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30–536 PDF 2006

COMMUNITY DEVELOPMENT BLOCK GRANTS:

THE IMPACT OF CDBG ON OUR COMMUNITIES

FIELD HEARING

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

APRIL 12, 2006

Printed for the use of the Committee on Financial Services

Serial No. 109–85

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

ROBERT W. NEY, Ohio 

SUE W. KELLY, New York, Vice Chair 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

JIM RYUN, Kansas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

VITO FOSSELLA, New York 

GARY G. MILLER, California 

PATRICK J. TIBERI, Ohio 

MARK R. KENNEDY, Minnesota 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

CAMPBELL, JOHN, California 

BARNEY FRANK, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

DARLENE HOOLEY, Oregon 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

HAROLD E. FORD, JR., Tennessee 

RUBE ́ N HINOJOSA, Texas 

JOSEPH CROWLEY, New York 

WM. LACY CLAY, Missouri 

STEVE ISRAEL, New York 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

JIM MATHESON, Utah 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

DEBBIE WASSERMAN SCHULTZ, Florida 

GWEN MOORE, Wisconsin, 

BERNARD SANDERS, Vermont

Robert U. Foster, III, Staff Director 

(III)

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice Chairman 

RICHARD H. BAKER, Louisiana 

WALTER B. JONES, JR., North Carolina 

CHRISTOPHER SHAYS, Connecticut 

PATRICK J. TIBERI, Ohio 

GINNY BROWN-WAITE, Florida 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

STEVAN, PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

CAMPBELL, JOHN, California 

MICHAEL G. OXLEY, Ohio 

MAXINE WATERS, California 

NYDIA M. VELA ́ ZQUEZ, New York 

JULIA CARSON, Indiana 

BARBARA LEE, California 

MICHAEL E. CAPUANO, Massachusetts 

BERNARD SANDERS, Vermont 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

BARNEY FRANK, Massachusetts 

(V)

C O N T E N T S 

Page 

Hearing held on: 

April 12, 2006 ................................................................................................... 1

Appendix: 

April 12, 2006 ................................................................................................... 57

WITNESSES 

WEDNESDAY, APRIL 12, 2006

Battle-Bey, Marva Smith, President and CEO, Vermont Slauson Economic 

Development Corporation .................................................................................... 40

Burke, Yvonne Brathwaite, District 2, member, Los Angeles County Board 

of Supervisors ....................................................................................................... 27

Dorn, Roosevelt F., Mayor, City of Inglewood, California .................................... 13

Garcetti, Eric, District 13 President, Los Angeles City Council .......................... 10

Graves, Clifford, General Manager, Department of Community Development, 

City of Los Angeles, California ........................................................................... 33

Hofmann, Harold, Mayor, City of Lawndale, California ...................................... 15

Jackson, Carlos, Executive Director, Los Angeles County Community Development Commission and Housing Authority of the County of Los Angeles ....... 36

Jenkins, Alvin, Project Manager, CBA/LA ............................................................ 38

Montiel, Rudolf, Executive Director, Housing Authority of the City of Los 

Angeles .................................................................................................................. 39

Netburn, Mitchell, Executive Director, Los Angeles Homeless Services Authority ................................................................................................................... 43

Ovrum, Robert, Deputy Mayor for Housing and Community/Economic Development, City of Los Angeles, CA (on behalf of Mayor Villaraigosa) ................ 9

Patenaude, Pamela H., Assistant Secretary for the Office of Community Planning and Development, U.S. Department of Housing and Urban Development, accompanied by Nelson R. Bregon, General Deputy Assistant Secretary and Jo Baylor, Assistant Deputy Secretary for Field Policy and 

Management ......................................................................................................... 7

Shockley, Brenda, President, Community Build, Inc. .......................................... 41

APPENDIX 

Prepared statements: 

Ney, Hon. Robert .............................................................................................. 58

Solis, Hon. Hilda ............................................................................................... 60

Battle-Bey, Marva Smith ................................................................................. 111

Burke, Yvonne Brathwaite .............................................................................. 62

Dorn, Roosevelt F. ............................................................................................ 64

Garcetti, Eric .................................................................................................... 68

Graves, Clifford ................................................................................................. 71

Hofmann, Harold .............................................................................................. 80

Jackson, Carlos ................................................................................................. 84

Montiel, Rudolf ................................................................................................. 94

Netburn, Mitchell ............................................................................................. 97

Ovrum, Robert .................................................................................................. 100

Patenaude, Pamela H. ...................................................................................... 104

Shockley, Brenda .............................................................................................. 109

Page

VI

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Statements of: 

City Council of the City of Los Angeles .......................................................... 113

City of El Monte ............................................................................................... 117

City of Monterey Park ...................................................................................... 118

City of Rosemead .............................................................................................. 119

Los Angeles Housing Department ................................................................... 122

Herb J. Wesson, Jr. .......................................................................................... 115

(1)

COMMUNITY DEVELOPMENT BLOCK 

GRANTS: THE IMPACT OF CDBG 

ON OUR COMMUNITIES 

Wednesday, April 12, 2006

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 9:00 a.m., in Loker 

Conference Room, California Science Center, Exposition Park, 700 

State Drive, Los Angeles, California, Hon. Robert W. Ney [chairman of the subcommittee] presiding. 

Present: Representatives Ney and Waters. 

Chairman NEY. I’d like to welcome everyone this morning to the 

Subcommittee on Housing and Community Opportunity’s field 

hearing on the Department of Housing and Urban Development’s 

Community Block Grant Program, known as CDBG to the rest of 

the country. And today will be an official hearing of the U.S. House 

of Representatives, so the transcripts, as well as the conclusions 

reached today will be taken back to Washington, D.C., and will be 

utilized. I can kind of guess there will be support of CDBG today 

to keep it. Then it will be important for the rest of our colleagues 

in Washington, D.C., to know what the attitude was out here. 

I want to thank, first of all, our ranking member—Congresswoman Maxine Waters—who asked for this hearing. I am so happy 

that you have asked the subcommittee to come here, and I thank 

you for hosting us here in Los Angeles. 

And, of course, Congresswoman Waters and her staff have played 

an extremely active role in preparing for this hearing. We want to 

thank them. Also, Jeff Riley is here today; he works for Ranking 

Member Barney Frank of Massachusetts. 

And our chairman of the Full Committee, by the way, is Michael 

Oxley of Ohio. 

The CDBG program, of course, as administered by HUD, is the 

Federal Government’s largest and most widely available source of 

financial assistance to support State and local efforts in Government related neighborhood revitalizations, housing, rehab, and economic development activities. It is generally recognized as the 

mainstay for targeted community development of cities, counties, 

and rural and urban areas to principally benefit low- and moderate-income persons. 

2

The program has developed its reputation for the past 28 years, 

and local officials constantly use CDBG funds to take on new challenges in the areas of housing, neighborhood development, public 

facilities, and provisions of social services. 

So this program, CDBG, emphasizes HUD’s mission of working 

through partnerships with State and local governments. And due 

to the flexibility in the uses of the CDBG funds, the program is 

used in conjunction with many other HUD programs to assist communities and to target specific populations. 

I do want to let you know that last month I held three House 

field hearings in rural Ohio that highlighted many of the important 

issues of CDBG that I am sure we are going to hear about from 

you today. And back in Ohio, many local mayors and community 

development officials testified about how CDBG monies have been 

used for a wide variety of projects such as providing safe drinking 

water, sewer repair, and purchase of firefighting trucks and equipment. 

To highlight one example, in Knox County, Ohio, CDBG funding 

has allowed for the revitalization of several downtown streets, such 

as in Mount Vernon. The rehabilitation of the Mount Vernon 

streetscape has brought new life to Mount Vernon and to residents 

and visitors alike. They can enjoy the renovated shops and restaurants and that, of course, leads to more tourists coming, which 

leads to more money in the community and, ultimately, to more 

jobs. At one time there was a question of well, you know, should 

CDBG be diverted to the Department of Commerce? And had that 

happened, I think you would not have been able to recognize the 

program by the time it got out of the Department of Commerce. 

In the areas that I represent, in the 18th District, 20,000 people 

is considered to be a large city. Most of our towns consist of 1,400 

to 2,000-some people. And in some cases—ambulance service, for 

example—it would take you 40 minutes to get somewhere between 

communities where there is even a hospital. So the ambulance 

service is important. So I think CDBG is something that is just so 

important. 

Now President Bush’s fiscal year 2007 budget proposal raises 

some interesting and serious questions about what role community 

development should play in helping local State governments provide safe and affordable housing to its constituents. In addition to 

recommending a new formula change for CDBG, that focus is more 

on the neediest communities which was raised, and I hope it is 

raised here today. That was raised back in Ohio by some experts—

Coalition for Appalachian Development—people running food banks 

about some of the change with CDBG and about the neediest communities and what is already being done for the neediest and what 

that would do by kind of changing the formula. So maybe that will 

be focused on today. 

But also the funding level for fiscal year 2007 in the budget is 

.27 cents below last year’s enacted levels. So if you take the 10 percent cut that actually came out, I think it was from the Reconciliation bill there was a cut, which I did not vote for the bill I would 

note for the record. But from that to this if you add the 25 if it 

would go through, and 10 you are at 35 percent cut for CDBG over 

the last couple of years. 

3

So, again, I think it is an important program. 

Let me just close by saying a couple of things. Now more than 

ever before, I have been in Congress for 11 years and I have been 

in government for 24 years as a State senator, State rep, so I have 

looked at CDBG from the State legislative end of things, as I know 

our Congresswoman has, but I think now more than ever since I 

have been in Congress, this is a time where, if you are going to 

help with CDBG, if it is going to be effective to save these concepts, 

it’s going to be effective on having this program continue, that the 

local CDBG, the local development entities, the local elected officials have to work with their Members of Congress more than ever 

before. You must have a tighter working relationship than ever before with Congresswoman Waters and myself, and other Members 

of the House. I think it is more critical than in the past to do that. 

It has to be a partnership in looking at how the programs are used. 

So, again, there are a lot of other issues our committee has tackled. I am proud to say that we are the first subcommittee that went 

to New Orleans and went down to also Gulfport, Mississippi. We 

were the first ones that did it even before the Katrina Committee. 

We have been trying to address, the subcommittee, many many important issuing in housing. And I know people think we cannot 

agree on anything, but in this area I am proud to say that our 

ranking member, Mr. Frank, and our chairman, Michael Oxley and 

other Members, especially on our subcommittee, have tried to do 

many things to help a lot of the neediest people. And there is a lot 

more work to do, but I am just proud to say that we have been 

working on those issues. 

So I want to thank again our ranking member, Congresswoman 

Waters, who has been a pleasure to work with. It has also been a 

pleasure to watch the Congresswoman as a voice for people who 

cannot speak out for themselves, not only here sometimes in the 

process, but also in Washington, D.C., on a national basis. So 

thank you. And I will yield to our ranking member. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

Good morning, ladies and gentlemen. Thank you for coming out 

this morning. Your attendance here is very important today, and 

I am so pleased to see this room full. 

It is important for you to be here today because you have to understand that we must try to stop the proposed cuts to this most 

important program. 

Before I continue with my remarks, I would like to thank Chairman Ney. I would like to thank him for authorizing this hearing, 

and for coming to Los Angeles to listen to our City’s leadership, 

and to our program directors testify about how important this program is. 

Why is it important for me to thank him? It is important for me 

to thank him because he could very well be in his district, doing 

the work that Members must be doing at this time to run for reelection. His election is just next month. And so most times Members do not take time from their districts to come to somebody 

else’s district to talk about their problems; they are focused on 

their own problems. So I am delighted that he responded to my request and is here. 

4

But more than that, I am delighted that we have been able to 

work together, not only on CDBG, but if you recall 3 years ago he 

was here on Section 8. These are programs that oftentimes you 

only hear from Members on my side of the aisle. But I want you 

to know that Congressman Ney and I struck a relationship because 

a long time ago we decided that the problems of the rural community are similar to the problems of our urban communities. We 

both have poor people in our districts. We have people who depend 

on assistance from the Government, and because of that, we should 

be working together. 

Now granted, we are not going to agree on everything, and we 

know that. But those things that we do not agree on, we just leave 

each other alone. But for those that things that we can work together on, we certainly do; CDBG is one of those programs. 

So, even though this is an official hearing and we do not entertain applause at official hearings, I am going to ask you to give him 

a big round of applause and thank him for coming to be with us. 

Let the record show I broke the rules again, Mr. Chairman. 

Okay. Let me just get to my prepared presentation this morning. 

I want to get right into the impact of CDBG on our communities. 

The Subcommittee on Housing and Community Opportunity—of 

which I am ranking member—of the Committee on Financial Services, is conducting this hearing today. And I believe, and I am sure 

the chairman would agree, that whenever we can bring the Congress to the people of our Congressional districts, it is well worth 

the effort. 

Today we are here to determine the impact of CDBG spending 

and proposed cuts in that spending on Los Angeles City and County, as well as in the 35th Congressional District, which I serve. And 

while I am going to focus on a few of those programs today because 

I am working very hard to try and preserve all kinds of programs, 

I want you to know that this hearing is about all of the CDBG 

funded programs. 

CDBG is a major Federal program that I have worked very hard 

for since coming to the Congress of the United States. And I have 

tried to protect and strengthen CDBG. CDBG has served the Valley to South Los Angeles since 1974. Every year for at least 5 

years, we have been asked to consider ideas ranging from substantial cuts in funding for the CDBG program to changes in the way 

the program funding is allocated. Other important community development programs including Section 108, the Home program, 

Brownfields Redevelopment Grants, and the National Community 

Development Initiative and Urban Empowerment Zones would be 

cut or eliminated by this Administration. However, I believe that 

it is because of the role of Mr. Ney and others who are advocates 

for housing and community development programs in Congress 

that our communities have benefitted right here in Los Angeles 

County and the City of Los Angeles. 

CDBG forces you to have a role in developing the CDBG plans 

for approval by HUD, since the input of the community is the most 

important step in the process of moving CDBG to a program of action. 

Just quickly, what is CDBG? I often hear that from people who 

are not directly involved. And I basically try to explain it this way: 

5

It is tied to three basic activities. It is here to principally benefit 

70 percent low- and moderate-income persons. It aids in eliminating or preventing slums and blight, or it is here to meet the urgent community development needs that are caused by certain conditions that pose serious and immediate threats to the public. 

Although many of you have heard of the CDBG program, or you 

are involved in it, there are often gaps in information relating to 

the President’s budget and Congressional action on programs such 

as CDBG, as well as many other programs that are in place to assist the communities that we serve. 

Now, I represent the 31st Congressional District, and included in 

that district are several cities: the City of Lawndale, the City of 

Inglewood, the City of Gardena and the City of Hawthrone. What 

you may not know is that the President’s budget proposal for fiscal 

year 2007, if enacted, would reduce the CDBG program by more 

than 20 percent. Every program supported with CDBG funds would 

be severely reduced or eliminated. 

As a strong supporter in Congress of the CDBG program, I have 

fought and will continue to fight to prevent these cuts. These unpopular cuts would affect a broad range of housing revitalization, 

community and economic development activities, job creation and 

public service programs designed to primarily benefit low- and 

moderate-income persons in Los Angeles County and City. 

The backdrop for these cuts is simple. In the past 5 years CDBG 

has been responsible for the rehabilitation of over 8,500 housing 

units, created and preserved over 2,060 jobs, removed over 41 million square feet of graffiti, and provided loans and technical assistance to over 7,000 small businesses. The President’s proposed reduction in CDBG would deny Los Angeles County $41.1 million in 

funding for all kinds of program activities. The City of Los Angeles, 

which will receive $74.5 million this fiscal year, would receive only 

$55.8 million in fiscal year 2007. This is an inflation adjusted cut 

of 48 percent. 

The State of California would lose almost 3 times the above 

amount, that would be $119.7 million. The positive statistics that 

I just cited would read differently if the State of California lost 

$119.7 million. 

What the cut will not reveal immediately is that low- and moderate-income persons and families would suffer the most because 

CDBG program is their program. 

And while many of you may not be familiar with all of the CDBG 

funded programs or the requirement that 70 percent of the funds 

be spent on activities to benefit low- and moderate-income persons, 

you have to come to rely on these programs in your day-to-day activities. And let me just mention a few of the programs throughout 

our City: Big Brother and Big Sister of Greater Los Angeles; Mentor Outreach; Junior Blind of America; Infant Family Project; Los 

Angeles County Department of Consumer Affairs; Homeowner’s 

Fraud Prevention Project; Community Development Commission; 

Single Family Grant Program; Gang Membership Vandalism and 

Illegal Nuisance; Dumping Reduction Program; Watts Labor Community Action Committee, etc. 

Now let us take a look at the impact of cuts on the City of 

Lawndale, an important community in my district. The Mayor is 

6

here today and he will talk more about this. They would most definitely suffer under the proposed cuts for CDBG as well. 

The City’s graffiti removal efforts would be undermined, and residential rehabilitation grants to low- and moderate-income residents for electrical, roofing, and plumbing repairs would just disappear. And just about everyone in Lawndale knows about the 

Lawndale Civic Center Seniors Hot Lunch program. 

Well, my friends, the City of Lawndale will have to find another 

source of funding for their seniors if these cuts become law. I do 

not need to mention every program that would be affected, but this 

should give everyone an idea of why we are here. Youth would be 

at great risk, seniors would be put at risk, blight and graffiti would 

return, and the overall quality of life for each and every one of us 

would be challenged. The City of Hawthorne would lose $321,000 under the proposed cuts while the City of Gardena would lose $298,000 plus. 

Finally, my City of Inglewood would suffer the most with the dis- appearance of $1,100,000 in CDBG funds. 

And I think today’s witnesses will answer the important mission 

of this subcommittee. We’re here to listen and to learn about the 

impact of the CDBG program on their communities and the people 

who live in them. 

And we thank you very, very much. I want to say to the elected 

officials who have come today, I know your time is valuable, and 

we thank you so much for showing up. 

I want to think HUD for being here today. I know sometimes it 

gets a little bit difficult to defend the President’s budget. However, 

in working with HUD, I have found that oftentimes there are many 

ways by which we can get the information, and hear from you, that 

will help us to be able to convince others that perhaps we should 

certainly not be making these kinds of cuts. 

With that, to the staff who are out here from Washington, D.C., 

we thank you for the work that you have done on both sides of the 

aisle to help put this together for us today. 

You are here at the California Science Center, which is one of 

the real gems of the overall greater Los Angeles area, and a place 

of which I am very proud. This building, and this complex, was 

part of my work when I served in the California State Assembly 

and we were able to fund a master fund that has brought it to the 

point that it is today. So if you have time, just spend a little time 

here after the hearing. 

Thank you very much. 

And I will yield back my time to the chairman, Mr. Ney. 

Chairman NEY. I want to thank the gentlelady. I thank her also 

for her fine comments. 

I also wanted to let you know before we start that there are copies of the testimonies over to the left on the table. And you’re more 

than welcome to get a copy of the testimonies today. 

Also for the record, without objection, we have several statements for the record from: Congresswoman Hilda Solis; The City 

of El Monte, City Manager’s Office; The City of Monterey Park; and 

the City of Rosemead. 

Without objection, these statements will be entered for the 

record. 

7

And today we will start with a panel. The Honorable Pamela H. 

Patenaude, Assistant Secretary for the Office of Community Planning and Development, U.S. Department of Housing and Urban 

Development, known as HUD. 

Of course, Mr. Robert, known as Bud as I understand it, Ovrum, 

deputy mayor for Housing and Community/Economic Development, 

City of Los Angeles, California on behalf of the Mayor. 

And also the Honorable Eric Garcetti— 

Ms. WATERS. Garcetti. 

Chairman NEY. Garcetti. I think in Italian, so I say Garcetti. My 

home city is 85 percent Italian, so if I see a C, it’s a J. But 

Garcetti. District 13, president of the Los Angeles City Council. 

I think 3 years ago you were a councilman? Okay. That’s good. 

And the Honorable Roosevelt F. Dorn, Mayor, City of Inglewood, 

California. 

And also the Honorable Harold Hofmann, Mayor, and I have 

heard a lot about Lawndale and a lot of good things, the City of 

Lawndale, as I have many of the smaller towns around here also. 

So I want to welcome all of you. And we will begin with Assistant Secretary Patenaude. 

STATEMENT OF PAMELA H. PATENAUDE, ASSISTANT SECRETARY FOR THE OFFICE OF COMMUNITY PLANNING AND 

DEVELOPMENT, U.S. DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT, ACCOMPANIED BY NELSON R. BREGON, 

GENERAL DEPUTY ASSISTANT SECRETARY, AND JO BAYLOR, 

ASSISTANT DEPUTY SECRETARY FOR FIELD POLICY AND 

MANAGEMENT 

Assistant Secretary PATENAUDE. Thank you, Mr. Chairman. 

I am pleased to be here in Los Angeles on behalf of Secretary 

Alphonso Jackson. 

I am joined here today by my General Deputy Assistant Secretary, Nelson R. Bregon, and Hud’s Assistant Deputy Secretary 

for Field Policy and Management, Jo Baylor. 

Thank you Chairman Ney and Ranking Member Waters for 

scheduling this field hearing to discuss the reform of the Community Development Block Grant program. 

The CDBG program has been the Federal Government’s primary 

vehicle for assisting State and local governments with a wide range 

of community development activities aimed at improving the lives 

of low- and moderate-income families. 

Chairman NEY. If you could yield for a second? 

Can you hear the witness in the back? You can. Okay. There was 

a question of whether you could or not. I’m sorry. Go ahead. 

Assistant Secretary PATENAUDE. Thank you. During the past 3 

decades over $113 billion has been appropriated for the CDBG program. These funds are used for housing rehabilitation, public services, infrastructure, and economic development activities. 

The President’s fiscal year 2007 budget retains the CDBG program at HUD with the recognition that the program’s impact has 

defused over time. We propose to redirect CDBG’s ability to target 

community development needs. We have identified a series of initiatives that, if enacted, will sustain the CDBG program in the future. 

8

One critical reform is the revision of the CDBG formula which 

has been essentially untouched since the 1970’s. Over the past decade, we have witnessed steady erosion in the ability of the formula 

to target CDBG funding to community development needs. Demographic changes, development patterns, and other factors have created significant distortions in the distribution of the CDBG funds. 

In February of 2005, HUD released a study that identified two 

serious deficiencies that result from the current formula. First, 

many communities with lesser need for CDBG funds receive much 

more per capita than many communities with greater need. Second, 

many communities with similar needs receive very different per 

capita amounts. 

For example, here in California, the Cities of Santa Monica and 

Santa Maria have approximately the same population. Under the 

current formula, they both receive about $1.3 million annually. 

However, in terms of need, they are very different. Santa Monica has a per capita income of $43,000 and a relatively 

low level of distress, while Santa Maria has a per capita of only 

$14,000, and significantly more distress. 

While Santa Maria’s community development needs are much 

greater, the current formula does not recognize this. I think we can 

all agree that it is critical to restore equity to the distribution of 

funds to improve targeting and to preserve the fairness of the 

CDBG program. 

The second major initiative proposed in the President’s budget is 

the establishment of a challenge fund. This fund would enable 

CDBG grantees to obtain additional funding for community and 

economic development activities in distressed neighborhoods. In 

order to be considered for a challenge grant, a grantee will need a 

strategy that concentrates public and private investment in distressed neighborhoods. 

The reform also proposes to consolidate programs that duplicate 

current efforts, such as BEDI, Rural Housing, and Section 108. 

Finally, we are implementing a new performance measurement 

framework to establish clear measurable goals and community 

progress indicators for our formula programs. 

Improvements to HUD’s Integrated Disbursement and Information System, commonly referred to as IDIS, are critical to the success of this performance measurement. We are working to transform the current antiquated version of IDIS into a user friendly 

web-based system. These enhancements will make the system easier to use and will expand our ability to collect data that shows the 

effectiveness of CDBG. 

The Community Development Block Grant program helps communities across the Nation address a variety of needs. However, 

program reforms are necessary to improve and expand the economic opportunities of the lives of low- and moderate-income Americans. 

I thank you for this opportunity to speak with you today about 

the Administration’s proposal to reform the CDBG program, and I 

look forward to answering your questions. 

Thank you. 

[The prepared statement of Assistant Secretary Patenaude can 

be found on page 104 of the appendix.] 

9

Chairman NEY. Thank you very much. 

Mr. Ovrum? 

STATEMENT OF ROBERT OVRUM, DEPUTY MAYOR FOR HOUSING AND COMMUNITY/ECONOMIC DEVELOPMENT, CITY OF 

LOS ANGELES, CA (ON BEHALF OF MAYOR VILLARAIGOSA) 

Mr. OVRUM. Good morning, Mr. Chairman, and Ranking Member 

Waters. I am very pleased to be here today to present testimony 

on behalf of Mayor Villaraigosa. 

Although the Mayor is very distressed by the President’s fiscal 

year 2007 budget proposal to consolidate and reformulate funding 

for the Community Development Block Grant program, we are certainly very encouraged by the commitment of Congress to understand the impact of this proposal on the nation’s low- and moderate-income population. Thus, on behalf of the Mayor and everyone here, allow me to say how pleased we are that you are visiting 

us in Los Angeles for this important discussion. 

As you may know, the Mayor was recently appointed to be the 

Chair of the United States Conference of Mayors Task Force on 

Poverty, Work, and Opportunity. We are very excited to work with 

the Mayors around the country to address the important issue of 

poverty by developing strategies that will make our Federal, State, 

and local dollars stretch further while enhancing the positive input 

that we can make on the lives of the poor. At the same, the Mayor 

looks forward to working with Congress to ensure that the critical 

programs and services funded by CDBG are preserved for the people who rely on them. 

As you will hear in other testimony this morning, CDBG funding 

is vital to the City of Los Angeles. For over 30 years, CDBG has 

been one of the most effective tools available to the Government to 

strengthen local communities. CDBG provides the flexibility and 

the funding to address the needs of the poor and working families 

who continue to face tremendous quality of life and opportunity 

challenges. 

Here, in Los Angeles, in the undisputed commercial and cultural 

atmosphere of the richest State in the richest Nation in the history 

of the world, you see close to 10,000 homeless children. Thousands 

of kids arrive in public schools every day who do not have a bed 

for the night. Poverty, however, is not confined just to Los Angeles. 

It has been 50 years since Brown v. the Board of Education, but 

one-third of African-American children still live in poverty. 

Across the country, 6 million school children are on the verge of 

failing out of school. 

Eleven million Americans cannot read a bus schedule or fill out 

a job application. 

Three-and-a-half million sleep in shelters and doorways and 

highway underpasses. 

These statistics are constant reminders of what level of work remains to be done in this City and across the country. 

That is why the Mayor remains deeply concerned that the City 

again continues to face substantial reductions in Federal funding 

for programs funded under our Housing and Community Development Block Grant program, particularly CDBG. Last year, that reVerDate 0ct 09 2002 18:38 Nov 16, 2006 Jkt 003536 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 F:\DOCS\HBA102.040 HFIN PsN: TERRIE
10

duction amounted to approximately $9 million, or 11 percent of our 

allocation from the previous year. 

While our Federal allocation shrinks, the need for services and 

the number of requests for funding continues to grow. For the 

2006/2007 program year the City received a total of 215 applications requesting in excess of $254 million in CDBG support, of 

which only approximately $73 million was available and awarded. 

It is my hope, and the Mayor’s hope, that the policy leaders in 

Washington do not confuse the disappearance of this program with 

the disappearance of the problem of poverty. 

In a few minutes our general manager of the Community Development Department, Clifford Graves, and others, will share with 

you some of the great program efforts funded in the City with 

CDBG dollars. Mr. Graves will provide you with an outline of how 

the City historically uses these funds and how any additional reductions will impact the City and its most needy residents. 

Again, thank you for the opportunity to address you this morning. And thank you very much for coming to Los Angeles, and for 

your interest in Los Angeles. 

Thank you very much. 

[The prepared statement of Mr. Ovrum can be found on page 100 

of the appendix.] 

Chairman NEY. Thank you. 

Mr. Garcetti? 

STATEMENT OF ERIC GARCETTI, DISTRICT 13, PRESIDENT, 

LOS ANGELES CITY COUNCIL 

Mr. GARCETTI. Thank you very much, Mr. Chairman. It’s wonderful to have you back here in Los Angeles. And Ranking Member 

Waters, thank you for your extraordinary work on behalf of not 

only your own district, but this entire region, and the United 

States in this area. 

And, Mr. Jones, it is good to have you back in Los Angeles, as 

well. 

I wanted to thank you for being here and for being so generous 

when we come to Washington with all of your time as well in looking at the context of what we are discussing. 

Just as a side note, Mr. Ney, you know Los Angeles was really 

settled by midwesterners and we have whole neighborhoods that in 

the past were known as, you know, Little Ohio and Little Indiana 

and other parts. So that legacy is continuing the links here. So consider this your second home. 

You know, let me change what I was going to be saying. I have 

been spending the last 4 weeks editing my fiancee’s doctoral dissertation which is on welfare poverty in America. And she took a 

case study from the midwest in Michigan, where she detailed and 

interviewed 80 women who were sampled and their life experiences; what it was that brought them to live in poverty, and what 

it is that is keeping them in poverty. 

And what was interesting about what she has been looking at, 

and that I have been editing for the last few weeks, is that we have 

something called the American Dream here in the United States 

which says we are all just one lucky break away from making it. 

And on the flip side of the American Dream is something that 

11

many people do not talk about, which is what happens to that one 

person who has one unlucky break: An abusive household that a 

child is raised in; somebody who is born into a homeless family; 

somebody who unfortunately does not have a social network in the 

neighborhood where they live in to find the job opportunities, no 

matter how strongly they look around each corner for it. 

So the ideological context of what we talk about here today, Republican, Democrat, nonpartisan, as many of us are here as local 

officials is the ideology of having the most basic government outreach to make sure that those who are on the flip side of the American Dream, in fact, living an American nightmare, have a way out. 

The political context of this you well know. We are a Nation at 

war, but we have been a Nation at war for 3 decades against poverty under Presidents Nixon and Ford, under President Carter, 

under President Reagan, the first President Bush, and President 

Clinton. We have seen an expansion of that war on poverty. We 

have seen the belief across partisan lines that it is a war that is 

worth winning. 

Unfortunately now the political context at the local scene has 

shifted dramatically. And I know that Congresswoman Waters, 

Congressman Ney, and so many other Members of Congress meet 

each year with the National League of Cities when we come there, 

and 95 percent of Congress sits down with local officials in one day. 

It is one of the most impressive lobbying undertakings anywhere 

in the United States. And we are speaking with one voice. 

And I chair for the Los Angeles County, I am the president of 

our National League of Cities Local Cities. So on behalf of the 88 

Cities that are here we are speaking with one voice across partisan 

lines about the importance of this. 

And then lastly, I want to put into context the need that we have 

here in Los Angeles. We recently used block grant monies to finally 

take a snapshot of our economy here in Los Angeles. And there are 

some wonderful things that showed that we got out of the recession 

from the 1990’s, retooled and are very nimble in terms of the economy and the entrepreneurship that we had. But as you break that 

down by geography, we have had some troubling statistics. 

In south Los Angeles more than a decade after the riots here, we 

lost 8 percent of the jobs. All the rest of the regions of Los Angeles 

saw job growth, and yet we saw a decline there. 

I know that you want accountability for these dollars, and we 

want that, too. It is already there because of the great work of 

HUD. Ask any of these community groups whether it is easy to get 

this money, easy to spend it, easy to apply for it. It is not. It is 

very stringent. In fact, some people are scared away because it so 

stringent, so we know we have the accountability. 

But secondly, if I can leave you with one thing, I want you to 

know that we are not here with our hat in hand saying we are not 

going to step up, too. 

In Los Angeles, we have built the largest affordable housing 

trust fund, partially with the block grant dollars, but with our own 

general fund monies, too. Every dollar that we have put out there 

on affordable housing, we have leveraged five fold; five fold with 

State, private, and nonprofit dollars. This fall, the Mayor and I are 

putting on the ballot a $1 billion affordable housing bond here in 

12

the City of Los Angeles, the largest affordable housing bond anywhere in the country’s history locally. So we are not just saying 

give us the money; we are doing our part and we are stepping up. 

We are asking you to continue to be that partner, and I know 

that you all feel that same way. 

I want to thank you from the last time that you were here because it was Congresswoman Waters who first said you know we 

always see these signs up saying the council member and the 

mayor are rebuilding this area, doing this wonderful project, but 

how about the Members of the House? And we passed policy based 

on that recommendation here in the City that now when we spend 

those block grant dollars, it gives credit to Washington, too, to our 

Representatives who are helping to spend that money, and we have 

those names up there as a recognition of the partnership that we 

have here. 

But I will share with you in closing that each dollar of this funding that we put out there, a dollar of block grant that goes to the 

trust fund that brings $5 more dollars in and builds housing and 

has created about 200,000 permanent jobs here just in the construction industry in the last few years, $1 of Brownfields’ money 

near the port in Wilmington where one-quarter of all of our City’s 

scrapyards are, where we are able to take a Brownfields, that has 

been greatly polluted, that we finally turn around for a company 

that makes almost a quarter of all the AYSO uniforms for our kids 

throughout this country, was able to double the jobs that they have 

there. 

$1 that goes into a new shelter in Hollywood and takes a person 

off the streets who has never been in a shelter in his life, and 

whom I just talked to a couple of weeks ago. And for the first time 

in 25 years, he has a job and is cleaned up. 

We know that this is accountable money. We know that it is 

flexible money and we know that we are your partner in that 

money. As we continue to spend, we hope that you will recognize 

the taxpayer money that is represented here, but behind us that 

goes to Washington, D.C., prioritizes that partnership from the 

Federal level as well. 

And I want to thank you, Chairman Ney, for being such a strong 

voice. And as the National League of Cities moves forward, you 

know that there is a bipartisan support for this. We see a different 

move from the Administration, but we know that we have so many 

allies in Congress across party lines. And we hope that not only 

can we beat back the cuts, we hope we can restore the levels that 

were there before. 

Thank you. 

[The prepared statement of Mr. Garcetti can be found on page 68 

of the appendix.] 

Chairman NEY. I want to thank you for your testimony. And 

we’re going to suspend the regular order for a second. 

There are people standing in the back, and I think in the hallway, there are some extra chairs that have been set up. So please 

have a seat. I was told there was some people in the hallway. So, 

please feel free to have a seat. 

And also, we are here for a lot of people today in communities 

of all ages, but the younger generation is what everybody is about, 

13

and I think I see some younger generation friends in the audience. 

And I know the Congresswoman wanted to give some recognition. 

Ms. WATERS. Well, I certainly do. One of the things we tried very 

hard to do, and I think we accomplished it, was to make sure that 

all of the CDBG funded program recipients received a notice about 

this hearing. We are going to need you to help us in this fight and 

in this struggle to try and keep these cuts from becoming reality. 

For those young people who came today, you are welcome. For 

those young people who are identifying us by way of your banner, 

thank you very much. And for those young people who want to sit 

down, we have some extra chairs. Welcome. Thank you for being 

here today. 

Mr. GARCETTI. Mr. Chairman, if you will excuse me, we have a 

Council meeting at 10:00 that I have to preside over. 

Chairman NEY. Yes. You are excused. 

Ms. WATERS. Thank you very much. 

Mr. GARCETTI. My apologies. 

Chairman NEY. And to the young people again, welcome. They 

range in all ages, but I think I see a 2-month old also over there, 

who is probably the youngest visitor in the history of House hearings. 

So, again, welcome to all you great young people. And I think we 

can give them a round of applause. Thank you. 

Mayor, Mayor Dorn? 

STATEMENT OF ROOSEVELT F. DORN, MAYOR, CITY OF 

INGLEWOOD, CALIFORNIA 

Mr. DORN. Good morning. 

I would like to begin by thanking Chairman Ney for conducting 

these hearings today. 

I want to especially thank Inglewood’s Congressional Representative, Congresswoman Maxine Waters, for her constant efforts on 

behalf of the City of Inglewood and the other communities and the 

United States that she so admirably represents. 

The City of Inglewood has participated in the Community Development Block Grant program since its inception. Our residents and 

businesses have benefitted greatly from the crucial Federal funding 

provided through the CDBG program. 

The CDBG program has provided more than $25 million in assistance to low-income families, individuals, and businesses. Indeed, the CDBG program has been vitally important to the City of 

Inglewood and to our ability to enhance safety, prosperity, and increased livability within our community. 

Inglewood utilized CDBG funds to educate and protect low-income individuals with regard to housing discrimination. In an effort to ensure fairness and eliminate housing discrimination, over 

10,000 low-income individuals have benefitted from fair housing 

counseling. These monies have funded legal assistance to individuals who are victimized by unfair housing practices. 

The CDBG funds help us in our overall effort to maintain a suitable living environment in our community. Inglewood uses over 

$1.3 million annually in CDBG funds to build and improve the public infrastructure system in CDBG-eligible portions of the City. 

14

These infrastructure improvement projects include: Redesigning 

streets for increased traffic safety around local parks and schools; 

increasing pedestrian mobility for persons with physical and developmental disabilities through an aggressive program of installing 

pedestrian wheelchair ramps in over 350 locations throughout 

Inglewood, and; increasing neighborhood safety through improved 

property maintenance and correction of building violation deficiencies. These efforts have resulted in achievement of an 80 percent correction rate of over 8.000 residential and commercial property maintenance/code enforcement violations. Additionally, CDBG 

funds are used to eradicate over 18,000 annual incidences of graffiti. This funding allows our City to enhance our community beautification efforts, which in turn encourages home ownership, community pride, and investment in our City. 

CDBG funds are a powerful community-based crime prevention 

tool. Our City has leveraged CDBG public service funds to assist 

several local nonprofit organizations to assist our police department to combat gang-related crime. This effort resulted in the development of vital game and intervention programs that divert atrisk youth from becoming involved in gang activity. As a result of 

our community-based crime prevention efforts, gang activity in the 

City was reduced by 18 percent over the past 3 years. We need 

CDBG funds to continue our efforts in this regard. 

CDBG helped spark an economic development boom in 

Inglewood. The City of Inglewood suffered from an increasing 

blighted downtown area after the relocation of our major retailers 

from the City: Sears Department Store; J.C. Penny; and Boston 

stores. Inglewood leveraged $1.2 million in CDBG Section 108 loan 

funds, with $700,000 in Redevelopment Funding, and $500,000 in 

Department of Commerce Economic Development funds, to rebuild 

the infrastructure in the downtown area and provided over 

$250,000 in small business loans, and created 10 full-time jobs. 

As a result of the economic development and beautification of the 

City’s central business district, major retail and restaurant chains 

have decided to open stores in our City. These businesses include: 

Home Depot; Target; Bed, Bath and Beyond; Chili’s; Marshall’s; 

Michael’s; Ross Dress for Less; Staples Office Supplies; Bally’s 

Total Fitness; Red Lobster; and In-N-Out Restaurant. These new 

developments have resulted in hundreds of additional jobs being 

created in the City. We fully anticipate that the other prominent 

national chains will follow now that the City of Inglewood is viewed 

as an economically viable place to conduct business. 

Inglewood, like most other cities throughout the Nation, depends 

on CDBG funds to provide services and improvements that are 

vital to maintaining the vitality of our community. The changes 

proposed within the President’s fiscal year 2007 budget would adversely affect the residents of Inglewood and our businesses. In 

fact, our budgeted CDBG revenues for the current fiscal year represent a 23 percent decrease in funding from the previous year. 

Our overall budgeted revenues from the Department of Housing 

and Urban Development represent a 27 percent decrease from last 

year. The proposed ‘‘reform’’ of the CDBG program would undermine our ability to help low-income families at a time when they 

need our help most. 

15

I want to take this opportunity to respectfully urge the members 

of this committee to take steps to protect a crucial source of funding for communities across the Nation. As the President of the National Conference of Black Mayors, I represent over 600 mayors 

across this country, and to reduce CDBG would hurt their cities 

significantly. In many instances, CDBG is the life blood of those 

cities. So I urge you to do everything you can to prevent the loss 

of these funds. 

America is a generous Nation that is constantly giving to others 

around the world. Now, I humbly ask that you do what is right and 

extend the same spirit of generosity to the citizens of America right 

here at home. 

Again, thank you very much for extending me an opportunity to 

testify before you today. 

[The prepared statement of Mayor Dorn can be found on page 64 

of the appendix.] 

Chairman NEY. Thank you, Mayor. 

Mayor Hofmann? 

STATEMENT OF HAROLD HOFMANN, MAYOR, CITY OF 

LAWNDALE, CALIFORNIA 

Mr. HOFMANN. Good morning. My name is Mayor Harold 

Hofmann, and I am starting my 17th year this morning as Mayor 

of the City of Lawndale. 

It is my pleasure to be here representing the community of 

Lawndale. I am here to discuss what CDBG funds do for Lawndale, 

how those funds are used to support and enhance our City, and 

what it would mean if those funds were to be cut, or worse, eliminated. 

I hope that this testimony will allow the subcommittee to see the 

great things the CDBG does for this community and allow you to 

discern why it is necessary to stop cuts in CDBG funding. 

Lawndale is a community of approximately 31,000 people, but it 

is strategically located in what we affectionately call the ‘‘Heart of 

the South Bay.’’ As is the case in many California cities, 

Lawndale’s financial resources are severely limited. This is shown 

in the two largest areas for generating revenue: Property tax and 

sales tax. In 1978, when California’s Proposition 13 was passed, 

Lawndale was a City that had no property tax. Today the City receives a very small percentage of what the residents pay in property tax, and much less than the average California city’s portion. 

Additionally, with the small size of approximately 1.9 square 

miles, Lawndale does not have a great deal of retail development, 

and therefore does not receive much sales tax. Because of these factors, the City of Lawndale must rely on other funding sources, including CDBG, to pay for many of the programs we operate. 

Lawndale is a community that has been participating in CDBG 

since its inception 32 years ago. This funding has been benefiting 

the community in many ways. However, in recent years, due to 

funding decreases, City staff has not had the ability to fund or implement any new projects. In the past, to determine what programs 

the City was able to provide, the staff generally recommended continuing existing CDBG funded program that provided the most 

benefit to the qualified residents. When a CDBG project was comVerDate 0ct 09 2002 18:38 Nov 16, 2006 Jkt 003536 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 F:\DOCS\HBA102.040 HFIN PsN: TERRIE
16

pleted, or additional CDBG funds were made available, staff recommended the implementation of new projects. This was accomplished through the request for proposals to implement new 

projects. This has not happened in some time, and the City has 

been using it’s dwindling CDBG funds to support the same programs year in and year out. 

Most recently, funding has gone to an item that is considered extremely important, and has become a necessity. The previously 

noted strategic location of Lawndale in the heart of the South Bay 

has caused, and will continue to cause, a significant number of vehicles and large amounts of traffic which are generated by 

Lawndale’s larger surrounding neighbors. Because of this, large 

portions of Lawndale’s CDBG money goes to improve and maintain 

our 22 miles of streets and to make our sidewalks A.D.A. compliant 

and more accessible to residents and visitors alike. In recent years, 

CDBG funding has been also used for procurement and advances 

for the Lawndale senior citizen population with goals of creating a 

new senior facility. These funds are currently used to support these 

seniors with a nutrition program, providing daily meals at reduced, 

and often, no cost. And other programs currently funded through 

the CDBG include residential rehabilitation and, of course, graffiti 

removal. These programs allow for the community of Lawndale to 

continue to appeal to and attract families, and move away from 

blighted conditions. 

As you may be aware, the Federal Government has been cutting 

funding to CDBG over the year with funding for CDBG decreasing 

significantly over the past 3 years. If funding is cut further for 

Lawndale’s CDBG’s program, its residents will be affected in immeasurable ways. Cuts in this type of funding will harm the City’s 

continued success in the programs it currently provides. The City 

would need to seek other funding for programs, but would likely be 

forced to eliminate a great deal of those programs. 

I would like to take this opportunity to thank the subcommittee 

for allowing me to speak today on behalf of the community of 

Lawndale. I urge you to use what you have heard today and do all 

you can to stop any reduction or elimination funding for the current and future CDBG programs. 

Thank you. 

[The prepared statement of Mayor Hofmann can be found on 

page 80 of the appendix.] 

Chairman NEY. I want to thank all of the witnesses. And I think 

by what you are doing today will be a great tool to help us for those 

of us who do not want the cuts, it will be a great tool to help us 

with this hearing and your voice today. 

I have a couple of questions. And I am basing some of these off 

of the hearings in Ohio, and frankly probably one of the questions 

I am going to ask about the formula and the neediest, might better 

be answered by the second panel when I realized because they 

work with, you know, sometimes a little bit more intricate details. 

But in the Administration’s proposal, putting aside the dollar figure in the cut, but in the proposal is to have a shift to help the 

neediest of the needy. And do you have any comments on that 

change within the formula to do that or do you have any thoughts 

on it? 

17

Mr. OVRUM. Let me just say quickly, and again I think, Mr. Ney, 

you are correct; the second panel might be better equipped to deal 

with that. There have been a number of formula proposals that we 

have looked at. We do not see any one of them at this point becoming the leading option in our mind. The thing that we want to urge 

upon you most is to fully fund the program and then we would be 

happy to work with you on an equitable funding formula. 

Chairman NEY. If fully funded? Okay. 

Mayor? 

Mr. DORN. I do not agree with the formula that has been proposed; I think needy is needy. And I think we need to have the 

CDBG fund fully funded so that those individuals can be helped. 

I mean, of course, if an individual is out on the streets, that individual is needy. If an individual is hungry, living in a shelter, that 

individual is needy. All of them need to be helped. I mean in a 

country this rich, why would we even consider saying well, this 

needy person we are not going to help, but this needy person over 

here we are going to help? 

The formula does not work. Let us fully fund CDBG. 

Chairman NEY. Mayor? 

Mr. HOFMANN. Who are we to determine who is really in need? 

I mean, if you are in need, you are in need. And we, as a City, we 

look at that and we try to help everybody that we can help. 

Chairman NEY. Well, the response back, and I asked this question because back in Ohio when we went to the rural areas like the 

Coalition for Appalachian Development, they felt that if the formula is altered, that they already try to take care of the neediest. 

And if the formula is actually altered, you would kind of restrict, 

maybe somebody is put in a category of poor, but they would not 

be in the neediest, and all of a sudden you cannot help them. They 

thought the flexibility—basically they are saying what you have 

said. And so I was just curious if the same feeling was out here 

on that. 

I want to ask a question about micromini loans. Let me tell you 

where I am coming from on this. We have asked this question also 

back in Ohio, and again maybe the second panel deals with it 

more. But has anybody has embarked on the use of micromini 

loans? 

After the United States went into Afghanistan, there was a 

whole ‘‘big picture’’ attempt to fund certain things through the 

United States Department of Commerce. And we found out that 

micromini loans were helping, especially in the areas of helping the 

women who weren’t allowed to read all these years or to own a 

business. And it is something that maybe surprised people when 

they heard about it, the theory being used in Afghanistan. We have 

been using it for years back home because the micromini loans are 

sometimes $100, $200—under $1,000. So back home some of the 

groups have been using these micromini loans in Ohio. And I was 

just wondering if any of you have any familiarity with them with 

them or the use of them, or have they been used here or not? 

Mr. DORN. We have used micromini loans for small businesses 

that need money for a short period of time. Micromini loans have 

been very vital to some businesses just getting started. And we 

have used those, yes. 

18

Mr. OVRUM. And Mr. Graves will speak to what we have done 

in Los Angeles on that during his portion. 

Chairman NEY. Yes. One question I had, I want to ask of HUD, 

but one of the things about assessing the program is the argument 

we hear out there that HUD is still using COBALT as the process. 

And I guess information to be transmitted to CDBG participants by 

computer somehow, but HUD uses COBALT. And I did not think 

this was accurate. Believe me, I am the last person to be a computer whiz. I am a history teacher by degree, so I am not into it. 

But we do hear comments, well, HUD is using COBALT, so it is 

an old, old system in the process of electronics, and therefore it is 

not an accurate gauge of the effectiveness of CDBG, 

Assistant Secretary PATENAUDE. Thank you, Mr. Chairman. 

HUD is currently revising the IDIS system. And by the fall of 

2006, we will move to a web-based program or platform, if you will. 

And I am not a computer tech, but I understand it is currently a 

COBALT mainframe. 

Chairman NEY. Yes. Because if I can remember, I hope I have 

my years right, but I think in 1999, Rick Lazio, I think, was head 

of the Housing Subcommittee. But HUD was revising it back in 

1999. So that is my institutional history. And I am not trying to 

get you here. I am just saying I think I heard that back in 1999. 

Assistant Secretary PATENAUDE. Mr. Chairman, if I may, the 

Secretary of HUD recruited a top talent. We have a new Chief Information Officer, Lisa Schlosser. She is personally committed to 

this. We have biweekly meetings with the contractor that is handling the revisions to IDIS. And I can assure you that this time 

HUD will get it taken care of. 

And as I said, by the fall of 2006, it will move to the web-based 

platform. 

Chairman NEY. By the fall of 2006? 

Assistant Secretary PATENAUDE. This fall. 

Chairman NEY. Okay. Well then, what about some of the comments people have made that the system is not as up-to-date as it 

should be, and it is not accurately portraying the use of CDBG or 

its effectiveness; either way, I mean, you could argue it. 

Assistant Secretary PATENAUDE. We can currently tell you what 

CDBG is being spent on. But with the implementation of the performance measurement framework, we will be able to accurately 

gauge the successes the CDBG program is having. 

Chairman NEY. Yes. 

Assistant Secretary PATENAUDE. And we will fully implement the 

performance measurement system in fiscal year 2007, but we will 

begin workshops this May. And the workshops will continue 

through the fall so that we can successfully implement this new 

system. 

Chairman NEY. And I appreciate that. And I do not want to be 

putting you on the spot, because you are not OMB, but OMB is 

saying that CDBG is not effective. So if OMB is saying that, are 

they getting that from HUD, or has OMB just made that statement 

and not utilized the uses in the right way? What do you think 

about OMB’s statements? 

Assistant Secretary PATENAUDE. As you know, the program was 

PARTed, which is an OMB tool to rate the effectiveness of the 

19

CDBG program 2-plus years ago. And, unfortunately, the program 

was rated not effective under the current part system. 

The Office of Management and Budget was instrumental in the 

development of the performance measurement framework, so I believe that this is one step in the direction that OMB supports. 

Chairman NEY. So OMB thinks it is not effective, then does 

HUD think the program is effective? 

Assistant Secretary PATENAUDE. We are implementing the performance measurement framework so we can accurately gauge 

what the program’s effectiveness is. And OMB was a partner in 

that. The stakeholders were involved. 

Chairman NEY. Yes. 

Assistant Secretary PATENAUDE. And it was a 2-year process developing this. And I believe the performance measurement framework was developed in response to the PART on the program. 

Chairman NEY. So actually it is kind of up in the air then if 

HUD has not determined whether it is effective or not, and people 

would tend to judge, I think, a little bit more HUD’s determination 

of the program than OMB. I am talking as a Member of Congress. 

OMB says a lot of things. But it is hard for me and other people 

dealing with this to visualize how OMB can say that it is not effective when HUD itself really is not in the assured position yet of 

determining how effective it is because you are trying to upgrade 

the systems to make that determination. And so I just wonder how 

OMB could have decided it. It just seems that OMB would be 

flawed in coming out and saying that this is not an effective program. 

Assistant Secretary PATENAUDE. Well, as you know, the PART is 

a tool that they used, and it is obviously not a perfect tool to gauge 

the effectiveness of a program. And the same PART is used to 

evaluate every Federal program. And as a result of that score, 

OMB engaged in dialogue with HUD to develop this performance 

measurement framework so that we can accurately gauge. 

Chairman NEY. Yes. 

Assistant Secretary PATENAUDE. Again, we have seen many, 

many successes with the program, but we do not currently have a 

system in place. We are implementing it right now so that we can 

assure the taxpayers that the money is being used wisely. 

Chairman NEY. It just seems that OMB has jumped the gun to 

say it is not effective when they are trying to communicate with 

HUD to see if it is effective. 

Just to go back in a little history with OMB, they had deemed 

that we could severely cut back the black lung clinics because we 

have less coal miners now. And, of course, black lung is something 

people got 25 years ago. We fought that when President Clinton 

was in office, and when President Bush was in office, so we fought 

under two Presidents. We argued with OMB because they kind of 

just talked to somebody and deemed well, there are less coal miners, without talking to Health and Human Services to find out the 

long term effects of pneumoconiosis, which is black lung. 

And so you look back on some of their history and how they 

make decisions. Now, sometimes they will have a more precise 

model. But I think this is another case where OMB, if you do not 

have a system kind of perfected it as HUD to determine the effecVerDate 0ct 09 2002 18:38 Nov 16, 2006 Jkt 003536 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 F:\DOCS\HBA102.040 HFIN PsN: TERRIE
20

tiveness, I just do not know how they could have had a 2-year kind 

of sit down on this, OMB, and deemed that the program is not effective. It seems like they should maybe listen more to what you 

all developed by 2006, I would assume. 

Assistant Secretary PATENAUDE. Well, they were a partner at the 

table. And I do believe that they, by being a partner at the table, 

they were at all of the public interest group meetings. I think they 

do support the reform of the CDBG program, and part of that reform is the implementation of the performance measurement system. 

Chairman NEY. I should explain, I am sorry, to the audience. I 

apologize because of words we use in Washington, D.C., a lot. But 

OMB is Office of Management and Budget. So I should explain. I 

am sorry for not explaining that in the first place. 

I will stop because I do want to get to our ranking member. But 

one other question I had, do you have any comment on the neediest 

of the needy and the formula, any comment on it? 

Assistant Secretary PATENAUDE. The current formula is flawed. 

As you know, the demographics have changed and it has been 30 

years since the formula was developed. And we can use the examples of St. Louis, Detroit, and Miami, where we have an aging 

housing stock. Communities actually benefit from that. I am a native from New England and we all know that in New England, the 

pre-1940 housing is very, very valuable, but yet New England benefits from the pre-1940 housing. 

We look to Detroit, that has demolished much of the pre-1940 

housing. The pre-1940 housing, when it is demolished, works 

against them because the need is not there. 

Chairman NEY. Okay. Just for the record, explain the 1940, what 

it is. 

Assistant Secretary PATENAUDE. Housing that was developed 

prior to 1940 is part of the current formula, and that is what is 

creating this distortion. And, obviously, you know the older cities 

benefit from this when indeed, many of the pre-1940 housing in 

Boston and even in Washington, D.C., are very high-end housing 

now. It is very expensive to rehab that housing. So that is part of 

the distortion. 

So we look at communities, the example I cited in my opening 

remarks. We have communities with very different needs receiving 

the same amount. So when we talk about targeting to the most 

needy, the formula that we propose would fix the current distortions. 

Chairman NEY. Thank you. 

Ms. Waters. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

Let us continue with trying to understand how you make decisions. First of all, let us recognize that last year’s budget eliminated CDBG. Was that decision based on performance studies? 

Assistant Secretary PATENAUDE. I was not in this position last 

year. As you know, I was confirmed on April 15th of last year. 

Ms. WATERS. But surely they told you what they were doing. No? 

Assistant Secretary PATENAUDE. I was not involved in the budget 

process for fiscal year 2006. 

21

Ms. WATERS. All right. Then I will not pursue that line of questioning. I am trying to find out how decisions are made. 

So the budget that we are dealing with proposes a substantial 

cut, 20 percent cut. But tell me how that relates to performance 

criteria measurements that you entered into the Federal Register 

on March 7th. Did you enter— 

Assistant Secretary PATENAUDE. We did. We published the final 

notice of the performance measurement framework. 

Ms. WATERS. The final notice of the performance measurement 

framework—what? 

Assistant Secretary PATENAUDE. The performance measurement 

framework. 

Ms. WATERS. Framework. 

Assistant Secretary PATENAUDE. That is the system that we will 

work with our grantees. 

Ms. WATERS. This is where HUD will be conducting these 15 

workshops? 

Assistant Secretary PATENAUDE. We will be. 

Ms. WATERS. Tell me about those. 

Assistant Secretary PATENAUDE. The workshops will be for our 

grantees. They will be throughout the country. We will have one 

here in LA in August and we will work with the grantees to successfully implement this program. Many, many grantees already 

have performance measurements in place, but this is to put a uniform system in place and it will be required to enter this information into the system. 

Ms. WATERS. Well, give me an example of what you will do when 

you come to Los Angeles? 

Assistant Secretary PATENAUDE. The workshops that will be conducted, they will be technical workshops, I think, on how to enter 

the— 

Ms. WATERS. Are you going to invite all of the grantees to a 

workshop? 

Assistant Secretary PATENAUDE. I believe that all grantees will 

be invited to these workshops. 

Ms. WATERS. There will be a number of workshops or one workshop? 

Assistant Secretary PATENAUDE. We will be conducting 15 workshops for this. 

Ms. WATERS. One of them will be in L.A.? 

Assistant Secretary PATENAUDE. I believe just one is scheduled 

for L.A. at this time. If I can check with my General Deputy— 

Ms. WATERS. Okay. All right. Let us see. You will have one here. 

You will be inviting some grantees or all grantees? 

General Deputy BREGON. All grantees. 

Ms. WATERS. Okay. What will happen when all of the grantees 

come to this workshop? Tell me how it works. 

Assistant Secretary PATENAUDE. We are working with the contractor right now to develop the curriculum, the training curriculum. Part of this will be technical on the revisions to the IDIS 

system, which are very much welcomed. The IT system will be 

much easier to use for the grantees who will be part of it. 

The performance framework, how to enter the activities into the 

system. And we also will be training all of our CDBG directors. As 

22

you know, we have 40 CDBG directors located throughout the 

country so that the technical assistance will be available from HUD 

as well as our technical assistant providers. 

Ms. WATERS. The information that you will be entering into the 

system, is that information that you will use then to evaluate particular programs? 

Assistant Secretary PATENAUDE. That’s correct. When a grantee 

puts together their plan and submits their annual performance 

plan, we will be able to actually look to see were the results 

achieved that they set out in their annual plan. 

Ms. WATERS. All right. So that I am very clear about this, and 

I may be mixing up some of the terminology, when you talk about 

the grantee, are you talking about the City of Los Angeles, the 

County of Los Angeles, or all of the programs that are involved 

with the City and the counties? 

Assistant Secretary PATENAUDE. The grantees are the entitlement communities that receive the grants directly from HUD. And 

then the States are also grantees. 

Ms. WATERS. Okay. So, the City of Los Angeles and the County 

of Los Angeles will be the grantees receiving this information. Now, 

the information that they are inputting into the system is going to 

be evaluated in some way. Can you explain that to me a little bit? 

Assistant Secretary PATENAUDE. Obviously, it will take a year for 

this to accumulate the information. But the grantee submits a plan 

to HUD, what they intend to do, with their CDBG dollars. At the 

end of that year they submit another plan. And by looking at what 

is now in the new IDIS system we were able to compare what they 

set out to do and whether or not they actually achieved the results. 

Ms. WATERS. Let me ask if our staffs from Congress have been 

involved or will be involved in any way in this training, or will be 

trained on what you are doing? 

Assistant Secretary PATENAUDE. I do not think we have plans for 

that, but I think it is a wonderful idea. And we can reach out to 

the Congressional staffers and include them. We have 1,100 entitlement communities that will be trained, so we can certainly reach 

out to the staffers. 

Ms. WATERS. We need to know what you are doing at HUD. 

Mr. Chairman, do you think it would be possible that we could 

send a letter to the Secretary requesting that our staffs be brought 

up to date and trained on what is going on with this evaluation 

process, this performance measurement criteria? 

Chairman NEY. We can do that without objection. And then it 

will be transmitted to the members of the subcommittee. 

Ms. WATERS. All right. I think that is going to be very important. 

Now let me understand a little bit more the example that you 

provided at the beginning of your testimony, where you compared 

Santa Monica to Santa Maria, was it? 

Assistant Secretary PATENAUDE. Correct. 

Ms. WATERS. You talked about the income of Santa Monica compared to Santa Maria. Are you trying to say to us that if there are 

enclaves, support people in Santa Monica, that somehow they will 

not count because Santa Maria should have much more money because they have many more poor people? 

23

Assistant Secretary PATENAUDE. The new formula does have as 

a basis poverty. We are looking at a better distribution of the funding. So the communities that have less distress would receive less 

CDBG dollars, the communities with greater distress would receive 

a greater amount of money. 

Ms. WATERS. In this evaluation process, is it possible that there 

would be communities that are now receiving money that would 

not receive funds because HUD would consider the population of 

the poor not poor enough, or too small a population to be considered? 

Assistant Secretary PATENAUDE. Currently, we have over 1,100 

entitlement grantees. And it is possible, and again we would need 

to finalize this piece of legislation, but it is possible that grantees 

would no longer be eligible as an entitlement community but would 

be eligible to compete for funds through their State. 

Ms. WATERS. This is with your challenge grant? 

Assistant Secretary PATENAUDE. No. The challenge grant is separate. The challenge grant would be another opportunity for distressed communities to receive additional CDBG funding. But communities currently in Chairman Ney’s District, his communities, he 

does not have any entitlement communities; his communities receive their CDBG dollars directly from the State. 

Ms. WATERS. Discuss the challenge grant a little bit more so that 

I can understand it. 

Assistant Secretary PATENAUDE. The challenge grant is introducing a competitive, not competitive in the traditional sense 

where you would submit an application, but competitive in the 

sense that communities that have made tremendous progress, you 

know, leveraging private dollars, concentrating CDBG dollars 

would be eligible for a challenge grant which could be up to $200 

million is what is proposed in the President’s budget. Certainly one 

community would not be eligible for that, but many communities. 

Ms. WATERS. When you talk about leveraging private resources 

are you talking about poor communities such as Santa Maria trying to have access to private capital, private resources by which to 

be eligible for a challenge grant? 

Assistant Secretary PATENAUDE. That would be one factor. But 

we would be looking at a community to see how well they used all 

Federal resources concentrating in a distressed neighborhood. 

Ms. WATERS. So what if Santa Maria, this very poor community 

with $13,000 incomes, did not use it as well, what would happen? 

Assistant Secretary PATENAUDE. They would not be eligible for 

the challenge grant. 

Ms. WATERS. But they would still be eligible for a CDBG? 

Assistant Secretary PATENAUDE. That’s correct. 

Ms. WATERS. So those communities who have relationships with 

the private sector who are able to attract private capital, who are 

able to be involved in economic development activities where 

there’s private participation would be eligible for challenge grants? 

Assistant Secretary PATENAUDE. They would. But leveraging the 

dollars is not the only criteria. We currently have neighborhood revitalization strategy areas, we have over 250 of them. They are 

designated by our CDBG offices. Those neighborhood revitalization 

strategy areas, CDBG are being concentrated in that area. And 

24

that is what we would be looking for in the challenge grant. So 

they would need to have a plan, and at some point an established 

track record of concentrating dollars for the greatest impact. 

Ms. WATERS. Finally, given what you propose to do in examining 

a community’s performance or ability to leverage, etc., how did you 

come up with the 20 percent cut for the 2007 budget year? 

Assistant Secretary PATENAUDE. Secretary Jackson said in the 

hearing 2 weeks ago, the Secretary made that recommendation 

throughout the budget process. And the $3 billion CDBG number 

was not stand alone. When they developed the budget it was with 

the consideration that there would be reform to the program. So by 

targeting the dollars the Administration believes that the $3 billion 

in CDBG funding is sufficient to meet the community development 

needs. 

Ms. WATERS. So what you are basically saying is you did not 

have any real criteria? You did not have any real way by which you 

evaluated this? The Secretary pulled it out of the air? 

Assistant Secretary PATENAUDE. I think the Secretary puts a 

great deal of thought into the preparation— 

Ms. WATERS. Oh, I am sorry. I did not mean to ask you that. I 

know you cannot agree that the Secretary pulled it out of the air, 

but the real question is you did not have any way by which to 

evaluate the grantees or their programs that could lead you to that 

kind of conclusion at this time? 

Assistant Secretary PATENAUDE. I do believe a lot of thought 

went into developing the budget— 

Ms. WATERS. No. I thought you were not involved in the budget. 

I mean, I want to know what the criteria was for the evaluation. 

How did you do performance evaluation that would lead you to the 

conclusion that 20 percent of the CDBG funds should be cut? 

Assistant Secretary PATENAUDE. I do not believe it was based on 

performance. When we proposed the fiscal year 2007 budget for 

CDBG we were talking about a formula revision. And that was the 

number that the Secretary submitted to the Office of Management 

and Budget— 

Ms. WATERS. Well, tell me about the performance, the revision 

of the formula, how did that work? How did that lead you to a 20 

percent reduction? Describe to me how you revised the formula 

that led you to the conclusion that CDBG should be cut by 20 percent? 

Assistant Secretary PATENAUDE. I am not sure there is a direct 

correlation between the 20 percent— 

Ms. WATERS. I am not either, that is why I am asking you. I am 

not either. Twenty-seven percent I am being told. I do not know 

how you got to that. 

Assistant Secretary PATENAUDE. It is a 20 percent reduction. The 

27 percent, you have to take the earmarks and the setasides out 

of it. So for the formula portion of the program it is a 20 percent 

reduction from fiscal year 2006. 

Ms. WATERS. Well, let me just ask this: If in fact we really did 

not have the kind of evaluation or the kind of criteria for evaluation to make that determination, is it possible at all that we could 

not come up with a 20 percent cut for 2007 year? And let us look 

at performance criteria and even formula revisions to see what we 

25

come up for the next budget year. Is it possible not to move for 

2007 and is there anything that we could do here today that would 

help you to say to the Secretary that these cuts will be extremely 

harmful, unexpected at this time and detrimental to our communities and we would ask that they would not be pursued? With the 

performance criteria and CDBG formula revision you must show 

what kind of changes you would like to make. 

Maybe after you do the real work you may go in the opposite direction. Do you think that would be reasonable to request of the 

Secretary? 

Assistant Secretary PATENAUDE. Well, as you know, Secretary 

Jackson worked very, very hard to keep the CDBG at HUD, we’re 

very, very pleased that it is in our fiscal year 2007 budget. He fully 

supports the program. And as he said in a hearing before your committee, you know the funding level is up to the Congress. This is 

the proposed amount for CDBG that the Administration has put 

forth. 

Ms. WATERS. Well, we know that. What we would like to do is 

work with you and not have to fight with HUD. As you know, we 

have significant bipartisan support for full funding for CDBG. And 

some of our strongest advocacy is coming is coming from the Republican side of the aisle, where Members have little towns and cities that depend on CDBG money for their infrastructure. 

I brought attention to Lawndale as one of the smallest cities in 

my district, because they depend heavily on CDBG for infrastructure. He talked about the traffic problems that they have and how 

they are able to deal with those, using CDBG just as my Mayor 

from Inglewood. 

So I will just leave you with this; I think what we are going to 

hear today, and what the people in this room want to hear is: 

(1) We cannot afford the cuts; and 

(2) We understand when Departments, Agencies, or this Administration would like to evaluate what is going on. But we really do 

understand the difference between some reasonable or credible 

evaluation and just some kind of speculation about whether or not 

programs are meeting the needs or whether or not the formula is 

correct. 

So, I would like to say to you that one of the things you can do 

that would be very helpful for all of us on both sides of the aisle 

is to say, you know I really do think before we do any cuts we 

ought to be able to justify them. Otherwise, we’re just not believable. Okay? 

Assistant Secretary PATENAUDE. The fiscal year 2007 budget has 

an increase for the Home program, the Continuum Care, those are 

our homeless programs. The SHOP program, which funds the selfhelp such as Habitat for Humanities. So we did see increases in 

other programs in the Office of Community Planning and Development for fiscal year 2007 that will also serve the communities in 

need. 

Ms. WATERS. Okay. I understand. And while we appreciate the 

other programs, we need those, plus we need CDBG. And while you 

identify that you have those programs that are continuing, you are 

cutting other programs. Are you not cutting Brownfields also? 

26

Assistant Secretary PATENAUDE. We are consolidating the 

Brownfields program. It is an eligible use right now under the 

CDBG program. 

Ms. WATERS. Would you like to tell me what other programs you 

are cutting? 

Assistant Secretary PATENAUDE. The Section 108 loan guarantee 

program was consolidated into the CDBG program. 

Ms. WATERS. Consolidated? But do you understand Section 108 

is extremely important to economic development? My City of 

Inglewood was able to expand its business community by reconfiguring the median in its main thoroughfare of Market Street, which 

helped to bring more businesses onto that community. And it has 

just been booming. Section 108 is really important. And do you 

know why I really like it. It was my first big accomplishment as 

a Member of Congress to keep it from being scored so that it could 

be used for cities. And so I am very partial to the Section 108 Loan 

Guarantee. And it is a very special program for me and I think for 

the cities. 

So what else did you cut? 

Assistant Secretary PATENAUDE. The rural housing program is 

also being consolidated into the CDBG programs. 

Ms. WATERS. Where you use ‘‘consolidated’’, I use ‘‘cut.’’ Now 

where are we differing? 

Did you know the rural program was being consolidated, Mr. 

Chairman? 

Chairman NEY. Clinton, did we know the rural program was 

being consolidated? 

Our counsel tells me we that knew it was being consolidated. 

Ms. WATERS. Okay. So what else are you consolidating? 

Assistant Secretary PATENAUDE. Those are the three programs 

that will be consolidated with the CDBG reform. 

Ms. WATERS. Okay. So thank you very much. And I am going to 

move on. 

Assistant Secretary PATENAUDE. Thank you. 

Ms. WATERS. Let me just thank our Mayors. I see that Supervisor Yvonne Burke has come in, Mr. Chairman. And we would like 

to have an opportunity for her to give her statement. 

I just want to say to my Mayors, because I know that they probably have to leave, that it is very important for you to work very 

closely with your Members of Congress. I know you do. We work 

very closely together. But if we are to engage the Members of Congress in the struggle, they have to be aware of the importance of 

these programs to their districts. 

Many Members will go along and they will say yes, they should 

be refunded. But they do not have the experience of really knowing 

what these programs are doing. We do because they are in our jurisdiction. This is the subcommittee of the Financial Services Committee that has the responsibility for oversight. But when you have 

members who do not serve on this committee, it is important for 

you to do several things. 

(1) It is important for you to get together with the Members of 

Congress and to tell them what your ideas are about funding programs and developments ahead of time. Let us not wait until you 

need gap funding and then you are coming for an earmark to try 

27

to keep something going that you started. Let us not wait until 

there are problems with some of these funding ideas to get to the 

member. 

In the City of Los Angeles, Mr. Ovrum, there was some talk 

today about the affordable housing trust fund. We like the idea, but 

if you are going to use CDBG or Home monies with their programs 

and you are announcing the program, the Members of Congress 

should know about it. We do not want to read about it in the newspaper. We want to know about it, because this is money we fight 

for and we work very hard for. 

In Los Angeles, for example, you have this huge delegation. Some 

of them sit on the Appropriations Committee, like Lucille RoybalAllard, you want her involved in this housing trust fund. We do not 

want to see that a housing trust fund is being announced and we 

are hearing about it for the first time. 

That also goes for the development projects in our districts. If 

you are working with developers on projects, you and CRA, do not 

let us find out about it through the back door. We want to hear 

about it upfront so that we will understand not only how the dollars are being spent, but, in many cases, how we can be very helpful, in other cases how we can add funds. 

Now, I have a request from the City of L.A. for some gap funding 

for a project at Vermont Manchester—no Manchester. You did not 

do that. Broadway Manchester. It was to build a parking facility. 

I did not even know you were developing the parking facilities. And 

I am not going to add that to my earmark requests to assist you 

with that because you are coming at it too late, and I have other 

earmarked requests that are in line that I have to pay attention 

to. 

So the message is this, mayors: Include your Members of Congress early on and particularly those who, again, do not have a lot 

of detail about these programs. Otherwise, those of us who are sitting here working for CDBG and Section 108 and home programs, 

etc., we are going to start to get more involved in writing into the 

appropriations legislation what can and cannot happen; so we 

would appreciate that. 

And if you would take that back. I see that your CDBG Director 

is here. We would appreciate it very much. 

Thank you very much. 

Yes, sir? 

Chairman NEY. And any of the Mayors, of course, who have to 

leave, but we have Ms. Burke. 

I do have, without objection, a statement for the record from Jan 

Perry, council member, City of Los Angeles 

Chairman NEY. And we welcome, we actually met you before out 

here, a former colleague of the U.S. House, the Honorable Ms. 

Burke. 

STATEMENT OF YVONNE BRATHWAITE BURKE, DISTRICT 2, 

MEMBER, LOS ANGELES COUNTY BOARD OF SUPERVISORS 

Ms. BURKE. Well, thank you very much to Chairman Ney and 

also to our Congresswoman Maxine Waters. 

We are certainly pleased to have you here. It is my pleasure to 

have a chance to share with you some of my concerns. 

28

My remarks will discuss the importance of the Community Development Block Grant, and maybe I should say, you are in our 

2nd District here, Exposition Park, it is in the 2nd District. We 

have both of our Mayors here are part of the 2nd District. And we 

are very pleased to have you here because these are issues that are 

of vital concern to us. 

And today you will also hear from Carlos Jackson, the executive 

director of the County’s Community Development Commission 

which administers our CDBG program on behalf of Los Angeles 

Urban County. 

Although you are receiving testimony on several aspects of 

CDBG, I am going to comment specifically only on the formula program. 

CDBG programs play a key role in improving the quality of life 

for low- and moderate-income residents of Los Angeles County. I 

am deeply concerned about the proposed cut for Federal fiscal year 

2007. The proposed 25 percent reduction in funding will be a loss 

of $7.7 million to the Los Angeles Urban County program. As you 

know, we have already been reduced annually since 2001. In 2001, 

our entitlement was $39 million, and with the 24 percent proposed 

cut for next year, our entitlement will be reduced to $23.1 million. 

That is a loss of $16 million in a 6-year period. It is vital that Congress maintain formula funding for the CDBG program at the $4.3 

billion to improve the quality of life of our citizens. 

I want to acknowledge the past support of Congresswoman Waters for our programs and for this large urban program. And in its 

32 years the program has been used constructively to provide housing, community and economic development, and public service 

projects. Our funds are normally leveraged with funding from other 

sources to develop affordable housing. We have been able to bring 

in tax credits, we are able to bring in banks. The only way we are 

able to utilize the funds that we have is because anyone who comes 

in to move forward with one of those programs, they know that we 

are leveraging other funds and they are going to have to leverage 

other funds to make it viable in Los Angeles County where land 

is expensive, construction is expensive, and where it is necessary 

to have affordable housing. Our biggest problem, we have 90,000 

homeless and it is basically a housing problem, affordable housing. 

So we have to do this kind of development. And we also support 

business. 

And I would like to give you one example. I believe this is right 

outside of your District, but Martin Luther King Hospital, where 

we have the Los Angeles Eye Institute, which has been involved 

with $21 million multi-discipline health care facility that will be 

adjacent to Martin Luther King Hospital. And this eye institute 

will provide, not only is it an eye institute, this is going to meet 

the requirement of Martin Luther King to have a place for doctors 

to hold their offices. 

And what has happened in our other hospitals, there is the opportunity for a practice plan. Martin Luther King Hospital did not 

have a practice plan. This will institute a practice plan with a facility adjacent to the hospital where those doctors will be able to have 

their practice and they will not have to go miles away from the 

29

hospital in order to carry that out and to make it competitive with 

other hospitals. 

Now this money is a combination of 108 Loan Guarantees and Economic Development Initiative Funds. And $3 million in private 

funding to construct a facility that will provide health services to 

low- and moderate-income people. 

In addition, CDBG funds are allocated for important ‘‘public service’’ activities. Our residents benefit from public service activities: 

Meals on Wheels for seniors; after school programs for youth; drug 

intervention; homeless assistance; and domestic violence counseling. The Los Angeles County Board of Supervisors values CDBG 

in that it provides the flexibility for us to prioritize the allocation 

of funds to address our local needs. And just like you said, we want 

to know about what’s going on. 

I believe that we provided to you a list of all of those funds that 

we are allocating, but I just want to talk about a couple. UJIMA. 

UJIMA came to the County for $1 from HUD when HUD no 

longer—when they had received it back in a foreclosure. We now 

have a proposal out to totally redo the UJIMA project. And there 

are proposals that have been accepted and that is moving forward. 

The Salinas property that we acquired from Compton High 

School, the school district when they no longer wanted that land. 

We have proposals out. We have not been able to arrive at those. 

But these are some of the things. We purchased the land from 

Compton and now we are moving forward for a major housing 

project there and the proposals have not been accepted totally, but 

it is in outreach to the community. And I am sure you will be hearing from some of the members of the community. Ninety-seven 

units of condo projects there. 

So I want to thank you for conducting this field hearing and to 

restate this is a vital program to Los Angeles County. It has been 

successful, it has been effective in providing services to low income 

people. And I am confident in the course of this hearing that you 

will realize how important CDBG is to the County and also some 

of the other programs that you discussed with HUD. We cannot afford to suffer the loss of any more in terms of drastic cuts. 

And I join all members of the Board of Supervisors in looking forward to continuing to work with your committee to assist in anyway we can to move forward where we can continue to have this 

funding that is vital. 

Thank you. 

[The prepared statement of Ms. Brathwaite Burke can be found 

on page 62 of the appendix.] 

Ms. WATERS. Thank you. 

Chairman NEY. I really did not have any questions. I want to 

thank you for coming. 

I did want to follow up on something, though, that the Congresswoman has mentioned, I think it is important and actually it was 

raised during the hearings in Ohio, and it is earmarks. A lot of 

members are afraid to say the word ‘‘earmark’’ today. It is a thing 

you’re not supposed to say. 

And as I made clear, we have a cancer center being constructed 

in Knox County and that is because we talked with local officials, 

they communicated to our office, and I put it in. In fact, you can 

30

put my name next to any earmark and piece of legislation that you 

want. Not you, but the government. But I always make it clear 

that I do not think the U.S. Government would have said wow, I 

really think the people in Knox County who are pretty isolated 

need a cancer center, let us just do one. No. It is because the local 

officials, or I could name you places you have never heard of that 

$20,000, $40,000 helps to bring water. Because I have areas that 

do not have potable water. There is no water in people’s houses. 

They get it out of wells, and maybe the wells were destroyed. They 

now go down the road and they get it out of a spring. We have 

places like that. And again, you know, I do not think the Federal 

Government is going to say we giveth water today to Ohio or other 

places. 

And so I am mentioning earmarks, and I will put my name on 

them. I mentioned earmarks, I know the Congresswoman will. But 

I think the Congresswoman raises a really good point, too. The 

communication is a turning point. And with the attack on the 

funds and the cuts on the funds and what we are trying to do to 

help people back in the districts, the communication at the local 

level to the Member of Congress is absolutely more critical than it 

has ever, ever been. Because we are not going to hear what people 

are doing. And I have said this to our local government officials on 

both sides of the aisle. We are not going to hear it out of the Federal Government. They are not going to call us up and say guess 

what is going on down in the district. 

So I just wanted to dovetail in there. I think it is more critical, 

again, then ever before. Right now we are battling the money, but 

it is again the process of it, too. 

Ms. WATERS. Well, no, I hear about Ohio. My husband was born 

in Zansville. 

Chairman NEY. Well, I live 30 miles from Zansville. Do you have 

any relatives back there? 

Ms. WATERS. He has. They are not mine. So I hear plenty about 

Zansville. 

Chairman NEY. By the way, well we have learned a new term, 

too. If things do not go right in November, I think that the line all 

of us in elected office ought to use is I did not lose, I was consolidated. 

Ms. WATERS. We learn something new everyday. 

I want to thank Supervisor Burke for coming today. I know how 

busy she is. And I do know about a lot of the programs, and I will 

talk with you a little bit more about the Martin Luther King 

project. We certainly cannot talk too much about it today, because 

it would take us all day to do that. 

But I want to ask you something. I think I read that L.A. County 

has come up with a very ambitious program for the homeless. 

Ms. BURKE. Yes. 

Ms. WATERS. And that you are spending County revenue to help 

deal with this problem. And I suppose you may be putting together 

money from wherever you can pull it from to deal with this problem. And as I understand it, you’re trying to do something to get 

rid of the concentration of the homeless in the downtown area and 

to ask communities to accept their share of responsibility in dealing with the homeless. Any of these dollars Federal dollars? 

31

Ms. BURKE. For the most part, these are our general revenue dollars. We took out of our $80 million that we’re taking out of—this 

housing trust fund is a motion that Supervisor Molina and I introduced some time ago saying that we need to have a housing fund 

that is separate. However, we will call on Federal dollars. Because 

first of all, if we have family assistance and we have stabilization, 

we are going to have to have some of the mental health dollars, we 

are going to have to have some of those dollars that go for general— well, our general relief is local, but we will be calling upon—

we have to use Federal dollars to provide many of the services that 

will be provided. 

This housing fund is a commitment from our general fund, a $15 

million ongoing commitment, not 80 million every year. $15 million 

ongoing from our general fund. Now, of course, you may immediately say well, will that take away from some of your health dollars that you use from the general fund? We feel that in a sense 

many of the people we are talking about go in and out of our hospitals everyday. These are the people that when someone wants to 

get rid of them, they call for an ambulance to take them to the hospital. 

So there are Federal dollars. But basically this is a general fund 

revenue source. 

Ms. WATERS. So what we are looking at, we have the City that 

has put together or extended or a housing trust fund. The County 

will have its own housing trust fund. And the two of you will work 

with each other. 

Ms. WATERS. Well, that is what I was wondering. The two would 

be working together. 

Ms. BURKE. Right. 

Ms. WATERS. And have they bought into your plan and you 

bought into their plan about how you are going to disperse from 

downtown? 

Ms. BURKE. Well, there is a very strong feeling, I think, from the 

City and—well, let me say this. The City, part of their program is 

a facility that is in the 2nd District but is really close to Skid Row. 

And that is controversial because there is a difference on the Board 

on terms of whether some people believe there should be any kind 

of additional facility there. But I suspect that will all be worked 

out. 

I have committed to support the facility. I understand that we 

do need to disperse, but you also have to have services where the 

people are. You know, all of the people are not going to leave. And 

it is a very difficult thing to say we are going to have all the services far away when you have the people right there. But I support 

the idea of having facilities in every district, all five districts. But 

at the same time we do have the people who are right there. 

Ms. WATERS. One of the things that I am going to ask of the 

Mayor and of the County Board is that you include us in those discussions. 

Ms. BURKE. Certainly, yes. 

Ms. WATERS. Because I was involved about a year ago, and after 

the fact in a plan that Ms. Tobacca was trying to advance. 

Ms. BURKE. Oh, yes. 

32

Ms. WATERS. And all of a sudden the resident councils were up 

in arms. And we ended up in a meeting one night with over 1,000 

people at Crenshaw Christian Center where the community was 

opposed to the plan that Ms. Tobacca was advancing. 

I think that if we have an opportunity to get involved with the 

discussions early on, we can help come to some conclusions about 

where facilities could be or should be located, or ways that we 

could at least communicate with the communities rather than hearing about it on the tail end. Because normally what happens if we 

are not involved and we hear about it at the last minute, we just 

go along with the people, whatever they say. You know that is the 

easy way out. But if we are involved in planning and development, 

we can defend a good decision. So I am going to ask the Mayor that 

we be involved. 

Ms. BURKE. Right. 

Ms. WATERS. And I would like to ask you that you be sure and 

get our staffs involved. 

Ms. BURKE. Right. 

Ms. WATERS. So that we can help in the development of the 

plans. 

Ms. BURKE. We certainly will do that. But it is not going to be 

easy. There are not going to be very many communities opening 

their arms. But I do want to say one community, we had a lot of 

problems when there were homeless people coming to Ted Watkins 

Park during the day. 

Ms. WATERS. Yes. 

Ms. BURKE. The church, Grant AME, came forward and has provided a facility for people there so that the homeless can go there 

rather than going into the park. And the community there is very 

happy with that, they are accepting it. 

So it is not going to be easy to find a facility location, but at the 

same time we would like to work with you. 

Ms. WATERS. Okay. 

Ms. BURKE. As we move forward to try to identify a location. 

Now, a location that the Mayor is suggesting is not in the 1st 

District, it is in the 2nd District, but it is close to Skid Row and 

that is highly controversial. 

Ms. WATERS. I am sure. 

Ms. BURKE. Yes. 

Ms. WATERS. Okay. Thank you very much. Thank you. 

Mr. Mayor, did you have a last word you would like to leave with 

us before you leave? 

Mr. HOFMANN. No, other than thank you very much for coming 

in. 

Ms. WATERS. You are welcome. 

Mr. HOFMANN. And letting us be part of this discussion. 

Ms. WATERS. Thank you very much. 

A round of applause for our first panel. 

Chairman NEY. We will take a very, very short recess as the second panel sets up. And it’ll be Mr. Clifford Graves, Mr. Carlos 

Jackson, Mr. Al Jenkins, Mr. Rudolf Montiel, Mr. Mitchell 

Netburn, Ms. Brenda Shockley, and Ms. Marva Smith Battle-Bey. 

And then we will go into our second panel. 

And I want to thank the audience. 

33

We will be right back. 

[Recess] 

Chairman NEY. The committee will come back to order. The 

short recess turned into a little bit longer one, but that is okay. 

And we will go straight to the panel. We have: 

Mr. Clifford Graves, general manager, Department of Community Development, City of Los Angeles, California; 

Mr. Carlos Jackson, executive director, Los Angeles County Community Development Commission and Housing Authority of the 

County of Los Angeles; 

Mr. Al Jenkins, project manager, CRA/LA; 

Mr. Rudolf Montiel, executive director, Housing Authority of the 

City of Los Angeles; 

Mr. Mitchell Netburn, executive director, Los Angeles Homeless 

Services Authority; 

Ms. Brenda Shockley, president, Community Build, Incorporated; 

and 

Ms. Marva Smith Battle-Bey, president and CEO, Vermont 

Slauson Economic Development Corporation. 

Thank you. And we will start with Mr. Graves. 

STATEMENT OF CLIFFORD GRAVES, GENERAL MANAGER, DEPARTMENT OF COMMUNITY DEVELOPMENT, CITY OF LOS 

ANGELES, CALIFORNIA 

Mr. GRAVES. Thank you, Mr. Chairman, and Congresswoman 

Waters. My name is Clifford Graves and I am the general manager 

of the Community Development Department for the City of Los Angeles. And thank you very much for taking the time to hold this 

hearing here in Los Angeles. I think the turnout today, from the 

veterans to the kids, indicates the level of interest there is in this 

very important program. 

And I am especially pleased that you came out now; I have been 

with the City about 3 years, long enough to develop a genuine 

sense of pride about what the City has been able to do with the 

block grant program over the years, and also to be extremely disturbed about what the future for the program might hold. 

As you all know, the secret to the block grant success has been 

that while it targets a certain population, the most challenged part 

of our population, it basically it leaves it to local officials to tailor 

programs and set priorities that are best suited to their particular 

community, whether it is a town in your district, Mr. Chairman, 

whether it is the City of Los Angeles, the City of Lawndale, or 

whatever. And it is that ability to respond, to have the officials 

closest to the issue respond in an appropriate way. It is what 

frankly separates this program from most other Federal programs 

and it was the reason for the program being formed back in the 

1970’s. 

Now, Mr. Chairman, you have talked about the typical city in 

your District. Obviously, Los Angeles would have a hard time fitting in your District, but we have not only a lot of people, some 4 

million, but we have over a million people in this City who are 

under the age of 18. We have 100,000 young people between the 

ages of 16 and 24 who are out of school and out of work. And it 

goes without saying, that is more than most of the cities in this 

34

country, so we are dealing with a problem of great magnitude. And 

when you add the complexity of this being probably the most ethnically diverse city in the country—41 percent of the population is 

foreign born, and 140 languages and dialects are spoken in the 

schools—it gives you an indication that the programs that the City 

puts into place to address the issues are going to be different here 

than anywhere else. 

And the flexibility of the program allows it to adapt over time. 

It is not necessary to go back to Congress every few years to amend 

the program to deal with some new issue that has come to the forefront. Local officials can adapt things as needed. 

For example, in Los Angeles, early in the program’s life, as I understand it, the bulk of the funds were spent on capital projects, 

neighborhood facilities, and things like that. After the riots of the 

early 1990’s, the City shifted its focus toward public services, trying to rebuild the social infrastructure of our most challenged 

areas. And that continues to be a priority today, but it has been 

recognized here that there is a growing gap in the economy between the kinds of jobs that are being created here, that Mr. 

Ovrum was referring to, and the skills of the workforce who should 

be meeting that need. It is hurting our economic development, and 

it also means, as Mr. Ovrum pointed out, that a large part of our 

population is not benefitting from this economic growth. Therefore, 

the Mayor and City Council have begun to shift parts of the block 

grant program toward economic development and marrying our 

economic development work with the work we are doing in workforce development through, among other things, the Workforce Investment Act. 

The irony is that you know full well what is happening with the 

proposals for funding of the block grant; the same thing is happening in the Workforce Investment Act. Whereas in 1995, the 

City’s allocation under the block grant was nearly $100 million, it 

is now down to $74 million this year, and it will go down even further. And if you add the effect of inflation, the City has about half 

as much purchasing power and half the level of services available 

to deliver now than it had 10 years ago, whereas the issues are getting more complex. 

In order to address this, the City has sought to basically intertwine the block grant with the other things it does with its own 

funds, and with other outside funds. I would like to use just a few 

examples this morning. 

In the community facilities area, the City passed a library bond 

issue some years ago which resulted in a renaissance in the public 

library system throughout the City. In the most needy areas, services and facilities a little above the standard were considered to be 

important, but could not be afforded under the bond issue, so many 

of the libraries in the most needy areas got special features and 

special facilities using Community Development Block Grant funds. 

They were also used because, in many of our challenge areas, 

land acquisition was especially complicated and the block grant 

was just able to supplement a much larger amount of funds. 

Similarly, there was one area of south Los Angeles that was very 

much lacking a facility suitable for supporting a major community 

center. So block grant funds were used to build the Rita Walters 

35

Learning Center in south Los Angeles, which includes an alternative high school, a community center, and a number of other outreach services. Many of those services are funded by other programs, City funds, school district funds, and others. The block 

grant also funds some of them, but it was the block grant which 

made that facility possible, which, in turn, makes available a whole 

range of services that the community needs. 

I mentioned the importance of rebuilding and strengthening the 

social infrastructure of the City. The City of Los Angeles has 

partnered with hundreds of nonprofit agencies around the City to 

deliver a wide range of human services, some of which you’ll be 

hearing about from other panelists, but the block grant is the glue 

that holds these systems together. 

We have molded many of these organizations into what we call 

family development networks, which are essentially consortia with 

common databases, and common client management, and we have 

12 of them around the City. Their base funding is the block grant. 

But to use an example, we are using funding we get from the State 

of California’s Office of Traffic Safety to use these agencies to promote traffic safety. And last year, we were able to give out 6,000 

free child safety seats to needy families, and over 13,000 bicycle 

helmets to increase the safety of young people. Again, if it weren’t 

for the block grant providing the infrastructure, these specialized 

programs could not work. 

In the economic development area, it is very interesting. The 

money is used as either a stimulus or as gap financing to make 

projects that are badly needed become feasible. Probably the biggest success story we have had in recent years is that, as you probably know, there is an area adjacent to Skid Row and the modern 

downtown on the other side known as the Old Bank District. It’s 

the former financial district of the City which includes a lot of 

multi-story, obsolete office buildings. 

The neighborhood was unsavory, to say the least. CDD used to 

be located there until about a year ago. But the City was trying 

to figure out what could be done to stimulate development there. 

So two things were done. First the City passed what it called an 

adaptive reuse ordinance which eased certain requirements for residential developmental that were making the projects unfeasible. 

There still weren’t many takers for that. Then one developer came 

forward with a proposal. The City provided a $5 million Section 

108 loan to go against a $37 million project. That project was so 

successful that it is largely credited with kicking off what now 

some people are saying is about a $10 billion building boom in that 

part of Los Angeles. And we have not been asked to provide any 

more 108 funding after that first one. 

We are using block grant in that same area in another way. 

While housing has taken off there, there is a shortage of commercial services. And so we are using what we call the L.A. Business 

Assistance program, which is a technical assistance program for 

small and emerging businesses to provide special marketing, business planning, and site selection services to retailers who want to 

locate in that area but run into problems— 

Chairman NEY. I’m sorry. I have to note we do have a 5-minute 

rule for— 

36

Mr. GRAVES. Oh, I’m sorry. 

Chairman NEY. Literally, I could listen to you for another half 

hour because I think you are going down the right path and, actually, you provided me some food for thought on just a few things 

you said already. 

Mr. GRAVES. Okay. 

Chairman NEY. But we do have the 5-minute rule so we can get 

everybody in. But if you would like to just summarize what you 

were saying, the rest of your statement will be entered for the 

record. 

Mr. GRAVES. Fine. There is a fuller statement that has already 

been provided for the record. 

I would like to just conclude by saying again the important thing 

about the block grant program is its flexibility and ability to adapt 

over time. And you have had an interest in formulas and performance measures and so forth like that, and there are always ways 

to tinker with the program. But the important thing is keep targeted on who you want to serve and allow local officials the discretion to figure out how best to do it. 

[The prepared statement of Mr. Graves can be found on page 71 

of the appendix.] 

Chairman NEY. Thank you. 

Mr. Jackson? 

STATEMENT OF CARLOS JACKSON, EXECUTIVE DIRECTOR, 

LOS ANGELES COUNTY COMMUNITY DEVELOPMENT COMMISSION AND HOUSING AUTHORITY OF THE COUNTY OF 

LOS ANGELES 

Mr. JACKSON. Thank you. Good morning, Chairman Ney and 

Ranking Member Waters. 

I would also like to express our appreciation on behalf of the 

County for your leadership, Mr. Chairman and Congresswoman 

Waters, and also Congressman Miller in your continuous support 

of the CDBG program. 

I have also submitted written testimony regarding the concerns 

that we have on CDBG and the Administration’s proposals. But I 

would like to go on with some spontaneous remarks after listening 

to the Assistant Secretary of HUD regarding their perception, their 

determination as to why they perceive a necessity to change the 

program as well the reduction. 

One of the comments made by the Assistant Secretary was about 

success. All you have to do is look in this room and see the results 

of people who have been assisted or as well as prevention with the 

young people by putting them into positive programs. 

I have been affiliated with the program for over 15 years, and 

there have been various challenges to the program over the years. 

But I sincerely believe, in my professional experience, that CDBG 

has been as Mr. Graves had indicated, really the glue in a lot of 

economic and community development activities. 

There is sufficient regulatory compliance for those entities or entitlements that are not fulfilling their role. I wish they had stayed 

to hear some of the successes, because this is really about people 

and human beings. And by them leaving, I think they are missing 

37

a major dimension as to why we are concerned about what is happening. 

Chairman NEY. I just wanted to let you know, I will assure you 

that we will make sure that portions of this record will be provided 

to HUD. 

Mr. JACKSON. No, I appreciate that. 

Chairman NEY. But I understand your point; had they been here, 

it would have been better. 

Mr. JACKSON. You know, we brought some charts to indicate the 

overall impact of our program. I mean, in 6 years we will be losing 

$16 million. Our program is different from an entitlement jurisdiction in that we are the Urban County Program. Not only are we 

concerned about the unincorporated areas of the County where we 

have approximately a million people, but also 49 cities like the City 

of Lawndale that received funding through us. These cities really 

do not have a lot of opportunities through the State to get funded, 

and so they rely on this type of funding to do housing, community 

development, commercial development, etc. It is very important to 

them, as well as to us. 

HUD talks about performance. For every dollar we put into housing, there is a leverage of 3 other dollars. It’s one to three. And 

that has been historically our pattern. 

CDBG has to be leveraged to make it very positive and very productive. 

L.A. County, our program, as I indicated we are going to suffer 

almost a 41 percent reduction in 6 years, as Supervisor Burke indicated. That is very hard to swallow in times of the demographic 

changes, the tremendous need on human services, social services, 

and more so, affordable housing. 

I do not need to say much about affordable housing, but our me- dian price of a house here is $565,000. We calculate that it takes 

about $140,000 annual income to afford the purchase of a home, 

and that really is beyond many of us at this point. Eleven percent 

of the residents of L.A. County can afford to buy a home. And so 

block grant is used for that purpose. 

We have exceeded the performance measures of HUD in terms 

of their requirements. Almost 95 percent of our funds are spent on 

low-income residents. There is not an issue about our draw down 

rate; we are .81 percent, and the requirement is 1.5. 

And, again, there are many entities like us who are very successful at implementing the program. I just do not understand how 

they arrive at these programmatic changes. 

We support the 108 program. We hate to see it consolidated. But 

more so as you indicated, Congresswoman Waters, it is a cut. It is 

a consolidation into the block grant allocation. I also think that the 

BEDI is very important. 

But on the 108, the cities that we work with, we have 11 participating cities who have used a total value of $56 million in 108’s. 

And these are small cities that don’t have the opportunity to accumulate a lot of funds at one time. So this becomes an incentive for 

them to get involved with revitalization efforts. 

Because of time, I am just moving through the different things. 

But I would like to say that we have not taken a position on the 

four alternatives in the formula. We are waiting for the actual proVerDate 0ct 09 2002 18:38 Nov 16, 2006 Jkt 003536 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 F:\DOCS\HBA102.040 HFIN PsN: TERRIE
38

posal from the Secretary to determine what the impact would be. 

But if there is any negative impact in terms of reduction in funding, we would oppose that. I think this area of Los Angeles County 

cannot endure any further cuts, cannot endure a 25 percent cut. 

As to the wealthy communities, well, there are poor people 

throughout the County. And I think Mayor Dorn really made a 

very strong point. We are splitting hairs about who is poor. If you 

are poor, you are poor. And I think that is where we have concerns 

that we do have communities who could be perceived as being rich, 

however they do have a substantial number of seniors who are in 

need of services. Like, for example, the City of Santa Monica, 

which is not one of our cities, they are one of the concentrations 

of homeless and they are trying to address that. 

So in conclusion, we support that the funding should be restored to the $4.3 billion nationwide. And we will hold back on our opinion 

yet to see what the formula will bring out by the Secretary. But 

it is very unfortunate to sit here in front of you to say we are going 

to suffer another $7.7 million reduction when our population is increasing, our poor population is increasing, as well as the homeless 

population. So many different needs and we are losing the ability 

to address those needs. 

Thank you. 

[The prepared statement of Mr. Jackson can be found on page 84 

of the appendix.] 

Chairman NEY. Thank you. 

Mr. Jenkins? 

STATEMENT OF ALVIN JENKINS, PROJECT MANAGER, CBA/LA 

Mr. JENKINS. Thank you. And good morning. 

I would like to thank Chairman Ney and Ranking Member Waters for inviting me to be here to represent the Redevelopment 

Agency. 

The primary goal of the Redevelopment Agency for the City of 

L.A. is really to eliminate blight and create economic development 

and to assist in providing affordable housing within the area. 

The CDBG funds have proven to be vital for the efforts that we 

have within the south L.A. area. Each of the 9 redevelopment 

project areas within south L.A. has relied heavily on the availability of these CDBG funds. As you know, most of the southern 

L.A. redevelopment project areas are unable to sustain themselves 

with the provision of increment funds or with program income, and 

that is really the nature of the project areas. And if the areas were 

able to sustain themselves, then there would be no reason to have 

redevelopment out there in those particular areas. 

In many cases, redevelopment within south L.A. would not be 

possible at all without having these particular funds from CDBG. 

I oversee three different redevelopment projects areas in the 

south L.A. area being the Crenshaw/Slauson and western/Slauson 

areas. And these HUD funds not only provide a direct source of 

funding, but also enable the leveraging of a great deal of private 

funding for these different projects in order to take place as well. 

Improvements that are a direct result of CDBG funding include 

a variety of different types of benefits for the community. One, for 

instance, is providing commercial facade grant programs for those 

39

areas such as Merk Park Village, Western Avenue, Crenshaw Boulevard, and Slauson Avenue. Those funds have been critical in providing improvements so that those small businesses which cannot 

afford it to make improvements on their buildings that they can 

take place which, of course, overall helps to beautify the South L.A. 

area. 

Street scape programs within the area also have a direct benefit 

to the community with new street plannings, street furniture, and 

other types of improvements. 

Another reason that we use the block grant funds are public improvements which are, again, throughout the south L.A. area. 

Besides these community benefits, other major developments 

would not even be close to be able to be provided without use of 

these funds, including the recently built Chesterfield Square Retail 

Shopping Center on the corner of Western and Slauson where 

funds were used for that. The Marlton Square project which is just 

beginning and is under construction under the very first phases 

and relies heavily on those funds. And other major catalytic 

projects within the south L.A. area as well. 

These projects and improvements rely on the use of CDBG, BEDI 

funds, Section 108 funds, and T&I. And the Agency has over the 

years experienced a significant decline in the amount of funds that 

are available. And these have been called out and mentioned by 

Cliff Graves and other speakers that we’ve had this morning. 

Therefore, I would urge the committee to assist the improvement 

programs for South L.A. by resisting these budget cuts for fiscal 

year 2007 of the block grant funds. 

Chairman NEY. Thank you. 

Mr. Montiel? 

STATEMENT OF RUDOLF MONTIEL, EXECUTIVE DIRECTOR, 

HOUSING AUTHORITY OF THE CITY OF LOS ANGELES 

Mr. MONTIEL. Good morning Chairman Ney and Ranking Member Waters. I represent the Housing Authority of the City of Los 

Angeles, one of the largest in the Nation. And I appreciate this opportunity to discuss with you the importance that CDBG funding 

represents to the services we provide our public housing clients 

that number nearly 25,000 in our City. 

The Housing Authority receives its funding through the City’s allocation of CDBG. And just as communities are not just bricks and 

mortar, these dollars that we receive from CDBG are instrumental 

in allowing us to really improve the lives of the clients that we 

serve. 

We have raised the percentage of AMI of our families from 17 to 

24 percent, primarily because our families have developed to the 

point that they can become working families and move on through 

that continuum in the housing arena. 

CDBG funding from the City helps us fulfill those responsibilities 

to our clients in the areas of safe, healthy communities, family selfsufficiency and most importantly, it even helps to support the Administration’s ownership society; moving families into an ownership scenario. 

Over the last 4 years, the City has reduced the level of CDBG 

funding for the Housing Authority by nearly 57 percent. They have 

40

had to do this because of the cuts that the City has received. Today 

we receive just over $600,000 a year. And in 2002, we were receiving nearly a million and a half dollars. 

The further reduction of CDBG funds proposed for the 2007 

budget would inflict mortal wounds to already weakened client 

service programs in public housing. The competition for the shrinking services will affect educational programs such as tutoring after 

school in computer learning centers, employment programs such as 

job training and job fairs and family development in everything 

from anti-violence to parenting classes to events that we hold for 

seniors. 

We are working very closely with the LAPD to address violence 

issues in our communities. But, again, just as communities are not 

made up of just bricks and mortar, safety in our communities is not 

policing alone. And it is the interaction with services and opportunities for the youth that will lead our communities to be safer and 

more liveable. 

Given the extreme challenges Los Angeles faces from organized 

gangs, low levels of educational attainment, and the City’s rank as 

the homeless capital of the Nation, funding to provide affordable 

housing services and to support healthy communities is as important to the City as it ever has been. And we urge you to help us 

restore full funding to the CDBG program. 

Thank you. 

[The prepared statement of Mr. Montiel can be found on page 94 

of the appendix.] 

Chairman NEY. Ms. Battle-Bey? 

STATEMENT OF MARVA SMITH BATTLE-BEY, PRESIDENT AND 

CEO, VERMONT SLAUSON ECONOMIC DEVELOPMENT CORPORATION 

Ms. BATTLE-BEY. Good morning. I want to say welcome to Chairman Ney, and to our very own Congresswoman Waters. I am 

Marva Smith Battle-Bey, the president of Vermont Slauson Economic Development Corporation. We are located in south Los Angeles, and have been there for about 25 years. 

Every year I make a trip back to Washington to save CDBG 

‘‘again.’’ And I say, ‘‘again,’’ because we come every year. 

I also chair the National Congress for Community Economic Development in Washington, D.C., that is made up of about 600 or 

so CDC’s across the country and the California Community Economic Development Association here in the State of California. We 

represent over 200 CDC’s. 

I want to talk specifically about some of the work we have done 

over the years, and how that work has involved Community Development Block Grant dollars. Because I think that you have heard 

a lot about the uses that the City and the County have for CDBG, 

but I want to put our perspective in very personal terms as it relates to people who reside in our neighborhood and people who do 

business in our neighborhood. 

We have built five supermarket-based centers of various sizes in 

south Los Angeles, all of them coming after the 1965 riots. Our 

first property at Vermont and Slauson was the first shopping center that was built in 1981 after the 1965 Watts riots. So it took alVerDate 0ct 09 2002 18:38 Nov 16, 2006 Jkt 003536 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 F:\DOCS\HBA102.040 HFIN PsN: TERRIE
41

most 20 years before there was a main commercial development in 

South Los Angeles. And that was done because of CDBG dollars. 

There was a tremendous gap in our funding request. Working 

with a private developer, we ended up needing CDBG dollars. And 

those dollars came through an Urban Development Action Grant 

(UDAG) funds as well as through general CDBG funds. 

We built that center in 1981 when interest rates were 22 percent. That was the regular interest rate for borrowing. Thank goodness there was some CRA legislation that passed in 1977 and we 

were able to borrow $2.5 million from a local bank at 10 percent. 

Okay. That was still expensive money. Now people talk about interest rates of about 7 percent, 8 percent. We were talking about 

22 percent money when we built that shopping center. We could 

not have done it had it not been for CDBG dollars. 

That shopping center brought major businesses to our neighborhood and provided over 500 jobs. We also put in a number of small 

businesses; like our McDonald’s which was African-American 

owned. We have a Post Office there. Some of these amenities that 

typically weren’t in shopping centers in our neighborhood, we were 

able to bring to that location because we had block grant dollars. 

We are tremendously under-retailed in south Los Angeles. There 

is not one major project in the 25 years I have been involved in economic development that has not involved CDBG dollars. The private sector comes because we can leverage block grant money, and 

we do so at three to one, four to one, five to one ratio. So it is well 

worth saving the Block programs. 

One last comment. It is not particularly related to economic development, but it is related to the Section 202 Housing program. 

That program is supposed to have a very significant cut as well. 

As the baby boomer population continues to age, many of whom are 

sitting across this panel today, there will be an increased demand 

on senior housing. So if we do not continue to build senior housing, 

we are going to have tremendous problems with the baby boomer 

population and finding adequate housing. 

Thank you. 

[The prepared statement of Ms. Battle-Bey can be found on page 

111 of the appendix.] 

Chairman NEY. Thank you very much. 

Ms. Shockley? 

STATEMENT OF BRENDA SHOCKLEY, PRESIDENT, COMMUNITY 

BUILD, INC. 

Ms. SHOCKLEY. Thank you. Thank you, Chairman Ney and Ranking Member Waters for the opportunity to testify on the impact of 

Community Development Block Grant, CDBG, programs on communities in south Los Angeles. 

My top and general comments would certainly echo that of all my 

colleagues from the community development advocacy organizations as well as from local government. 

I am here today to put a face and a voice on the type of organizations, programs, and communities that have significantly benefitted 

from both direct and indirect CDBG funding. Community Build’s 

initial funding in 1993 was a $3 million CDBG emergency assistance grant in the aftermath of the civil unrest. That funding was 

42

matched by $1.5 million in State funding and was used to provide 

employment training to youth and young adults who had actually 

been disenfrancished and were actually a part of the conditions 

that led to the civil unrest of 1992. 

With that funding, not only did we provide employment training 

services to youth and young adults, we partially financed the development of 24,000 square feet of commercial development on a site 

that had been destroyed during the unrest. That development has 

spurred further development in that are and revitalized the surrounding community. 

Direct CDBG funding was received by Community Build again, 

and in that opportunity we were able to acquire, renovate, and expand to a 9,000 square foot youth center that I must tell you is located in the 35th Congressional District and it has served over 

12,000 youth and young adults since 1994, and annually serves a 

minimum of 1,200 youth and their families. 

Community Build has also received CDBG funding indirectly 

through the budget of the City of Los Angeles. Community Build 

is a one-stop environment for youth and their families. As a result, 

we access CDBG funds each and every day, whether it is a referral 

to a homeless shelter, housing rehabilitation, home ownership assistance, nuisance abatement, or the Targeted Neighborhood Initiative. By way of example, Community Build provides safe passage 

to the youth in our gang prevention middle school program, L.A. 

Bridges. Through L.A. Bridges, too, which is funded by CDBG 

through the CDD Department of the City. 

We are slated to provide gang prevention and intervention in an 

expanded geographic area using CDBG funding. 

We partner with Jennesse Center, a domestic violence prevention 

organization that is funded by CDBG. 

Our youth participating programs at the Youth Technology 

Training Program, that is also funded by CDBG. 

Community Build refers students and their families to the Rita 

Walters Learning complex that Mr. Graves mentioned on Manchester and Vermont, and to the youth and family centers, family 

development networks in our community. All of these programs are 

funded by CDBG. 

But as Ms. Smith Battle-Bey said, one of the most critical aspects is the 108 loan fund, which is glue for some projects and critical leverage for others. The flexibility of the funding allows organizations like Community Build to access conventional bank financing by blending rates to make debt service manageable. 

The Brownfields program is also very, very important because in 

a community such as ours that has experienced long term disinvestments there are many potential development sites in need of 

toxic remediation. 

Community development and revitalization requires as many 

tools as possible. CDBG funding is one of the most effective tools 

for turning around neighborhoods and turning around lives. For organizations such as Community Build, decreasing these resources 

and eliminating important programs such as Brownfields would not 

only be crippling, but in many cases devastating. 

Thank you for the opportunity to offer testimony, and I urge you 

to restore the CDBG program and funding. 

43

If time permits, I just have two brief observations and comments 

regarding issues that have been raised during the course of this 

hearing. 

The first has to do with the discussion with the representative 

from HUD, whom I wish, too, was still here, regarding the evaluation of the program. And I would just submit to the subcommittee 

that the nature, the very unique nature of CDBG resources is that 

it is catalytic funding and it doesn’t necessarily lend itself to a one 

size fits all evaluation tool. That really the idea of looking at how 

the impact and the outcomes relate, it may be more a function of 

the tool than the reality. Because we can all tell you how much a 

small amount of CDBG money will be able to make a big project 

happen. So I raise questions with the tool and would hope that the 

committee would as well. 

Finally, on this issue of the formula and this language regarding 

the neediest of the needy. And what I think some are missing is 

that one of the very critical and important aspects of CDBG is to 

help families and neighborhoods from slipping into the ranks of the 

neediest of the needy as well as serving the neediest of the needy. 

And that is a critical aspect that often, to sort of paraphrase, allows us by investing CDBG dollars you’re offering a hand before 

someone needs a handout. 

Thank you. 

[The prepared statement of Ms. Shockley can be found on page 

109 of the appendix.] 

Chairman NEY. Thank you. 

And the last witness. Before we do, without objection, I have a 

letter from Herb J. Wesson, Jr., council member from the 10th District, signed also by Jan Perry and Bernard Parks. Without objection, it will be part of the record. 

Chairman NEY. Thank you. 

STATEMENT OF MITCHELL NETBURN, EXECUTIVE DIRECTOR, 

LOS ANGELES HOMELESS SERVICES AUTHORITY 

Mr. NETBURN. Thank you. Good morning, Mr. Chairman and 

Ranking Member Waters. My name is Mitchell Netburn and I am 

the Executive Director of the Los Angeles Homeless Services Authority known as LAHSA. 

I am honored that you have invited LAHSA to testify on the 

value of the Community Development Block Grant program as a 

vital tool to help end homelessness. I would also like to thank you 

for holding this hearing in Los Angeles and for your ongoing leadership in support of homeless programs. 

LAHSA is a joint powers authority of the City and County of Los 

Angeles. Founded in 1993, LAHSA is governed by a 10 member 

commission appointed by the City and County of Los Angeles. We 

have been the lead coordinator for the second largest continuum of 

care services in the country since the inception of HUD’s continuum of care funding. This has enabled LAHSA to vigorously 

pursue a regional approach to addressing homelessness. This is 

critical to successfully addressing homelessness, especially given 

the geography covered by our continuum: 4,000 square miles and 

extreme differences in infrastructure and needs across the County. 

44

Moreover, Los Angeles County encompasses 88 jurisdictions, including 34 entitlement cities. 

Based on recent statistics, the City of Los Angeles has now been 

titled the homeless capital of the United States. And according to 

Philip Mangano, Executive Director of the U.S. Interagency Council 

on Homelessness, one in nine people who are homeless in America 

resides in Los Angeles County. A truly astounding statistic. 

Mr. Mangano’s statistic was based on the Greater Los Angeles 

Homeless Count conducted in January of 2005 by LAHSA. This involved a point in time enumeration and survey. The findings estimated that in the course of a year, close to a quarter of a million 

people, 250,000 men, women, and children experience homelessness, and on any given night there are approximately 88,000 homeless people throughout the City and County of Los Angeles. And 

tragically, the vast majority—88 percent—are living on the streets 

or other places not meant for human habitation. 

The Community Development Block Grant provides critical funding to address acute problems of communities such as poverty and 

homelessness. Because of its flexibility, LAHSA utilizes CDBG 

funds for a wide range of homeless services and housing, including 

overnight emergency shelters, a respite center for families and 

model programs which target homeless people living on the streets 

and providing them with shelter. 

These programs enable homeless people to live as independently 

as possible and become productive members of society. Permanent 

housing with services is the key to ending homelessness, and 

CDBG funds are critical to developing housing. For example, just 

last week the Bring Los Angeles Home Blue Ribbon Panel held a 

press conference to launch a 10-year campaign to end homelessness 

in Los Angeles County, which is in keeping with President Bush’s 

initiative to end chronic homelessness. 

A key strategy of the Bring LA Home plan is to create 50,000 

units of affordable housing targeted to people who are homeless. 

Community Development Block Grant funding is proposed to comprise 20 percent of the money necessary to achieve the 50,000 unit 

goal. 

Contributing to LA County’s homeless problem is the County’s 

affordable housing crisis. For example, within the City of Los Angeles there is a 3 percent rental housing vacancy rate based on recent 

reports. Not only does this mean a tighter market for low income 

renters, but those fortunate enough to have a Section 8 voucher are 

finding it harder and harder to find landlords willing to rent to 

them. To address this situation, in November of 2005, Mayor Antonio Villaraigosa announced a commitment to add $50 million, including CDBG funds, to the City’s housing trust fund for permanent supportive housing for Los Angeles’ neediest residents. 

The CDBG funding that LAHSA receives on an annual basis has 

been an invaluable resource for the agency and its service providers who are working in the trenches to end homelessness. Currently LAHSA receives about 19 percent of its overall budget from 

CDBG funding. Therefore, a proposed reduction of more than 20 

percent to the CDBG program would be devastating to Los Angeles. 

To cite just one example, CDBG-funded programs provided 

203,188 bed nights for people who are homeless in the Los Angeles 

45

area in the last program year. Assuming a cut of even just 20 percent, that would be reduced by over 30,000 bed nights. These reductions would severely cripple efforts to address homelessness, especially in Skid Row, South Central, and Hollywood. 

CDBG funding provides a major foundation for homeless service 

providers as well as a major resource for Los Angeles as it seeks 

to implement strategies to end homelessness. The City and County 

of Los Angeles have made significant commitments of resources to 

end homelessness and collectively are moving in the same direction. Any overall reduction in CDBG funding or changes to the allocation formula which will reduce Los Angeles’ share of CDBG fund 

will force people back on the streets and significantly impact our 

ability to end homelessness. 

On behalf of the homeless community in Los Angeles, I thank 

you for this opportunity to provide testimony. We unequivocally 

support continuing the current level of CDBG so that we will have 

the critical resources and Federal leadership necessary to reach our 

mutual goal of ending homelessness in the richest Nation in the 

world. 

Thank you. 

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

97 of the appendix.] 

Chairman NEY. I want to thank the panel. 

I have just a couple of questions and a statement and then we 

will go on to our ranking member who will have some questions, 

I am sure, and the final word since we are in her home area. But 

if she was in D.C., she would probably still have the final word, 

and I mean that flatteringly. 

I wanted to go back, Mr. Graves, because I think you hit on—

and I am sorry to have cut you off. It was just due to time. I think 

you also touched on something that sparked a thought when you 

talked about the helmets and you talked about different ways 

CDBG has been used. And so I am not sure that HUD has taken 

items like this into account in their calculations or the Office of 

Management and Budget has taken these items into account. 

Again, if you look at an ambulance that is purchased for a fire 

department, for example, where I am from, or a nearby area Monroe County, Woodsville, Ohio. If you get into a car, the quickest you 

can get to a hospital is technically a 30-mile trip, which is going 

to be 48 minutes speeding, you know, between there and the hospital, for example. So you might as well say an hour to get somebody there. So if a community like that does not use an ambulance, 

CDBG monies, then there may not even be medical care. 

So my whole point to that is that may not be calculated by the 

bureaucracy as a benefit job wise, but it is a quality of life and necessity. 

Mr. GRAVES. Yes. 

Chairman NEY. So I think by your example, just for the example 

the helmets and the seats that were provided, is a good local flexibility that does help a community or it helps to save somebody’s 

life or going to the emergency room or costing more in medical 

care. I think there are a lot of ways that I am not sure that that’s 

calculated in. I don’t know. 

46

Were you ever requested by the Office of Management and Budget or HUD to provide these types of items to them as part of the 

wholeness of CDBG? 

Mr. GRAVES. In formal communications with HUD, they do ask 

for success stories and examples. I am not sure what they do with 

them. I mean, in terms of, I do not know how they’re sent up the 

line. But we try to keep HUD apprised, the local office here, of 

what we are doing with the funds. 

Chairman NEY. Yes. 

Mr. GRAVES. And, frankly, the local office is very cooperative in 

terms of understanding what we are doing, interpreting the regulations really in a way that allows the City to fulfill its priorities. 

But the answer to your basic question is as far as the national 

level goes we provide that information often to our Congressional 

delegation, to our interest groups, but I do not know how they are 

used. 

Chairman NEY. Mr. Jackson, what was the .81 percent you were 

talking about? You had to be at a certain level of 1. something, but 

it was .81 percent? 

Mr. JACKSON. One of the indicators if you run an effective program is the draw down rate, that you have spent it over a period 

of time. Usually the cut-off period is April 30th of the year. And 

the requirement is that you cannot have more than 1.5 of your entitlement unspent. And we have spent way below that amount. Basically we are spending our dollars is what it comes down to. And 

we have exceeded that requirement of HUD. 

Chairman NEY. Okay. The question on providing the monies for, 

I think maybe it was Mr. Jenkins, the monies provided for money 

to be able to get into housing, CDBG is used for that to be able 

to get housing for people. Does it provide for down payments or—

somebody had mentioned about providing money for people, the 

high cost of housing here and try to provide some CDBG funds to 

help people. I am assuming that is helping with down payments 

or— 

Mr. JACKSON. Well, also on the subsidy of the development, 

bringing it down so it is affordable and they use other resources, 

lending resources for that purpose. But it is really to buy down the 

land costs maybe the construction site. 

Chairman NEY. Yes. 

Mr. JACKSON. But, again, it is only 11 percent of the L.A. County 

residents can afford housing now. To purchase a home. 

Chairman NEY. Is there any shared appreciation where somebody gets some benefits and then the money is put back if they sell 

house, they put some money back in? 

Ms. SHOCKLEY. CRA does. 

Chairman NEY. And I am referring to, for example, revolving 

loans in small towns—a company gets the revolving loan and then 

they use some of it as sort of a grant but they put it back into another revolving loan fund so somebody else coming down the road 

it creates a job. I just wondered if there was share appreciation 

where you are helping people get into the house or housing and 

then they sell at some point in time if the price goes up, and then 

they go back into a program? A shared appreciation. You do? 

47

Mr. JENKINS. Yes. And there have been situations where because 

of the subsidy that goes into, let us say, a home ownership program 

once the house does sell, then the money or the appreciation is 

shared back with the agency. And that is being used to help the 

other homeowners as the new program continues on. 

Chairman NEY. Yes. Ms. Shockley, did you have something that 

you wanted to say? 

Ms. SHOCKLEY. Well, Mr. Jenkins answered it. The CRA, the 

Community Redevelopment Agency, has—and I believe the Los Angeles Housing Department also has programs that allow for the revolving loan as well as a shared appreciation. And you have to hold 

the property a certain amount of time and if you sell after a certain 

amount of time, the appreciation is one thing. If you get in and you 

are trying to flip it and you sell it sooner, it is more. 

Chairman NEY. Yes. I just think the issue of housing has been 

touched on. And I think housing is just, in a lot of ways around 

the country, at a crisis point. And in particular, for example out in 

the cities. Now I have been in Congress and I have served with colleagues, but being on the Housing Subcommittee and being with 

our ranking member who is from here, you know, I found out more 

and more. You can still acquire a place, for example, in areas 

where I am from, you can still acquire a 1956 home. 1956 was built 

with maybe an acre of ground for $62,000. I did not get to the 

5,000 square foot homes yet where it is $320,000 for them. 

Now one of the problems we have, on the other hand however, 

is we had such a downturn of the loss of our coal mines, our steel 

mills our glass houses, you know, all the things that have happened. So for people even though, thank goodness it is at that price 

and not everything’s cheap, but it is decent price, but because of 

the loss of the jobs people could not afford it or they lost their jobs 

and then they lost their credit, and now they have bad credit. 

The other problem we have, we have some space but then again, 

some people do not have water and sewer. And you have water and 

sewer out here, but you do not have the space. 

So I just think that it is dramatic. I mean, the prices and the 

wages are so much higher out here than they would be back in 

rural parts. I mean, I think it’s a huge, huge problem that the Congress has to continue to come to terms on. 

We went down to New Orleans and the question was posed down 

there. In fact, there was a restaurant owner who said he had, I 

think, 157 jobs open but he could not fill them, because there was 

no place for people to live. And so I think when you are looking 

at poverty and jobs and, you know the whole nine yards, it is so 

difficult. 

And actually some things were pointed out to me today by a 

guest in our audience, I will give her credit for it. We were talking 

about, you know, people say well why would people go to a high 

priced store or a 24 hour store and buy things? Well, because they 

do not have a house, they do not have a microwave. And so they 

go there to get the prepared meals when it would be cheaper if 

they had a house with a kitchen area. I mean there is just a 

whole—I could just go on and on. But I just think that the CDBG 

money has to be critical for that and for the housing. 

48

And so I am just going to wrap up my part of this just trying 

to say that it is important to understand. Being out here today, I 

want to thank again Congresswoman Maxine Waters for speaking 

up, speaking out on these issues, for inviting us here. In my opinion being here in Los Angeles and listening to the testimony and 

being able to go back to the U.S. House helps my area, helps the 

entire country. And what we are hearing from the rural areas from 

the hearings, although different circumstances, different needs, 

dovetails the critical nature of the timing. 

I am also going to give a pre-warning. This is not just so easy 

that this money is going to go back. Because last time the money 

went back, but it was still was a 10 percent cut. So this time we 

are having a 25 percent cut and we sit there and say oh wow, you 

know instead of 25 percent saying we’re going to be cut five. Well 

you take the 5 and the 10, no, that is 15. 

And we are doing a lot of other things, too. I wanted to mention, 

too, with Congresswoman Waters, Chairman Oxley, and Ranking 

Member Frank, we did a GSC bill for affordable housing, and I 

hope the Senate moves on it. We did CDBG budget resolution. So 

we are trying to do some of these things. 

But I want to warn you, you know, speaking to the Senate if we 

can get this restored in the House, it is going to be critical in this 

whole process to get these funds. And in times where if the communities are healthy, let us not rip them down if they are healthy. 

But a lot of communities are not healthy and they need help. And 

this is the contrary time to go against the job creation and the 

quality of life elements, which I think is obviously CDBG. This is 

like the worst time I think philosophically that the Administration 

could do this type of thing. 

And there are a lot of ways, and I know we have a budget out 

of balance, we could all talk about 100 ways to do it. But what I 

will tell you is, and I have looked at this, you know, if we just do 

not plan a mission right now to Mars, we can save $32 billion. You 

know, I saw things throughout the budget where we are giving another $200 million to some program, frankly, I have never heard 

of, and we still cannot find anything out about it. 

So going in to just specifically attack CDBG, I think, is a contrary way to go. But I just do not want to give you the false sense 

this is so easily restored. We have been down these roads and these 

battles. But today what you did helps us out. 

And I want to again thank our ranking member for something 

that is important, I think, to everybody in the country to try to 

help them. So thank you for your participation. 

I will yield to our ranking member. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

And I would like to thank all of the panelists who came today 

to share with us their concerns and to help us to be able to have 

the information by which to defend CDBG and try to avoid these 

cuts. 

I do have a few questions I would like to ask. And a few other 

concerns that I would like to share with you. 

Well, first of all, for all of our participants, know that I and others believe very strongly in CDBG and we are going to be fighting 

for all of the money that we can get for CDBG. I am very concerned 

49

that the 20 percent or so cut that the Administration is advancing 

is going to pit economic development against community programs. 

I really do not want to see that happen. 

And I am also concerned, and I have always believed that to the 

degree that we could get Section 108 that could relieve CDBG 

somewhat so that the Section 108 for economic development would 

help to do some of what CDBG monies may have been used for, 

and that way we would have more CDBG monies for some of the 

social programs and programs that we have not even mentioned 

here today. 

First, let me say to all of those who are in the audience today 

who have programs that you would love to tell us about, we are 

going to spend some time learning more about many of the programs that have not been mentioned. Someone came to me a little 

bit earlier to show me a program that had to do with helping the 

blind, the adult blind in the Valley. And they reminded us that 

there are many folks who do not necessarily know Braille and they 

just sit all day long. And so we are aware that there are many programs that are being assisted that we really do need to have even 

more money for, and we are going to fight for them. And we thank 

you all for being here today. 

For the City of Los Angeles, the challenges are many. I think you 

spoke about the Ted Watkins Park and the fact that people from 

some of the programs, the drug rehab programs were being 

dropped during the wee hours of the morning into Ted Watkins 

Park. Somebody spoke about that issue. And that is true because 

at a Town Hall Meeting I was just besieged with folks who said, 

what are you going to do about it. You know, it could have been 

easy for me to say well, it is not my problem, I mean you know 

I go to the City. But we just do not operate our office that way. 

So we got up in the wee hours of the morning and we went to 

the park. And sure enough, there they were. And then we tracked 

down the buses that dropped them off. And then we went to the 

program of the people who were dropping folks off in the park to 

find out what was going on. Well, the fact of the matter is we need 

housing for people who may be in rehab programs, but those programs do not provide day care for them during the day. They do 

not know what to do with them, so they drop them off in the park 

and they have their little blankets there. They sleep in the park, 

and then they may go back to the program for a few hours a day 

to do what they do. 

Now, let me just say to our representative here from the Homeless Authority. I listened to your testimony about permanent housing. But I want to ask you what have we come up with to deal with 

the homeless who do not want permanent housing, cannot keep up 

permanent housing, and will never be able to work another day in 

their lives. They have mental problems and on and on and on? Permanent housing will not solve their problems. What do we have 

and who is advancing the idea that we need communities that are 

developed for people who need a bedroom, toilet facilities, and communal meals to be taken care of in a humane way? We do not need 

a two bedroom house or not the kind of permanent facility that we 

always think about. This other kind of solution could be a permanent facility, but it seems as if we are not developing models for 

50

the people that we really find on Skid Row who really are not going 

to be able to manage the permanent home that we always talk 

about. Who is dealing with that issue. What are you coming up 

with to solve this problem in the homeless community? 

Mr. NETBURN. Yes. You know, to some degree my agency is 

working certainly with the City and the County, as well as HUD. 

And while we do focus on permanent housing, we do try to create 

a range of housing options because, as you pointed out, homeless 

people are different and have different abilities. So while permanent supportive housing may always be the end goal, many people 

may not be ready for that for periods of time. 

So one of the programs that we started in Los Angeles a few 

years ago, originally spearheaded by Councilwoman Perry, was 

converting our winter shelter program, which only operated a few 

months of the year, by converting many of those beds to year round 

beds. It is a very minimal program, People are there just at night, 

but they do get a meal, clean showering, etc. And for many of the 

people in the program it has become, to some degree, de facto permanent housing. 

We try to move as many of those people as we can into more stable housing. It is really the lowest level of housing that we provide. 

But certainly in the few years that it has been operating, that is 

where, right now, they are comfortable staying. They need those 

ongoing supports, meals provided for them in a communal setting. 

Sometimes you will see after 6 months they will move on, sometimes a few years. There are certainly some people who have been 

there since those programs started. And that is quite a large number. Currently we are funding about 820 of those beds in the City 

of Los Angeles. 

Ms. WATERS. Does anyone have a Rolls-Royce style program that 

will deal with the various needs of the homeless from the single 

person with mental disabilities to the person who, with a little bit 

more educational opportunities, could be trained for a job, to the 

family that needs a two bedroom house? Where is the Rolls-Royce 

idea to deal with the various needs of homeless? 

Mr. NETBURN. Right. 

Ms. WATERS. Does anybody have that? 

Mr. NETBURN. There are certainly, I do not know if I would want 

to call them Rolls-Royces, but certainly there are some model programs throughout both the City and the County. They tend to be 

separate for families and for singles. There is certainly a movement 

toward integrating homeless families along with other populations 

so you don’t create sort of mini ghettos of buildings where it is only 

homeless people. But certainly we have some. 

And talking about the population you referred to earlier, in a relatively short period of time, there is going to be a model facility 

opening in Santa Monica. It’s right there on Cloverfield. It is for 

people who you were talking about who really have failed in all the 

other programs. It is a model that the Federal Government funds, 

and it’s called A Safe Haven. And the idea is that people can come 

and go at different hours. There are not the regular rules that have 

to be followed, and a tremendous amount of services are provided 

on site. 

51

Ms. WATERS. So they have the health services, both mental 

health services and other kinds of services, associated with the program. And these people are engaged in some way during the day? 

Mr. NETBURN. Exactly. Because particularly for that population, 

and given the transportation issues in Los Angeles, it is very hard 

for somebody, you know, especially without a car or especially for 

a family, if you have two or three kids with you, to make an appointment across town to be there at 1:00 and then to get to another one by 3:00, and you show up a little bit late, and either your 

appointment is canceled or it is seen as a negative that you got 

there. 

Ms. WATERS. Yes, but see the Rolls-Royce program that I am alluding to would take into consideration those people who are job 

ready, almost job ready who have appointment to keep and we 

could provide the transportation for them. 

Mr. NETBURN. Right. 

Ms. WATERS. We could provide the child care for them. 

Mr. NETBURN. Right. 

Ms. WATERS. And let me just say this and then I will be saying 

this to the Mayor and others; while we are moving toward a time 

when it appears that there is going to be a focus on poverty and 

homelessness and the Mayor is making this tremendous effort with 

his housing trust fund and the County is doing that, and the Mayor 

is now designed by the Conference of Mayors to lead the Nation in 

leading with poverty issues, we need to develop something for the 

Congress of the United States to fight for and to be challenged for 

along with CDBG and these other programs. We need a comprehensive approach to dealing with poverty. And the centerpiece 

of that is homelessness. 

And so I think what I am asking you for is temporary overnight 

facilities are needed, but we have to get out of that. 

Mr. NETBURN. Right. 

Ms. WATERS. We have to get down to what we are going to fight 

for to get rid of homelessness in America, and particularly in Los 

Angeles with the concentration that we have in our City area. So 

I will be asking my staff to work and to get to know all of the programs a lot better. We will be asking for those who want to work 

on the Rolls-Royce idea, the vision, you know, for America to deal 

with homelessness and poverty. 

So I thank you for being here today. 

Mr. NETBURN. Right. 

Ms. WATERS. And let me just raise a few other questions and I 

will be ready to close. 

For the City of Los Angeles and CRA you mentioned, for example, Mr. Graves, that with this problem out at the Ted Watkins 

Park where the people were being left, that Grant AME helped out. 

Mr. GRAVES. That was Supervisor Burke. 

Ms. WATERS. Oh, Supervisor Burke. 

Mr. GRAVES. Yes. 

Ms. WATERS. Okay. Now Grant is involved with some extensive 

development in that area where they bought up, acquired land of 

the old Social Security building and those houses that have been 

boarded up on the opposite side of Grant on Central for some time, 

etc. But I do not see them mentioned in your Section 108 program 

52

for the participation in the $50 million that I thought we had targeted to do something in that overall area. Is there some reason 

why they are not mentioned? 

Mr. GRAVES. Congresswoman Waters, they have not been discussing 108 funding with us. I believe they are working with CRA 

on a broad project. And what typically happens in things like that, 

as they begin to reach an agreement with CRA, if there are extra 

financing needs, they bring us into the package. We have not been 

working with Grant AME. 

Ms. WATERS. Mr. Jenkins, this is not your area. You said you 

were a little west of the area that I am talking about? 

Mr. JENKINS. That is correct. 

Ms. WATERS. I see. 

Mr. JENKINS. I do not have the specifics about the Watts project. 

Ms. WATERS. Okay. I would like my staff to get together with 

CRA and with the Community Development Department to talk 

about some of these projects and to try and understand from the 

point that CRA gets involved with some of these projects, how it 

works with the City for a Section 108 or other CDBG or other funding so that we can not only understand how you cooperate and how 

you work together, but how you set your priorities. And I want to 

know more about the development projects. Ms. Battle-Bey talked 

about some projects that I am very much aware of. But as I look 

in the south, so-called central L.A. area, I want to know more 

about Broadway Manchester, Vermont Manchester, and Grant 

AME projects. I want to understand exactly what kind of resources 

are being dedicated to these projects and what role everybody is 

playing in them. 

Yes, Ms. Battle-Bey? 

Ms. BATTLE-BEY. Congresswoman, the Grant AME project came 

before CRA prior to October of 2005. 

Ms. WATERS. Okay. 

Ms. BATTLE-BEY. So there are dollars from CRA involved in their 

project, but I understand that they are not yet fully developed and 

over to the CDC side. So that may be something that Brenda can 

look into as well. Because you have to bring those projects back up. 

You have to keep going back. 

Ms. SHOCKLEY. And the Grant AME project has not come to the 

CRA since I have been on that Board. 

Ms. WATERS. It has not? 

Ms. SHOCKLEY. Our Board. But I will call it out. 

Ms. WATERS. Okay. That would be good. 

Mr. Montiel, I cannot let you go because without saying something about public housing. We are all very concerned about public 

housing. 

Mr. MONTIEL. Yes, ma’am. 

Ms. WATERS. And I know you have some particular concerns that 

you would like to see targeted revitalization of some of the areas 

that include east L.A. and south central L.A. But while you are 

looking at that issue and working on getting some feedback on 

that, I want to know about what funds you are using to deal with 

drug elimination which HUD wiped out of the budget? I understand, and I just talked with the Attorney General who was before 

the House Judiciary Committee about the recent efforts at the JorVerDate 0ct 09 2002 18:38 Nov 16, 2006 Jkt 003536 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 F:\DOCS\HBA102.040 HFIN PsN: TERRIE
53

dan Downs Housing Project. For example, where evidently there 

was some cooperation between the Housing Authority, the City of 

L.A., and the Attorney General’s office to come into Jordan. I think 

some surveillance cameras are being installed and you are doing 

some other things. 

You are my friend, I am not going to tell you the same way I told 

Mr. Gonzalez. Do not ever come to my District and do that anymore without me understanding, at least having an idea of what 

you are doing. We had just been there with you where we did a 

job fair and we held a Black History Month celebration trying to 

make sure that we include public housing in the same kind of cultural activities that go on in other parts of the City. You were very 

cooperative. It was very successful. As a matter of fact, I had dinner with four participants who got jobs and the company that supplied them with the jobs. 

Mr. MONTIEL. Wonderful. 

Ms. WATERS. We had dinner the night before last, not only to encourage them to continue to do well, but to serve as role models 

for others who we will be trying to connect with jobs. 

So I want to know when you all come up with the ideas about 

crime prevention on the one hand; we think we have some ideas. 

We are working with you, but we are surprised by some of the 

other ideas. How do we create the kind of communication that will 

help us to work together a little bit better so that people will not 

say to me, well, why did you not tell me you all were bringing some 

more FBI, some more ATF and others out here when you came, 

and we looked pretty stupid. We said we did not know. Oh, you did 

not know they were going to put some cameras up out there? Did 

the Feds do this? No, I did not know. 

And my good friend at the Housing Authority did not call me, the 

Attorney General did not call me. So what should we do? 

Mr. MONTIEL. Ranking Member Waters, you are absolutely correct in that regard. But let me explain from the perspective of the 

cameras at Jordan Downs, the lead agency is LAPD. And initially 

the cameras were always slatted to go on the public right-of-way, 

essentially to provide safe passage for the students to get back and 

forth between the schools. 

What has happened is that LAPD has moved the initiative forward to try and also place some of the 12 cameras within the development. And what we have gotten from LAPD is an agreement 

working with Chief Bratton and Commander Beck that as they 

place anything within the right-of-way that is within the community, that they will have to meet the residents and understand the 

resident concerns and figure out how the cameras could be positioned so as not to violate their privacy, etc. But essentially this 

program began as a right-of-way program on the public streets. 

What has happened also is that, I think, the Mayor’s office has 

been very successful in working with the Department of Justice to 

try and expand that program. And the Attorney General issued additional money grants to Los Angeles. And this program may be expanded to other areas now on the east side of Los Angeles as well, 

and perhaps more communities surrounding our public housing 

communities in the south side. 

54

All this is in flux now, but I can give you a commitment that as 

we go forward we are now working a lot closer with some of these 

efforts and we will certainly ensure that your staff is the table understanding what is taking place, etc. But on this initial initiative 

at Jordan Downs, it is LAPD that is driving that initiative. 

Ms. WATERS. Well, I appreciate that, and let me just say that we 

have sent a very clear message to the Attorney General, and we 

will do that with the Mayor and with the Police Chief, Mr. Bratton. 

I do not know what is going on, but I think there may be some constitutional issues here. And I am not pleased that the Attorney 

General came here to get tough on crime and only brought $1 million dollars with him. If you want to get tough on crime prevention, 

you have to bring money with you to talk about how to provide 

some opportunities for our young people. 

So I know that this is your jurisdiction, the Housing Authority. 

You are the top dog. So when they come to you to tell you what 

they are going to do on your territory, I wish that you would at 

least let us know so that we could be involved in some dialogue to 

talk about what we can do on the one hand to involve the residents, as well as talking about crime prevention and the ways that 

they would like to proceed, or things they would like to do. And 

also, we must always raise the question about what to do about 

real prevention rather than so-called just get tough so that we can 

provide some more opportunities here. 

For example, I do not know—I know that HUD eliminated the 

drug elimination program. I do not know if anything replaced that 

program. I do not know if programs are really being made available 

or coordination is being done to help people get GED’s. I do not 

know if we have any job developers who are really trying to connect people with jobs, ready to cooperate with people on the 

ground. So we are going to have to get back on this. I spent many 

years working in public housing developments. It seems, you know, 

since that time, things have gotten a little bit worse. And so we 

need to talk about what we can do to change the situation. 

Mr. MONTIEL. Yes, ma’am. 

Ms. WATERS. I know we need more money, and I am always 

going to fight for that. But you have this great responsibility. Others will come to you and foster their ideas on things that will only 

make your jobs a lot harder. 

Mr. MONTIEL. Yes. 

Ms. WATERS. So I want to stay in close communications with you 

about some of that. 

Mr. MONTIEL. Okay. And if I could comment, Congresswoman 

Waters. That is the issue that we are before this hearing today. We 

really do not have monies for programmatic aspects other than 

running the public housing. And we are losing funding in the capital fund, we are losing funding in public housing. We do not get 

enough money just to run the house, the brick and mortar, much 

less provide what is really needed in our communities which is 

jobs, training, family self-sufficiency, day care, transportation. Because quite frankly most families that could get a job and move 

their life forward, would prefer to live in their house than to live 

in public housing. And if we are not engendering that, then we are 

creating legions of people that will require public housing for decVerDate 0ct 09 2002 18:38 Nov 16, 2006 Jkt 003536 PO 00000 Frm 00060 Fmt 6633 Sfmt 6633 F:\DOCS\HBA102.040 HFIN PsN: TERRIE
55

ades instead of serving as that stepping stone for moving families 

onto better lives. 

Ms. WATERS. Well, I appreciate that. And I think one of the 

things we are going to have to do is we are going to have to activate some advocacy in our public housing projects to confront every 

level of government about their role in dealing with these very real 

problems. I think these problems are only being dealt with in a 

way that says put some cameras up to catch somebody or break 

down some doors to apprehend someone. We have to be about advocating for the resources for the investment in these human beings 

that can help change some lives. 

So I just wanted to have a little bit of a talk with you about that. 

Mr. MONTIEL. Okay. 

Ms. WATERS. And I hope the message today that goes out from 

here is one about communication with all levels of government and 

with each other. And I am going to talk with the Mayor about how 

do we get the Members of Congress and the members of the Board 

of Supervisors, the Housing Authority, CRA, and CDC; how do we 

get together so that we can start to talk about what we are doing 

and how we are doing it in ways that will strengthen us to become 

even better fighters for these resources? Right now I think we are 

a little bit too fragmented. I think that we work in ways that we 

are dealing with what we think is the most needed program or our 

favorite program, or the one that showed up at the most meetings, 

etc. I think we can do better than that. And that is what I would 

like that message to be to every entity today that we have to communicate. 

And for Members of Congress, I have made a commitment to the 

California delegation that we are going to create this communication, or I am going to have to develop legislation that will mandate 

certain kinds of cooperation and interaction so that it will give us 

more input and more direction. Okay. 

Now, let me close by saying that I would like to thank my colleague, Congressman Ney, for taking time from his very busy 

schedule to be here with us in California. This is the second time 

he has honored me with having a hearing. 

As you know, the Republicans are in charge, and they do not 

have to hold hearings at the request of a Democrat. But fortunately, we have developed a good relationship working on those 

issues that we can work on together. His interest in housing, 

CDBG, Section 8, home program, 108, and Loan Guarantee is absolutely extraordinary. He is concerned about the same things that 

I am concerned about. And his desire to save these programs is 

quite unusual. 

So we hope to be able to use your input and our advocacy to 

bring back these cuts. This will be very, very detrimental to our 

area and that has been spoken to very well here today. 

So again, even though my chairman has often been defensive and 

supportive of me when I break the rules, he is the first one to say 

that I probably break them all the time; whether we are here in 

Los Angeles or in New Orleans, he does a fabulous job—I want to 

tell you, he did a fabulous job. And I cannot tell everybody everything that he did publicly because they would begin to question his 

credentials as a good Republican. But I want to tell you, he was 

56

absolutely extraordinary in New Orleans. And because of his work 

we have been able to do some things. And we certainly were able 

to take some of the CDBG money that the Administration thought 

that we did not need to direct toward New Orleans and give them 

an opportunity to use these monies to do some rebuilding. We are 

also concerned about the public housing developments. But, again, 

I just want to say that I am very appreciative to him for the attention that he has given to all these issues. 

And I would break the rules and ask you to give him another 

round of applause. 

Chairman NEY. You know, I want to thank the gentlelady for her 

kind comments. And she gives me the other perspective and the 

other side of the aisle, and combined with my 82 year old parents 

who are lifetime Democrats from Ohio, I get another perspective 

from them, too. 

It has been a pleasure to be here. This is productive. This helps, 

like I said, the entire country. Helps our people, helps people 

around this country and it was so important. So thanks again for 

hosting us. 

The hearing record will remain open for 30 days for members to 

submit additional questions, possibly, to you, and we can get a response. 

And also, sitting here today we have Nat Thomas, Jeff Riley, 

Clinton Jones, and Tom Johnson. And also Michale was here. 

Ms. WATERS. And all of our Washington and Los Angeles staff. 

Chairman NEY. Yes. I want everyone to stand up from the staff 

and give them a round of applause. There we go. 

And we will submit all their names for the record. 

Ms. WATERS. A big round of applause for the staff for having 

done a very, very good job today. 

Chairman NEY. And also one of the staffers, Dana, has his new 

bride here, so that is how dedicated he is. 

Ms. WATERS. Oh, okay. 

Chairman NEY. Is that correct? Thank you. 

With that, the hearing is concluded. Thank you very much. 

Ms. WATERS. Thank you. 

Chairman NEY. And thank you again. 

The hearing is concluded. 

[Whereupon, at 12:51 p.m. the hearing was concluded.] 

(57)

A P P E N D I X

April 12, 2006

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