable, very

bad, difficult situation and made it merely just bad. I have had, in

conversations with him, discussions concerning the mechanisms by

which we could unleash good professional judgment to do the work

that needs to be done, and I intend to pursue that line with Mr.

Nicotera in the next panel.

But I make that point in his defense, but then to ask this question. Do you, and perhaps Mr. Drozdowski is the appropriate party

or between the two of you for sure, have knowledge that HANO has

asked for a waiver from the mandatory demolition rule for four

particular projects? And I speak of Cooper, Fisher, Florida and

Guste have been determined to be not meeting the appropriate

standards or that they should be demolished, that HANO has

asked for a 10 year waiver of that requirement meaning—let me

translate for those who didn’t understand that gibberish—that the

current request is for tenants of those four projects which do not

meet decent habitable standards by HUD’s own measure, are going

to be asked to stay there at least 10 more years?

Mr. BEARD. Let me make that very visual for you, Congressman.

That bathroom is located in one of those projects. She’s lived, she

told us, 3 years and they’re asking her to stay another 10 until

they get her on the fix list. You’re exactly right. They have asked

for a waiver not to do anything for 10 years to that bathroom.

Mr. BAKER. Well, I just want the resident representatives here

to understand what we are trying to communicate. We are here

really to try to figure out how to fix this. We are being told that

we have money in accounts for various purposes that remain

unspent. We’re being told that we have properties which don’t meet

minimum standards to live in, and we’re being asked to turn our

heads for another 10 years. I think the power of that needs to be
29

fully understood by those who are worried about change. The one

thing we do know is what we have today is not acceptable, and we

have to do everything within our power to change it and yet we

find ourselves in the posture of being asked to turn our heads for

another decade. Frankly, in my conversations with Congressman

Jefferson about this matter, that’s what disturbed him the most. I

realize he’s been in Congress now over a decade and he’s seen

young people grow up in this environment with no evident change

in living condition and now he’s being asked to turn his head again

for another decade. Watch them grow into young adults. That’s incomprehensible.

Is it your judgment that the current circumstance and the lack

of expenditure of funds can be laid to mismanagement, turnover,

lack of a comprehensive plan? I know that Anderson Consulting

was paid $3.7 million about 1998 or so to develop a short- and longterm plan. What happened to the money and where’s the plan?

Mr. BEARD. Their draft of that plan we really liked. I don’t think

anybody ever actually implemented it, but there has been a number of excellent plans made.

Mr. BAKER. You paid $3.7 million for a plan that was put on a

book shelf?

Mr. BEARD. It almost works out that way. I mean they plan and

then it just doesn’t go any further than that.

Mr. BAKER. I read somewhere, I don’t know if it was your comment or a quote from someone else, that HANO loves to plan, but

doesn’t like implementation.

Mr. BEARD. That’s a quote from one of the HUD people.

Mr. BAKER. How much in the aggregate of the $832 million

spent, how much of that has gone into consulting and planning?

Mr. BEARD. I would hate to venture a guess, but I can point out to you that on the Comp Grant Funds that are $279 million, I

think they had somewhere in the neighborhood of $70 million or

$80 million that went to what’s called ‘‘soft costs,’’ which is that

sort of activity.

Mr. BAKER. So a conservative guesstimate would be $70 million.

Mr. BEARD. Just out of that one block of the Comp Grant Funds.

You’d have to speak to them. HOPE VI has just as large a number

of—they all come with their consultants, their planners, their engineers, their lawyers, their accountants. I mean it costs a lot of

money to employ them.

Mr. BAKER. To eat here in the city is nice, but it can be expensive, too, I hear. If you had to make a recommendation to this subcommittee based on your analysis today, beyond the question of judicial receivership, are there other elements that you would want

to make to us as a part of resolution of this problem?

Mr. BEARD. We’ve always maintained over the years to get it out

of the politics of the local city, and that was our intent this time.

When we were recommending smaller entities, we were hoping

that someone might be able to focus on one or more of these 10

projects and turn some of them around.

Mr. BAKER. But that would only be subsequent to a determination of a judicial receivership to give them the authority to take appropriate action.

Mr. BEARD. That’s right.
30

Mr. BAKER. I don’t want to take inappropriate time. Thank you,

Madam Chairwoman.

Mr. BEARD. Let me just emphasize that the Office of Inspector

General has been publishing pictures like this since 1983.

Chairwoman KELLY. I thank you, Mr. Baker.

I just want to put this in perspective a little bit. $3.7 million for

the Anderson plan. Before I got to Congress, I rehabilitated real estate. I went out with my kids and we walked through buildings and

we would take a look how we could rehabilitate real estate. I hate

to see a beautiful building go to waste. So I’m going to throw out

some figures.

I come from New York, from the greater New York area north

of the city, so I’m not in the city, but I always figure it costs $400

to fix a window. $400 and they spent $3.7 million for a plan that’s

on a shelf. $200 for a door, $50 to put a good dead bolt lock on it.

That’s what we’re talking about in the scale of things. You can put

in a whole new kitchen for about $3,000. And we’re talking about

$3.7 million for a plan that’s sitting on a shelf.

You know, if you just stop and think about the scale of what

we’re talking about here, we can talk in terms of millions of dollars, but it’s only a few hundred dollars that some of these residents need to rehabilitate a building, to rehabilitate what they’re

living in, to give them a decent place to live, to rehabilitate. To go

in and reconstruct that bathroom with waterproof sheetrock to

cover that wall, to put on new tile, to put in a bathroom sink, a

toilet, a new tub, you’re talking maybe, at the most, $3,000. $3,000

and we spent—I shouldn’t say ‘‘we.’’ The Housing Authority spent

$3.7 million on a plan that’s on the shelf.

Mr. BAKER. Will the gentlelady yield?

Chairwoman KELLY. I certainly will yield.

Mr. BAKER. It was my intention, Madam Chairwoman, I had

what I called a virtual tour for the subcommittee that I wanted to

take you on, primarily those four buildings that were being requested to have the 10 year waiver on the demolition standard. It’s

apparent with our next panel that we will be pressing the time envelope a bit for you to make your flight, and I may do that at another occasion when you might choose to make it available.

But it is almost inconceivable to me that when we look at the financial condition, you look at the physical condition, when you’re

talking about fixing those windows, we don’t have GAAP accounting standards used here, and the $10 million of judgments awarded

that are on the books as a result of individuals being harmed by

the lack of maintenance, if you put that on the books, I believe you

would find our organization to be insolvent, much less litigation

that is in the pipe and still pending that we don’t have resolution

for that could run those numbers literally into the hundreds of millions of dollars.

So that lack of maintenance has had a very significant effect far

beyond just inefficient expenditure. It’s unbelievably costing us

huge sums of money, because we aren’t maintaining these buildings properly. So one problem leads to another, which is, I think,

just getting us to an end result which is just no longer defensible.

Thank you.
31

Chairwoman KELLY. Thank you, Mr. Baker. And you’re right. We

have gone on.

Mr. Vitter, you have no further comments? We thank this panel

very much. I appreciate your being here and I know that there may

be additional questions, not only from us, but also from Congressman Jefferson so, without objection, the hearing record is going to

remain open for 30 days for the Members to submit written questions for these witnesses and for them to place their responses in

the record. This panel is excused and we’ll now go to the third

panel. I would like to take at this point about a 10 minute break

just so everyone can shake their legs out a bit. Thank you.

[Recess]

Chairwoman KELLY. Thank you very much. If you will all please

be seated, we’re going to start the hearing right now. As you know,

we’re trying to get this hearing moved along. We move to our third

panel before us.

We’re pleased to have Mayor Marc Morial. Mayor, your place is

here at the table, if you will, please. And Mr. Frank Nicotera, the

Executive Monitor of the Housing Authority of New Orleans. You’re

both aware that this subcommittee is holding an investigative

hearing and, when you do so, the Chair may decide to take testimony under oath. Do either of you have any objection to testifying

under oath?

Mr. NICOTERA. No, ma’am.

Chairwoman KELLY. Mr. Mayor, you do?

Mayor MORIAL. I’m raising my hand.

Chairwoman KELLY. Well, that was fast. Then the Chair advises

you that under the rules of the House and rules of the committee,

you’re entitled to be advised by counsel. Do any of you desire to be

advised by counsel during your testimony today?

Mr. NICOTERA. No.

Mayor MORIAL. No.

Chairwoman KELLY. In that case, please raise your right hand

and I’ll swear you in.

[Witnesses sworn.]

Chairwoman KELLY. Thank you very much. Each of you is now

under oath. Without objection, your written statements will be

made part of the record. You will each now be recognized to give

a 5-minute summary of your testimony. We will begin with you,

Mayor Morial.

STATEMENT OF HON. MARC MORIAL, MAYOR, CITY OF NEW

ORLEANS, LA

Mayor MORIAL. Thank you very much, Madam Chairwoman,

Members of the subcommittee, Congressman Jefferson, Vitter and

Baker. Madam Chairwoman, I’m pleased to be here. I want to

apologize to you for not having any written testimony. I was advised that this hearing would take place on June 24. I received that

letter approximately 10 days ago and wasn’t notified until Wednesday/Thursday last week that this would be the new date of the

hearing. As all three Louisiana Members of this panel know, the

Louisiana Legislature is in session and I was required to spend

Thursday in Baton Rouge and left to go to New York on Friday,
32

so I did not have an opportunity to prepare for you any written testimony.

But let me offer you some observations which I think are important:

One, I really appreciate the Congress’s continuing interest in

public housing in New Orleans and also public housing on a national basis;

Two, I want to offer to you some ways in which I think that the

Congress, working with the new Secretary of HUD, could be helpful to this process. One is that the HOPE VI program is broken and

the HOPE VI program which is currently financing improvements

at both St. Thomas and Desire, a well-intentioned program, is a

program that needs dramatic overhaul, and here’s why.

First, the red tape from the Federal level through the HUD bureaucracy associated with getting these projects approved smacks

of some kind of Russian or criminized bureaucracy. The approvals

needed and the approvals necessary and the delays associated with

both of these projects in the time, from the time that these grants

were awarded to the city to the current period, we have built convention centers, we have added two new concourses to our airport

and built a new ticket terminal. We’ve built swimming pools and

amusement parks. The time period and the bureaucratic approvals

and delays associated with these two projects leaves much to be desired. That, despite the good intentions of what I believe were three

successive HUD secretaries: Former Secretary Kemp, Secretary

Cisneros, and Secretary Cuomo, all three committed to work to try

to eliminate some of the bureaucratic delays associated with this

program.

Second, with respect to HOPE VI, because HOPE VI is the primary financing vehicle, Congressman Baker, put before Public

Housing Authorities for the redevelopment of Public Housing Authorities. The second very, very broken part of HOPE VI is that the

mixed financing requirements are overly ambitious, and have made

it very, very difficult for developers to proceed to complete these

projects. What do I mean?

The idea behind HOPE VI is that you give an amount of Federal

money and you say to a developer, ‘‘Now you go out and raise the

rest through private equity, private debt, tax credits, and public

money.’’ At St. Thomas, a site which I believe you visited today,

there are tax credits. The city, through a recent bond issue, has

committed $6 million. The State, through the capital outlay process. Imagine that. We’ve got to go to the State capital outlay process to try to finance the redevelopment of an essentially Federal

public housing development. They’ve committed an additional $6

million and the developer has indicated to us in order to close the

final gap he may need a tax increment financing initiative from us

to fill the gap.

The mixed financing requirements are overly ambitious and what

they do at the end, respectfully, is place a good program in a situation where, if you look around the country, very few HOPE VIs

have been completed. One focus is to say, ‘‘Well, maybe the Public

Housing Authorities didn’t do their job.’’ I’m here to say that there

is a bigger problem begging for a solution, and that is that the

HOPE VI program needs overhaul.
33

The third area where the HOPE VI program, I believe, leaves a

lot to be desired is in the area of what it does in terms of relocating

public housing residents. Simply providing public housing residents

with a Section 8 voucher is not enough for effective relocation and,

in many instances, what these initiatives are doing is causing displacement, doubling up, tripling up of families under the guise of

relocation. A better solution must be found.

Fourth, very importantly, Public Housing Authorities must competitively compete for HOPE VI grants. There is no guarantee that

you’re going to get the grant, Congressman Jefferson. So what may

happen is a Public Housing Authority may be waltzed down the

road of demolition in an effort to comply with stringent HUD requirements of decommissioning apartments which, quote ‘‘don’t

meet minimum housing standards.’’ Large public housing developments are demolished and there’s no money to redevelop them because not enough money has been committed to redevelop every

site which is demolished.

This program, despite its well-intentioned beginnings, despite

tremendous efforts from three successive HUD secretaries, from

local Public Housing Authorities, from all sorts of developers and

experts, is a program crying out for significant change.

Second observation—— Chairwoman KELLY. Excuse me, Mr. Mayor, but you weren’t here

when we established the ground rules for this hearing. It was that

everyone has 5 minutes for testimony, so if you could please sum

up, we’d appreciate it.

Mayor MORIAL. Well, I’d really ask for some additional time, if

I can have some additional time, Madam Chairwoman. I understand the ground rules, but these are very, very important issues.

I see your aide shaking saying no, don’t give the mayor any additional time. But I will comply with your request and stay as long

as I can for questions. But I want to hit on two other additional

points, and those are that there are two things in the—— Chairwoman KELLY. I just want to say if you could do it in a couple of minutes, I’d appreciate it.

Mayor MORIAL. Two quick things I want to add, and that is that

currently one of the biggest advances that we’ve made in this city

is that we have significantly reduced violent crime. I am proud of

that. And it’s happened because we’ve worked very hard and it’s

happened because we’ve placed community policing substations in

public housing developments to give people in public housing the

same kind of policing that people in other neighborhoods have had.

We’ve financed that with a drug elimination grant program. Congressman Vitter, that program has been proposed for complete and

total elimination, as has the community policing program.

Second, on the budget, after HOPE VI, the only pool of money

that Public Housing Authorities have for construction is the Comprehensive Modernization Program. That program, better known as

the Comp Mod Program, is also proposed for approximately a 30

percent reduction in this year’s budget, and I would beg and plead

with this subcommittee to look very closely with that, weigh in

with the appropriators on those two points. And I’d be happy to answer any questions you have.

Chairwoman KELLY. Thank you very much, Mr. Mayor.
34

At this time, I want to turn to my colleague, Mr. Jefferson. I’m

so glad you were able to be here, Mr. Jefferson. We welcome your

appearance with the subcommittee and would like to at this point

let you have time for a statement.

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

Mr. JEFFERSON. Thank you, Madam Chairwoman. I want to

thank you very much for permitting me to speak for a brief moment on this, and I want to thank my colleagues Richard and

David Vitter for coming down to work with us on these important

issues and thank you, Madam Chairwoman, for your attention.

This is a very difficult subject for all of us. You have a Mayor

in front of you who has worked his heart out in the city to do the

best job that he could, and he’s done an extraordinary job, as he

has just mentioned, on the crime reduction issues, not only in public housing, but across the city. He has spoken passionately about

these issues and worked hard on them. These are very tough

issues. They have proven to be intractable over the years. We have

tried one form after another of governance, of changing governance,

of new contracts, all sorts of different arrangements, and all sorts

of Federal programs. The Mayor has just described one that he

thinks isn’t working very well. All sorts of arrangements with our

tenant leadership and trying new ways to make the programs work

more effectively.

I haven’t come here today to condemn the work of this committee. I think it’s important work. I think questions need to be

asked and answered. Nor have I come here to point fingers at the

Administration for their efforts, because I think they’ve been genuine and they have been well-founded and, in many respects, they

have been helpful. All of us though when we talk about these properties of brick and mortar and all these pictures and so on, we

don’t have any people in there. This really turns out to be all about

the people who living in public housing and what happens to particularly a lot of the children who live there and who ought to have

a better chance for a better life. We ought to be able to say at the

end of the day that we did something for them.

And so I’ve come here with an open mind with a few conditions

though to it. It’s easy for us to characterize what is happening here

as a political exercise by a Republican committee. I don’t believe

that’s what it is. And it’s easy to say that the Mayor is a strong

Democrat, as am I, and we can point fingers in that direction. But

I think it has to be above all that and I know that I’ve talked to

Richard privately about it and I know that he is working in that

direction and Susan, I haven’t had a chance to talk with you about

it, but I’m confident that you will and that David will so that at

the end of the day what we really are focused on here is how we

can make quick work of what needs to be done in these developments so that we do not see another generation of children grow

up in sub-standard housing in this city. That’s the bottom line for

me. That’s the bottom line, I believe, for the local administration

and ought to be the bottom line for this subcommittee.

If we can work in that direction and work on it well, I’m sure

there are some things that need to be changed at HANO. I’m sure
35

there are things that need to be changed at HUD. I’m sure there

are things that need to be changed with our Federal legislation to

make it work better. Whatever the requirements are, bottom line

has to be that what we do here must always be with the people

who live in public housing in mind and we ought to be focused now

on as quickly as possible getting to some solutions for the people

out here without anything about politics. I think if we work with

that as our basic condition, then I think that I’m certainly willing

to work with this subcommittee and with the Chairlady and with

Richard and with David and with everybody on both sides of the

aisle to try and make this process work for all of us.

So I thank you for letting me make these brief remarks and I

welcome you to our city, and I’m sorry you have to come and go

so quickly. But I’m very happy to see you here and I look forward

to getting back to Congress and sitting down with you and trying

to work hard on these issues so we can come to resolution for the

people who live in public housing, particularly for the children who

live there so we can make sure that we do not have another generation of children growing up in public housing where they don’t

have a decent chance and they don’t have the support that we need

to give them.

Chairwoman KELLY. Thank you very much, Mr. Jefferson. You’re

absolutely correct. This issue is not a political one. This is a matter

of public policy that affects the lives of the people sitting in this

audience who must live in substandard housing, and we need to all

of us put our shoulders to the wheel to make sure that this policy

is changed enough so that money gets to those people so they can

have good lives. Thank you very much for being here and for making that statement.

Mr. Nicotera, we’d like to go to you for your statement.

STATEMENT OF FRANK NICOTERA, EXECUTIVE MONITOR,

HOUSING AUTHORITY OF NEW ORLEANS

Mr. NICOTERA. Thank you, Madam Chairwoman, Congressman

Baker, Congressman Jefferson, Congressman Vitter. It’s my pleasure to appear before the subcommittee today. Despite all of the testimony prior to me, I’m here to present a picture of HANO as I

have seen it over the last 15 months as the Executive Monitor.

From my position, I think the HANO management team that’s in

place right now is probably the strongest public housing management team that’s been in New Orleans in years. I’ve been in New

Orleans since 1977, and it certainly goes back that far. If you just

drive around the city, despite what the critics say, there’s more ongoing development and modernization at HANO properties right

now than at any time in the last 30 years. The last significant development at HANO was back in the 1960s. I have some examples

before you and I know Congresswoman Kelly, you had a chance to

see some of those this morning at St. Thomas.

That demolition started in July of 2000 and, as of today, it’s

more than 80 percent complete. At Desire, the master site developer mobilized in March and they’re continuing the demolition.

That’s the picture that’s closest to you. That demolition is proceeding and that project will start infrastructure construction probably sometime in July or August.
36

On the modernization side, just to correct some of the testimony

that was heard earlier: The first large scale new units that we’ll

actually bring online are at the Florida development where we’re

doing a comprehensive modernization, reconfiguring out public

housing apartment-type units into townhouses, cutting the old

street through so that they can have walk-up entrances to the

fronts of the units, and we’re also going to build some new duplexes. And also at the Guste high rise development. We have already finished the east wing and a new elevator lobby with new

elevators, which were badly needed, because the old ones would

break down frequently. And we have a number of accessible units

in that building, and I believe there’s 88 units in the east wing

which were turned over to the resident management corporation

this week so that they could be reoccupied and the rest of that

project will be done about this time next year.

We’ve heard discussions about relocation. Well, at St. Thomas

I’m happy to report that as of about 3:00 this afternoon, the last

resident of St. Thomas was relocated. At Desire there’s approximately 70 families left. The first stage of C.J. Peete, which is another development that we’re undertaking as a mixed finance development utilizing Comprehensive Grant Funds. The first stage

has been relocated and we’ve begun demolition on another stage.

The Section 8 problems have been noted in the IG report and

here today. But I want to compliment the current HANO management under Ben Bell and his staff. They didn’t hide from this problem. Nobody tried to bury this problem. We took on a very difficult

position last year when we went into the administration and found

out that there were some serious problems in Section 8, there was

some serious neglect on the inspection side, and we had heard rumors for years, but we started digging. We did it in a professional

way like you would in any normal business. You hire an expert to

come in who has a background in fraud accounting and take a look

at all of the files and see if there’s a problem. And that’s what we

did so we could come up with a comprehensive solution. It resulted

in some folks being terminated. It resulted in some folks being

moved. It resulted in the privatization of the inspection function so

that we could get more reliable inspections and get them done

quicker and so that we could get new units inspected so that residents would be relocated faster, despite all those problems.

As of today, the actual utilization rate of Section 8 vouchers is

81 percent, not 68 percent. And so in less than a year, we have increased it by over 10 percent. We know we need to get to 90 or 95

so that we have enough Section 8 properties available and so that

it brings in some Section 8 administrative fees to HANO. That’s an

important resource. I think the fact of the matter is that we’ve

completed the relocation at St. Thomas. We’ve completed all but 70

at Desire and, even with a broken Section 8 department, the

HANO staff has been able to put in the time and effort necessary

to complete relocation so we can get both of those HOPE VI

projects going.

We have been trying over the last few years, and particularly

over the last year, to convert HANO to an asset management organization. And it’s interesting when I hear discussion of breaking it

down into smaller housing authorities, because breaking it down is
37

not going to increase any funding for HANO. The way the HUD

regulations are written now, operating subsidies are calculated on

the number of units in service. Comp Grant funds or capital funds

are calculated by the number of units. So the only thing that

breaking HANO down into smaller authorities will do is increase

administrative costs if you have to service the needs and the costs

of several different boards.

What HANO has already done is turn two properties at B.W.

Cooper and Guste Homes over to resident management corporations, and those are both functioning well. Those are businesses

owned by the residents that have been set up. It’s something they

tried to do for years. They were encouraged by the city administration, but it wasn’t until the last 2 years that we finally got those

programs going, and now they’re doing a fine job of managing and

they’re there on-site. They know where the problems are. They

know who the problems are, and they do a much better job of management.

Now as far as the HOPE VI projects, we’re not going to manage

St. Thomas. When St. Thomas is finished, our developer, Historic

Restoration, through their management entity, will manage St.

Thomas including the public housing units. We’ll get a portion of

the subsidy to cover our costs for asset management services,

which is supervising the contractors in place. The same model will

be used at Desire, the same model will be used at C.J. Peete when

that is completed. So that’s five of eleven conventional sites, and

there certainly is room to convert some of the other sites to private

management or a combination of private management and resident

management. It is the way to go, in my personal opinion. I don’t

know that everyone shares that, but that’s my personal opinion.

It’s good to have folks on-site who are living there 24 hours a day

involved in the management of the properties.

There have been some comments and there were some reports

with regard to HANO’s finances. HANO’s finances on a day-to-day

basis are fine. They operate within budget, they actually operated

in the black the last 2 years. The only reason that HANO fails the

financial indicator under the PHAS measuring system is because

they have had this long-term accumulation of judgments and settlements from litigation. This started back in 1991 when HANO

was under private management and, for reasons that I have never

been able to determine, the private management company just

stopped paying claims and stopped providing insurance. So those

accumulated and when I joined HANO in 1997 as general counsel,

those claims were in excess of $18 million. They’re down now close

to $10 million. But, because of those large, unfunded litigation

costs, HANO can not pass the PHAS indicator. So that is going to

be a continuing problem. It was there in 1996. It was not addressed

by this Cooperative Endeavor, and I don’t know why, because some

type of system should have been set up to correct that. And besides, some of those folks who have legitimate claims who have

been waiting for money for 4 or 5 years are entitled to recover their

money.

As far as the Section 8 program is concerned, there’s been suggestions that it should be turned over to the city and run by a nonprofit. With all due respect, Mr. Mayor, the city gave us their Sec-
38

tion 8 program in 1999 with HUD’s blessing. And I know the city

doesn’t want it. So that is not a well-reasoned suggestion.

With regard to Section 2002. Tearing down the four sites that

are under 202 consideration and vouchering them out is not a practical solution. The New Orleans residential real estate rental market will not support that type of massive relocation, and that’s not

just a guess from me. We went to one of the acknowledged experts

in this area, Doctor Wade Regas at the University of New Orleans.

He is used by developers and government all over the Gulf Coast

and the State of Louisiana, and he issued a report to HANO that

supports our suspicions. So that is not a realistic possibility.

What HANO plans to do is apply for HOPE VI grants for both

Fischer and Guste, two of the sites that are under 202 consideration. Is that my minute?

Chairwoman KELLY. You’ve got 1 minute.

Mr. NICOTERA. One minute. OK. At Florida, quickly, when this

side of the development is finished, which will be next year, the

master plan is to move residents from the other side that’s under

202 into the new units and then we can deal with the other units

later.

As far as planning. I heard some comments about the Anderson

Report. It’s not on the shelf. It’s being used. The Comprehensive

Modernization Program that HANO has undertaken, which includes a little bit of work at all of the sites on a scheduled basis,

was an Anderson recommendation. And I might add that HUD

hired Anderson and HUD paid Anderson directly. That was not a

HANO contractor. We accepted those recommendations and we

worked with them. We’ve modified them to meet some of the requirements of the Louisiana Housing Finance Agency, because

some of their projections were a little optimistic. The fact is we

don’t have that much money available in tax credits every year.

Finally, I think we all share the same concerns and that’s why

we’re here, and that’s why I’m going to be as candid with all Members of the subcommittee as possible, provided I remember everything. We all have great concern for the residents. The residents

in New Orleans have been subjected to numerous methods of management, all resulting in the same thing: a lack of units, a lack of

quality units. We’ve made some headway in the last year, and

we’re continuing to make headway, but I realize that it’s not

enough and it doesn’t meet the expectations of everyone in this

room. But that’s no reason to discredit the current HANO staff. If

changes are to be made, don’t throw the baby out with the bath

water. These are dedicated folks who are intelligent, have worked

in a variety of fields. They have experience, they work hard, they

are the hardest working people I have ever worked with, and I

have practiced law for 20 years, and they beat most lawyers I

know. They’re there nights and they’re there weekends and they’re

truly committed to making things better, but they’re handicapped

by the past.

Chairwoman KELLY. Excuse me.

Mr. NICOTERA. And that’s the end of my opening remarks.

[The prepared statement of Frank Nicotera can be found on page

177 in the appendix.]
39

Chairwoman KELLY. Thank you very much. I appreciate that.

Mr. Nicotera, I enjoyed going through the different areas with you

this morning, but I’m left with a couple of questions. You said that

there was a lack of the capital funds and yet I have in front of me

a printout showing that the status of the open programs as of 2000,

there was available to the city for capital fund programs $28 million. I have the fact and we’ve talked before that there’s $85 million available for renovation and modernization. When I walked

through and up into some of those buildings this morning, I’m

going back to this little chart. I sat at my kitchen table before I

came down here and just listed out the cost of a few things like

$600 to install a new toilet with the plumbing, $400 for a window,

$50 for a lock, a dead bolt. I’m talking about an installed price and

yet, in walking through some of these areas with you, we were

looking at buildings where residents themselves have stuffed pillows and clothing or cloth of some kind in to try to cover glass that

had been broken out of their windows.

Now, doggone it, if it costs $400 to fill up some window panes

in a project, how come we can’t go into one of these areas and fill

up those panes while they’re waiting to get moved? Why should

they be condemned to live in units where there are no windows

being repaired? Why should children, little tiny children, grow up

in these areas where they’re told they have to wait because there’s

no money for repair when we know that there’s $85 million that’s

untapped that could go right out to make those residents have a

better life right now. As Mr. Jefferson pointed out, you’re going into

generation after generation. How can those kids grow up in any

kind of hope for their lives, their own lives, when they see that the

big guys in the neighborhood are the drug dealers, because they’re

the only people who can get up and out, because they make enough

money to do so?

I think we’re condemning generation after generation in these

houses, and I find that an unacceptable use of public funds if we

don’t get it done and get it done yesterday. And I don’t blame you,

sir, because I know you haven’t been on the job that long. I do,

however, feel that the Housing Authority of New Orleans bears a

large share of the guilt for letting people live in these circumstances. I think, no matter how long somebody has been there,

surely there must be a way to get somebody up there to replace

window panes so kids don’t fall out and die.

Mr. NICOTERA. I agree with you, Madam Chairwoman, and just

in discussing the funding. The fact is that as of right now, over 91

percent of our capital grant funds have been obligated and 65 percent have been expended. I’m getting that information from the

last report that the local HUD office gave to the National Advisory

Council just this past week. There’s $243,625,000 capital funds authorized to HANO, $222,653,000 obligated and $156,553,000 expended. We have obligated all of the funds through the 1998 year

and we’re on schedule to do the 1999 and 2000 years. All of those

funds are going into activities such as you indicated but, if there

is an emergency situation where there is a broken—— Chairwoman KELLY. Excuse me. I’m sorry, sir, but would you

give us those facts in writing, because that certainly doesn’t match

what I have.
40

Mr. NICOTERA. It’s Exhibit 1 to my written testimony.

Chairwoman KELLY. It’s Exhibit 1. Well, we just got your written

testimony an hour ago.

Mr. NICOTERA. That’s right.

Chairwoman KELLY. So we’ll try to find that. Thank you.

In the interest of time, I’m going to go first to Mr. Jefferson. Mr.

Jefferson, have you any questions you’d like to ask this panel?

Mr. JEFFERSON. Am I to understand that the people who have

been moved out of St. Thomas as you’re making the demolitions,

all these families have been placed in livable residences and a family unit?

Mr. NICOTERA. Generally, about 50 percent of the residents have

gone to other public housing units and the rest have gone to Section 8 units owned by private landlords.

Chairwoman KELLY. All of them?

Mr. JEFFERSON. Do we know where all of the people are?

Mr. NICOTERA. We can track all the residents who have been relocated from St. Thomas, Desire and C.J. Peete.

Mr. JEFFERSON. And they all are settled into some decent place,

as far as you know?

Mr. NICOTERA. There’s supposed to be a tracking mechanism in

place that does some follow-up to make sure that folks don’t fall

through the cracks. That’s part of the services that IRI was providing.

Chairwoman KELLY. Will the gentleman yield?

Mr. JEFFERSON. Yes.

Chairwoman KELLY. Earlier, Mr. Nicotera, you heard Ms. Davis

say that the residents don’t know where everybody went, that there

is no—I believe Ms. Davis said something that indicated that there

is no tracking for some of those people in Desire.

Mr. NICOTERA. There is tracking. I do not know when it began.

I think it was in 1997 or 1998. So folks who were relocated before

that date, and that’s before I got to HANO, then I’m not sure if everyone was tracked. I could supplement my testimony and indicate

that later.

Chairwoman KELLY. In the Inspector General’s report, there is

an indication that not everyone was tracked.

Mr. NICOTERA. Is there a particular—— Chairwoman KELLY. Well, it says that in the report.

Mr. NICOTERA. With your permission, I’ll consult with the HANO

staff and supplement my written testimony and address that issue.

[The information referred to can be found on page 219 in the

appendix.]

Chairwoman KELLY. I wish you would and get back to us, please.

I’m sorry, Mr. Jefferson. Yield back.

Mr. JEFFERSON. I’ll reclaim my moment. Let me ask you this

question. If you continue on the path that you’re following now,

having just started 15 months ago, given the problems that have

been discussed here today, how long do you think it might take you

to get the repairs made that need to be made? I know it’s an ongoing dynamic thing. I know you can’t fix them and nothing else

breaks, but are you on a path now where you think you can do appropriate maintenance for these properties and on a path where

you can do the things we have to do with respect to construction
41

and demolition? How long would it take you to get to where we all

want to see this project end up if we stayed on the path that you’re

now pursuing and nothing else changed? How long would it take

to get to the end of it?

Mr. NICOTERA. I have to condition my answer, because we have

four sites that are under this consideration for 2002 and some of

those sites present difficult maintenance. If nothing is done or no

additional funding is provided so that we can revitalize those properties, it’s almost impossible to do routine maintenance and have

it last for any appreciable period of time. I believe that if you take

those four properties just out of the equation for right now, I think

the plans that HANO has for ongoing modernization would show

that all of the sites would be addressed, and it’s not total redevelopment, but at least modernized, I believe by, I think it’s 2008 or

2009. But that assumes there’s a gap in funding. We can’t do it

with the present comprehensive grant formula. There would be

probably close to a $200 million gap in funding. If we want to do

everything that’s on our schedule within that period, there’s not

enough money under the comprehensive grant program formulas.

Mr. JEFFERSON. The last thing. So over the next 18 years you

would need $200 million more if you pursue your present operating

management scheme to actually catch up with your maintenance

and keep it going and to bill out the——

Mr. NICOTERA. That really just deals with the modernization and

development activities.

Mr. JEFFERSON. Modernization. That doesn’t deal with the maintenance activities.

Mr. NICOTERA. No.

Mr. JEFFERSON. What does it take to do that and keep it going?

Mr. NICOTERA. Well, most of that budget is funded from the operating subsidy, although there’s discussion and there is a situation

now where there is kind of a spike and HANO is using a fairly

large percentage of the capital funds for operating expenses which

are allowed under the HUD funding formulas. They kind of got

caught in a trick bag, because several years ago when the Cooperative Endeavor first came into place, they moved aggressively to demolish a lot of these sites with promises of future funding, but the

future funding didn’t come. If you compare HANO from 1996 until

now with, let’s say, Washington, DC that was put under a judicial

receivership at about the same time, Washington, DC received five

HOPE VI revitalization grants from 1996 to the present time.

HANO received none. I’m sure there are naysayers out there who

say even if we got them, we couldn’t handle them. But the point

is if you’re going to try to really revitalize and turn the Housing

Authority around, then at least give it the same opportunities that

you’re giving to other Housing Authorities that were in similar conditions. There’s not a cheap way or a quick way to do this. We’re

talking about 30 years of deferred maintenance and trying to do it

now less than 6 years under the Cooperative Endeavor. With the

manner in which you have to get things approved at HUD every

step of the way, the process just takes longer. So any solution that

this subcommittee proposes has to deal with the issues at HUD as

well.
42

Mr. JEFFERSON. From the point of view of this judicial receivership you just mentioned under which Washington is now——

Mr. NICOTERA. I think they’ve come out of it actually.

Mr. JEFFERSON. OK. But my question is there’s been talk about

that sort of thing up here on this panel, I understand, before I

came here today. What would be your feeling about that sort of

thing happening now, looking at what you’re doing? Is it all negative? Is it all bad? Or what?

Mr. NICOTERA. Well, I’m kind of biased, and I don’t want to make

any self-serving remarks, because that may show up in the next IG

report, but the fact is I’m very partial to the management staff at

HANO. I feel for them and I would hate to see a situation come

into play where they would be discarded. But the reality is, if

you’re asking for my opinion, the reality is Washington, DC was

able to turn around quicker and get their buildings revitalized

quicker under the judicial receivership, because they had a judge

who wasn’t afraid to tell HUD you need to move faster. So I think

that’s one benefit, but I’m sure there’s certainly other models.

Mayor MORIAL. I want to respond to that, because it’s probably

sort of a similar question. First of all, the Housing Authority is not

part of the government of the City of New Orleans. It’s a separate

State-chartered political subdivision. Second, in the Cooperative

Endeavor Agreement that we signed in 1996, I effectively gave up

my ability to appoint the HANO board of commissioners, which

was a power that the Mayor of New Orleans had had since the

1930s or 1940s when this Housing Authority was created.

I think respectfully what you effectively have now, because I negotiated the Cooperative Endeavor Agreement, is receivership without calling it receivership. And that’s because what you have is the

Executive Monitor, the Executive Director of HANO, all of the top

staff people at HANO were selected by HUD. HUD serves as the

board of this Housing Authority, has to approve every single decision that this Housing Authority makes, and you in effect have receivership without calling it receivership.

In the case of Washington, DC, that receivership began because

the residents filed a class action suit against the Washington Public Housing Authority. That receivership was not initiated by the

Department of Housing and Urban Development. I think Mr.

Nicotera makes the point that I agree with. Whatever management

system you have, call it what you want, describe it the way you

want, unless sufficient funds are committed to address the 30 years

of deferred maintenance, unless the HUD bureaucratic rules are relaxed, fast-tracked, substantially reformed or changed, then what

you have is the same old same old under a different name.

I think that we have learned in the years that we have dealt

with this that it is tremendous frustration that you can have. For

the first time in the history of this agency, highly talented and

skilled staff people who do not owe their jobs to politics, who, if

they were running another agency and had the same resources

without all of the bureaucratic layers that they’ve got to deal with,

would get a whole lot more done. So I fundamentally believe that

whatever management system you have, unless you’ve got the sufficient commitment of funds, the change in the bureaucracy and
43

some adjustments in the programs, that’s where the proof is and

the proof of changing this agency is going to be in that.

When I took office, I did something quite radical. I committed

that I would make the residents, the majority of the board, the

Housing Authority, because I was inspired by Jack Kemp and

Henry Cisneros who at the time said in their speeches and their

writings, ‘‘give the residents more control.’’ That move was opposed

by HUD, criticized by the Inspector General, as a management system, which at the time I thought was progressive. The Cooperative

Endeavor Agreement, which modeled what Henry Cisneros did in

many other parts of the country now finds itself under criticism as

a management system.

The most important thing is you call it what you want to call it

but, unless you deal with the underlying issues, funding on one

hand, the administrative bureaucracy and the approval process

which is so extenuated and attenuated, and the fundamental problems in the design, flaws in the design, particularly the HOPE VI

program, I think it’s going to be very difficult to substantially and

fundamentally change this agency. I am prepared to work with you

and I am open to anything that’s going to lead to meaningful

change for the people that I represent. I’m open to anything. I’m

open to a quality, substantive discussion that will lead to that result. But what I do have objections to is superficial gestures or superficial changes which don’t deal with the fundamental problems

associated with public housing.

One of the problems we have historically in New Orleans, because we’ve got a lot of people, we’re the second or third poorest

city in America in terms of the degree and the numbers of people

who live below the poverty line. We’ve probably got the highest percentage of our residents who live in public housing anywhere in

America. Washington is a much smaller system. Our Executive Director is now the Executive Director in Washington, DC. Detroit,

Philadelphia. Many of those systems are much smaller than ours

in terms of the percentages. We have a much larger system which

makes it much more difficult to change.

What I think has worked is resident management. At B.W. Cooper, at Guste where rent collections are up, where there’s more of

a sense of empowerment there. But even with resident management, control over capital budgets and things like that still remain

up the chain through HANO with the Department of Housing and

Urban Development. So it doesn’t fast track anything. It doesn’t

allow them to be entrepreneurial. So I am open to anything and

I’m open to a discussion with this subcommittee, with our Member

of Congress who represents these areas, Congressman Jefferson, to

what, in fact, will work and lead to substantive and meaningful

change. But what I do have an objection to is anything that’s going

to be superficial where people are going to say, ‘‘Guess what? We

changed the management structure. We called it a different name,

but we never ever really addressed the underlying issues that face

this agency.’’ And I am committed to that and I am open to working with you in that regard.

Chairwoman KELLY. Thank you very much, Mr. Mayor, and

thank you, Mr. Jefferson. I want to go on record as saying that this
44

subcommittee is not here on a superficial mission, Mr. Mayor.

We’re here to do business, and I appreciate what you said.

Mr. Baker.

Mr. BAKER. Thank you, Madam Chairwoman. I think we’re on

the edge of something important here, Mayor. You and I have had

conversations about this and many subjects over the years. Perhaps not always as positive as either of us would like. But I sense

a willingness on your part that frankly I am encouraged by. I’m

dramatically changing my direction here from earlier comments

through the hearing. I am listening to your intent. It’s that, with

the assent of Congressman Jefferson, that if a plan can be developed that you think is real, that without regard to what the plan

looks like today, because we don’t know what it is, you would be

willing to facilitate that plan’s adoption. Do you, today, have confidence that Mr. Nicotera’s efforts over the past 15 months have

been very constructive?

Mayor MORIAL. I believe so. Mr. Nicotera has worked very, very

hard and has done good work as Executive Monitor.

Mr. BAKER. Listen carefully to these questions of Mr. Nicotera,

because if this goes well, I think we’re together here for the first

time.

Mr. Nicotera, in our discussions over the past weeks—let me

back up. I’m omitting a very important step. Let me say to you that

I think the conduct of your office, your professional staff, your shop

over the past 15 months has, in fact, accomplished more than any

prior Administration relating to public housing in the City of New

Orleans since I have been an observer of the process. So I start

commending you for your efforts. Having said that, my comments

are in no way relating to a lack of professionalism on your part,

but a broader set of issues that relate to the constraints in which

you find yourself operating, to which the Mayor has made reference.

In order to solve the problem which Congressman Jefferson started to pursue moments ago, how long would it take, and the answer

was 7 or 8 years to do the basics if we exclude four major projects

from consideration, which is——

Mr. NICOTERA. And get more money.

Mr. BAKER. And get plenty more money. If we were to do this

a different way based on your recommendation, the only way I

know of, based on our discussions, to get around the limitations

that currently restrict you from engaging in the process you wish

to engage in is to go to a judicial receivership. If the current staff,

staff you select, were to remain at your side to put the plan in effect with a concurrent statement that this subcommittee would

pursue to its utmost ability the funding needed to make the plan

work, I am convinced we have a unique political opportunity here

where all forces are lining up in a similar direction and, with your

leadership, we could perhaps fashion an agreement that would indeed put paint on the walls, frames in the windows, and get you

the money you need to relocate residents at an acceptable rate.

By acceptable, and this is my view of it, I don’t know what other

Members may feel on this subject, but I’d like to see closure on this

in a 5-year window and that’s an extremely aggressive effort in

light of the magnitude of the problem that you’re left with. Do you
45

think a judicial receivership is the appropriate step to take to get

you where you need to be in order to fix the problem?

Mr. NICOTERA. First of all, let me put a couple of qualifiers in

there. I think that the Congress appointed the National Advisory

Committee. I would hope that this subcommittee will take their

recommendation, because—— Mr. BAKER. Let me add to that point. I’m the one who started

that trouble.

Mr. NICOTERA. I know.

Mr. BAKER. Just so you know that you’re not treated differently,

HUD took 15 months to appoint that panel, because they should

have concluded their work by now. I had a conference call with the

counsel last week.

Mr. NICOTERA. I actually walked in the room halfway through

the conference call.

Mr. BAKER. I apologize to you.

Mr. NICOTERA. No. I appreciate it. I think you were complimentary to the HANO staff, and I appreciate that.

Mr. BAKER. Well, my point of making this public is I have asked

the Advisory Council to conclude their work by the next August

meeting and report to us in September so we can move forward.

We can’t hold this up waiting on a council to come with another

recommendation, which frankly we don’t know what that will be.

Mr. NICOTERA. Right.

Mr. BAKER. But I don’t want to have the Advisory Council be the

shield for you and this subcommittee to reach an agreement today

if we can reach an agreement.

Mr. NICOTERA. I think, first of all, I don’t know if I’m the person

to reach the agreement. I think the city has input into that, because they do have the power to appoint and that is an issue.

Mr. BAKER. But my point is is that right now we both have regard for your work. You are at a pivotal point. You’re telling us

that with the good effort you’ve made, that with certain changes,

you could make the kind of changes the Mayor and I and Congressmen Vitter and Jefferson both want.

Mr. NICOTERA. There are certainly benefits to the judicial model

and actually, I think now that the HUD regulations—because of

HANO’s size, I think the HUD regulations would almost require

that.

Mr. BAKER. So that in order for you to get where you want to

be in a 5- or 6-year window with appropriate funding, a judicial receivership with maintenance of the professional staff you select to

implement whatever the program turns out to be is——

Mr. NICOTERA. I don’t know that I’m ready to sign up for another

tour of duty, to be honest with you.

Mayor MORIAL. You’ve got to, Frank. You’re drafted.

Mr. NICOTERA. I’m being drafted. Is that what’s happening here?

Can I have counsel now? Is it too late for me to have counsel? I’m

sorry. I didn’t mean to make light of the question, but we’ve been

here a while. I guess I’m getting a little punchy.

Mr. BAKER. I don’t know if you were here earlier, but after rats

with switchblades anything is in play to here today.

Mr. NICOTERA. I enjoyed that. I had a very good mental picture

of that.
46

Mr. BAKER. So did I, as well. I’ve met a few in my life.

Mr. NICOTERA. Actually, before we moved the HANO offices, you

probably would have found a few of those inside the old office

building. I’m glad we got the staff out of there.

Mr. BAKER. I really think this is constructive. Mr. Mayor, would

you want to—— Mayor MORIAL. Let me say this. I’m open to discussing the specifics of a proposal like that with you, Congressman, because the

money, the elimination of the restrictions and the approvals and

fast tracking, that is what this agency needs. And also, sincerely,

a commitment by the subcommittee to look at redesign of a number

of programs. Secretary Martinez, in my initial meeting with him,

indicated that he wanted some guidance from local elected officials

such as mayors about what HUD programs work and what HUD

programs may need change and need reform. I think in the public

housing area, the HOPE VI program needs some change and needs

some reform with respect to mixed financing, relocation, and many

of the very difficult issues that we face today. So I am open to discussing the prospects of your proposal. It encourages me and I do

think if we sat down and talked about it, I do think we might be

able to come up with a constructive solution.

Mr. BAKER. I would suggest as a follow-up, to move things along

a little bit, because I know the Chairwoman has to catch a flight

and the most important thing is making sure the Chairwoman

catches her flight.

Mayor MORIAL. We’ve got great hotels here, Madam Chairwoman. You come to dinner with me, too.

Mr. BAKER. I would suggest that the principals here get together

for a meeting as soon as possible to discuss the concrete elements

of this and, since we have a Member of the Appropriations Committee here as well who will speak for himself, I think we have a

number of elements here that might be beneficial and these, indeed, are unusual circumstances and, if it starts this positively,

we’ve got a shot of making it work as long as we’re not all throwing

bricks at one another, and that’s not our intent. We’re here today

to try and help. Thank you, Mr. Mayor. Thank you, Mr. Nicotera.

Chairwoman KELLY. Thank you very much, Mr. Baker.

Mr. Vitter.

Mr. VITTER. Thank you, Madam Chairwoman.

I want to underscore and echo Richard’s comments and also the

Mayor’s comments. I think the key is not to do something superficial. I think the key is to do something truly fundamental. In my

opinion, and everyone may not agree with this, but in my opinion,

just from reading the history, because I haven’t been involved as

a Member of Congress until recently, I think a lot of the restylings

of the management in the last 5 to 10 years have been relatively

superficial. I think we need to talk about something much more

fundamental in terms of really smoothing the way for a much faster action, much more dramatic action that we can really demand

some results on and, based on what I know of it, that would seem

to point to some version of judicial receivership.

So I would really encourage these sorts of discussions with an

aim of doing something really fundamental and not superficial. I

think we’ve been through a few rounds of the superficial. Over 9
47

years we’ve been through $832 million of the relatively superficial,

in my opinion. I just did some quick math on that. We’re talking

about 13,000 families under your jurisdiction. That’s $70,000 a

family. That’s $650 a month a family. We’re saying some of these

conditions that were the same as they were 5 and 10 years ago. So

I want to certainly echo Richard’s comments and the Mayor’s

pledge to work toward some truly fundamental change rather than

mandate superficial approaches.

Chairwoman KELLY. Does anyone else have any more questions?

Mr. BAKER. Madam Chairwoman, I don’t have a question. I just

want to compliment you for your initiative in coming to the city

today. I think your effort here is going to result in some significant

potential for change, and I’m most appreciative for your time and

interest. Thank you.

Mr. JEFFERSON. I want to reiterate my appreciation for having

you here as well. You and I have traveled all over the world at different times. This is the first time I’ve had the pleasure of having

you here with us, so thank you very much for coming.

Chairwoman KELLY. Thank you. It’s a real pleasure to be able

to be here in New Orleans. I’ve been back a number of times and

every time I come, I like the city more and more. So it’s wonderful.

It’s going to be great to come down here and see this housing taken

care of.

I want to note that some Members may have additional questions for this panel and they may wish to submit them in writing.

So without objection, the hearing record is going to remain open for

30 days for Members to submit written questions to the witnesses

and place their responses in the record. This third panel is excused

and the subcommittee has a great appreciation for your willingness

to be here and your time.

I want to thank Mr. Baker, Mr. Jefferson, Mr. Vitter, and their

very capable staffs including my staff for all of their assistance in

making this hearing possible. This hearing is now adjourned.

[The hearing was adjourned at 5:00 p.m.]

(49)

A P P E N D I X

June 4, 2001
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