Written Statement

Secretary Shaun Donovan
U.S. Department of Housing and Urban Development
Homeland Security And Governmental Affairs Subcommittee On Disaster Recovery
United States Senate

"Five Years Later: An Examination Of Lessons Learned, Progress Made, And Work Remaining From Hurricane Katrina"

Good morning Chairwoman Landrieu, and Members of the Committee. Thank you for inviting me today to testify before you on the fifth anniversary of Hurricane Katrina as part of my sixth trip to the Gulf Coast since becoming HUD Secretary.

From my first visit with Secretary Napolitano where we announced millions of dollars in funding to stimulate long term recovery, to volunteering with my own family as part of the St. Bernard Project last summer, it has been critical to see the progress we are making and the work that still lies ahead – particularly in the wake of the recent oil spill. So, thank you for this opportunity.

As you know, since taking office, the Obama Administration has worked hard to provide residents of the Gulf Coast with the tools they that they need to recover and to rebuild their lives and communities.

Today, I would like to discuss the scope of HUD's efforts to make that possible—where we were when President Obama took office, the progress we have made since that time, and the steps we still need to take to ensure that the resources we've provided are used in the most effective way possible—and I have provided more complete testimony for the record.

As you know, Madam Chairwoman, Hurricane Katrina destroyed more than 200,000 homes in Louisiana alone, including more than 82,000 rental homes. All told, the storm displaced more than a million people from the Gulf Coast, with 600,000 households displaced a month after the hurricane.

When President Obama took office three-and-a-half years later, nearly 40,000 families who had been displaced by the storms were still relying on government assistance to find housing. And within days of his inauguration, I discovered that more than 30,000 of those families were on the verge of losing that assistance—and potentially their homes—when the Disaster Housing Assistance Program came to an end.

Working with nearly 350 public housing agencies around the country, we helped all of these families find permanent housing by extending DHAP for an additional six months, providing comprehensive case management and providing 12,300 of the most vulnerable families with permanent Housing Choice Vouchers.

We also worked closely with our partners across the Administration. For the 7,600 families that remained in temporary housing units throughout the Gulf Coast when we took office, FEMA and HUD worked together to move as many of these families as possible into permanent housing.

All told, because of these efforts, Madam Chairwoman, I'm proud to say to you today that, of the 40,000 families who relied on temporary government housing assistance when we took office, we have helped 98 percent of them move into permanent housing. But we will not rest until we've completed the job for the 883 remaining families.

One of the reasons we've made progress, Madam Chairwoman, is that we realized early on that far too many Gulf Coast residents—through no fault of their own—had become stuck in the recovery process due to numerous challenges and barriers that left them unable to complete the rebuilding of their homes – or their lives.

That is why, since taking office, HUD has provided the additional clarity and guidance to states that gives them flexibility to address these so-called "unmet needs" – including modifying a rigid "duplication of benefits" rule which failed to account for the true cost of displacement.

My experience with the St. Bernard Project that I mentioned earlier provided a powerful example of how we could get resources to people on the ground more quickly and effectively.

Spending a day with my family rebuilding the homes of an elderly woman living alone and a retired couple struggling with advanced Alzheimer's disease, I saw for myself who has born the greatest burden on the road home: our most vulnerable populations.

Perhaps most important of all, the work of non-profits like the St. Bernard Project affirmed my belief that these extraordinary organizations could do even more with the support of a federal partner. Indeed, we've already seen how non-profit organizations partnering with Non-Profit Rebuilding Programs run by the States of Louisiana and Mississippi have housed hundreds of Katrina and Rita victims.

That's why we've provided $23 million in funding to these groups under the Non-Profit Rebuilding Program of Louisiana, to encourage their assistance as well as $28 million under Mississippi's Neighborhood Rental Restoration Project.

With hundreds of thousands of homes damaged and destroyed, Louisiana's Road Home Program is among the largest housing efforts ever undertaken by a state in our nation's history, assisting homeowners across more than two dozen parishes throughout all of Southern Louisiana and nearly 46,000 in Orleans Parish alone.

A year ago, more than 4,000 eligible applicants had yet to receive their program award – by working with the state, we've reduced that number to 170. And we've resolved more than 1,700 appeals over the last year, with only 103 remaining.

Last year, we removed the $50,000 cap on grants to help low and moderate income homeowners rebuild their homes. This change has put nearly $400 million in rebuilding dollars in the hands of homeowners with modest incomes.

None of that is to suggest the job is over, Madam Chairwoman. In Louisiana, while the Road Home program is close to its end, we recognize that decisions made by the previous administration have left some families with ongoing difficulties – and the Obama Administration remains committed to getting those families the help they need.

As part of this commitment, Madam Chairwoman, HUD's Office of Fair Housing and Equal Opportunity is investigating several complaints concerning practices that may be impeding the availability of federally-assisted housing to families most in need – as well as new rental permit practices that allegedly restrict rental housing for African Americans attempting to return to their homes after Hurricane Katrina.

No one should have to wonder if the color of their skin somehow influenced whether they could receive a mortgage, access to economic opportunity, or disaster recovery assistance.

But this isn't just about helping families who were living in temporary housing or at risk of homelessness, Madam Chairwoman. It's also about rebuilding the region's housing stock for families who want to return. It's about helping a community that at one point had lost half its population and is now back over 90 percent not only rebuild what was there before the storm, but rebuild stronger and smarter.

One of the most important challenges we face today is vacant buildings and blight across the metropolitan area where we estimate there are 79,000 blighted units today. We have made progress since we came into office – this number has been reduced by 14 percent.

But to truly address the problem of blight, we must go beyond recovery to revitalization that solves the problems that existed before the storm, when the metropolitan area had one of the highest per capita vacancy rates in the country, with almost 30,000 vacant properties.

And in that respect, the Neighborhood Stabilization Program can be a powerful tool, helping communities purchase and redevelop vacant and abandoned homes.

With Mayor Landrieu's leadership, guidance from HUD, a professional procurement process, and technical assistance provided by Enterprise Community Partners, I'm pleased to report that HUD expects New Orleans to obligate 100 percent of its NSP 1 grant in the next few weeks – targeting these funds to the families and neighborhoods where they are needed most.

As part of the competitively awarded second round of NSP funding, the New Orleans Redevelopment Authority received $29 million grant from HUD to demolish hundreds of blighted properties, build and rehab hundreds of affordable rental homes in their place, and provide homebuyer counseling and other services essential to these neighborhoods' success.

I am also pleased to say that we are making real progress building affordable rental housing, which prior to Katrina, comprised half of all the housing stock here in New Orleans. And in the wake of the storm, public housing developments known as the "Big Four" were severely damaged, disrupting the lives of some of the city's most vulnerable populations.

As you know, HUD has committed to rebuilding the Big Four – and rebuilding the New Orleans housing authority under the leadership of David Gilmore.

When we first came into office, HANO was in disarray. Today, it has leased up thousands more vouchers than were in use before the storm. Combined with our other efforts to spur privately-owned affordable housing developments, we have created 8,400 affordable homes in New Orleans since taking office. In total, this means there is more federally-assisted housing in New Orleans than there was before the storm.

But even still, we are committed to doing more. When we first came into office, not a single family had returned to the Big Four. Today, all four complexes are under construction and hundreds of families have returned to their homes there.

Programs that were simply stuck under the previous Administration, such as the State of Louisiana's $684 million Small Rental Property program, are now producing thousands of units with expenditures of $7.3 million per month – more than five times before I became Secretary.

But as you also know, this work depends on a mixture of Federal, State, and private sector funds, which will require an extension of the "Placed-in-Service" date on Gulf Opportunity Zone Low Income Housing Tax Credits. Without an extension of the GO Zone credits, more than 6,000 Gulf Coast affordable housing units are unlikely to be completed.

This is a top priority for this Administration, which is why I am so thankful for the leadership provided by members of the Louisiana delegation to ensure that the extension would be passed by the House and considered by the Senate. And I am committed to working with all of you to send this critical legislation to President Obama's desk.

The estimated 13,000 construction-related jobs that depend on the extension of these tax credits reminds us that public housing is not only a place for families to find safe, affordable housing – it also can provide a critical opportunity to create jobs, particularly for those who live there and need those jobs the most. And nowhere is that more true than New Orleans.

For that reason, I was thrilled to announce a new partnership in April between HANO and 5 local major service providers.

One notable example of this new collaboration is the recent effort initiated by HUD and orchestrated locally by Urban Strategies to secure $1 million of CDBG Funds to support a subsidized employment program. If funded, this program will provide approximately 200 adults with direct, on-the-job training.

CDBG disaster recovery funds have also helped New Orleans forge new partnerships that create jobs for those who need them the most. One example is Louisiana's partnership with a consortium of local non-profits, created to offer vital assistance in the Small Rental Property Program I mentioned earlier, which has produced over 3,000 affordable homes in the state.

The City of New Orleans has committed to participating in this partnership as well by creating a bonding pool to ensure small and minority businesses participation in redevelopment construction projects. The Housing Authority of New Orleans under David Gilmore's leadership has pledged to join with the city to provide similar opportunities to participate in HANO developments.

Of course, comprehensive community development means more than just housing or economic development – it also means quality healthcare for community residents.

Toward that end, today, Madam Chairwoman, I'm pleased to announce that HUD has approved the use of CDBG funds to help keep 87 community health clinics open, reducing the strain on emergency rooms and improving access to healthcare for the families who need it most.

Lastly, let me say a few words about the lessons we have learned. Perhaps the most important is that when it comes to disaster recovery, it is not just how much money government spends, but how we can spend it better and more effectively.

Too often in the past, the Federal government has paid to rebuild what was there before the storm, rather than to build back stronger and smarter, helping avoid disaster when the next storm strikes.

According to an independent study by the National Institute of Building Sciences, every dollar spent on disaster mitigation saves taxpayers $4 in disaster recovery expenses.

That's why HUD created a Disaster Relief Enhancement Fund – a $300 million pool to incentivize states recovering from disasters to use their funds in a way that would also mitigate against future disasters and prepare them for future recoveries.

And Louisiana and Texas are leaders in this respect. Louisiana and Texas received $1 and $3 billion respectively in CDBG funds to recover from Hurricanes Ike and Gustav – and have committed to using a substantial portion of those funds for disaster mitigation.

That's why I'm pleased to announce today that HUD is awarding Louisiana over $32 million and Texas nearly $68 million from the enhancement fund – to complement, enhance and scale up their innovative efforts. We are also awarding funds to Mississippi and Florida to help them as they work to recover from the Gulf oil spill.

And so, Madam Chairwoman, as you can see, while we have a ways to go, we are making progress for a Gulf Coast region still struggling to regain its footing.

I know it isn't easy – and I want every resident of this proud region to know that this Administration will never forget you. Indeed, at HUD we have made Gulf Coast recovery one of the very measures of our agency's success for the next five years in our strategic plan – and we expect to be held accountable for producing results.

But as long as we continue to cut through the red tape, listen to the voices of people on the ground and work together to get help to families and neighborhoods that need it most—across agency silos, at the federal, state and local levels—I have no doubt we will continue to produce results – results this region needs to not only rebuild, but rebuild stronger, better and faster.

That is what moving from recovery to revitalization is all about – and it remains our goal today. And with that, I would be happy to take your questions. Thank you.

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Content Archived: February 6, 2017