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IMPLEMENTATION OF THE ROAD 

HOME PROGRAM FOUR YEARS 

AFTER HURRICANE KATRINA 

FIELD HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

AUGUST 20, 2009 

Printed for the use of the Committee on Financial Services 

Serial No. 111–70 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

SUZANNE KOSMAS, Florida 

ALAN GRAYSON, Florida 

JIM HIMES, Connecticut 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

MAXINE WATERS, California, Chairwoman 

NYDIA M. VELA ́ ZQUEZ, New York 

STEPHEN F. LYNCH, Massachusetts 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

WM. LACY CLAY, Missouri 

KEITH ELLISON, Minnesota 

JOE DONNELLY, Indiana 

MICHAEL E. CAPUANO, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

LUIS V. GUTIERREZ, Illinois 

STEVE DRIEHAUS, Ohio 

MARY JO KILROY, Ohio 

JIM HIMES, Connecticut 

DAN MAFFEI, New York 

SHELLEY MOORE CAPITO, West Virginia 

THADDEUS G. McCOTTER, Michigan 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

RANDY NEUGEBAUER, Texas 

WALTER B. JONES, JR., North Carolina 

ADAM PUTNAM, Florida 

KENNY MARCHANT, Texas 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

August 20, 2009 ................................................................................................ 1 

Appendix: 

August 20, 2009 ................................................................................................ 63 

WITNESSES 

THURSDAY, AUGUST 20, 2009 

Baker, Shari, on behalf of Lillie Baker, resident, Pontchartrain Park, New 

Orleans, Louisiana ............................................................................................... 49 

Colangelo, Matthew, Director, Economic Justice Group, NAACP Legal Defense and Educational Fund ............................................................................... 48 

Croom-Fontenot, Mary, Executive Director, All Congregations Together .......... 46 

Duval-Diop, Dominique, Senior Associate, PolicyLink ......................................... 43 

Finger, Davida, Clinical Professor, New Orleans College of Law, Loyola University ................................................................................................................... 44 

Franklin, Mildred, resident, Pontchartrain Park, New Orleans, Louisiana ....... 51 

Oney, Christopher J., Executive Vice President, Hammerman & Gainer, Inc. .. 39 

Plyer, Allison, Deputy Director, Greater New Orleans Nonprofit Knowledge 

Works .................................................................................................................... 41 

Rainwater, Paul, Executive Director, Louisiana Recovery Authority ................. 9 

Sathe, Ommeed, Director of Real Estate Strategy, New Orleans Redevelopment Authority (NORA) ...................................................................................... 12 

Tombar, Frederick, Senior Advisor for Disaster Recovery, U.S. Department 

of Housing and Urban Development .................................................................. 8 

APPENDIX 

Prepared statements: 

Baker, Lillie ...................................................................................................... 64 

Colangelo, Matthew .......................................................................................... 66 

Franklin, Mildred ............................................................................................. 70 

Oney, Christopher J. ........................................................................................ 73 

Plyer, Allison ..................................................................................................... 79 

Rainwater, Paul ................................................................................................ 85 

Sathe, Ommeed ................................................................................................. 92 

Tombar, Frederick ............................................................................................ 97 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Waters, Hon. Maxine: 

Written statement of Melanie Ehrlich, Founder of Citizens’ Road Home 

Action Team (CHAT) .................................................................................... 101 

(1) 

IMPLEMENTATION OF THE ROAD 

HOME PROGRAM FOUR YEARS 

AFTER HURRICANE KATRINA 

Thursday, August 20, 2009 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 1:25 p.m., in the 

Lawless Memorial Chapel, Dillard University, 2601 Gentilly, New 

Orleans, Louisiana, Hon. Maxine Waters [chairwoman of the subcommittee] presiding. 

Members present: Representatives Waters, Cleaver, and Green. 

Also present: Representative Cao. 

Chairwoman WATERS. This field hearing of the Subcommittee on 

Housing and Community Opportunity will come to order. 

Good afternoon, ladies and gentlemen. First, I would like to 

thank President Marvalene Hughes for allowing us to use Dillard’s 

facilities one more time. 

President Hughes, again, I am very thankful for the opportunity 

to be here with you and I would like to let you know how appreciative I am for your generosity. Whenever we have called on you, 

you have not hesitated. And to be here at this beautiful facility is 

certainly delightful and wonderful. And I would like to ask you to 

just say a few words to our audience here today. 

Ms. HUGHES. Thank you so very much. 

I want to start, first of all, by saying to the Honorable Chairwoman Maxine Waters, welcome back home. 

Chairwoman WATERS. Thank you. 

Ms. HUGHES. And I want you to know that it is so fascinating 

that this campus has totally adopted you. So any time you want 

to use this building, it is here for you. This building is different 

than it was the last time and it is fully restored and operable, so 

we are very proud of that. 

I also would like to acknowledge the Honorable Al Green from 

Texas, who is, incidentally, a native New Orleanian. So welcome 

home to you. 

To the Honorable Emanuel Cleaver, we are happy to have you 

here, and I am pleased to announce that your son, who graduated 

from here a couple of years ago, is very successful in Hollywood. 

He is the kind of alumni that we are proud to have. 

2 

And of course, our new Representative who has been so active 

with Dillard University is Representative Cao. 

The cause for being here is a very important cause and I know 

that this audience is pleased that you have come back to do the 

tasks that are so important ahead of us. 

This is the third time that this committee has convened here. 

You were here twice in 2007 when things were much more devastated and the recovery efforts and the renewal efforts were all 

very, very challenging. We at Dillard University have almost finished. We even have two new buildings under construction now 

and those buildings will be LEED certified buildings. 

We are hopeful, of course, that the Corps of Engineers, FEMA, 

and the insurance industry will realize the severity of our need to 

recover and that by 2011, we will be absolutely completely finished. 

I want you to make yourselves at home, let us know what you 

need. And I know that this audience joins me in welcoming you to 

bring us up-to-date on the latest issues and efforts that you are experiencing and can promise to us. 

Dillard University is in a very special year. We are celebrating 

our 140th birthday and it was that important effort that caused us 

to know that we were absolutely going to restore the university. 

Our efforts continue. We depend on you to support us and we want 

to remain partners with you in everything that you are doing in 

Washington that relates to us in higher education. 

Thanks for being here to each of you. 

Chairwoman WATERS. Thank you so very much, President 

Hughes. Again, we are very pleased to be here and we see the 

progress and the work that has been done. And again, this building 

has been beautifully restored and we drove around the campus a 

little bit this morning as I was coming in, and you have done a 

wonderful job. 

Even though we do not really applaud in these hearings, I always break the rules. Would you give President Hughes a big 

round of applause? 

[applause] 

Chairwoman WATERS. Thank you so very much. 

I would also like to thank our Representatives from Congress 

who are here with us today. I have been explaining to some that 

many of the Members of Congress are traveling all over the world. 

We have CODELs that are in Afghanistan, we have CODELs in Africa, we have CODELs in Central America. But we have some 

Members who decided that they were going to spend time in their 

districts and important time on some domestic issues. 

The next two gentlemen that I am going to introduce serve on 

the Financial Services Committee where I serve, but they also 

serve on the Subcommittee on Housing and Community Opportunity, which I chair, and which is holding this hearing today. 

They decided that they would break from their districts to be here 

because New Orleans deserves our presence. As President Hughes 

has said, we have been here several times trying to make sure that 

we understood what was happening with the Federal funds that 

have been sent to this district, trying to make sure that the people 

were being supported in every way possible. But they came back 

again today, because they thought it was so important to be here 

3 

on the fourth anniversary of Hurricane Katrina, to follow up. Not 

to have just come early on, not to have just come to say that we 

were in support, but to come to say we are following up to make 

sure that we are doing everything possible to be of assistance to 

the people of New Orleans. 

With that, I would like you to welcome Congressman Cleaver all 

the way here from Missouri, Congressman Emanuel Cleaver; and 

Congressman Al Green from Texas, who is here with us today. Mr. 

Green and Mr. Cleaver have been consistent supporters of the Gulf 

Coast and its recovery. They both attended, again, the field hearings that we had here in 2007 and have been tireless advocates for 

this region. And I am delighted that they are here today. 

We are joined also today by the Representative of this community, Representative Cao, who represents this district. Without objection, Mr. Cao will be considered a member of the subcommittee 

for the duration of this hearing, so that he too can participate in 

ways that will help us to extract the information that we need so 

that we will know what we must do. 

I further believe that several members of the Louisiana State 

Legislature and the New Orleans City Council may be present in 

the audience today. We welcome them and we thank you for attending. 

Today’s hearing will focus on the implementation of the Road 

Home Program 4 years after Hurricane Katrina. Tomorrow, we will 

reconvene to hear testimony about the status of the redevelopment 

of the ‘‘Big Four’’ public housing developments. As I mentioned earlier, my subcommittee was initially here 2 years ago for its first 

field hearing. At that time, I was concerned about the lack of 

progress in rebuilding the City, including its affordable housing 

supply. I was especially concerned about the slow pace of the roll 

out of the Road Home Program. 

While the program picked up its pace, I am now concerned about 

its processes and the amounts homeowners have received. Funded 

at $10.5 billion in Federal Community Development Block Grant 

funds, the Road Home Program is the largest direct run program 

to assist homeowners following a natural disaster in our Nation’s 

history. The main purpose of the Road Home Program is to provide 

homeowners with funding up to $150,000 to repair or rebuild damaged homes. Homeowners can also receive Road Home funds to either relocate to a new property or to sell their damaged property 

to the State of Louisiana. 

However, the majority of complaints that I hear about the program are brought by homeowners who do not want to sell or move. 

They simply want to fix up their home and live here. In many 

cases, these homeowners have lived in their homes and neighborhoods for decades. They have strong ties to their communities and 

do not want to live anyplace else. Unfortunately, because some of 

these homeowners have received less than they need to make repairs, their ability to rehabilitate their homes and stay in their 

neighborhoods is at risk. 

In fact, just this morning, I met with a group of homeowners in 

the Pontchartrain Park area who are having problems with the 

program. These residents shared with me their experiences with 

the Road Home Program. Their stories are similar to many homeVerDate Nov 24 2008 14:59 Feb 17, 2010 Jkt 053250 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\53250.TXT TERRIE
4 

owners in the City. The residents I met with this morning have 

been ripped off sometimes by unscrupulous contractors. They have 

followed difficult program rules, including title clearance. They 

have heard nothing back from Road Home. They have filed multiple appeals and 4 years after Katrina, they are still no closer to 

rebuilding their homes. This is especially frustrating given that the 

program is expected to have a surplus. 

I am also concerned about disparities in grant awards that may 

exist between low-income and minority homeowners. The Road 

Home distribution formula provided homeowners the lesser of either the amount of damage less any insurance or pre-storm value 

less any insurance. As a result, homes with low pre-Katrina values 

received less funding. Unfortunately, many of these homeowners 

were low income or minorities. For example, according to one estimate, residents in the Lower Ninth Ward had an average shortfall 

of about $75,000 where residents in Lakeview had an average 

shortfall of $44,000. 

Housing is critical to our national economic recovery and I believe that it is critical to the recovery of the Gulf Coast in general 

and the City of New Orleans in particular. The Road Home Program is an important part of that recovery. 

However, if it does not work for homeowners, then we all need 

to be prepared to discuss how the program can be improved so that 

it fulfills its mission and truly puts homeowners on the road back 

to their homes. 

I look forward to hearing the witnesses’ views on this very important program and now I would like to recognize Mr. Cleaver first 

for his opening statement. 

Mr. CLEAVER. Thank you, Madam Chairwoman. 

Let me just speak on a personal level because I think it may in 

fact represent what I have heard thus far today at the listening 

session over at the Southern University of New Orleans. As the 

President mentioned, my son graduated from Dillard University a 

couple of years ago. Actually he was here when Katrina hit and 

managed to spend the night in a Wal-Mart parking lot before getting out of the City and making it to Houston to stay with his aunt. 

Dillard did a good job. My son was offered a full scholarship to go 

to LSU to get an MFA, but made a decision after Katrina, that he 

would rather go to California, which is what he did. He now resides 

in my colleague, Ms. Waters’ district in Los Angeles. 

But it was the decisionmaking that I want to talk about. After 

coming back from Missouri to New Orleans, going back to the 

apartment where he was living, visiting the campus, looking at the 

area with which he was most familiar, he made a decision that he 

did not think that it would be in his best interest to stay here, in 

spite of the fact that the movie industry was trying to crank up a 

high level movie manufacturing center here in New Orleans. But 

he said to me, that is not going to work because nobody is trying 

to rehab New Orleans and so it is going to lead the movie industry 

to begin to back away from New Orleans. I do not know whether 

that has happened or not, all I know is that he backed away. 

So I can understand clearly people who left New Orleans, went 

to Houston, went to Atlanta, went to Chicago—I think Chicago took 

more residents than any other city outside of the south—and who 

5 

have made decisions, after looking at what was going on, not to 

come back. 

Now I think all three levels of government can do better. The 

road home has been filled with road blocks and so a lot of people 

cannot come back home because it is difficult to climb over the 

mountains on the road. And in some places, I think either bureaucrats or government officials dug holes in the road and even when 

we attempted to pave over the holes, when we leave they dig some 

new holes. So I think there is a lot of work to be done, at all three 

levels—Federal, State, and the municipal level. And I think that it 

is important for you to express to us the kinds of opinions that I 

do not think anybody is going to be inhibited, that we can use to 

continue to fight. 

The good news is that we serve with the Chair—who, if you 

know anything about her, is relentless and is not ever going to 

back away. And so here in the heat of August, we are in New Orleans because of her commitment and her willingness to go to bat for 

the people of New Orleans who deserve the best, because the road 

back is not representative of the Big Easy. 

Thank you, Madam Chairwoman. 

Chairwoman WATERS. Thank you so very much, Mr. Cleaver. 

Mr. Green. 

Mr. GREEN. Thank you, Madam Chairwoman. 

I also would like to thank and compliment Dr. Hughes. She is 

a stately, courtly, and gracious lady who is also brilliant, and we 

appreciate you sharing your brilliance with us. 

I would like to echo some of what Congressman Cleaver has 

called to our attention. And I would especially like to call to the 

attention of all present that Louisiana, and New Orleans in particular, is on the radar of the Congress of the United States of 

America because the Honorable Maxine Waters has caused it to 

focus on New Orleans. And if anyone deserves an expression of appreciation for hard work done on behalf of everyone, including the 

least, the last, and the lost, it is the Honorable Maxine Waters. 

And I think we ought to give her that expression of appreciation. 

[applause] 

Mr. GREEN. She has clearly been a friend. And the beautiful 

thing about having her as your friend is that she brings her friends 

with her. When she calls, there is no question as to what the answer will be. If it is New Orleans today, then Al will be in New 

Orleans today, and I come gladly. Not because I am a Charity 

baby, by the way. I was born in Charity Hospital and I am proud 

of it. But I come because I understand that our chairwoman is 

going to do everything within her power to make sure that the road 

home brings everybody home. And in a metaphorical sense, the 

road home is not bringing everybody home. 

As Congressman Cleaver indicated, it has some potholes in it. 

But we fix potholes in the Congress of the United States of America, and we would be honored to fix some of these potholes and help 

you. 

It also has some hazards. Hazard insurance, as I understand it, 

is a real problem—hard to come by and hard to maintain once you 

get it. But hazard insurance is a problem, that is a hazard in this 

road home. 

6 

It also has, as I understand it, some detours along the way. It 

seems that you had a management company that did fairly well. 

They are no longer managing, but they were properly compensated, 

as I understand it—or maybe I should said fairly compensated. I 

do not think anybody argues that they were not fairly compensated. 

And finally, it has some tolls along the way. It seems to take a 

greater toll on some more than others. It seems to be costing some 

more to get home than others. 

I am here because I believe in making sure that every person is 

treated properly and that everybody has an opportunity to have a 

similar experience that will lead each and every one back home. 

About 10,000 people from Louisiana and this area of Vietnamese 

ancestry came to Houston, Texas, and many of them still desire to 

come home. I represent a constituency that is as diverse as any in 

the country: 36 percent African-American; 31 percent Latino; 21 

percent Anglo; and 12 percent Asian. My Asian constituents are 

concerned. I have received anecdotal evidence that language has 

become a problem in helping them to return home. I am here to 

represent all of my constituents and that includes everyone in this 

room, because we are Congresspersons for the United States of 

America, U.S. Congresspersons. That means that when I vote, I 

vote for everyone in this room, and I assure you, I want to make 

sure that everyone has an opportunity to come home who wants to 

come home and then have a place to call home when they get here. 

Madam Chairwoman, I thank you, and I thank Representative 

Cao, I believe this is his district. I thank you and I thank Representative Cleaver as well. Thank you. 

Chairwoman WATERS. Thank you, Mr. Green. 

At this time, I am going to call on the Representative for this district. When we were here before, there was a different Representative. When we learned that we were coming here, we extended an 

invitation to your Representative because that is the protocol that 

should be followed. We should come to a Representative’s district 

and allow them the opportunity to participate. He responded immediately and he is here today and I will call on him for his opening 

statement. Mr. Cao, thank you very much. 

Mr. CAO. Thank you, very much, Madam Chairwoman, for 

hosting this very important field hearing. And I would like to 

thank my distinguished colleagues in the House, Al Green and 

Emanuel Cleaver, for also coming here. I and the other officials 

who represent the people of this district are grateful that the committee has renewed its interest in the recovery of New Orleans and 

seeing that its citizens receive fair treatment as the City’s housing 

stock is rebuilt. My hope is that this interest and the work that 

stems from this hearing will go beyond a once-per-Congress event 

to a sustained dialogue on the issues and solutions. 

In just 9 days, the City of New Orleans will mark the fourth anniversary of Hurricane Katrina. Once again, this community will 

take stock of what has and has not been done to restore the City. 

As their Representative in Congress, it is now my task to work towards bringing them home to a city prepared to house them. 

When Katrina hit, entire sections of the City were destroyed. No 

one has ever seen a disaster of this magnitude on U.S. soil. No 

7 

local, State, or Federal Government entity was ready for what happened. At that time, there did not exist in our national psychology 

a framework for rebuilding every aspect of a city. How does one rebuild an entire city and get mentally, physically, and financially fatigued residents to come home? Do we focus on jobs first, housing, 

schools or stores? In August of 2005, no one had the answers to 

these questions. Today, we are still in the process of finding the answers. 

One of the key outstanding issues left for us to resolve is solving 

the City’s housing problem. Thousands of people were displaced 

after the storm and many still are. With roughly 40 percent of the 

City’s housing stock abandoned or blighted, there are still areas 

which need to be repopulated. One of the solutions we have worked 

on to address rehousing residents was the Road Home Program. 

While the Road Home Program has undergone some changes and 

made significant progress in the last year, it still was a challenged 

program that left many homeowners unable to return home. We 

now need to work to resolve these final cases and bring these families back to Louisiana permanently. 

I know from working with the LRA and their staff that they are 

hard at work trying to correct some of the residual issues with the 

program and have made providing complete assistance to the affected families a priority. The State cannot accomplish this task 

without cooperation from the Federal and State Governments. As 

I and my counterparts in the Louisiana Congressional Delegation 

work with our colleagues in Washington to get more resources to 

the State, we need for the City to plan ways to effectively use those 

resources. 

In addition to working on Road Home, the City has yet to spend 

more than $200 million in long-term community recovery funds 

that the State has approved, but has remained relatively unspent 

by the City. The recovery of this great City depends on money 

being spent and I urge the City government to do so in an expedient manner. 

With that, again, I want to thank Chairwoman Waters for holding this very important hearing. I would like to thank my distinguished colleagues for being here. And lastly, I would like to thank 

President Hughes for providing us this facility to hold this very important hearing. 

With that, I would like to ask the chairwoman for leave to go to 

another event and I will be back right after the end of that event. 

Chairwoman WATERS. Thank you very much. 

I am pleased to welcome our first distinguished panel. Our first 

witness will be Mr. Fred Tombar, III, Senior Advisor to the Secretary for Disaster Recovery, U.S. Department of Housing and 

Urban Development. Our second witness will be Mr. Paul Rainwater, executive director, Louisiana Recovery Authority. Our third 

witness will be Mr. Ommeed Sathe, director of real estate strategy, 

New Orleans Redevelopment Authority. 

And without objection, your written statements will be made a 

part of the record. You will now be recognized for a 5-minute summary of your testimony. 

Thank you very much. We will start with Mr. Tombar. 

8 

STATEMENT OF FREDERICK TOMBAR, SENIOR ADVISOR FOR 

DISASTER RECOVERY, U.S. DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

Mr. TOMBAR. Thank you, Congresswoman Waters, and members 

of the subcommittee for hearing my testimony today. As you said, 

my name is Fred Tombar, and I am a Senior Advisor to Secretary 

Donovan at HUD. More importantly, like Congressman Green, I 

am a Charity baby and a native of New Orleans. It is my honor 

to join with you today to discuss the implementation of the Road 

Home Program 4 years after Hurricanes Katrina and Rita. 

I first want to express HUD’s commitment to the recovery and 

revitalization of New Orleans and the entire Gulf Coast—to ensuring that the resources that we have provided are used in a most 

effective way to help people move back into their homes and revitalize the entire region. That is a message that we sent within 

weeks of President Obama’s inauguration, when HUD brought together partners from across the country to help provide Disaster 

Housing Assistance Program transitional rental assistance to more 

than 30,000 families. It is a message we have continued to send 

over the past 6 months and it is a message that Secretary Donovan 

and Deputy Secretary Ron Sims and many of our Assistant Secretaries will make clear when they are down here next week to mark 

the fourth anniversary of Hurricane Katrina. 

The storms of 2005 were deadly and costly to communities across 

the Gulf Coast, and particularly destructive here in Louisiana, 

causing the loss of lives, damage to businesses and public facilities, 

and devastation to homes. 

To address the devastation left in the wake of the 2005 disasters, 

three supplemental appropriations providing HUD Community Development Block Grant, or CDBG, funds for Gulf Coast disaster recovery purposes were enacted. In December of 2005, Louisiana received $6.2 billion in its first disaster supplemental appropriation. 

The following June, an additional $4.2 billion was appropriated for 

Louisiana; and in November of 2007, a $3.0 billion third appropriation was specifically allocated to close the anticipated funding gap 

for the State of Louisiana’s Road Home homeowners assistance program. 

The State has dedicated approximately $10 billion from its Hurricane Katrina CDBG disaster recovery appropriations for this 

Road Home homeowner assistance program. 

To assist the State of Louisiana in administering a recovery program of this size, HUD has implemented strong programmatic 

oversight and ongoing technical assistance measures, which are 

critical elements to ensure compliance. HUD staff conducts on-site 

management reviews twice a year to ensure that programs and related cross-cutting Federal requirements are carried out efficiently 

and effectively in compliance with applicable laws, regulations, and 

policies. Monitoring visits include an overall management review of 

the State, as well as provide on-site technical assistance in areas 

that are deemed high risk. The intended goal of monitoring and 

technical assistance is to assist our grantees like the State of Louisiana in improving their performance, developing and increasing 

capacity, and augmenting their management and technical skills. 

9 

The magnitude of Louisiana’s programs and the sensitive nature 

of expeditiously getting resources to the individual and to neighborhoods warrant careful monitoring and ongoing technical assistance. 

With the aid of the Department, Louisiana has been relatively successful in disbursing $8 billion with few findings. The Road Home 

Program has been heavily scrutinized as reflected in the State 

being audited over 52 times since the first supplemental. HUD is 

committed to assisting Louisiana and all of its disaster grantees to 

effectively and efficiently manage the resources needed to recover 

and rebuild communities stronger after a disaster. 

Effectively administering a program as significant as the Road 

Home Program requires a great deal of coordination. As an immediate response to aid Louisiana and other disaster-affected States, 

HUD acknowledged the complexities of addressing a disaster of 

this magnitude and granted several waivers to allow programmatic 

dexterity. 

The Road Home Program specifically benefitted from the compensation waiver, which allowed the State to provide compensation 

to homeowners whose homes were damaged during the covered disasters and met approved program stipulations. The waiver also allowed the State to offer disaster recovery or mitigation incentives 

to promote housing development or resettlement in particular geographic areas. The compensation waiver made it possible to more 

quickly put resources in the hands of disaster-affected homeowners. 

HUD also granted a low- and moderate-income waiver that allowed the program to meet the recovery needs of the entire community affected by the 2005 disaster. But to be sure, this has been no 

easy process for homeowners and for families who lost their homes. 

As we speak, some families are still trying to work their way 

through the process of receiving compensation for their damaged 

homes. 

In conclusion, CDBG has assisted States and communities with 

disaster recovery, especially, long-term recovery. Over the last 4 

years, we have seen many challenges that face our Federal-State 

partnership in quickly administering grant assistance to individuals and neighborhoods. We are dedicated to working through 

these challenges while ensuring the continued focus on both performance and accountability. Long-term recovery and rebuilding 

after a disaster is a complex process that requires tough decisions 

at all levels as well as the ability to acquire additional capacity to 

carry them out. 

Thank you for the opportunity to appear before your subcommittee. This completes my testimony and I look forward to answering your questions. 

[The prepared statement of Mr. Tombar can be found on page 97 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Mr. Rainwater. 

STATEMENT OF PAUL RAINWATER, EXECUTIVE DIRECTOR, 

LOUISIANA RECOVERY AUTHORITY 

Mr. RAINWATER. Thank you, Congresswoman Waters, Congressman Cleaver, and Congressman Green, for being here. 

10 

I work for Governor Jindal, and just as introduction, I have been 

involved in this disaster since the beginning. I was part of the 

evacuation team that helped evacuate the City. I have been involved with the Louisiana recovery under Governor Blanco. I 

worked for Senator Landrieu as her Legislative Director in 2007. 

She needed someone to help her through recovery issues. I gladly 

went to Washington and worked with her to get the last $3 billion. 

And Governor Jindal asked me to come down and run a consolidated recovery organization, one that would be focused on helping 

people get back in their homes. I served as the Governor’s authorized representative to the Federal Emergency Management Agency 

in negotiations with helping Dillard University get rebuilt, as well 

as Secretary Napolitano just announced about Southern University’s public assistance money it will receive. We have been involved in those negotiations as well. I want to thank you for the 

support that you have given us here in Louisiana. We appreciate 

it very much. 

As I go through some of the numbers and talk about the Road 

Home Program, I do it as a measure, because there is a lot of work 

to be done. I do not have all the answers. I have believed from the 

first day I took this job that we could not do it without our Federal 

partners and without the City in partnership. And Fred Tombar, 

who works with Secretary Donovan, and Secretary Donovan have 

been good partners, and we appreciate very much the Obama Administration and what they have done through Secretary Donovan; 

it has been a good partnership. And Fred and I talk quite often 

about trying to resolve some of the complicated issues that exist 

out there. 

The Road Home Program, although it has faced many trials and it struggled early on, has paid out $8 billion to 124,538 Louisiana 

homeowners, including about $836 million for homeowners to elevate their homes. 

In New Orleans alone, the homeowners have received about $3.7 

billion. And again, I throw those numbers out as a measure, not 

that—you know, it is what the program has done. As I said, we 

still have a lot of work to do. 

In January of 2008, when Governor Jindal came in and he asked 

me to take the program over, we wanted to do a couple of things. 

We wanted to look at how people were being treated and we wanted to hold the contractor accountable. There was no doubt that the 

contractor was compensated very well and had a very loose contract, a very loosely written contract with no performance measures 

at all. But we held the contractor accountable and ended up fining 

the contractor a little over $1 million when I got there in 2008. 

We have paid over $2.2 billion since 2008 and when we relaunched that elevation program I talked about earlier, one of the 

things we did is to remove the bureaucracy from the elevation program. We basically worked with HUD to come up with a simple 

formula that did not require any more paperwork and really got 

$828 million out in about 8 months to about 124,000 homeowners 

to help them elevate their homes. 

Additionally, when it came time to renew the ICF contract, we 

did not renew that contract. We chose to go a different route. And 

what I did basically is break up the contract, unbundle it into four 

11 

separate pieces. Before, ICF ran a Small Rental Program, the Piggyback Low Income Housing Tax Credit Program, the Road Home 

Program, and also managed the accounting of those files. We have 

broken it up into four different pieces. Hammerman & Gainer, Inc. 

is now a Road Home contractor, the largest minority contract in 

the history of the State of Louisiana, an IT contractor, who manages independently from the Road Home contractor. ACS has the 

Small Rental Program and a group called the Compass Group manages our piggyback program. CGI, the IT contractor, works independently and works for me, to go in and pull up electronic files 

to show me what is happening on the ground so that we can validate what is going on. Before, we did not have that opportunity. 

So I think by breaking it up into different pieces, unbundling it, 

the State has been much more responsible in the execution of the 

program. 

Many of the remaining applicants have either difficult title/power 

of attorney issues—we are in the process of putting an RFP out, 

a request for proposals, through Hammerman & Gainer, Inc., to 

provide additional legal services to those folks who are low- to moderate-income and cannot afford an attorney of their own. 

A recent analysis of the Road Home Program showed that Road 

Home had been instrumental in restoring homes in areas impacted 

by Katrina in the City of New Orleans. That is, 75 percent of its 

population, without the aid of the Road Home Program, could not 

have come back. 

That said, the same analysis pointed to 30 percent of the Road 

Home—that is, in Option 1, those who were going to rebuild or repair—did not have the money to do so. 

So we had an analysis done and it showed there is about a $1.6- 

$2.3 billion gap. In looking at that, many of those people are lowto moderate-income homeowners and do not have the resources to 

rebuild. 

Tuesday, I briefed the Governor; and yesterday, I talked to our 

Board of Directors in the Louisiana Recovery Authority. We did not 

have a meeting in July, so we had our meeting yesterday. And we 

made a decision to—there has been a lot of conversation about 

what surplus we might have. And I will tell you that in that third 

allocation, the $3 billion, Congresswoman, that you worked so hard 

to get for the State of Louisiana, along with Senator Landrieu, to 

make the Road Home Program whole, we made a decision that the 

surplus or any dollars we have left over we use to help Road Home 

applicants. We have made a decision to lift what is called the additional compensation grant cap of $50,000—we have decided to lift 

that, which will hopefully have a positive impact on about 20,000 

low- to moderate-income Road Home applicants. Hopefully we can 

get them an additional $30,000 for a total of about $600 million. 

So we think by doing that, it is a smart decision, we will send an 

action plan to HUD in September. Part of that conversation happened up in D.C. in a meeting with Mayor Nagin and yourself and 

others and Senator Landrieu in a roundtable, having a study done 

at the beginning of August that showed us that gap. So we have 

come to that conclusion. We have always been committed to using 

the Road Home money that you sent us, that $3 billion that has 

12 

tight language around it, on trying to help people get back in their 

homes. 

So while the proof is in the pudding, I have my staff working on 

an expedited plan to not force people to come back and do additional paperwork, provide additional documentation. We have 

worked very hard and I myself have signed waivers, personal waivers, for people who could not prove homeownership. I have signed 

waivers for people who could bring electrical bills to me, whatever 

they could bring to me to give me some proof that they had a 

homeownership, I was willing to do that and we will continue to 

do that. You have our commitment to do that. 

Not always perfect, I know that, but we have been to multiple 

outreach sessions. We did about 20 mobile outreach sessions last 

year and closed about 30,000 grants, very difficult grants where 

people were having difficulty because there is no doubt the contractor fast forwarded the easier grants early on in the program, 

left some low-income folks who could not afford to hire attorneys 

and other things in the back of the program. We picked that up, 

and we have worked very hard to complete those grant applications. 

We will continue to work closely with Congress and the Senate 

and Mr. Tombar and HUD to make sure that people are given to 

opportunity to return home. 

Thank you, Congresswoman. 

[The prepared statement of Mr. Rainwater can be found on page 

85 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Am I pronouncing your name correctly? Please pronounce it for 

us. 

Mr. SATHE. Ommeed Sathe. 

Chairwoman WATERS. Mr. Sathe, thank you very much. 

STATEMENT OF OMMEED SATHE, DIRECTOR OF REAL ESTATE 

STRATEGY, NEW ORLEANS REDEVELOPMENT AUTHORITY 

(NORA) 

Mr. SATHE. Thank you for having us here today. 

I represent the New Orleans Redevelopment Authority, which 

has been tasked with a very specific part of the Road Home process. I think, Congresswoman, you mentioned the Option 2 and 3 

properties which were the ones that people sold back to the State. 

There are approximately 4,700 of those properties in Orleans 

Parish. NORA is the exclusive agent in charge of the disposition of 

those properties; 4,700 properties is undoubtedly an incredibly 

large sum of properties. I think we are competing to be the largest 

land bank in the entire country. However, it is a small piece of the 

puzzle and I think Mr. Rainwater and Mr. Tombar have talked a 

little bit about the Road Home 1, which very much matches what 

we are trying to do. 

If you look at the map I think I put on the first board over there, 

you will see that the properties we have are very spread out. The 

ones highlighted in yellow on that map are all the ones that we 

have been transferred ownership of. 

And so in devising our disposition strategy, you asked us to sort 

of come talk about what we are trying to do to redevelop these 

13 

properties. We have three or four primary avenues we use to dispose of those properties. 

The first and an incredibly important program to our City Council was the Lot Next Door Program. That gives any homeowner 

with a homestead exemption the right of first refusal to purchase 

the property adjacent to them. They can use that property to expand their footprint. New Orleans is an old urban city, we have a 

lot of small lots, a lot of people who have been dying for off-street 

parking, a place to have the kids play. At the same time, it is also 

things they can rebuild for relatives, family members who are 

struggling to get back. 

It is an incredibly important program. To date, we have identified approximately 2,000 families who are eligible to participate. 

We have sent 1,200 letters to those families inviting them to purchase the property and have signed 300 purchase agreements. 

We began that in March, when the properties became available 

for transfer. So until then, they were closing through the Road 

Home process and going through the various HUD environmental 

reviews. So these properties only became available for transfer in 

March of this year, and we have already signed 300 purchase 

agreements on those lots next door. We expect to do somewhere between 500 and 800. 

The second and incredibly important program for us are our 

Neighborhood Based Disposition Plans. New Orleans, as we all 

know, is a city of incredibly varied and diverse neighborhoods, all 

with different characteristics and desires. The City went through 

an extraordinary planning process and we have tried to ground 

that in the specific context of the properties we have. We have developed neighborhood development agreements for a variety of 

neighborhoods. We have already done 15, and we should cover the 

whole City by the end of the year. 

One of our hallmarks, and that is the one that you see in front 

of you right there, is the Pontchartrain Park neighborhood. There 

are approximately 120 what we call LLT properties in that neighborhood as well as approximately 400 properties where people cannot rebuild on their own. They did not get enough money from the 

Road Home Program. A lot of our families were elderly and struggling to come back, and a lot of them were just mentally and physically exhausted. 

And so working with the neighborhood, they approached us and 

deeply wanted a master developer who would come in, be able to 

build a high-quality home on the properties we controlled as well 

as assist the families next door trying to rebuild as well as all the 

people struggling with ongoing gaps. 

We went out, we selected a national developer, SRP. They have 

done a tremendous job. We expect to break ground on the first 

houses in a few weeks. We are working closely with the State to 

have the properties demolished prior. It is a very important part 

of the program because we have to have them elevated. And for 

these old houses, it makes a lot more sense to elevate them, rebuild. They are going to have the latest energy efficiency features 

and we are working again with the State to find the resources to 

make these affordable. 

14 

One of the central challenges we have in the recovery is that the 

cost of construction exceeds what many, many, many families can 

afford. And if that was not bad enough already, the cost of homeownership has skyrocketed since Katrina, it has gone up nearly 

500 percent. What that means is that a family making less than 

120 percent of AMI cannot afford new construction. And that is 

quite a heavy burden. Down here, it is about $70,000. Anyone making less than that is deeply struggling to afford housing. And so we 

are absolutely dependent on the support of the Federal Government and the State to find the resources to fill those gaps. 

We are working with the State on a soft second program for some 

of that. We are also working to try and get some of the elevation 

resources to reduce that cost. We are also looking to try to get some 

of the energy efficiency resources to resource that. Solving that gap 

is absolutely crucial to the rebuilding of this City. A lot of people 

have talked about wanting to rebuild smarter and safer. Without 

the resources, people are being driven to rehab in situations where 

that is a terrible idea. 

In terms of some of our other programs, we have also—you know, 

we have taken very different approaches in other neighborhoods. In 

Lakeview, which had a strong demand, they decided they did not 

want any developers. They said what we want is just to get single 

families to come back, we have plenty of demand. Give folks a shot 

who want to come here, live here, and raise their kids. We did a 

disposition program there that sold over 200 properties. 

To put these numbers in context, and I think it is helpful, in the 

typical year in New Orleans, you only do about 1,000 to 1,200 single-family home sales a year in the entire private market. Between 

Pontchartrain Park, Lakeview, and our programs, we will have 

done over 1,000 this year alone. 

We have worked in almost every neighborhood. We have done 

projects in the Lower Ninth Ward working with groups like NINA 

and Make it Right to build back some of the most energy-efficient 

houses in the country. 

Where are the impediments going forward, however? And that is 

what I would like to talk to you Congresspersons about. We are 

struggling with a couple of things. 

Demolition—we were recently denied a waiver from the EPA 

that would have allowed the City to continue with demolition in a 

rapid fashion. It is a peculiar choice, since they extended the waiver to St. Bernard Parish which is neighboring us. And we have had 

that waiver for the past 4 years. It is crucial in demolishing a lot 

of these Option 2 and 3 properties because after 4 years of being 

ungutted and sitting there in many cases, these homes need to 

come down so that they can be elevated and rebuilt in a sustainable fashion. That is one key thing we are struggling with. 

The second is construction costs. 

The third I think is a jack-o-lantern pattern of rehabilitation. If 

you look at these maps and you see our neighborhoods, you see 

beautiful houses next to houses struggling to rebuild. We have applied some assistance to try to help fill some of those gaps that 

Paul is going after and to do it in a way that brings people into 

a more sustainable solution and stops them from being ripped off 

by unethical contractors. 

15 

[The prepared statement of Mr. Sathe can be found on page 92 

of the appendix.] 

Chairwoman WATERS. Thank you very much. I notice that perhaps you did not all get an opportunity to finish your testimony. 

You can do some of that through the exchange you will have with 

us on questions. And I would like now to recognize myself for a few 

questions. 

First, let me ask you, Mr. Tombar, I know that this Administration is only 6 months into leading this country, and I appreciate 

the information that you shared with us about the oversight. Did 

you discover in your work that perhaps some parts of the Road 

Home Program had been originated in ways that created problems 

during the implementation and while you were doing oversight to 

make sure that they were doing what they said they would do. Was 

the program designed correctly in the first place to accomplish the 

goals it intended to accomplish? 

Mr. TOMBAR. That is a very good question; thank you for asking 

it. 

Let me say that one of the things that I did testify to is that this 

is an incredibly complex undertaking, as we all know. There never 

before has been a disaster of this magnitude, causing as much 

damage as was caused. 

The State of Louisiana, in the year before Hurricane Katrina, its 

overall CDBG allocation was in the millions, the tens of millions. 

And as I testified to, the overall allocations that they have dedicated to the Road Home Program is upwards of $10 billion. So 

there was a tremendous issue with capacity building, one. 

The second thing that I know personally was that there were 

ever-changing rules. The State—this is prior to Mr. Rainwater’s involvement, but the State of Louisiana Recovery Authority was, 

quite frankly, I believe making the train as they were riding on it 

in many cases. And the rules changed constantly, making it difficult to communicate to homeowners exactly what it was that they 

should expect in the way of the application process and the program itself. But that was done because of the complexity, because 

of the challenge of trying to address so many of the issues that are 

out there. 

I will tell you, part of the challenge from a Federal perspective 

that we had was that the CDBG program is sort of like a square 

peg in a round hole. It is intended for long-term recovery, but it 

happens to be the most flexible tool, the most flexible program, 

that we have at the Department and, therefore, is used by the Congress often to help communities in their recovery. 

That flexibility limits the Federal Government’s ability to actually determine how that money is used. There are broad, really 

broad, goals that are set up for the program. And as long as a 

grantee like the State of Louisiana in its program design meets 

those broad goals or demonstrates how its program could meet 

those broad goals, we are obligated to approve it. That is the Federal law and how the program operates. 

And so part of the challenge is, one, the complexity of the challenge in addressing the devastation of Hurricanes Katrina and 

Rita, quite frankly. And then two, the fact that this had not been 

16 

done before, and there was rulemaking and policymaking as the 

program itself was being implemented. 

Chairwoman WATERS. What is HUD’s authority or role with 

CDBG in this instance in advising or determining in any way how 

any excess funds should be used? 

Mr. TOMBAR. The final $3 billion, that Paul testified to and I did 

as well, is strictly tied to the compensation grants for the Road 

Home Program. If in fact that money is not needed for that purpose, after the program is completed, the way that the legislation 

was written is that the money would be returned to the Treasury. 

I can say to you that Secretary Donovan and President Obama 

have absolutely no desire to see money returned to the Treasury 

when there are still ongoing needs here in the State of Louisiana. 

We have been in internal discussions about a legislative—working 

with Members of Congress on developing the legislative strategy, 

once it has been satisfied that there is a surplus, should there be 

a surplus, about redirecting those dollars to some other existing 

needs here in the State of Louisiana. 

Chairwoman WATERS. Mr. Rainwater, the $3 billion or so surplus, let us not call it surplus, let us call it funds unexpended. As 

you have identified and I guess we talked about, you are talking 

about using that money to satisfy some of the unmet needs of Road 

Home of compensating in some way those people who fell through 

the cracks. Explain that one more time to us. 

Mr. RAINWATER. Yes, Chairwoman Waters, if I could. 

The $3 billion, we have spent $1.5 billion of that, and we have $1.5 billion left. 

Chairwoman WATERS. How much do you have left? 

Mr. RAINWATER. $1.5 billion. 

Chairwoman WATERS. 1.5 billion? 

Mr. RAINWATER. Yes, ma’am. And we think we are going to 

spend half-a-billion on finishing out the more traditional Road 

Home Program. I hate to use the word traditional; nothing is traditional about it. 

Chairwoman WATERS. Right. 

Mr. RAINWATER. But going forward, we made some budget ad- justments. Originally, we were going to take $600 million and use 

it to pay out individual mitigation measures for applicants at about 

$7,500 an applicant. But then we made a decision to go ahead and 

move that over to our Hazard Mitigation Grant Program because 

it made more sense, and we were seeing, you know, it takes awhile 

to get the information, but we were starting to see that gap. And 

so we said, let us go ahead and use the Road Home money for what 

it was intended, that is, to help people repair their homes. 

And so we think—we had an additional compensation grant program that had been set up back in—I was not part of the design, 

but as I understand historically back in 2007, to help low- to moderate-income applicants. And it was capped at $50,000. We have 

now made a decision to lift that cap, and we think just on the 

broad data that we have looked at, there are 20,000 low- to moderate-income Road Home applicants that we can give around an average of $30,000. And so that is what we plan to do. And we think 

that will make a huge difference in their ability to rebuild their 

homes. If the gap is for Option 1 in New Orleans, for example, acVerDate Nov 24 2008 14:59 Feb 17, 2010 Jkt 053250 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\53250.TXT TERRIE
17 

tually across the recovery area, about $600 million, that should do 

some of it. 

Now we have a $20 million pilot construction repair program 

that we are sending down to nonprofits across New Orleans and 

the area that we are just getting ready to execute. That should 

help repair some homes as well because you have folks with much 

smaller gaps. 

Chairwoman WATERS. Let me try and understand. 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. On the low-income homeowners that you would like to try and help with these $30,000 subsidies in some 

way, are these people who may have applied for Road Home money 

who were homeowners, or these are not homeowners for the most 

part? 

Mr. RAINWATER. These are homeowners. 

Chairwoman WATERS. These are homeowners. They may have 

applied for Road Home assistance. They may or may not have gotten some assistance? 

Mr. RAINWATER. Yes, in most cases, they would have most probably gotten something. 

Now we have been going back into our files to look at people 

who—and one of things I am doing right now, we have about 8,000 

applicants that I am still holding onto, you know, that we are still 

trying to work through the proof of homeownership, title issues and 

so forth. We are going to continue that on through next year. 

Chairwoman WATERS. I know, you are going to continue on with 

the traditional Road Home Program. 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. And you are going to try to go back and 

identify the low-income homeowners who may have applied, may 

have gotten $10,000 or $15,000, but certainly it did not go very far 

in rehabbing that home. And so you are going to look at how you 

can give some additional assistance, because their incomes are 

low— 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. —and 9 times out of 10, they cannot save 

the money or have the money by which to get these homes done; 

is that right? 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. And then the money to the nonprofits is 

more like a smaller program to do repairs of some kind, to help 

people who may not have had significant damage, but have some 

damage or may still have some needs left over after they have 

spent their Road Home money, etc., something like that? 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. Okay. Now you say there are about 8,000 

people who may be left in the Road Home Program, who need to 

be dealt with. These are people who filed considerably late, these 

are people who had complaints or they are on appeal. Something 

like that? 

Mr. RAINWATER. Well, yes, ma’am, if I could just walk you 

through it really quick. 

We have about—early on in the program when I got here in January 2008, there was this program called dispute resolution that 

18 

ICF was running, that basically there was no accountability. We 

got rid of that, pulled those out, put them into an automatic appeal. We created a two-tier appeal process, one at the contractor 

level and one at the State level. 

Before 2008, the contractor had the final say-so on the appeal 

and that just did not make a lot of sense to myself and to many 

others, as we looked through the issues. And right now, we have 

490 appeals at the contractor level and about 60 at the State level. 

So we have worked through those, I think. 

But there are still obviously in that group of 8,000 people, there 

are people who are having trouble, you know, with title succession 

issues. I mean I can give you example after example of folks who— 

Chairwoman WATERS. Let me ask you, Mr. Rainwater, did you 

find that one of the problems—and Mr. Tombar, you may have 

found this in your overview in some way—did you find that there 

were problems with assessments? I hear a lot about that. I hear 

that people who had a home that was worth $150,000, got an assessment from Road Home for $70,000. What is that all about? 

Mr. RAINWATER. That is about the formula and the way it was 

laid out. Basically if you were considered 51 percent over—it was 

a complicated formula that had to do with pre-storm value versus 

estimated cost of damage. 

Chairwoman WATERS. Well, most people say that whatever that 

formula was, it was not right. Is there a need to correct that? 

[applause] 

Chairwoman WATERS. And the reason I asked is if we are going to play with some of the $3 billion in some way—and this may be 

complicated. It is all complicated. 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. But if these places were underassessed, 

that really determined how much money they got in Road Home 

assistance, right? 

Mr. RAINWATER. That was one— 

Chairwoman WATERS. So if your max was $150,000 and you 

ended up receiving $75,000 because your home was assessed at a 

much lower rate, is there a need to fix that? 

Mr. RAINWATER. That was one of the reasons I think they set up 

the additional compensation grant back in 2007, was to help the 

assessments, and parts of New Orleans were lower than other 

parts, like Lakeview. So that is one of things we are going back to 

do, not a re-evaluation, but just the automatic, you know, dollars 

to those folks who fit in the additional compensation category. 

Chairwoman WATERS. So are you saying that you may look at 

this in a way that you say okay, a review of our records shows that 

30,000 people may have been underassessed. We are going to give 

them a set amount of money. We cannot go back and do all the reevaluation, but we are going to give everybody $20,000 or something like that. Is that what you are talking about? 

Mr. RAINWATER. Congresswoman, if I could, one of the challenges 

that we have is if I go back and start trying to re-assess, we just 

recreate the problem. 

Chairwoman WATERS. I get that. 

Mr. RAINWATER. Yes, ma’am. And I have spoken with HUD 

about, you know, adjusting formulas, for example. I do not think 

19 

at this point, what I have been told is that it is probably—the program was the program. What I need to do now is try to go back 

and reconcile as quickly and easily as I can some of those issues 

to try to get money to people. 

Chairwoman WATERS. Okay, well, you know, this is very important. If that is on your radar, and it should be I think, and you 

recognize that and you have some money, and you can dedicate 

some of the billion or so to that; does it make good sense to do a 

flat amount of subsidy without having to jump through a lot of 

hoops? Because one of the things the people complain about is what 

they have been required to do, how their money, $150,000, has 

been reduced because of an SBA loan, because of insurance money 

they should have gotten, may have gotten, because of the underassessment, on and on and on. 

If they have simple proof, and you talked about simplifying that 

in some ways, show me that you own the house—if they can do 

that in a very simplified way, are you prepared to come up with 

a program that will subsidize all of those people who fall in that 

category a set amount? 

Mr. RAINWATER. Yes, ma’am. And we can work with HUD to do 

that. We support that 100 percent, that’s why we talked about— 

Chairwoman WATERS. But HUD does not care. 

Mr. RAINWATER. Yes, ma’am—no, ma’am, they do care, they do 

care. 

Chairwoman WATERS. In this case, we will hold them to it. Ordinarily, we would say okay. 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. But—well, he did not quite say it that 

way, but what he said is, Congresswoman, you have rules. The 

public policy says that when you use Block Grant money, this is 

the only amount of oversight that we have. And HUD cannot write 

the exact rules for how you spend that money. That is what you 

told me, right? 

Mr. TOMBAR. Yes, ma’am. 

Chairwoman WATERS. And so—just a moment. And so, having 

said that, and because the State made the determination about its 

Road Home Program and we agree, and we are sympathetic to the 

fact that this was difficult. I mean everybody recognizes it is the 

biggest disaster in the history of our country certainly and that it 

is complicated. And that even from the time you started, there 

were modifications and changes to accommodate the difficulty that 

you ran into to try and be fair. 

So now, we have one of those issues we are dealing with right 

now. There are a lot of others, but we are only dealing with one 

right now and that is the assessment issue. HUD will not interfere 

with how you correct that, will you, HUD? 

Mr. TOMBAR. Ma’am, if I could— 

Chairwoman WATERS. No, just tell me. 

[laughter] 

Chairwoman WATERS. You can speak for Secretary Donovan, he 

told me you could. 

Mr. TOMBAR. The language on the money that we are talking 

about— 

Chairwoman WATERS. Yes. 

20 

Mr. TOMBAR. —as you know, was very tightly written. 

Chairwoman WATERS. Yes. 

Mr. TOMBAR. I am not a lawyer, so I will not play a lawyer here, 

but I do want to say that because of how tightly the language was 

written, it really constricts in ways that the CDBG program normally does not. It really constricts the usage of that money. 

Chairwoman WATERS. Mr. Green, Mr. Cleaver, what does it take 

for an amendment quickly when we get back in whatever is passing through our committee to fix it? Are you prepared to do that? 

Mr. CLEAVER. Yes. 

Mr. GREEN. Yes. 

Chairwoman WATERS. Let’s fix it. 

Let me tell you, Mr. Rainwater— 

[applause] 

Chairwoman WATERS. —Mr. Rainwater, we expect that—we cannot tell you how much, we do not want another set of rules that 

will put people through a thousand hoops to correct the underassessment of their property. 

If we agree and you concur, and you said you did—do not change 

on me after we do this. 

Mr. RAINWATER. Congresswoman, I will send money out faster 

than you can get back down here, I promise. 

Chairwoman WATERS. You got it. That is exactly what we want. 

We want you, in the most simplified way, to get to me and Chairman Frank a letter of request for assistance to rectify the underassessment of properties considered under the Road Home bill so 

that you may, in the simplest way possible, compensate or make 

up for that difference or that gap that everybody agrees occurred. 

Now let me just say this. It may not be what everybody would 

want. 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. Or would like to have. But it is going to 

be something that is substantial enough that people will know that 

they have some money that can help move them along in either 

completing the repair of that property, or will get them much further than they are now. 

So I am not talking about what you did in Road Home where people could have gotten $150,000 and ended up with $1,000 or 

$2,000 or $12,000. We are not talking about that. We are talking 

about coming up with a number that would be somewhere—well, 

I do not want to start talking about that number, I think it would 

be unfair to you. But do not bring me any $2,000, okay? 

Mr. RAINWATER. Oh, no, ma’am. 

Chairwoman WATERS. It is not going to work. It has to be substantial enough to make a difference in the lives of people who 

have been struggling with properties that have been underassessed. Okay? 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. Okay, I could go on with other things, but 

I have two colleagues who have come a long way. Mr. Cleaver, yu 

are recognized for as much time as you would like to take. 

Mr. CLEAVER. Thank you, Madam Chairwoman. 

Mr. Tombar, do you and Mr. Rainwater communicate on a regular basis? 

21 

Mr. TOMBAR. Yes, sir. 

Mr. CLEAVER. So, HUD and the State. The Mayor is going to be 

here tomorrow, I think, but can we add the municipality as well? 

Mr. RAINWATER. Congressman, if I could, Mayor Nagin and I text 

each other. I mean we are in contact with each other all the time, 

absolutely. 

Mr. TOMBAR. The Secretary brought me on—called me on the day 

that he was confirmed by the Congress, and asked me to come and 

join his staff specifically to work on disaster recovery. I have been 

in regular communication with folks not only in this State but also 

in Congressman Green’s State of Texas and others that are recovering from disasters, to help out as much as possible. 

Mr. CLEAVER. I am very pleased with Secretary Donovan, other 

than the fact that he looks like he is 16, but beyond that— 

Mr. TOMBAR. I have asked him what water he drinks, too. 

Mr. CLEAVER. Yes. I am asking the question because apparently 

there are questions being raised about the inspections when homes 

are being readied for citizens to move in. People are complaining 

that sometimes the house is inspected by five different jurisdictions, including FEMA, but that, you know, you will have a HUD 

inspection, you have a City inspection, you have a FEMA inspection, you have a State inspection, vendors, major league baseball 

referees—I mean everybody is coming in to inspect. 

I am wondering why we cannot reduce the number of inspections 

so that people can be about the business of getting back into their 

homes. When I talked about people digging potholes in the road 

home, that is what I mean, when we are doing that kind of thing. 

I am a former mayor, and we had a problem with delays in inspections, so during my term, we established a one-stop-shop. 

There is no point in having 15 different departments inspecting one 

home. So can we not put some kind of system in place for a onestop-shop so that it does not delay people getting back into their 

homes? 

Mr. TOMBAR. It is a very good question. 

Part of what the Obama Administration actually is doing is certainly trying to learn lessons from the past. And we think the experience in Hurricane Katrina is extremely instructive. And you are 

right that there have been issues with multiple inspections, those 

that are used for various Federal programs. As you mentioned, 

FEMA, the Small Business Administration, and the CDBG grantees, the State of Louisiana doing a third. And in many cases private insurance companies coming out and doing inspections. 

What we are looking to do at the Federal level is to consolidate 

those inspections under one agency. Quite frankly, what some of 

this will require is beyond just administrative coordination, some 

new authorities given to various Federal agencies to do some coordination, especially around the Stafford Act. 

Congressman Waters mentioned some of the complexity that the 

program has seen and things that have irritated people about 

amounts being taken into account from their insurance company 

and from FEMA and from other places. That is a clear requirement 

coming from the Stafford Act, against duplication of benefits. That 

is something that I must say that even in the exchange that was 

just had that would have to be dealt with, because that Stafford 

22 

Act requirement is in no way—there is no way to get around it. It 

is a requirement that stands. 

And so while we might want to easily facilitate the additional 

compensation to homeowners and applicants under the program, it 

could be that the requirement under the Stafford Act, which supersedes everything in the disaster context, could get in the way of 

easily facilitating that. 

Chairwoman WATERS. Will the gentleman yield for a moment? 

Mr. CLEAVER. Yes, Madam Chairwoman. 

Chairwoman WATERS. As you know, the Stafford Act is but an 

Act of Congress. 

Mr. TOMBAR. Yes, ma’am. 

Chairwoman WATERS. We make the laws. 

Mr. TOMBAR. Yes, ma’am. 

Chairwoman WATERS. And what we are talking about doing is 

amending, modifying or doing whatever is necessary to expedite 

the assistance to these homeowners so we can get these problems 

behind us. And that is what we are willing to do. We will have to, 

and our staff will have to take a look at everything of how we do 

it, but we are committed to doing that. So do not worry about the 

Stafford Act. It may end up the Cleaver Act or the Waters Act or 

the Green Act. But we are going to have to get it done. Okay? 

Mr. TOMBAR. I was not worried. I mentioned it only so that it 

would not be missed and that when in fact implementation came, 

if it were missed in the drafting of whatever legislation would provide the flexibility, did not want it to come back on us that we are 

being bureaucratic. 

Chairwoman WATERS. I yield back. 

Mr. CLEAVER. The Chair has already spoken. 

So you could probably give us—the two of you, maybe the three 

of you—information about what we need to do. If there is new authorizing legislation required and where, can we get that quickly? 

Mr. RAINWATER. Congressman, I can give it to you this afternoon. 

I have a list of duplication of benefits and we have tons of issues 

that we have been fighting with for quite some time. Fred and the 

Secretary have only been in the job for a bit, and we have had numerous conversations about how—the Mayor and Fred and I have 

met with the Secretary a number of times and talked about the 

complexities of this and trying to get information to you so you can 

act. Because we know if you know the issues, that you will act, and 

you will make it simpler for us to work with some of these issues. 

So absolutely. 

Mr. CLEAVER. Okay, thank you. That has almost justified a trip 

down here, but I want to go one other place. 

In addition to the inspection issue, we are told that there are 

some issues around zoning that some neighborhoods are balking at 

zoning changes because the prefab housing that is being placed in 

some areas are not consistent with the housing stock that remains, 

and so people are concerned about a reduction in property values. 

Are any of you familiar with that issue? 

Mr. SATHE. Quite honestly, Congressman, I do not think that is 

an issue of anyone at the table. It may be that is probably best 

raised with the Mayor in terms of the zoning code. 

23 

Mr. CLEAVER. Yes, I used to be mayor of a city larger than New 

Orleans, so I know how that goes. 

Mr. TOMBAR. I have heard the issue more closely tied to the 

neighboring State of Mississippi than in Louisiana, where that concern has come up. 

Mr. CLEAVER. We had a listening session this morning and in 

hanging around, somebody came up and raised that issue with me. 

Which was a valuable session, incidentally, and so I wanted to, you 

know, make sure that if that is an issue, that we need to do whatever we need to do. 

I will mention that to Mayor Nagin. 

Madam Chairwoman, I yield back the balance of my time. 

Chairwoman WATERS. Mr. Green. 

Mr. GREEN. Thank you, Madam Chairwoman. 

I would like to, for the record, associate myself with the comments of the Chair. I appreciate greatly her pearls of wisdom and 

I would only add that the people of Louisiana and New Orleans 

have suffered too long, they have waited too long, and it is really 

time for us to do everything that we can to get them back into their 

homes. It really is. 

[applause] 

Mr. GREEN. And because I am going to be terse and laconic, I am 

going to ask that you be pithy and concise, so that we can go 

through this as expeditiously as possible. 

In my former life, I was a judge and I have learned the value 

of the truth, the whole truth, and nothing but the truth. So let us 

move, if we can, to truth, because there is beauty in truth. You 

know the truth, it will set you free. So let us see if we can free a 

few souls today. 

Let us start with some intelligence that I have received. Is it true 

that home values in predominantly African-American neighborhoods tend to be lower than values in similar houses in predominantly white neighborhoods? Mr. Rainwater, you were here at the 

genesis of this and I suspect that you are the best person to help 

us get to Revelations. Is it true? 

Mr. RAINWATER. Sir, I have only been here since 2008, January 

of 2008. I worked— 

Mr. GREEN. That is genesis for us. 

Mr. RAINWATER. So I was not part of the design of the program, 

I will say that the additional— 

Mr. GREEN. May I ask you to do this, if you would, Mr. Rainwater—I love you and I am not trying to be overbearing— 

Mr. RAINWATER. No, sir. 

Mr. GREEN. —but this is important. 

Mr. RAINWATER. Yes, sir. 

Mr. GREEN. Sometimes when people finish, I do not know whether they have said yes or no. So I am going to ask that you start 

with yes or no, and then we will get the explanation. So is it true 

that in African-American neighborhoods property values are valued 

less than similar properties in Anglo neighborhoods? Is this true? 

Mr. RAINWATER. Yes, sir. 

Mr. GREEN. If this is true, is it true that African-American homeowners are more likely to receive what is called the pre-storm 

value for their homes by virtue of the three different methodologies 

24 

that you use to compute values—is it true that they are more likely 

to receive the pre-storm value as opposed to the actual cost to repair value? 

Mr. RAINWATER. Most probably, I would suspect so. 

Mr. GREEN. If you would now, I have a record that I am building. 

Is this true? 

Mr. RAINWATER. Yes, sir, I am sure it is. 

Mr. GREEN. Okay. 

Mr. RAINWATER. I do not deny that. 

Mr. GREEN. It is true, it is true. I am building a record. But you 

and I know that it is true. 

Given that it is true, then it is more likely that African Americans who have homes that are similarly constructed to homes in 

other areas are going to receive less for their repairs than the persons who live in these other neighborhoods. That causes me some 

concern. That kind of invidious methodology needs to be corrected. 

You are in a unique position. It is my hope that you will give 

consideration to the truth, the undeniable truth that you and I absolutely agree on. Somehow that should be corrected. 

Now I am not going to ask more information, because you have 

already been sued because of this. There is a lawsuit against HUD, 

lawsuit against—I believe against— 

Mr. RAINWATER. Against me for a program I did not design, but 

that is okay, Congressman. 

Mr. GREEN. Yes. Well, I do not want to get into your lawsuit and 

I hope you have a good lawyer. But what I really trust is that this 

will be resolved, not because of ethnicity, not because of race, but 

because it is just right to make sure that people who have homes 

that are similarly constructed receive similar amounts of money to 

repair their homes. Hurricanes do not discriminate and we should 

not discriminate once hurricanes have gone by. 

[applause] 

Mr. GREEN. Now I hate to ask you if it is true, but I have to. 

I am a lawyer and I do not know how to start sentences otherwise, 

so please forgive me. 

Is it true that the management company received a handsome 

amount of money for the work that it was supposed to do? 

Mr. RAINWATER. There is no doubt about that. 

Mr. GREEN. What was that amount of money, please, sir? 

Mr. RAINWATER. It was $897 million. 

Mr. GREEN. $897 million? 

Mr. RAINWATER. Yes, sir. In a contract I did not sign, in a contract I accepted or was handed over to me. We basically held back 

about $11 million of that based off of audits that we have done and 

program requirements that were not met. Congressman, it is distasteful, I know that. But we did everything we could in 2008 when 

we took the contract over, to set benchmarks and to— 

Mr. GREEN. Well, let me ask you this. By the way, this is in no 

way a reflection upon you. 

Mr. RAINWATER. I understand that, sir. 

Mr. GREEN. But again, there is beauty in truth. 

Mr. RAINWATER. Yes, sir. 

25 

Mr. GREEN. Did we, as has been done with you, did we consider 

litigation? Did we consider suing these people to get some of the 

taxpayers’ money back? 

Mr. RAINWATER. We are in the process of putting together a lawsuit now, Congressman. That is what we are doing right now, going 

back and looking at mistakes that the company made, not treating 

people fairly. And our lawyers, who are here today, have been in 

the process of reviewing that. That is why, as I mentioned earlier, 

I separated out the IT piece from the contract— 

Mr. GREEN. You did. 

Mr. RAINWATER. —so I could get the truth. 

Mr. GREEN. You did, and I salute you for doing it. 

Would you kindly, once the lawsuit has been filed, forward a 

copy to—if you will send it to me, I will make sure that it is available to committee members. And Madam Chairwoman, if there is 

a better way to do this, I will yield to your wisdom. But I would 

like to see a copy of the lawsuit. And my assumption is that your 

lawyer will be in a position to give us somewhat of a summary. I 

would be interested in seeing your summary— 

Mr. RAINWATER. Yes, sir. 

Mr. GREEN. —of the litigation. 

Finally, let us deal with something that is important to many 

thousands of people who have come to my district. I am concerned—and maybe this should be to Mr. Tombar—I am concerned 

about anecdotal evidence that I have received indicating that persons who do not speak English are not having enough information 

accorded them in a language that they do understand. Is it true or 

not true that you have your information printed in Vietnamese for 

the purpose of helping the 10,000 Vietnamese persons who relocated to Houston, many of whom live in my district? How have we 

dealt with the language barrier that can exist when we try to communicate with persons who speak a language other than English? 

Mr. TOMBAR. I am trying to clarify—is this information on the 

Road Home Program? 

Mr. GREEN. Yes, sir, on the Road Home Program; yes, sir. 

Mr. TOMBAR. I would have to defer to Mr. Rainwater. 

Mr. GREEN. Mr. Rainwater, we are back, here we are. 

Mr. RAINWATER. Yes, sir. I do not have that information, Congressman. I know we have— 

Mr. GREEN. This lady is going to help you. 

Mr. RAINWATER. We are required to translate; yes, sir. I have 

had staff who have gone to Houston and worked with folks over in 

Houston; so yes, sir, we have translators. 

Mr. GREEN. Do you have a person who is continually working in 

this process, a person that I can contact that I can have an opportunity to receive some empirical evidence from? 

Mr. RAINWATER. Yes, sir. 

Mr. GREEN. I would like the name of this person. 

Mr. RAINWATER. Yes, sir. 

Mr. GREEN. And I would like for you, if you can, to accord me 

this name—can you do this within a week, please? 

Mr. RAINWATER. I can do it this afternoon, sir. 

26 

Mr. GREEN. All right. I would like to have the name. And if you 

will do this, for fear that you may not get me, I hope that you will, 

if you will give it to a staff person, it will be given to me. 

I have other areas that I would like to visit with if there is another round or perhaps I will address my questions to someone 

else, but I do want you to know that this is serious business for 

us and we are going to do everything that we can as fast as we 

can, to make a difference. 

I thank you, Madam Chairwoman. I yield back. 

Chairwoman WATERS. Thank you very much, Mr. Green. 

I will authorize another round for 2 minutes each for us to kind 

of wrap up any questions we might have for the witnesses who are 

before us. 

We did not spend much time on Mr. Sathe and we need to spend 

time on you. 

We did not spend much time, but you have an important responsibility, you have acquired the people’s property. You acquired 

property from people who decided to leave the City, who decided 

they were too old and they just could not go through dealing with 

another crooked contractor, or decided that they were just going to 

give up owning a home and maybe going to an apartment. So you 

have all of this property. What are you going to do with this property? 

Mr. SATHE. Sure. We are going to do our best to get as much of 

it back into commerce as possible. 

Chairwoman WATERS. What does that mean, back into commerce? 

Mr. SATHE. I think we talked about the two key initiatives. One, 

the Lot Next Door, so homeowners who— 

Chairwoman WATERS. That is good. Let me repeat that, so that 

I understand it. The homeowner adjacent to acquired property will 

have the right of first refusal for the purchase of that property, is 

that right? 

Mr. SATHE. That is correct. 

Chairwoman WATERS. And is that property to be purchased at 

what you would consider market rate or something different? 

Mr. SATHE. We have gone out of our way—under the regulations 

we are working under, it is current appraised value and it is current conditions, but what we do recognize is that one of the things 

we adjusted is that in all those neighborhoods that are storm damaged and where properties have to be elevated, it is the raw land 

value and nothing more. So we have reduced the cost down to the 

raw land value because we recognize that it would be unfair to 

charge someone for a home that on the one hand, FEMA was saying should be demolished or elevated and basically— 

Chairwoman WATERS. So this property that can be bought by the 

adjacent homeowner can be purchased for the pure land value and 

not for the building or the property that is on there that has to be 

demolished, or any of that? 

Mr. SATHE. That is right. So long as it is outside the historic 

areas. So long as it is in the areas that require elevation. 

Chairwoman WATERS. Okay. 

Mr. SATHE. Which is most of it. 

27 

Chairwoman WATERS. When the assessment was done and you 

purchased that house and that land, was there a determination 

about that land value that you paid that is different than what you 

are charging the new homeowner buyer for it? 

Mr. SATHE. We had nothing to do with the original acquisition, 

so I cannot speak to that. 

Chairwoman WATERS. Oh, I see. 

Mr. SATHE. We had current appraisals done as of now. 

Chairwoman WATERS. How do those appraisals compare with the 

appraisal that was used when you bought it from the person or the 

individual or whomever? 

Mr. SATHE. My sense is that in most cases, the property was 

bought with the structure on it, so it would have been bought at 

a considerably higher price than what we would be selling it at. I 

mean by orders of magnitude, I would imagine. 

Chairwoman WATERS. Would you please supply to this committee 

a description of how you value the land— 

Mr. SATHE. Absolutely. 

Chairwoman WATERS. —that you are selling, that you now have 

in your portfolio. 

Okay, now while we are discussing in a big way how to rectify 

some of the mistakes that were made originally—and we talked 

about one today and I think we have a consensus that the assessment was not perhaps what it should be and there were other 

kinds of things that have to be straightened out. And we have so 

many unhappy homeowners who feel as if they were not compensated properly. And I have a bias about this, I do believe, as 

I have watched what was happening with the so-called 150,000, 

that the mentality and the attitude was, do not give them the full 

amount, that somehow we have to work very hard to reduce this 

amount as much as we possibly can. I mean that is the feeling that 

I get. 

[applause] 

Chairwoman WATERS. I do not know if that can be proven or not, 

but we know that there were mistakes and some things happened 

and I always flinch when I hear about the description of damage 

and how much people received, and I am going to ask somebody to 

tell me, give me a list of all of the ways by which you subtract from 

the $150,000. What are the ways by which you say you had an SBA 

loan, you did this, you had insurance for this amount, you were 

supposed—I would like a list of that, perhaps Mr. Rainwater can 

give that to me. 

But now I want to go someplace else. And the place that I want 

to go with you is this, if we are doing corrections in some way and 

if we are able to do what I would like to have us do, and that is 

amend law in whatever way we need to, in order to come up with 

some subsidies that are given to people who were underassessed, 

without having to go through a lot of other hoops. I am looking at 

what you can do with all this land that you have. Because in essence, while the people who sold you the land may have benefitted 

a little, many of them lost a lot. And particularly, the seniors who 

had bought those homes, improved on those homes, raised their 

children in those homes, and during the time that we had a bubble, 

28 

those homes were worth a lot more than what you probably paid 

them for them. 

I am trying to figure out how you are going to give the people 

back some of their money that was lost in all of this complicated 

situation. I like the idea of first refusal for those who live nearby. 

Maybe first refusal should be looked at in a lot of other ways too. 

I do not know, but I want to start this conversation, I want to look 

at first refusal in terms of immediate family, I want to talk about 

how we can think about that. And I just want to put that on the 

table and I am going to think about it a lot more. I want to think 

about the difference in the cost of that land to buyers and I want 

to differentiate between individual buyers and commercial or big 

contractors. 

Mr. SATHE. Sure. 

Chairwoman WATERS. Have you done that already? 

Mr. SATHE. Well, we have done something towards that extent 

which should make you very happy. 

Chairwoman WATERS. Tell me what you did. 

Mr. SATHE. One of the programs we offer for folks buying it for 

expansion is that if they agree to take immediate action to fence 

and beautify— 

Chairwoman WATERS. They cannot hear you, let us speak up a 

little bit louder. 

Mr. SATHE. Sorry. If they take immediate action to clean up the 

property, put a nice fence around it, plant it with some trees, we 

actually will reduce the value of the appraisal by up to $10,000. 

Chairwoman WATERS. Hold it. 

Mr. SATHE. And in many cases, that makes the property— 

Chairwoman WATERS. Hold it, hold it. 

Mr. SATHE. —entirely free. 

Chairwoman WATERS. Hold it, that is good. Did everybody hear 

that? Just a moment. 

This is a program that says if you clean up the property and 

maybe put a fence around it and maintain it, that you could have 

a $10,000 reduction on an already reduced amount of land. 

Mr. SATHE. We would give you a dollar-for-dollar credit for the 

money you spend on that. 

Chairwoman WATERS. Does everybody know that? Has that been 

publicized? 

AUDIENCE. No, no. 

Mr. SATHE. Just to put it out there, it is on our properties that 

we control, which is the Option 2s and 3s. But yes, it is publicized 

when people come in on every appointment. They have an appointment, and we have case managers who walk them through it. 

Chairwoman WATERS. How do you publicize it? 

Mr. SATHE. It is—basically we send a letter and there is a little 

information about the program. They are invited to call and come 

in for an appointment. 

Chairwoman WATERS. No, no, no, no. You cannot be sending letters out for this because this should be for everybody who wants 

to buy. 

Mr. SATHE. What we do, Congresswoman, we— 

Chairwoman WATERS. Yes. 

Mr. SATHE. —actually have the universe of buyers. 

29 

Chairwoman WATERS. Okay. 

Mr. SATHE. So when we go to contact them— 

Chairwoman WATERS. What is a universe of buyers? 

Mr. SATHE. Basically, there are 4,700 properties. 

Chairwoman WATERS. Yes. 

Mr. SATHE. And of those, to be eligible for this program under 

the City Council ordinance, you need to have a homestead exemption. So 2,000 of the properties—we go to the tax records and say 

look, here is to the left, here is to the right. 

Chairwoman WATERS. Okay, I get it. I don’t want to keep— 

Mr. SATHE. So we— 

Chairwoman WATERS. But this is for people who already own 

homes? 

Mr. SATHE. The person living in the home can acquire the property we own when it is next to them. 

Chairwoman WATERS. We know about that. 

Mr. SATHE. Right. 

Chairwoman WATERS. Are you tying this ability to maintain or 

clean up the property to that same program that is adjacent— 

Mr. SATHE. That is right. 

Chairwoman WATERS. Okay, I like that, but I want to go past the 

possibility of buying the property by those who are adjacent. I like 

that but we have to publicize even more that those homeowners adjacent to that property can get another $10,000 deduction. That is 

what you are talking about. 

Mr. SATHE. Yes, and— 

Chairwoman WATERS. Now in addition to that, I want to talk 

about Mr. Jones who is not an adjacent homeowner, but is somebody who said, you know, we have a lot of property around here 

for sale and my government is selling this property, I would like 

to buy this property. What kind of break can Mr. Jones get? 

Mr. SATHE. In terms of the main program that is being designed 

currently to assist people—you know, we can definitely go back to 

the drawing board for more of them, but the main one is actually 

on the back end. The State has been very generous to create a soft 

second program for first-time home buyers to provide them with up 

to $65,000 in assistance, to fill gaps between what they can get a 

mortgage for and what the property sells for. So the assistance is 

actually on the purchase at the home level as opposed to at the 

purchase of the land. 

And so generally, what we are trying to do with the land is in 

part—one of the challenges that I think people saw with the Road 

Home and with all the owner rehab is a lot of times people were 

struggling to rehab. And I think we have in many cases been able 

to identify excellent entities that are building the kind of housing 

that we want to see people get into, so it is energy efficient, properly elevated. 

Our Pontchartrain Park project, as you know, and you can see 

on the renderings in front of you, we are not putting them up on 

stilts, we are actually regrading the land. The project led by the 

Pontchartrain Park CDC, they are going out and reaching out to 

family members, they are investigating a reverse mortgage product 

to help people get into those houses. Because I think while there 

are a lot of people who would just love to do another fix it up or 

30 

rehab job, there are a lot of folks who want to come in, buy a house 

they know is well built, cost controlled, properly manufactured, the 

latest and greatest in energy efficiency. And so I think we do believe that soft second for purchasers—now we would potentially 

love to come to you and talk to you about some of these surplus 

funds being used for expanding that soft second, expanding the eligibility because right now it is only for first-time home buyers. 

There are a lot of resources that could really— 

Chairwoman WATERS. Please come and talk, because we are on 

the same track. And I heard about what you are doing in Pontchartrain Park, of course. I am very pleased about organizing effort 

there and SRP and what they are doing there. And I think we are 

going to be able to see the redevelopment, rehabilitation of a whole 

community if we can help get additional funds through the Road 

Home Program, so that people can participate. And I do not know 

what else goes with that, but I think you have another piece that 

may be helpful. 

Now one of the things we have to understand is this, that the 

City, the State, what have you, in acquiring these properties and 

helping people out who cannot rehab them or did not want to come 

back, what have you, you are not trying to make a profit, are you? 

So what you are interested in is facilitating the rehab, the building, 

the ownership—not necessarily losing money, but certainly not 

making money. 

Mr. SATHE. Absolutely. 

Chairwoman WATERS. So you are not trying to sell these properties to make money? 

Mr. SATHE. We do not even get to keep the proceeds. 

Chairwoman WATERS. What happens with the proceeds? 

Mr. SATHE. It is program income to HUD. 

Chairwoman WATERS. Program income to HUD? HUD gets some 

of New Orleans’ money? 

Mr. RAINWATER. Congresswoman, can I please— 

Chairwoman WATERS. Yes. 

Mr. RAINWATER. What happens is it becomes program income, it 

gets put in an account for the City of New Orleans and NORA. 

That is what happens. NORA comes back, says that is what we 

want to do with that money. Once they spend it the second time, 

we are done with it. Whatever happens, happens. Those are the 

HUD rules. I am just— 

Chairwoman WATERS. Wait just a minute, let me make sure that 

I understand this so my staff can get this down. 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. If you sell property and you make some 

money, it goes into another pot of money controlled by HUD? 

Mr. RAINWATER. The State. 

Chairwoman WATERS. The State? 

Mr. RAINWATER. The State; yes, ma’am. 

Chairwoman WATERS. And what do you do with that money? 

Mr. RAINWATER. I hold it until they come up with a project they 

want to spend it on that is HUD-eligible. Once we clear that, then 

I am done with it. If they build another house, for example, and 

then sell that house, so we can create a revolving fund, then they 

keep the money after that. 

31 

But I have to do that review one time, which is program income, 

and then we are done. So yes, ma’am, that money is set aside for 

the City of New Orleans, not for the State of Louisiana. 

Chairwoman WATERS. For the City of New Orleans. 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. That money goes into a pot? 

Mr. RAINWATER. Yes, ma’am. 

Chairwoman WATERS. Is this the pot where Mr. Cao was talking about the City had $200 million or so? Is that the pot he was talking about? 

Mr. RAINWATER. No, ma’am, that is separate. What Congressman Cao was talking about was $411 million of Long-Term Community 

Recovery Program money that the State allocated to the City of 

New Orleans. They obligated $200 million of that to certain 

projects, and they have another $200 million that they have not obligated as of yet. 

Chairwoman WATERS. We will talk with the City officials about 

that. 

But I now want to talk about this pot that you just described and 

I want to make sure that it is being utilized in ways that will do 

several things; not only help new home buyers or whatever you 

want to do, but I am still also keyed and focused on the people who 

have gone through Road Home, who do not feel that they have 

been properly compensated. 

So I want to look at that money as another way to add to possibly the underassessment and maybe we can put this all into some 

kind of package, I do not know. But that is good information. 

Is there anything else you would like to share with me that perhaps we can help you with? 

Mr. SATHE. You know, I think the issue we did not get the 

chance to get to, which I know we are all fighting for on the same 

side, is the elevation issue. I think there have been some rules on 

the elevation program such that it was only available to the Option 

1 families. It makes all the sense in the world to elevate our properties. I think people would think we were crazy not to elevate 

these properties. 

Chairwoman WATERS. You are talking about elevating existing 

properties? 

Mr. SATHE. No, no, the ones, the 4,700 that we are— 

Chairwoman WATERS. The new ones. 

Mr. SATHE. Yes. The FEMA funds that are supporting elevation, 

under some crazy regulation, I will let—you know, you guys know 

more about that than I do—are only available to Option 1 families, 

not available on these Option 2 and 3 properties. And that puts us 

at a real disadvantage in being able to afford to elevate. If we could 

pay for that cost, all of that gets passed on to the end buyer. 

Chairwoman WATERS. Would you please do as we are asking Mr. 

Rainwater to do and perhaps Mr. Tombar, is do your one page, two 

page descriptions, get them to us, talk with us, so we can see what 

we can do. 

And again, remember I am focused on trying to put behind us 

the inequality, the inefficiency of the implementation of the Road 

Home Program. And again, the fair opportunity and ability for people to own the land and to get it at prices that make good sense. 

32 

And in addition to those homeowners who have right of first refusal on that land that is adjacent to them, other New Orleans 

residents who would be interested in acquiring property in ways 

that would be very, very efficient for them. 

Okay, thank you very much. 

Mr. Cleaver. 

Mr. CLEAVER. Thank you, Madam Chairwoman. 

Let me first, before—I have one question, but before we go any 

further, I need to just compliment the people of this community. 

You know, we are sitting here talking about what could have made 

the road home a lot easier. And we talked about one group getting 

almost a billion dollars in consulting fees, a billion dollars. You 

know, you give me a billion dollars, I could set up an office at 

Church’s Fried Chicken and you come back 2 years later and you 

can see some changes. But what I am so fascinated with is that if 

there is any group in the United States with the right to be angry, 

it would be those of you who live here, and yet nobody is screaming— 

[applause] 

Mr. CLEAVER. Nobody is screaming, nobody has Hitler signs with 

mustaches, nobody, you know, is bringing guns in and talking 

about death panels. I mean, you have a right to be angry and yet, 

I wish we could show this tonight on CNN or Fox on how American 

citizens, who have been wronged, still act civil. And I appreciate it. 

[applause] 

Mr. CLEAVER. Now, we approved just under—I cannot even remember how much would have come here, but the stimulus bill 

which provided—should have provided additional dollars to do a 

major project here, the NSP program in particular I think would 

be of some value. But most major cities got a doubling of the 

CDBG, whatever their annual allocation was, the State received 

additional CDBG dollars. I am wondering where the—I mean we 

supported the stabilization program because of the impact it would 

make. So I am wondering what impact has been made through the 

stimulus, the spending of stimulus dollars. 

Mr. SATHE. Congressman Cleaver, one of the great disappointments we share with you as well is that so little of the stimulus 

funds were provided directly for New Orleans. One of the decisions 

that the Administration made was not to have earmarks in the 

stimulus program and, therefore, for whatever reason, they deemed 

the recovery needs not only I think in our district, but the needs 

in Houston and Cedar Rapids, all across the country, as not worthy 

of a separate allocation in the stimulus program. 

The State has gotten its share, as other States have of the stimulus money, of course, but the primary program I think we are 

very interested in is the Neighborhood Stabilization Part 2. The 

City of New Orleans got $1 million in version 1 out of— 

Mr. CLEAVER. You hush. 

Mr. SATHE. —out of a $4 billion pot, actually $1.8 or $1.9 million, I believe, from just the NSP program, out of a $4 billion pot. 

The second round is competitive, it is supposed to be based on 

need as opposed to the scoring criteria. And we have put in an application for $80 million to assist the City of New Orleans with 

neighborhood stabilization. And quite frankly, we would have liked 

33 

to have asked for a lot more, but the scoring criteria were very limited. 

As absurd as it may seem, and there are reasons for this, but to 

be eligible as a district, you either had to score very highly on foreclosure or vacancy. Well, our properties were foreclosed by Katrina, 

so a lot of our districts that are deeply struggling did not score 

highly on the foreclosure and the vacancy data they used was all 

pre-Katrina. 

Mr. CLEAVER. Why were there not protests? The people need to 

be more upset than I thought when I started speaking. I mean we 

passed this mammoth spending bill, which would have been perfect 

for New Orleans and then you tell me that New Orleans did not 

get the money. 

Mr. SATHE. I mean it was not even a category in the bill. 

Mr. CLEAVER. Neighborhood stabilization money, you got $1.5 

million? 

Mr. SATHE. 1.8 million, I think, we can give you the exact— 

Mr. TOMBAR. To be clear— 

Mr. CLEAVER. Yes, I want to get some clarity. 

Mr. TOMBAR. —he was talking about NSP–1. 

Mr. CLEAVER. Yes. 

Mr. TOMBAR. And that was done under the previous Administration and was done on a formulaic basis. NSP–2 under the stimulus 

is a competition that is ongoing. And what he is testifying to is that 

there is an application, as there are many applications across the 

country, that are now into the Department being reviewed, determinations about awards under that NSP–2 dollars will be made in 

coming months, in the next couple of months. 

Mr. CLEAVER. Okay. I am very familiar with it. What I am saying is NSP–1 was approved after Katrina and so that was a wrong 

there. And so special attention should be given to what we are 

going through now. And I do not know what other city—if we need 

to change regulations, I mean I think you are right if they are talking about foreclosures and where you have this technical deal, we 

need to fix that. 

Mr. TOMBAR. Under NSP–2, in fact there was a fix. Secretary 

Donovan was asked to review that issue and made a determination 

that properties that were impacted by disasters and blight caused 

because of a disaster would be eligible, which makes NORA’s application eligible to the Department under NSP–2. So that is a change 

that Secretary Donovan—it was brought to his attention, he made 

a determination and actually increased the flexibility under the 

program so communities like New Orleans— 

Mr. CLEAVER. So the application is in, there is an application 

currently. Do you know what the amount is? 

Mr. SATHE. $78.5 million. 

Mr. CLEAVER. 78 million? 

Mr. SATHE. $78.5 million. 

Mr. CLEAVER. Okay, that is more in line with what I think the 

people around this country would expect. That is probably not 

enough, but that is certainly better than what happened—in NSP– 

1, political decisions were made. I would not be surprised to learn 

that there were cities in Louisiana that received more money than 

New Orleans, even though this city would be larger. We found that 

34 

to be true in Missouri and we eventually did a little study and 

found out that the amount of money that communities received depended in part on the way they voted. And I know people down 

here would not do that, but what I am trying to say is— 

[laughter] 

Mr. CLEAVER. —what I am trying to say is we have to be vigilant 

on NSP–2 because I think it is critically important. I am so pleased 

that we have a new Secretary who was willing to delve into this 

issue and make the changes. 

But I think we need to be concerned about it and involved with 

it and should some additional problems surface, I think you need 

to notify the Chair immediately if it is something that cannot be 

fixed internally with her, some of the regulatory inclusions cannot 

be changed unless we act. I think you need to notify the Chair immediately. 

Thank you. I yield back the balance of my time. 

Chairwoman WATERS. Thank you very much. I will yield to myself for a minute here to say that Mr. Sathe, you talked about the 

need for demolition money, you know you can do demolition within 

NSP? 

Mr. SATHE. Yes. 

Chairwoman WATERS. So I am hopeful that you get it. 

We have gone back and forth on NSP–1 and NSP–2 about formulas and about competition and all of that and we need to continue to work on that to make sure that we can have fairer allocations. The chairman and I are looking at the possibility of even 

more money in NSP, that we would get from the profits that we 

make off of the money we gave to the banks, as they pay it back. 

We have our sights on that money for a national housing trust 

fund and for money to further expand the opportunity for NSP and 

a few other things. So we will be working to make sure we try and 

fix the inequities in how that money is allocated. 

Mr. Green. 

Mr. GREEN. Thank you, Madam Chairwoman. 

I want to talk for just a moment about the Community Reinvestment Act. And I want to talk about the Community Reinvestment 

Act because we spent $30 billion to bail out Bear Stearns, $180 billion to bail out AIG, and had a $700 billion amount of money allocated to buy toxic assets and ended up spending billions of that to 

bail out banks. 

Here is my thought: If we can spend $30 billion on Bear Stearns, 

$180 billion on AIG and billions to bail out banks, it is time for 

banks to help us bail out people. 

[applause] 

Mr. GREEN. And the Community Reinvestment Act may be a vehicle, with some degree of encouragement, that banks may utilize 

to help in this endeavor. 

Madam Chairwoman, it has come to my attention by way of persons that I have had an opportunity to visit with, across the country I might add, in Florida, in Washington, D.C., and in Louisiana 

and other States, that some banks, at a time when CRA is most 

important, some banks are cutting back on their CRA departments. 

Some banks are moving to eliminate CRA departments and have 

35 

one—a—CRA officer at a time when CRA could be of great benefit 

to people. 

So my question is this, can you envision a means by which CRA 

and banks through CRA could be in a position to help with this endeavor, given that it is time for them to start lending money and 

given that you need money and given that the Federal Government 

is doing its share—can you envision a means by which we can use 

the CRA and the banks’ ability to invest in communities to help rehabilitate some of these communities? Mr. Rainwater, if you would, 

please, sir. 

Mr. RAINWATER. Yes, Congressman, I think there is an opportunity there to work through the CRA and the banks. We have approached bankers to try to leverage some of those funds with what 

Ommeed is doing in the Louisiana Redevelopment Authority and 

what we are doing with Community Development Block Grant 

money, trying to push those dollars—you know, what we are trying 

to do is really create a neighborhood stabilization program and we 

do that through—I believe there is a way to do that. 

But part of our challenge has been getting to this point where 

we can have this conversation, you know, at the end, tail-end of the 

Road Home Program and begin to talk about how we work with the 

banks through the Community Reinvestment Act. I think there is 

a way to do that, sir, and I think we can leverage some of those 

dollars and create revolving funds that we have talked about. I 

think there is a way to do that absolutely. 

Mr. GREEN. What I would like for you to do, if you would, is once 

you get your plan together, if you would, let us know what the plan 

entails. I would like to chronicle the history of this as it develops 

because I literally sleep with one eye closed and the other on the 

CRA. I do. Because my fear is that many banks are going to start, 

in their downsizing process, to downsize the very department that 

we really need in this time of crisis. So I sleep with one eye on the 

CRA. And I would ask if you would let us know what this plan is, 

because there may be a means by which we can do something to 

help with this endeavor. 

Next point, and I will be very brief on this one. I was present 

when the chairwoman asked if there would be a one-for-one replacement of properties that are demolished, housing projects that 

would be demolished. And my belief is that we were given an assurance that there would be a one-for-one replacement. Did not 

have to be on a given site, could be scattered, could be across the 

length and breadth of the area, but my belief, Madam Chairwoman, is that we got an affirmative answer that there would be 

one-for-one replacement. 

I went by the St. Bernard project on my way here and I can see 

where construction is taking place there. Obviously I do not have 

the number of projects from just looking, but will we end up at the 

end of the day with as many units as we had before Katrina hit 

New Orleans? And that would be Mr. Tombar, I believe. Will we 

have the same number of units or more than we had before the 

Hurricane hit? 

Mr. TOMBAR. At the St. Bernard site in particular, the answer is 

no. The plan that was put in place on each of the developments— 

and we are talking about the big four public housing redevelopVerDate Nov 24 2008 14:59 Feb 17, 2010 Jkt 053250 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\53250.TXT TERRIE
36 

ments, which I know the chairwoman has a hearing tomorrow to 

focus specifically on that. At that site, the plan that was approved 

by the previous Administration is currently, as you said, being enacted and constructed based upon, does not have one-for-one replacement. There is, however, not far away from the St. Bernard 

development one other of the big four redevelopments, the Lafitte 

redevelopment, that does in fact—not on the footprint itself, but 

within the community, throughout the community, has a plan for 

one-for-one replacement. 

Mr. GREEN. Now if we can do this for this second location that 

you are talking about, that was unnamed, why can we not, notwithstanding the space in St. Bernard, and I can see why you 

might not want to have as much of a concentration—makes sense. 

But why can we not replace those some place else in the area as 

well? For me, it is not as important that they be in a given location 

as much as it is important that we do locate the one-for-one replacement so that they are accessible to people who live in New Orleans. 

Mr. TOMBAR. Part of the challenge is that we inherited some of 

this and are trying to do the best we can to make lemonade out 

of some of the lemons that we were given. And I will tell you that 

you have worked with my boss and know that Secretary Donovan 

is the biggest advocate of affordable housing that this country has. 

I have known him for nearly 20 years and known him as an advocate for affordable housing. He has done great things in his native 

New York as Commissioner there, and is bringing that type of 

same commitment to the communities that he is responsible for 

around the country. 

We here in New Orleans are doing as much as we can using the 

resources that we have available to provide for as much in the way 

of affordable housing as possible. I will tell you though that in the 

hearing tomorrow, and Assistant Secretary Henriquez, as she 

comes to testify before this committee, will speak more intelligently 

about these issues. There is a challenge with replacing the number 

of units that are taken down in a traditional public housing development. 

Quite frankly, here in New Orleans, in both of our native city, 

there are developments that were built in the 1940’s and 1950’s 

that simply are substandard by today’s housing standards—the 

size of the units, the functionality of the units and what-not. And 

if we are to use, as is the challenge in many cities, and New Orleans is not unique in that way, use the same or similar footprint 

and give those families the same type of amenities, the same type 

of living standards that all of us who are not limited by income 

would enjoy, that in fact, it will require dedensitication. That is the 

sad reality, is that you cannot get as many units if you are trying 

to upgrade the type of quality standards that are in those units 

with the families that are there. 

Mr. GREEN. Well, I assure you that degentrification is something 

that I will salute. I think a good many people now understand that 

the density of population that we had in some places was just not 

healthy for having people become all they can and do all that they 

can do and be productive. So I appreciate this, this is why I said 

scattered in other areas. But in this area so that the people who— 

37 

many of whom are in other places who want to come home, but 

their home was a part of the public housing and we want to make 

sure that they get an opportunity. 

Now let me comment on this. I want to agree with you about the 

Secretary. I have great respect for him, I really do. I appreciate 

him very much and I am looking forward to working with him on 

this and many other projects. As you know, he and I will be meeting. I got the consent of the chairwoman to meet with him and I 

will be meeting with him and I look forward to it. He is a good man 

and I think he has a tough job, but we are going to work together. 

Mr. TOMBAR. Great, thank you. 

Mr. GREEN. Madam Chairwoman, I will yield back. 

Chairwoman WATERS. Thank you very much. Yes? 

Mr. TOMBAR. If I could, I would just comment on the banking 

question that came up. I am not an expert in banking, but there 

is one thing that I do know about the situation here that has impacted the recovery of New Orleans. Many folks did have their 

homes insured and the insurance, as is the case when you have a 

mortgage in place, the insurance proceeds are written both in the 

name of the homeowner and of the banking institution. And in 

many cases—this is anecdotal—I am aware that banks encouraged 

families in some cases and in some cases families on their own for 

whatever reason, chose to take the entire insurance proceeds and 

actually pay it towards mortgage balances. What that created was 

a situation where the family no longer had that debt associated 

with the home, but had a home that in fact still needed to be repaired, that resource was now gone. That resource, as we talked 

about, by the Stafford Act, is required to be taken into account 

when making a determination about grants that the family is eligible for under the Road Home Program. And so what happened was, 

because of the choice that the family made, encouraged by a bank 

or otherwise, their grant, overall grant, now was reduced by what 

may have been pretty substantial insurance proceeds that they 

have received. That stands in the way in some cases. 

What I know is that there are families who may be interested 

in now replacing the mortgage that they have paid off, to close the 

gap that the Road Home Program doesn’t quite cover for them— 

replacing that. But because of what has happened in the last 18 

to 20 months in the financial markets, the credit markets have 

tightened and it has made it incredibly difficult for people to even 

get those loans. 

One of the things that my boss and we are doing at the Department is trying to encourage and make flexible the FHA lending 

program so that more families could in fact avail themselves of financing, supported and of course backed by the Federal Government through the Federal Housing Administration. 

But it is indeed a challenge because of the tightening of the credit markets for some of these families who in fact did get insurance 

proceeds, used those insurance proceeds to satisfy a mortgage that 

they have, to actually get the financing that they need now to close 

the gap to finish the construction on their homes. 

Chairwoman WATERS. All right, that is very good information 

and as we look at this whole thing, Mr. Rainwater, would you 

please take that into consideration also. And let me just say that 

38 

the one-for-one is a commitment of Barney Frank, myself, and 

many of the members of our committee. And we know that there 

may be problems on the footprint, but of course, we are not opposed 

to having that one-for-one on scattered sites. And since we have all 

this land in New Orleans, we will just ask the State to give us 

some of that land so that we can make sure we have our one-forone replacement. And guess what, one of the biggest costs of development is land acquisition. We just wrote down the cost of building 

those one-for-one replacements because we are going to take some 

of the State’s land. Okay? 

[applause] 

Chairwoman WATERS. The City’s land. 

Thank you all so very much. You have been wonderfully cooperative, and we have learned an awful lot. We look forward to working 

with you. What we do not want to hear from you is, ‘‘I did not 

know that I should contact you,’’ or ‘‘I was waiting on somebody 

else to tell me.’’ I expect to hear from you. Okay? 

Mr. RAINWATER. Congresswoman, I have Charla’s phone number. 

Chairwoman WATERS. Thank you very much. Thank you all very 

much. 

We are going to call on our second panel. I am very pleased to 

welcome our distinguished second panel. 

I know we took a long time, but oftentimes, the people who have 

the responsibility get away with just making a statement and leaving. And so we had to do a little bit of asking more questions so 

that we could help to get to a point of resolution on some of these 

problems. 

Our first witness will be Mr. Christopher Oney, executive vice 

president, Hammerman & Gainer, Inc. Our second witness will be 

Ms. Allison Plyer, deputy director, Greater New Orleans Nonprofit 

Knowledge Works. Our third witness will be Ms. Dominique DuvalDiop, senior associate, PolicyLink. Our fourth witness will be Ms. 

Davida Finger, clinical professor, Loyola University College of Law, 

New Orleans. Our fifth witness will be Mr. Matthew Colangelo, director, Economic Justice Group, NAACP Legal Defense and Educational Fund. Our number six witness will be Ms. Mildred Franklin, resident, Eighth Ward, New Orleans, Louisiana. We also have 

Ms. Shari Baker, resident Pontchartrain Park, New Orleans, Louisiana. And we have added to that, Ms Mary Croom-Fontenot, executive director, All Congregations Together. 

Now I want to, first of all, thank you for your patience. I know 

that you have been sitting here a long time. But again, let me reiterate that we have heard some of the complaints and we had the 

value of getting some input over a period of time and additionally 

today. And we wanted to make sure that we grilled those who were 

before us who have responsibility for making decisions to create 

change, that we get as much out of them as we could this morning. 

And so again, thank you for your patience. 

We are going to start with our very first witness on our second 

panel, which will be Mr. Christopher—is it Oney? 

Mr. ONEY. ‘‘Oney.’’ 

Chairwoman WATERS. Oney. Mr. Oney, thank you very much. 

Please start. 

39 

STATEMENT OF CHRISTOPHER J. ONEY, EXECUTIVE VICE 

PRESIDENT, HAMMERMAN & GAINER, INC. 

Mr. ONEY. Good afternoon, Representative Waters and subcommittee members. My name is Christopher Oney, and I am the 

executive vice president of Hammerman & Gainer. My responsibilities include— 

Chairwoman WATERS. I do not think they can hear you in the 

back. 

Mr. GREEN. Pull the microphone closer if you would, sir. 

Mr. ONEY. My responsibilities include corporate oversight for the 

Homeowner Assistance Program of Louisiana’s Road Home Program. 

I am pleased to have been extended this opportunity to participate— 

Mr. GREEN. I am getting an indication that some people cannot 

hear. Would you pull it within almost a touching of your lips. 

Mr. ONEY. Can you hear me now? 

Mr. GREEN. Yes, sir, I can hear you now. Good commercial. 

Mr. ONEY. I am pleased to have been extended this opportunity 

to participate in the hearing and describing HGI’s role in the implementation of the Homeowner Assistance Program. 

First, I would like to provide a brief history of Hammerman & 

Gainer. HGI was founded in 1929 and has grown to become the 

largest minority-owned third-party administrator in the country. 

Since inception, we have always worked with a strong commitment 

to customer service and an ability to work with a wide array of 

partners in providing tailored solutions to demanding issues. 

Headquartered in Lutcher, Louisiana, and with 12 office locations across country, HGI provides distinct services across multiple 

disciplines including property/casualty, third-party administration, 

healthcare administration, risk management, regulatory compliance, and emergency management. 

For the past 80 years, HGI has maintained its focus on working 

with customers to develop business solutions that are specific to 

our clients’ requirements and add value through efficiencies, expertise, quality, service, and technology. 

The initial Road Home Program began in June 2006 for a 3-year 

term and included several components: Homeowner Assistance; 

Small Rental; Hazard Mitigation; Piggyback; and IT Management. 

As the original program drew to a close, the State of Louisiana decided to issue separate contracts for each of the original Road 

Home component programs. HGI was awarded a 24-month contract 

to continue and then close out the Homeowner Assistance Program. 

On March 30, 2009, HGI began the transition phase of the 

project. Originally slated for 90 days, the transition was completed 

in less than 30 days with HGI taking full operational control on 

April 20, 2009. 

These operational responsibilities include: resolving grant eligibility for 7660 homeowners who have yet to have a determination; 

reaching a final status for applications; processing additional disbursements based on appeal and grant review; providing compliance and monitoring services; and providing closeout functions for 

the program. 

40 

Since taking operational responsibility, HGI has achieved the following: implemented process-improvement techniques, thereby reducing the time to move applicants through the program; processed 

over 1,500 applications to the closing company and disbursing 

funds to 968 applicants; identified over 1,000 applications requiring 

additional information from applicants to move the file forward to 

closing; eliminated a backlog of approximately 400 appeals awaiting additional disbursement; achieved an error percentage of less 

than 1 percent on a 100 percent State review of all files transmitted for closing; reduced an average call volume per day approximately 20 percent since transition; and identified a need for and 

provided a limited in-person appointment capability that to date 

has resulted in 400 applicants being served. 

While HGI’s operational control has gotten off to a solid start, 

there are still obstacles facing homeowners as they attempt to complete this part of their journey. Approximately 8,000 applicants are 

still awaiting eligibility determination and a potential award of 

funds. For these applicants, the largest single hurdle remains their 

inability to obtain and provide ownership and occupancy documentation for the damaged residence. For many of these applicants, they simply have difficulty in obtaining the legal services required to deal with a variety of inheritance issues. 

Other applicants are experiencing difficulty in addressing a lack 

of sufficient funding to complete either the rehabilitation or reconstruction of their damaged residence and dealing with a dramatic 

increase in insurance premiums. A direct result of these financial 

constraints is that the affected applicants are unable to comply 

with covenant requirements associated with the receipt of a program award. 

To assist applicants in obtaining legal services to resolve inheritance issues and other ownership-related issues, HGI has approval 

from the State to issue a request for a proposal to obtain a legal 

provider that will work directly with low- to moderate-income applicants to attempt to resolve these issues and move them forward 

through the process. The RFP will be released tomorrow, Friday, 

August 21, 2009. 

HGI has designed a due diligence process that allows us to communicate with applicants and identify documents required to move 

them forward through the process. If documentation cannot be obtained, the reasons for not being able to move a file forward are 

documented and shared with the State. This information can better 

help the State understand issues facing applicants and provide 

input into its decision-making process. 

The State has identified that groups of applicants share similar 

challenges as they attempt to move forward through the program. 

HGI has partnered with the State to provide limited outreach activities to assist applicants in meetings these challenges. As an example, HGI recently supported the State with educating and visiting with a group of applicants concerned about home evaluation 

and damage allowances. 

As HGI moves forward with administering the Homeowners Assistance Program, we are keenly aware of the importance of staying focused on assisting the remaining applicant population by 

processing the applicants as quickly, efficiently, and accurately as 

41 

possible. HGI has and will continue to work closely with the State 

of Louisiana to develop solutions that meet the challenges of the 

program. We are committed to providing effective and professional 

assistance to all remaining applicants and properly closing out the 

Homeowner Assistance Program. 

[The prepared statement of Mr. Oney can be found on page 73 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

We are going to move now to Ms. Plyer, is it? Thank you. 

STATEMENT OF ALLISON PLYER, DEPUTY DIRECTOR, 

GREATER NEW ORLEANS NONPROFIT KNOWLEDGE WORKS 

Ms. PLYER. Madam Chairwoman and members of the subcommittee, thank you for the invitation to appear before you this 

afternoon. I am the deputy director of the Greater New Orleans 

Community Data Center, a product of Nonprofit Knowledge Works. 

Operating since 1997, the Data Center analyzes and disseminates 

data to help nonprofit and civic leaders work smarter and more 

strategically. 

The purpose of my testimony today is to provide an overview of 

the status of the Road Home Program, the recovery of greater New 

Orleans, and some of the challenges homeowners have encountered 

as they rebuild. This overview draws largely from the New Orleans 

Index that we publish in collaboration with the Brookings Institution, as well as a large array of other data sources and studies that 

we have been gathering since Katrina. 

I want to preface by saying that the Data Center is a neutral 

data intermediary. Our expertise does not extend to how law is 

written or how programs are designed. but I can present you with 

a solid set of facts about the Road Home program and New Orleans’ recovery. 

According to HUD estimates, the 2005 storms damaged more 

than 515,000 homes in Louisiana, the majority were owner-occupied, and of these, one-third were underinsured. The New Orleans 

metro area sustained the largest losses with 320,000 damaged 

homes. 

Immediately after Katrina, housing costs rose sharply as demand 

exceeded supply. By 2006, fair market rents had risen 39 percent 

and job vacancies soared, particularly in lower-wage occupations. 

Road Home provides grants for the uninsured losses of homeowners to repair their homes or relocate. The program began in 

June 2006, but got off to a slow start. 

Nonetheless, by the third anniversary of Katrina last year, the 

program had disbursed grants to the vast majority of the applicants expected to receive awards. And today, over 120,000 grants, 

averaging $64,000, have been disbursed. 

Road Home recipients include 96,000 in the New Orleans metro 

area, 45,000 of these are in the City of New Orleans itself. And 

fully 90 percent are repairing their homes rather than selling to 

the State. 

By mid-2008, after the Road Home Program had distributed 

thousands of grants in the metro area, covering more than onequarter of all damaged homes, the market began to soften and in 

2009, rents fell for the first time since the storm. 

42 

Four years after Katrina, the City has recovered 77 percent of 

the number of pre-Katrina households, a big jump from mid-2006 

when the Road Home Program began, at which time, less than half 

the population had returned. 

New Orleans families with children have struggled to return. 

When the Road Home Program began, the share of all households 

with children had dropped from 30 percent pre-Katrina to only 18 

percent, but rebounded somewhat to 20 percent by 2007. In 2006, 

the African-American population of the City had decreased dramatically from 67 percent of the total pre-Katrina to 58 percent. 

Three years after Katrina, the African-American population of New 

Orleans has rebounded somewhat to 61 percent of the total. 

I would like to highlight three obstacles encountered by Road 

Home recipients in their attempts to rebuild: gaps in funding; contractor fraud; and inaccurate cost estimates. A PolicyLink study of 

Road Home data concluded that an astounding 81 percent of recipients in New Orleans and 69 percent of those in other parishes who 

planned to rebuild did not have sufficient funds to cover repairs, 

even when taking into account insurance and Road Home grants. 

Because grant awards were based on pre-storm home values rather 

than total repair costs, the average gap between damage estimates 

and rebuilding funds was $36,000 statewide. Gaps were larger in 

lower-income and African-American neighborhoods. For example, in 

the Lower Ninth Ward, the average gap was $75,000, as you mentioned earlier. 

News reports abound about contractor fraud and a study by LSU, 

PolicyLink, and LouisianaRebuilds concluded that 9,000 households 

were affected. In over 40 percent of the cases, the homeowner was 

unable to finish rebuilding. More than half of the incidents were 

reported, but in 41 percent of the cases, no action was taken by authorities. Only 1 percent of victimized homeowners successfully got 

their monies returned. 

Nonprofit groups working with homeowners also report that 

many recipients complain of a high-cost environment as one barrier 

to rebuilding. And although no post-Katrina studies have quantified this problem, extensive nationwide research by HUD indicates that estimating the cost of rehabbing structures is extremely 

difficult. Unforeseen circumstances such as termite damage behind 

walls can drive costs above initial estimates, sometimes by a factor 

of 100 percent, even when estimates are provided by experienced 

professionals. 

Inability to accurately budget for all rebuilding costs, gaps in 

funding, and contractor fraud are three obstacles frequently encountered by Road Home recipients. Nonetheless, the Road Home 

program has had a marked effect on the New Orleans area housing 

market and the ability of homeowners to return. 

Once again, we thank you for the opportunity to appear today. 

I would be pleased to answer any of your questions. 

[The prepared statement of Ms. Plyer can be found on page 79 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

We will now move to Ms. Diop. 

43 

STATEMENT OF DOMINIQUE DUVAL-DIOP, SENIOR ASSOCIATE, 

POLICYLINK 

Ms. DUVAL-DIOP. Thank you and good afternoon, Madam Chairwoman, and members of the subcommittee. My name is Dominique 

Duval-Diop and I am a senior associate with PolicyLink. I want to 

begin by thanking you for your continued vigilance in overseeing 

and monitoring the housing recovery programs of the State of Louisiana that were developed in the wake of the 2005 storms. 

PolicyLink is a national research and action institute working to 

advance social and economic equity, with offices in Oakland, New 

Orleans, New York, and Los Angeles. Since early 2007, PolicyLink 

has invested significant resources in monitoring the development, 

implementation, progress, and impact of Louisiana’s housing recovery programs. Throughout our work, we have partnered with State 

agencies such as the Louisiana Recovery Authority, and we have 

also helped to convene hundreds of nonprofits and faith-based 

groups who are working to recover their communities, both to inform our analyses and also to help in crafting policy recommendations to remedy gaps. 

Four years after Hurricanes Katrina and Rita, we have seen 

much progress but we have also witnessed the struggles of the 

poor, the disabled, and the elderly as they languish, unable to transcend their difficult situations. I highlight in particular the still-relevant findings of our 2008 report entitled, ‘‘A Long Way Home,’’ 

and the insight that we have gained over the years in my following 

answers to your questions regarding the status of the Road Home 

Program and the disparities in the distribution of funds to individuals and neighborhoods. 

You have heard from the State detailed figures about the current 

status of the Road Home Program. But what is important to reiterate is that while 82 percent of those eligible have received funds, 

and low-income families have received over half of these funds, significant challenges still remain for those who have received their 

grants and those who have yet to close. Our research found that 

the majority of homeowners choosing to rebuild did not have sufficient funds to fully recover. And we are repeating conversations 

that have been stated before. But I think it bears repeating. 

Furthermore, programmatic policies have had an impact on the 

equitable distribution of funding to low-income and to certain predominantly African-American neighborhoods in the City of New Orleans. Particularly by not taking into account damage estimates 

and instead using pre-storm home values to calculate grants, the 

Road Home Program grant formula caused major gaps for homeowners in low-income neighborhoods that had low pre-storm values 

that suffered high damage. 

A geographic pattern also emerged in terms of gap with the highest gaps being experienced in the most damaged parishes, including Orleans of course, St. Bernard and Cameron. Across the City 

of New Orleans, we have heard that again certain neighborhoods 

that are largely African American and some low-income have experienced high gaps, including New Orleans East and the Lower 

Ninth Ward. 

And to further illustrate the geographic distribution of gaps, I 

refer you to the map that can be found on page 7 of my testimony. 

44 

It shows a clear connection between high gaps facing residents in 

this area and the number of properties that still remain blighted 

and abandoned. It is a powerful way to show the actual progress 

or lack of progress on the ground and the impact of program policies on neighborhood rebuilding. 

What obstacles or challenges are most frequently encountered by 

homeowners using the program? Again, nonprofit groups that we 

have been working with and we have been discussing over the 

years and meeting with report that many recipients face insufficient rebuilding grants, contractor fraud, a high cost environment, 

inability to access additional credit, and title or succession challenges that delay or deny their additional funding for home repair. 

In the case of contractor fraud, as Allison quoted from our report, 

again, 9,000 people are estimated to have been the victim of fraud 

in the past 3 years. 

So in conclusion, people face huge gaps and there has also been 

a sustained lack of investment in the community infrastructure 

that has traditionally responded to disasters in the past. Recently, 

the State has allocated a modest amount of funding to nonprofits 

who have stepped up and responded after the storms, but $20 million being allocated a couple of months ago is too little too late and 

it is still insufficient vis-a-vis the need. Nonprofit groups have really worked to leverage resources, leverage volunteers, leverage donations, and we need to allocate additional funds to complete this 

community infrastructure. 

Thank you for allowing me to testify. 

Chairwoman WATERS. Thank you very much. 

Ms. Finger? 

STATEMENT OF DAVIDA FINGER, CLINICAL PROFESSOR, NEW 

ORLEANS COLLEGE OF LAW, LOYOLA UNIVERSITY 

Ms. FINGER. Congresswoman Waters and members of the subcommittee, thank you for inviting me to testify today. I am grateful 

for this conversation and hopeful that these hearings will help 

change policies to increase safe and affordable housing for all. 

I want to also thank the incredible advocates from Fair Housing 

Legal Services and community groups whom I talked with to prepare this testimony. Their concerns and the issues their clients face 

are reflected here and I appreciate their input. 

As an attorney with Loyola Law Clinic here in New Orleans 

doing post-disaster housing work, I have given direct assistance to 

many hundreds of Road Home homeowner applicants. My understanding of Road Home is drawn from the experience of my clients, 

regular people just trying to come home. While funds distributed 

are useful, on the whole, this program has contributed to the bundle of post-Katrina challenges, especially for low-income and vulnerable displaced people. 

For example, the ownership rules to qualify for Road Home were 

very burdensome. Families living in their homes for generations 

continue to struggle to pay for and complete title clearing procedures just to qualify. Our system should and can do better. 

You asked me to report on Road Home obstacles. I am going to 

describe specific program obstacles. I am going to get into some details because that is what is important to applicants. 

45 

First obstacle—the design of the grant formula itself. Given property values and the way in which the program’s grant formula utilized the pre-storm value, the program was discriminatory for African-American homeowners. If the Bobby Jindal Administration 

cannot fix that on its own, we really need your help. Pre-storm 

value should be taken out of the calculation, leaving the correct 

cost of damage as the basis of grants. 

Obstacles two and three—pre-storm value and estimated cost of 

damage. The program chooses the lower of these two calculations 

to find the grant. Both measures are problematic. Incorrect determinations about both go uncorrected on appeal. Low-income homeowners could not afford the independent appraisals to increase prestorm value. Low-income homeowners could not afford the structural engineer’s report to increase estimated cost of damage. On 

pre-storm value, even with an independent appraisal, the highest 

home value is not always used. For example, when a homeowner 

supplies a Louisiana certified appraisal and it comes back with a 

value of 20 percent or greater than the Road Home’s incorrect 

value, the program will not utilize the higher value. We have heard 

that this is because of a HUD rule. There is still the opportunity 

to change this and, Mr. Tombar, we request your assistance on this 

specifically. The highest credible value of a home should always be 

utilized. Actual repair costs should be the measure for determining 

cost of damage. 

Problem four—the additional compensation grants for low-income people. This grant of up to $50,000 was available to homeowners 

who income qualified and who had a gap in their assistance. So not 

all low-income homeowners will qualify. They had to have a gap in 

assistance under the problematic program rules I just described. 

Low-income eligibility as determined by Road Home is a serious 

hurdle. The standard is governed by rules that have changed causing confusion and errors. Most notably, rather than considering a 

household’s actual annual income, the program has used one elevated pay period and attributed that spike in periodic income as 

annualized income. This wrongly cuts off low-income homeowners. 

Annualized income should be utilized as the benchmark. 

Obstacles five and six—access to information and appeals. It has 

been very challenging to get individual file information and program policy information. Without this information, meaningful appeals could not occur. Appeals procedures themselves are broken. 

Basic best practices are missing. ICF reviewed its own decisions as 

the first tier of appeal. The second tier is reviewed by an unknown 

State panel. At no point does the appeals process include a hearing 

where the applicant can contest errors. There are no meaningful 

appeal guidelines to help applicants, nor are there standards that 

explain how documentation is evaluated and weighted in decisionmaking. All applicants should be given their full files with an explanation of the grant calculation. Because of serious systemic 

flaws, the appeals process should be reopened and independent review panels should make decisions. 

Recapture of funds—we heard some new information today about 

recapture of funds. The bottom line is that as a basic first step, all 

recapture rules must be well publicized. They currently are not. No 

fund recapture should ensue without due process hearings, hardVerDate Nov 24 2008 14:59 Feb 17, 2010 Jkt 053250 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 K:\DOCS\53250.TXT TERRIE
46 

ship exceptions, waivers and, most importantly, opportunities for 

full leniency. 

I just want to add here that people’s experience with FEMA’s 

recoupment of post-hurricane grants was unbelievably difficult. It 

ruined lives. People who have lived through botched evacuations, 

the shelters, FEMA, and everything else cannot now endure the additional toll of Road Home’s collection efforts, especially after those 

funds were used to rebuild homes. 

Turning to unspent Road Home funds, let me emphasize that 

there are no surplus funds to divert. While other important needs 

remain, including medical and infrastructure, these funds must be 

spent on unmet housing needs. For example, these funds should be 

used to correct all the program mistakes I just described, support 

the nonprofit community that is assisting Road Home applicants, 

and expand the additional compensation grants. 

I am glad to hear that this is in the works, but the devil is in 

the details, and we need to fix already existing problems. I have 

just a few more. 

Chairwoman WATERS. I’m going to have to move on. Ms. 

Fontenot, I understand you have to leave right away. I am sorry, 

because we have so many, we are going to have to move and just 

kind of keep it to 5 minutes, but Ms. Fontenot is next. And we will 

exchange some information through the questioning process. 

STATEMENT OF MARY CROOM-FONTENOT, EXECUTIVE 

DIRECTOR, ALL CONGREGATIONS TOGETHER 

Ms. CROOM-FONTENOT. Thank you so much for your consideration. Madam Chairwoman and to the panel and your committee, 

we extend our sincere thanks to you for all that you are doing. I 

was asked somewhat late today to prepare a statement, so please 

bear with me. 

I would like to share with you all just a little information as to 

who we are. We are All Congregations Together, we are faith-based 

organizers who have worked in and across this City for over the 

last 19 years. 

We believe firmly in the right for every citizen to return should 

they choose to do so. And not only to return, but to be made whole, 

to be restored in this process, in this rebuilding process. We are the 

organization, the only organization that organized to march on the 

State Capitol in reference to the ICF and the Road Home process 

under a banner of ‘‘big contracts, no benchmarks’’. So Mr. Rainwater and those who came before him know our organization and 

know our work well. 

We also worked with Davida Finger and the Katrina Clinic 

around stopping a deadline which the Road Home worked to impose just last year, which would have excluded an estimated 14,000 

citizens from their right of appeal. So we have been monitoring this 

process, this Road Home process, for quite awhile. 

In addition, I am not only the director of ACT, but I am a survivor, and I am also an applicant who is undergoing the appeals 

process. And I can assure you, it is as insane as everyone has said 

here. I am extremely concerned, because being somewhat a healthy 

person, I am concerned about the very elderly and we are also concerned, as it was brought up, about those with language barriers. 

47 

But let me bring up one more concern or one more area for concern, around literacy. We know that we had quite a substantial 

amount of our population who had challenges around literacy. We 

have learned in our intake process and serving that this too created barriers, the literacy piece, to citizens being able to successfully complete the application process. And so we are concerned 

about that as well. 

I have some comments in reference to the guests who were here 

previously, in reference to HUD. We are working presently on stopping the demolition of 77 units which are located at the Florida 

housing site. Why? Because we have gone in, we have inspected 

that site with professional eyes that know what they are looking 

at. We see it as HUD being really fiscally irresponsible. There is 

nothing wrong with that site when last we inspected it. So we have 

been working to stop the demolition of it in hopes that we would 

demonstrate at a time when our City and our State is so financially 

strapped, that we are as a city and a state being fiscally responsible. And I have petitioned Ms. Finger to assist me with that, the 

Katrina Clinic. 

The other comment I would like to make is in reference to 

NORA, who was here earlier. And I really do wish that they would 

have stayed. And I encourage that at the next session that they do 

stay to hear our side of it. In reference to NORA, NORA is working 

and building on a process that was created by ACT in the 1980’s 

which it was called the expropriation process which called for any 

citizen who was living next door to a blighted or abandoned property to have first rights to that property, simply because they had 

been impacted by that property being there, blight, rodents, their 

lives had been impacted. And so in an effort to restore them, we 

worked to create what was called the expropriation process. They 

are now calling it the Lot Next Door. Our experience has been and 

is, and we have walked in, for lack of a better word, as secret shoppers, to explore that process. It is not working for the citizens of 

New Orleans. We are finding that developers have a much easier 

time acquiring property than the citizens who have been impacted 

do. 

Is my time up? 

Chairwoman WATERS. One minute. 

Ms. CROOM-FONTENOT. Okay. In reference to the Road Home, the 

appeals process, we urge you to investigate the red ribbon file, 

which is where they send your appeals process after months of 

them not having contacted us. They put your file into the red ribbon file. And that file says that all of a sudden, you are at peace, 

and have no opposition to your grant process. 

That was my experience; my file was sent to the red ribbon file 

after having written them several times and not having heard from 

them. 

In closing, I ask that you work with us to ensure that every cit- izen is made whole with the $150,000 grant. 

Thank you so much. 

Chairwoman WATERS. Thank you so very much. I thank you for 

accommodating us on short notice. It was based on the information 

you shared with us this morning. 

Mr. Colangelo. 

48 

STATEMENT OF MATTHEW COLANGELO, DIRECTOR, ECONOMIC JUSTICE GROUP, NAACP LEGAL DEFENSE AND EDUCATIONAL FUND 

Mr. COLANGELO. Thank you very much, Chairwoman Waters and 

members of the subcommittee. I appreciate the opportunity to testify today on behalf of the NAACP Legal Defense and Educational 

Fund. I am an attorney and the director of the Economic Justice 

Group at LDF. 

There was something striking to me about the testimony from 

your first group of witnesses on your first panel. They mentioned 

a number of Federal laws that guide their judgment as they implement and decide what to do with the $13.41 billion, the Federal 

funds that Congress appropriated to Louisiana. They mentioned 

the 2005 and 2006 appropriations statutes, they mentioned the 

2007 special supplemental law for additional Road Home funds, 

they mentioned the Stafford Act, they mentioned a number of other 

Acts. But not one of those witnesses mentioned the Civil Rights Act 

of 1968. And I found that omission striking. Unfortunately, I also 

found it unsurprising. 

The Civil Rights Act obviously includes as one part of it, Title 8, 

which prohibits discrimination in housing. Title 8 prohibits not 

only discrimination that is intentional, but also actions that have 

the effect of excluding people from housing on the basis of their 

race. 

The Fair Housing Act also requires HUD and the Louisiana Recovery Authority to take steps that affirmatively promote fair housing, which is much more than a mere obligation not to actively discriminate. It requires active steps to break down barriers and 

eliminate disparities that exist in housing policies. 

As has been mentioned, the Road Home Program, that $11 billion or nearly $11 billion, is the single largest housing recovery program in American history. Sadly for African-American families, the 

reality of the Road Home Program has fallen far short of its promise due to a fundamental flaw in the program design. HUD and the 

LRA created and approved and are now implementing a recovery 

program that links housing assistance to the depressed values of 

black families’ pre-storm, segregated housing. 

Under the terms of the program, as has been mentioned during 

this hearing today, rebuilding grants are calculated based on the 

lower of two figures—the pre-storm market value of the home or 

the cost of storm damage to the home. Therefore, by definition, 

homeowners either receive enough assistance to rebuild or they do 

not receive enough assistance to rebuild. And unfortunately, this 

dichotomy between enough and not enough falls disproportionately 

and most heavily on African-American New Orleanians. This is because, as, Congressman Green, you so eloquently put on the record 

earlier today, it is undeniable that homes of similar quality, size, 

and construction happen to be valued less if they are located in a 

black neighborhood than if they are located in a white neighborhood. As a result, Road Home grants for African-American families 

are far more likely to be based on the depressed pre-storm value 

of their homes rather than on their cost of damage. And this leaves 

those families disproportionately burdened in their ability to return 

home and rebuild and restore their communities. 

49 

This discriminatory disparity is the subject of a class action lawsuit that my office, the Legal Defense Fund, has filed on behalf of 

five African-American homeowners and two nonprofit housing organizations. We represent a class, a proposed class, of nearly 20,000 

African Americans who are struggling to return to their homes in 

New Orleans because their Road Home grant awards were based 

upon the pre-storm value of their homes. Our lawsuit alleges that 

this disparity violates the Fair Housing Act of 1968 and the Housing and Community Development Act of 1974. 

The math is clear and the outcome is obvious. African-American 

families in New Orleans are being short-changed. But rather than 

address this unfairness and treat all New Orleans homeowners 

equally, both HUD and the LRA have opposed making any changes 

to the Road Home Program. 

HUD has argued that it lacks the authority to impose fair housing conditions on CDBG recipients like the LRA after Federal 

funds have been disbursed. This position is contrary to the legal 

duty that Congress has imposed on HUD to affirmatively promote 

fair housing in its programs and to make sure that its grantees do 

not violate Civil Rights laws. 

The LRA has argued astonishingly that the Road Home Program 

is actually not even covered by the Fair Housing Act. This argument we think is frivolous and in enacting the appropriation statutes that funded the disaster recovery grant program, Congress, to 

its credit, refused to allow the waiver of fair housing and nondiscrimination requirements. 

Although some of these issues are now before the United States 

District Court in Washington, D.C., this subcommittee has its own 

oversight role over Federal fair housing programs. Congress devoted substantial funds to restoring New Orleans and other stormdamaged communities and now Congress must call on HUD and 

the LRA to distribute those funds fairly and in compliance with 

civil rights mandates. 

Regardless of what has happened in the past, the Obama Administration and the 111th Congress have a responsibility to ensure 

that our Nation’s largest housing recovery program does not go 

down in history as a government-sponsored act of housing discrimination. 

I thank the subcommittee for this opportunity to testify and I 

look forward to your questions. 

[The prepared statement of Mr. Colangelo can be found on page 

66 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Ms. Baker. 

STATEMENT OF SHARI BAKER, ON BEHALF OF LILLIE BAKER, 

RESIDENT, PONTCHARTRAIN PARK, NEW ORLEANS, LOUISIANA 

Ms. BAKER. Good afternoon. Madam Chairwoman, and the distinguished members of the subcommittee, I am indeed thankful and 

grateful for the invitation and opportunity to be able to speak before you today on behalf of my mother, Lillie Baker. I am just going 

to read a letter that she prepared for you: 

50 

‘‘My experience with the Road Home Program has been tedious 

at best. After Katrina, my husband, who was 82 at the time, and 

I, 77, were devastated. Everything we worked for was gone in a 

matter of minutes. We had lost everything. We had 10 feet of water 

in our home. We both were retired from the Plaquemine Parish 

School system after 40-plus years combined. He was a principal 

and I was a teacher at Phoenix High School. We had nine children, 

six boys, three girls, one is deceased. All memories were lost. We 

had nothing but the clothes on our back and the car we were riding 

in. 

‘‘One cannot understand the anger and despair that you feel 

when the media portrays you as a refugee in a country that you 

were born and raised in and paid taxes in for 65-plus years, and 

to be abandoned during the greatest natural disaster of all times. 

‘‘We filled out the application for the Road Home Program in August of 2006. This gave my husband and me something to hold 

onto. When you lose everything at one time and do not know where 

or how to start over, it is scary, especially for an 82- and 77-yearold on fixed incomes, and living with someone else in a city that 

is not your own. ‘‘We received funds from FEMA in the amount of $23,370.41 and 

$9,269.63 from Allstate Insurance. Unfortunately, we did not have 

flood insurance. Our expenses seemed greater now and we did not 

have anything. The funds we acquired were basically used for living expenses, since there was nothing to go back to. 

‘‘We received communication from the Road Home via letter 

dated December 22, 2006, stating that we were eligible for benefits. 

We chose Option 1 because we wanted to go back to what we had 

spent over half our lives building. ‘‘We received $54,364.10 to rebuild our home. We tried to repair 

our home, but we were taken advantage of by so many contractors. 

I had to pay for my electrical work 3 times and it is still not right. 

Some of the outlets are not functioning. I got the Attorney General’s office involved, but that did not do any good. My plumbing 

is the same way. Some of the pipes leak. My shower doors fell off 

the tracks. My air conditioning was not done correctly. My duct 

work, from what I understand, was not changed. My lights come 

on when they want to sometimes. 

‘‘It is a shame that people are so driven by money that they 

would take advantage of people at such a low point in their lives. 

‘‘We appealed the amount of money that was given to us, but to 

no avail. You can call the office every 5 minutes and speak to 5 different people and everybody is going to tell you something different. We also applied for the elevation grant and were told I had 

to open succession, which was done, and I still have not heard anything. I am being told it is in the legal department. 

‘‘I thought that the Road Home was going to help us regain some 

semblance of normalcy back into our lives, but it only created more 

stress at a time when stress was not what we needed. I am glad 

that my husband did live to see us get back into our home, even 

though it is still not right. 

‘‘Sincerely, Lillie Baker.’’ 

Just to touch on, if I may, comments that Mr. Rainwater said as 

far as the assessment of the property and how the money is being 

51 

allocated. Because I have heard, and they said her estimated prestorm value was $87,171, and the estimated damage to the home 

was $209,671.20. But she was only given $54,000. So if you do the 

math, there is no way, if it is $209,000 worth of damage, that 

$54,000 is going to correct the problem. 

And to what Mr. Sathe with NORA said, he made a comment 

about the soft second program being a way for people who are not 

next door to acquire some of the property, but the soft second mortgages are only given to people when they are buying a home that 

is already built, constructed, and has passed Code. So I do not 

know how he can say the soft second mortgages would be used to 

acquire some of these properties that are available now. 

[The prepared statement of Ms. Lillie Baker can be found on 

page 64 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Ms. Franklin. 

STATEMENT OF MILDRED FRANKLIN, RESIDENT, 

PONTCHARTRAIN PARK, NEW ORLEANS, LOUISIANA 

Ms. FRANKLIN. Good afternoon, everyone. 

Chairwoman WATERS. Good afternoon. 

Ms. FRANKLIN. I am pleased to say as of today, my primary home 

is completed. I am living now in my primary home from Katrina 

and Rita that had 7 feet of water. I am in the home now as of yesterday. 

My primary home that was destroyed due to Katrina and Rita, 

the contractor did me a fraudulent situation for 7 months. But a 

contractor in 7 weeks completed the home where we could live in 

it. So thank you, the Lord, and you all for allowing Road Home to 

really work with me. 

But I had a problem with a donation that my father gave me due 

to my mother’s death. This is where the problem is now and I will 

just give you the meat of this because my home is up and I cannot 

complain because I waited 2 years to even get into this primary 

home. It is not all done, but I am able to live in it now. 

Now the home that I am really concerned about is my donated 

home that my father gave me in 2007. I applied for the Road to 

Home for the small rental and after applying for the small rental, 

I could not really begin the work until the succession was done. I 

have done the succession and as of now, I am encountering problems rebuilding the family home that my father donated to me on 

Delachaise Street in the Garden District of New Orleans. He was 

94 years old and he donated the property to my husband and I. I 

am waiting for the small rental program. 

I applied for the small rental program in 2007. I was initially 

told by the bank that I could not borrow the money, so therefore, 

I have to rely on the Road to Home to give me the money. I was 

denied the loan because of our income, we are on a fixed income. 

If I had borrowed the money, I would have had to pay the money 

back, so I am glad I did not get the loan, in effect. 

I qualified for the first clearing of the title, when I removed my 

deceased mother’s name from the title and I had the succession 

done and it was fully cleared. But I was rejected because they 

claimed the succession was not clear, so I did it over. And they 

52 

have all my paperwork, all my material, and I am just waiting for 

my award to be granted. 

The money did not arrive and they said they do not know exactly 

when I will get it. But I would call constantly and I completed the 

succession in December of 2008, I sent the documents to Road to 

Home but I never heard from them. In January of 2009, I received 

a Code Enforcement citation for Delachaise Street. The Code Enforcement levied a fine of $100 to $500 a day if I did not get the 

repairs done to the home. We were cited several times and it required me to fix the house just to have enough to show that I was 

trying to improve the home, with the money that I had on hand. 

My lawyer and I did something to write off the Code Enforcement 

officials that we were trying to rebuild the home on Delachaise 

which was donated to me. 

I provided many things that I could use to defend myself in the 

hearing. We finally reached the hearing panel and they were sympathetic with my rebuilding delay but we will still have to reach 

the hearing that they could show me that I was sitting and waiting 

for them to do something. So there were 20 to 30 other people in 

the neighborhood waiting for the Code Enforcement, like we were 

just a group of cattle sitting around and waiting doing whatever for 

hours just trying to get them to do our paperwork and everything. 

I paid another contractor to do some small repairs that they were 

asking me to do, but he took my money and he did not complete 

the work. Finally, the Broadmoor Civic Association donated paint 

and labor. We were able to come in and complete and went back 

for the hearing in May of 2009. 

On our way out the door, the Code Enforcement, I heard the 

panel warn us the next time you may be cited for having a vacant 

unit. However, we will not have the money to rebuild the interior 

of the house without a grant from the Road to Home. I last spoke 

to the Road to Home Program on August 6, 2009. A worker named 

Diane told me that the State has not released the money and it 

should be released between September and October of 2009. I sincerely hope that the money is released well before the Code Enforcement begins their sweep on unoccupied property. 

I would like for these improvements to be done to Road to Home 

for applicants who are applying for help through the Road to 

Home. 

In order for the Road to Home to be improved, they need more 

local administrators, so the people in New Orleans can work closely 

with their caseworkers who are handling the application. 

I would like for them to write us more and update our applications. Unless we call or we are going to sit on hold for a specific 

period of time, we will not know what is going on with our application. 

The Road to Home Small Rental Program needs to finish its 

work, do its best in the interest of the applicants, and let the renters of New Orleans return. Waiting on the funds is holding the people back from being able to rent their homes. 

[The prepared statement of Ms. Franklin can be found on page 

70 of the appendix.] 

Chairwoman WATERS. Thank you so very much, Ms. Franklin. I 

am going to yield to myself a few minutes here to engage our panVerDate Nov 24 2008 14:59 Feb 17, 2010 Jkt 053250 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 K:\DOCS\53250.TXT TERRIE
53 

elists a bit. Then I am going to turn it over to Mr. Cleaver and we 

are going to wrap it up after Mr. Green. 

Let me just say very quickly, if I may, that your testimony historically has been wonderful and you have confirmed everything 

that we thought we had learned about what is wrong with the implementation of the Road Home Program, and more, that we will 

act upon. What we have to do is act very quickly, because we cannot allow the Road Home Program to close out, as they are poised 

to do, with all of these issues still before us. 

Mr. Oney, I just wanted to—first of all, let me say I recognize 

that your company has taken over the implementation toward the 

end of the so-called Road Home Program and that a lot of the problems you are certainly not responsible for. I do not know what your 

contract is all about and exactly what it says, but I would expect 

that when you run into certain kinds of problems that are created 

for the citizens of the city that just does not make good sense in 

the way it is indicated they should be dealt with in the Road Home 

program, that you would raise this up as a problem. 

I see, based on your testimony, that you have a lot of people who 

need legal assistance, legal assistance in documenting the ownership of the property, is that right? 

Mr. ONEY. Yes, ma’am. 

Chairwoman WATERS. And I see that you have taken some steps 

to help with that. But this is a very difficult process, is that right? 

Mr. ONEY. Yes, ma’am. 

Chairwoman WATERS. And you have not really been able to provide that much help in making sure that people who have been living in property oftentimes for many years get the documentation 

that they need in order to get the help from Road Home; is that 

right? 

Mr. ONEY. Yes, ma’am. 

Chairwoman WATERS. All right, let me just say this to you. It 

was suggested to me some time ago that instead of denying people 

because of the lack of documentation on property that has been 

passed down perhaps, that perhaps we should be suggesting that 

there be a fund set aside and perhaps it can be done with some 

of the overage that we have or some of the $3 billion or $2 billion 

or whatever it is that is still left. Set aside a fund to protect 

against lawsuits that would be in effect for a number of years, so 

that you can move forward with assistance to those who need documentation. That you perhaps could set up some kind of criteria— 

if you have been living in a home for a certain period of time and 

other things exist, I do not know what they all are, that they be 

covered and that everybody be covered by this fund in case somebody comes along 10 years from now or 5 years from now to say 

that is my house, that is really not that person’s house. So that we 

can expedite. If the fund was set aside to cover the liability, then 

that should take care of helping the people rather than not allowing them to be helped because they do not have the clear title or 

documentation. 

Would you respond to that? 

Mr. ONEY. I think that that is a wonderful idea and we would 

be happy to administer it at the direction of— 

54 

Chairwoman WATERS. You have attorneys who are involved in 

your firm? 

Mr. ONEY. Well, we are issuing an RFP for legal services and it 

will be released tomorrow, so New Orleans and Louisiana legal 

firms will be able to respond and we will end up contracting with 

one of those firms. 

Chairwoman WATERS. So you do have some money for legal services? 

Mr. ONEY. Yes. 

Chairwoman WATERS. Would you factor into your RFP—if it has 

been released already, whether you can do an addendum or another one or however you do it—that the recovery program, the 

Road Home Program, set aside some money to guarantee against— 

to deal with lawsuits or whatever the liability may be, if in fact you 

move forward with assisting residents who fit a certain criteria. 

And that criteria should make good sense. If they have been living 

in this home for a certain period of time, if they have been paying 

the bills, they have been paying taxes or electric bills, what-haveyou, set up a criteria, put the fund there to protect against the lawsuits, let the fund be responsible for the next 5 years, 6 years, 7 

years, I do not know how long. And if people have not made a claim 

on that property in that length of time, it is over. 

Can we do something like that? 

Mr. ONEY. It is not currently part of our contract. We would be 

happy to do it at the direction of— 

Chairwoman WATERS. Would you look at drawing something up 

and seeing if we cannot help get that into the implementation of 

the Road Home Program? 

Mr. ONEY. Absolutely. 

Chairwoman WATERS. I thank you very much. 

Let me just say, I thought I made myself some notes here, I am 

so bad at scribbling, I have the recommendations both I think from 

PolicyLink where you have documented and confirmed what we are 

hearing about contractor fraud, not enough money to rebuild, credit 

issues and foreclosures. Credit issues and foreclosures, we need to 

take a look at that. Increased financial vulnerability and all of the 

other things that you have identified here. You also talked about 

title issues, is that right? 

Ms. DUVAL-DIOP. Right, yes. 

Chairwoman WATERS. You heard what I am trying to suggest 

here. Does that make good sense to you? 

Ms. DUVAL-DIOP. Legal issues are not my forte. I would defer 

that to Davida Finger. 

Chairwoman WATERS. Okay, that’s okay. That’s all right. 

The contractor fraud issue has not been dealt with. That is part 

of the criminal justice system, we ought to bring some people to the 

bar of justice on this stuff. We need to talk with the justice system 

about what we are going to do about contractor fraud, just like Ms. 

Franklin was talking about. You know, people have been ripped off 

tremendously here and I do not hear anybody saying we indicted, 

we arrested, we put somebody out of business and we are going to 

take a strong look at what we can do. 

55 

Mr. Green is a tough lawyer, he is tough. You hear him on these 

yes or no scenarios. And so I am going to ask you to particularly 

pay attention to that. 

The recommendations that you made, Ms. Finger, are very, very 

well written and very well put in a position where we can move forward on some of that. You took each one of your complaints about 

the Road Home Program and you clearly defined, similar to what 

was done with PolicyLink, what your recommendations are and 

what we should do and we will definitely take that back to Washington, the staff has all of that. We will act and move on that, some 

of which you identified which we did not have an opportunity to 

talk about today. 

You stopped me dead in my tracks, Mr. Colangelo, about the civil 

rights laws. You are absolutely correct and if what you have, the 

lawsuit, what you need is—not what you need, you are doing what 

you need to do. I do not know if this reaches class action status 

but I do know this, that class action possibilities were undermined 

in the previous Administration and we have not done anything 

about it. It just dawned on me that our Judiciary Committee under 

Mr. Conyers should revisit this so that we can get rid of the obstacles to filing class actions. And aside from that, if you will be in 

contact with us and let us know legally whether we can file an 

amicus curiae in support. I will be willing to do it and I would be 

willing to go to a tri-caucus that includes the Black Caucus, the 

Asian Caucus, the Latino Caucus, to see if we can file an amicus 

curiae in support of the lawsuit. If that makes good sense, you let 

me know. Okay? 

Mr. COLANGELO. Absolutely, and thank you, Madam Chairwoman. 

Chairwoman WATERS. You are absolutely welcome. 

Ms. Baker, thank you so very much for being here on behalf of 

your mother. One of the things we discovered as we did our listening session over in Pontchartrain Park area was that we have so 

many people who are trying to help their mothers and fathers, who 

are aged, who are being taken advantage of, who cannot traverse 

this terribly cumbersome system that has been placed before them. 

We recognize that as a problem and we definitely will do everything that we can to try and talk about the plight of seniors in this 

whole mess. Seniors have lost a lot and I am very disturbed by it 

and we will do everything that we can to pay attention. 

I do not want to lose the bit on renters either that you brought 

to our attention. Someone said just before I came in that nothing 

has been done for renters. So we have to take a look at that and 

see what can be done with existing funds or funds that are unexpended or responsibilities added to your contract for the Road 

Home Program, or additional monies that may have to be appropriated, to deal with that. We have situations that have been defined for us where people got some Road Home money and because 

they were displaced, they had nothing, they had to have some place 

to live and so they are using that money in order to just rent a 

place, have some place to live. They do not have that money to put 

toward rehabilitation or rehab of their home, which was not 

enough to begin with. And we have to look at that and see what 

56 

we can do because they fall in that renter category now, or people 

who need some assistance. 

So based on your testimony, I have heard you loud and clearly 

and I have the testimony that you have made. I am committed to 

acting on it, as my colleagues who are here, and you can count on 

us to do it. 

And I thank you so very much. I must give time to Mr. Cleaver 

at this point. 

Mr. CLEAVER. Thank you, Madam Chairwoman. 

Let me apologize. I had to step out and then ended up in the 

hallway engaged in another listening session, unscheduled, with 

people who came up to me and raised a number of issues and some 

of it was with some bone-chilling emotion. 

Professor Finger, I am curious about your testimony because it 

points out a part of the problems here, that the Road Home Program would not accept certified Louisiana appraisals if the appraisal was higher than 20 percent of the Road Home, even if the 

Road Home appraisal was wrong. Am I right about that? 

Ms. FINGER. Generally yes, that is my understanding and that is 

part of the convoluted appeal process and ever-changing rules on 

how home valuation was made and substantive problems with how 

the pre-storm value itself was calculated. In other words, if there 

was a meaningful appeals process that could have cured an error 

in an erroneous pre-storm value, there could have been some remedy there, but there was not. The homeowner’s last resort, if they 

learned of it, was to pay for their own independent Louisiana certified appraisal. And if that came back with that higher value— 

Mr. CLEAVER. Twenty percent. 

Ms. FINGER. Twenty percent or more is our best understanding. 

Then it simply was not counted. 

Notably, low-income homeowners who could not afford to pay for 

their own Louisiana certified appraisal did not even have that option even if they were lucky enough to learn about it. 

Mr. CLEAVER. Let us go to the appeals process because that is— 

are you a football fan? 

Ms. FINGER. I can be today. 

Mr. CLEAVER. I mean, you cheer for the Saints, I am sure. 

Ms. FINGER. Sure. 

Mr. CLEAVER. We can still have a relationship even though I 

cheer for the Chiefs and our team is worse. 

But one of the—I am just curious whether or not as a fan of the 

Saints, you would support giving Clark Hunt who owns the Chiefs 

permission to appeal bad decisions or ask for a replay if the Chiefs 

are playing the Saints. But the only person who could file the appeal against the Chiefs would be the Chiefs’ owner Lamar Hunt? 

Ms. FINGER. I see where you are going and in an analogy to ICF, 

I would not think that would be a very equitable appeals process. 

Mr. CLEAVER. For those of you who may not have caught on with 

the football analogy, it appears as if some of the companies would 

have—are the only ones who can participate in the appeals process. 

Ms. FINGER. Right. In the world of best practices, the decisionmaker should not be reviewing its own decision. 

Mr. CLEAVER. The contractor— 

57 

Ms. FINGER. Right. Which is what happened and sadly, the decision-maker seems to have been paid for the bad decision and then 

paid again to review it. 

And, you know, in any system of appeals where we are looking 

at best practices, where we are looking at equitable results, where 

we are looking at trying to create a system that has uniform and 

understandable standards, that just does not make sense. 

Mr. CLEAVER. Well, is there a written, a developed appeals process? I mean does anybody in here know, has anyone seen— 

Ms. FINGER. I have seen many rules about appeals and like the 

other rules in this program, they have changed. As Mr. Rainwater 

described earlier this morning, there was initially something called 

dispute resolution that was very confusing for applicants and advocates. We thought that applications were going into appeal, but 

they were not. They went into some kind of dispute system. I truly 

cannot explain that. My understanding of Road Home is based on 

my experience going through this with clients and on behalf of clients, and it has been very difficult to understand. 

Mr. CLEAVER. Sir, are you holding up an appeal? 

[document displayed by a member of the audience] 

Mr. CLEAVER. I do not want to get in trouble with the chairwoman and nobody else should want to get in trouble with her either. But I am very much interested in this because I do not understand the appeals process. 

Mr. HOLMES. That is my name, my address, my phone number. 

That is the appeal process. 

Mr. CLEAVER. Just state your name for the record, but I— 

Mr. HOLMES. My name is David J. Holmes, and I am a resident 

of Jefferson Parish. 

Mr. CLEAVER. Thank you. The problem I have is I am very much 

interested in that but the rules— 

Mr. HOLMES. I understand. I did not know anything about this 

meeting. Someone called me from Nashville, Tennessee, to tell me. 

Mr. CLEAVER. I will visit with you as soon as this is over, because there are a lot of people who wanted to talk, but we are restricted to the panel. 

And maybe looking at whatever he has will clarify. I just do not 

understand what the appeal process is. 

Ms. FINGER. It has been a convoluted process and one that is 

very difficult to understand. Applicants believed at many points in 

the program that they were engaged in appeals only to find out 

later that they were not. 

The substantive problems I described existed. Under the program’s own rules, applicants should have had the opportunity to 

appeal before and after closing. People were under great financial 

pressure to close on a grant, any grant, even when they intended 

to appeal it. At that closing, they checked off, amongst the many 

forms they filled out, a box that said, ‘‘Intend to appeal.’’ Many applicants thought that they perfected their appeal by checking that 

box, only to later learn that an appeal had never been filed. That 

amongst the many papers they signed was a form that says, ‘‘I will 

file yet another written appeal within 90 days of this closing.’’ So 

many applicants either did not know about that or did not underVerDate Nov 24 2008 14:59 Feb 17, 2010 Jkt 053250 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 K:\DOCS\53250.TXT TERRIE
58 

stand that or were not able to do it within that time period, and 

were cut off from appeal that way. 

That is why my best recommendation, because of the systemic 

flaws of the appeal system, both procedural and substantive, is 

that the appeal system be opened up for applicants, but that it not 

just be opened up to the program as it existed with flawed rules, 

with broken policies, that applicants be given a copy of their file 

with an explanation of the grant, that formulas be redesigned to 

enable equity in this program and that appeals be opened up with 

those corrections. 

Our system can do better than this and where we know the program has failed and where we have the opportunity to fix it, we 

have to take that opportunity. 

Mr. CLEAVER. All right, Ms. Franklin? 

Ms. FRANKLIN. I have to leave. Do you have my phone number? 

Mr. GREEN. Would you move closer to the microphone, please, 

ma’am, Ms. Franklin? I cannot hear you. 

Ms. FRANKLIN. I said, you have a telephone number on my paper 

that you have. 

Mr. GREEN. A little closer, please. 

Ms. FRANKLIN. Do you have a telephone number on my testimony 

that I gave to the panel? My phone number, I would like to keep 

in contact with you all, please. 

Mr. CLEAVER. Yes, we have your testimony. 

Ms. FRANKLIN. Yes. Do you have my telephone number? 

Mr. CLEAVER. Yes, ma’am, thank you. 

Ms. FRANKLIN. Yes, I need to keep in touch with you all through 

Legal Aid. 

Mr. CLEAVER. Thank you very much. We appreciate you coming. 

Ms. FRANKLIN. Thank you so much. 

Mr. CLEAVER. One final question and I will turn it over to my 

colleague. 

What do we need to do to clear up this appeals process or, frankly, to establish it? 

Ms. DUVAL-DIOP. Thank you for allowing me to respond. 

Representative Waters committed to granting the State greater flexibility in terms of sending the—how to spend the remaining $3 

billion, whatever amount remains. I really strongly urge that in 

granting that flexibility that Congress ensure that that the funds 

only get spent on the ongoing needs of Road Home applicants. You saw in the LRA testimony a range of between $1.6- to $2.3 

billion in terms of gaps that are the result of low grants because 

of pre-storm values, issues with appeals and errors, etc., that Ms. 

Finger mentioned. 

Also, we have done, in our analysis that was done in 2008, we 

did an estimate of the amount of funds it would take to bring people up to their damage estimate or $150,000, whichever comes first, 

and our estimate was $1.7 billion. 

And so the community and the nonprofits and the communitybased groups, people like Davida, people like the Road Home applicants, they have the wisdom, they understand the problem, they 

talked about the issue, the need to address contractor fraud about 

6 months into the life of the program. So 21⁄2, 3 years later, we see 

the issue of contractor fraud arising and nothing has been done, no 

59 

infrastructure has been put in place to deal with it. Yet the community knew and had the wisdom and insight to understand that 

that would be a problem down the road. 

So what we strongly encourage is that in allowing for the greater 

flexibility and allowing for the State to use those funds, that we 

not only hear from the State about how to address these problems, 

but that we urge the State to work with the community-based 

groups and the nonprofits to devise solutions. Only working with 

people like Davida, people like other advocates, is I think the best 

way of coming up with real solutions to address the needs. 

Ms. FINGER. You mentioned earlier, you complimented our community about the lack of evident anger in the room, and what I 

want to say is that people are exhausted. Almost every week, I 

hear from someone who is absolutely at the end of their rope, who 

cannot go on, who is struggling waiting on Road Home, so many 

open cases still, trying to figure out how to make ends meet. 

There is a lot of wisdom in this community and we also need serious oversight from policymakers who can help us improve these 

policies. We cannot let this program close knowing about the systemic flaws in the system, and allow it simply to trail off like that. 

We need your help in making sure that the funds get spent for 

most people who needed the money the most. 

Mr. CLEAVER. That is exactly what we want to do. It would be 

helpful to me at least if you could send your recommendations on 

how we could put in place this oversight and actually provide 

homeowners with some rights. This is unbelievable. And then I 

think we can look to see if there is something that we can do legislatively. Because if there is, I can assure you that is the direction 

we are going to go. 

Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. 

I found the last line of dialogue quite intriguing. If I may paint 

a picture, it seems that the person appealing would announce, ‘‘I 

am going to appeal this,’’ and the person who was being complained against would say, ‘‘But of course you may. And if you will 

go over next door, you can have your appeal heard.’’ And then you 

walk out of the room and you go next door to have your appeal 

heard and, lo and behold, it is the same person that you just said 

you would like to complain against, he is sitting right there saying, 

‘‘Okay, come right up, you will be heard, let us have a fair trial, 

fair hearing.’’ And proceeds to give you another opinion that I 

would think many people would conclude is tainted by the original 

decision. It just does not make sense, it really does not. 

We have a concept of due process in this country. That ought to 

afford a person the opportunity to be heard by some disinterested— 

interested in the sense only that it is a part of your duty—third 

body when disputes are promulgated. I find it shocking that such 

a process was in place. And this is what makes it even more invidious—lawyers worked on this—lawyers worked on this, people who 

were trained as students of jurisprudence worked on this. They 

knew what should have been done. And I find it remarkable that 

lawyers would allow such a process to be promulgated. It is shocking. 

Thank you for bringing this to light, Mr. Cleaver. 

60 

Let me move to, if I may, what the chairwoman has assigned me 

to do and I would like to speak to Ms. Plyer, is that the way you 

pronounce your name, ma’am, Ms. Plyer? 

Ms. Plyer, in your testimony, the pages are not numbered, but 

let us say that it is the third page from the very last page. You 

indicate that only 1 percent of victimized homeowners successfully 

got their monies refunded. May I say this conversely, conversely 

am I to conclude that 99 percent of those who were victimized did 

not get their monies returned? 

Ms. PLYER. Well, PolicyLink did that study and I think that 

would be correct. 

Mr. GREEN. 99 percent. 

Ms. PLYER. Of those who responded to the survey. 

Mr. GREEN. Say again? 

Ms. PLYER. Of those who responded to the survey. 

Mr. GREEN. Yes, of those that responded to the survey. 

The Chair mentioned prosecutions. Have we had any prosecutions in this area, any at all? Has anybody been prosecuted? 

Ms. DUVAL-DIOP. According to the results, I recall maybe one or 

two and the issue is that the process is flawed, the process of reporting fraud. Police stations say that it is not their jurisdiction or 

they provide barriers, they put up barriers to people reporting 

fraud. The district attorney sends them a letter and that is about 

it. There is a lack of staff, a lack of capacity. 

Recently in the State legislature, the penalties were strengthened and that was viewed as a way to deter fraud, but if we do 

not address the issue of allocating additional resources to prosecute 

and really take these cases beyond the simple reporting phase, 

then we will continue to waste State resources, Federal resources. 

Mr. GREEN. We will make some inquiries in terms of statistical 

information to give us some indication as to whether or not this 

has been vigorously delved into and whether prosecutions would 

have taken place. 

What I marvel at is how a welfare mother who receives money 

that should not have been received is prosecuted and many times 

jailed for much less money. If we can prosecute welfare mothers, 

we can prosecute people who take advantage of welfare mothers, 

we really can. 

Now I want to talk for just a moment to Ms. Plyer. Ms. Duval, 

is the last part of your name Diop? 

Ms. DUVAL-DIOP. Yes, sir. 

Mr. GREEN. Okay, you and Ms. Finger, let us talk about these 

pre-storm values, and Mr. Colangelo. 

My suspicion is—well, without giving you my suspicions, do you 

all agree that the pre-storm values as recommended by—I have the 

testimony of Ms. Finger before me, on page 3, and she recommends 

that we should simply have pre-storm values taken out of the grant 

calculations. If you concur with her recommendation that moving 

forward we take this out. Ms. Plyer, would you give me your response—a simple yes or no would be sufficient. 

Ms. PLYER. Personally, I would say yes, we should take that out. 

Mr. GREEN. That was a yes, for the record. Ms. Duval-Diop? 

Ms. DUVAL-DIOP. Can I give a little bit longer answer? 

Mr. GREEN. A little closer, please. 

61 

Ms. DUVAL-DIOP. Can I give a little bit longer answer? 

Mr. GREEN. After you say yes or no. 

Ms. DUVAL-DIOP. Yes, but— 

Mr. GREEN. Okay. 

Ms. DUVAL-DIOP. —I understand that resources are limited and 

so I think we need to think creatively about how to address gaps 

that were caused by the formula and so we need to bring in additional resources to nonprofits that leverage other resources such as 

volunteers and donations, and that we need to target to the most 

vulnerable. There are people who really could cover with their own 

resources some of the gaps, and so— 

Mr. GREEN. I am with you. You are talking about the remedy 

now, right? 

Ms. DUVAL-DIOP. Right. If you take out the pre-storm value, we 

are talking about affecting everybody, including those who are 

upper income, who do not really need the additional resources. 

Mr. GREEN. I understand. And I can see that it would impact everyone, but based upon the testimony that I have heard, the prestorm values seem to disproportionately impact some. And the 

question is, if it has disproportionately impacted some and adversely impacted others, perhaps it is something that we need to 

take a look at extricating. 

Ms. DUVAL-DIOP. Yes. 

Mr. GREEN. Ms. Finger, your thoughts on the pre-storm value. 

Ms. FINGER. Yes, I agree with myself. And the reason I proposed 

that is because where we know that the pre-storm value led to discriminatory impacts, yielding lower grants for African-Americans, 

indeed removing that would impact everyone in the program, but 

a discriminatory disaster housing program necessarily impacts everyone. We cannot continue to operate a discriminatory housing 

program here. Where we have the data to support that, we need 

to craft a remedy. And one idea is to take out pre-storm value so 

that grants will be based on the correct determinations of estimated cost of damage. That is one idea, knowing the discriminatory 

formula that we have. It is certainly not the only idea and we do 

need to be forward thinking and pragmatic and know that we will 

not have endless resources to continue to operate this program. At 

the same time, we cannot gloss over something so big as the problems we see with pre-storm value. 

Mr. GREEN. Thank you. 

Mr. Colangelo? 

Mr. COLANGELO. Yes. 

Mr. GREEN. I suspected you would say yes. 

Let me just ask you one additional question, Mr. Colangelo. 

In your efforts to call this to the attention of the appropriate parties, have you had an opportunity—and I do not want you to get 

into the litigation, let us talk about pre-litigation—have you had an 

opportunity to sit and has there been any opportunity for some sort 

of mediation by way of judicial mandate or judicial—no mediation? 

Mr. COLANGELO. No, there is not. 

Mr. GREEN. I know that in the Federal courts, it is not as commonplace as it is in State courts. Is there any rule that would prohibit a request for mediation in such a circumstance? 

Mr. COLANGELO. No, there is not, Congressman. 

62 

Mr. GREEN. I am exceedingly concerned about this. It is very unfortunate that after all we have fought for to get the 1968—actually 1965 as well as 1968 civil rights laws, that we find ourselves 

in 2009 with this sort of circumstance and we have to find ourselves trying to find a remedy after the fact. It just does not make 

sense that if something is called to the attention of the appropriate 

persons that we would not have an appropriate remedy. If there is 

something that I am missing, I will gladly rethink my position, but 

I did get answers earlier from a prior panel that seems to confirm 

that this formula is inherently invidious discrimination. By virtue 

of just imposing it, by simply using it, it seems to discriminate and 

it goes back to the red-lining, goes back to the housing patterns. 

But someone has to say, not on my watch. Someone has to say, it 

stops here, this much, no more. 

I hope that we will be able to rectify some of these concerns. And 

Mr. Chairman, I thank you for your indulgence. I know that I have 

gone longer than I should. I yield back. 

Mr. CLEAVER. Thank you. 

Let me thank all of you on behalf of Chairwoman Waters, for donating the most valuable thing you have, which is time, to helping 

us with information that will be used hopefully to help you. We appreciate the fact that you came out. 

We want to thank again Dillard University for today and the 

Chair would have me note that some members of this subcommittee may have additional questions for the panelists and we 

might ask for the submission of some information in writing. And 

without objection, the hearing record will remain open for 30 days 

after today for members to submit written questions to those of you 

who are serving as witnesses and to place the responses you give 

us in the record. 

We appreciate your participation; this panel is dismissed. 

And before we adjourn, without objection, the written statement 

of the following organization will be made a part of this hearing: 

The Citizens Road Home Action Team. That will be included. 

And this says, close the hearing. This hearing is adjourned. Bang 

the gavel. 

[Whereupon, at 4:50 p.m., the hearing was adjourned.] 

(63) 

A P P E N D I X 

August 20, 2009 

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