Mary James Testimony RECOMMENDATIONS: 1. 2. 3. 4. All federal housing programs should have set-asides which address the last three areas of disaster recovery described above. In particular, the Department of Housing and Urban Development should have a Secretary's set-aside for disasters. This set-aside should include Section 8 vouchers/certificates for immediate use, Section 8 Moderate Rehabilitation for mid-term/long-term use. All federal housing new construction funds should have set-asides for permanent disaster recovery. Congress should refund, or at a minimum re-authorize, the Housing Development Action Grant Program for disaster recovery purposes. The Section 202 Program providing housing for the elderly and disabled should also have a Secretary setaside for disaster response and additional points allocated in ranking of proposals in disaster areas. Low Rent Public Housing funds should similarly be set-aside and receive priority ranking. Congress should also reconsider its preference in its allocation of public housing funds for large families. This preference has effectively shut down the public housing program for the elderly and disabled. Congress should waive the FmHA population limit for the 502 program when the disaster area has primarily an agricultural economy. The General Accounting Office or similar body should conduct a study to determine if the cost of the federal response to the processing of claims, loans and temporary assistance, sustained over many months is equal to the probable fraud which might occur if disasteraffected familles simply certified their need without extensive verification. FEMA should accept from public agencies a self-certification of the extent of damage and amount of claim. 5. FEMA should consider charging a percentage of a family's income for rent of a FEMA mobile home. 6. FEMA should cooperate with the National Association of Housing and Redevelopment Officials (NAHRO) in the creation of a disaster handbook for public agencies. This handbook will have as a primary focus the role of housing, community development and redevelopment agencies in housing recovery after a disaster. It will also define the roles of emergency response agencies so that there is clear understanding before a disaster Mary James Testimony Background to the above recommendations Recommendation 1: Set-aside of Section 8 existing program funds. These set-asides would address housing recovery beyond the first component of a disaster. The first phase of recovery is addressed by temporary assistance programs. After a disaster people need immediate shelter, either through hotel/motel vouchers, Red Cross shelters or FEMA's housing allowances. These, however, are limited. Not only by the fact that families must return to FEMA month after month to receive assistance and be limited to a maximum of 18 months, but this uncertainty does not encourage landlords to lease to families whose future ability to pay rent is uncertain. Section 8 vouchers should be issued to a disaster area within 30 days of the disaster. Vouchers would enable low-income families to return to the rental market and give landlords assurance they have the ability to stay. With assistance many rental properties which received only minor damage, or damage which the landlord could handle with a conventional loan, could be rented within weeks of the disaster by low-income families. Private loans which have to be paid back by rent increases can be handled through Section 8 voucher assistance as is done in the rental rehabilitation program. A moderate rehabilitation program, allocated within 60 days of the disaster can keep more severely damaged rentals affordable. Owners of rental properties cannot afford to sit around waiting for Small Business Administration loans. They start to make decisions about their property, seek conventional loans which then cause the rents to be raised to pay back the loans. Moderate Rehabilitation would not only encourage owners to use conventional loans rather than taking up SBA staff and time but would cause the rentals to be affordable for 15 years and provide a source of permanent, affordable housing for families being assisted by FEMA. The need for FEMA mobile homes might be reduced or limited. A priority in allocation of Moderate Rehabilitation units to owners who own their properties prior to a disaster would do much to dissuade speculation by those who would take advantage of the program unscrupulously. HUD has stated that it is not in the business of disaster recovery. Through a congressionally mandated Secretary's set-aside, this agency which administers the nation's housing programs might be considered to be in the "business" with the rest of Mary James Testimony Recommendation 2: New Construction funding set-asides New construction programs are necessary for replacement of those dwellings totally destroyed in a disaster. These funds should be allocated within 90 to 120 days of the disaster. New construction obviously is the longest and most costly of recovery programs but ultimately, the only long-term, permanent solution. There is nothing more stark and devastating than seeing a vacant lot where affordable housing once stood, with no prospect for replacing it. 202 funds are highly competitive nationally. The timing of funding rounds do not necessarily coincide with a disaster. There should be a Secretary set-aside allowed for a disaster response where the elderly and disabled were affected. There should be points allocated in the ranking system that, depending on the extent of the disaster, would give a preference to proposals from disaster areas. Such a set-aside would give immediate hope to communities suffering the loss of affordable housing. The Housing Development Action Grant Program should be refunded. At the very least it should be re-authorized so that recaptured funds could be used for disaster response rather than returning to the Treasury. The point selection system for HoDAG also should recognize disaster areas. Several years ago Congress decided that its limited public housing allocations ought to be used to house large families first. Public housing funds are obtained only through competition in which preference is given to those proposals which will address large families. As the request for funds exceed the allocation public housing for seniors and disabled has been in effect eliminated. Today's families are smaller. In Santa Cruz County our waiting list for one- and two-bedroom units consistently exceeds the waiting list for three-bedroom units and far exceeds those waiting for four-bedrooms or more. Large families do have a more difficult time finding units but the entire national allocation is skewed in this direction to the detriment of seniors, disabled and small, often womenled families. This would seem to indicate it is time to re-evaluate the allocation system. Instead, a guaranteed percentage of the allocation, commensurate with the percentage of large families in a locality, might be appropriate. Mary James Testimony Recommendation 3: GAO should conduct a study of the cost effectiveness of the current system for verification of claims. Six months after the disaster, local conversations still revolve around the length of the FEMA/SBA process, the ridiculous paperwork, the lack of expertise of the inspectors, how inadequate the federal response has been. The stories are horrendous. In one case, a five-unit apartment building in Watsonville, rented to low-income families, was severely damaged and had to be vacated. The owner applied to his bank for a loan and was rejected, he then went to SBA. Five months after the disaster he was told that he had received an SBA loan, finally! However, SBA insisted he take a larger loan than he wanted, and required that it be paid back in three years which meant he had to increase his rents by $400 per month per unit. He decided to sell the apartments. Luckily, in this case, the Housing Authority is purchasing the building and so the apartments will remain affordable. But meanwhile, the families have been supported by FEMA with temporary assistance; the Federal government has had to spend staff time to verify their need every month or so and inspect the property, do verification write-ups, and spend staff time processing the loan. The owner has lost time from his job as well as rental income. Does the cost to the federal government for this long, staff intensive effort exceed a much simpler process similar to the annual income tax reports to the IRS, in which a claim is put in with a limited amount of verification which the claimant self-certifies upon pain of severe punishment that the above is true and correct. There will certainly be some false claims and bad loans made, but would they exceed the time and money spent in maintaining disaster assistance centers, FEMA and SBA staff over the long term? GAO should also take into consideration the tax loss to the Treasury from the loss of income to individuals while they wait months for their SBA loans with which to repair their incomegenerating property. A quicker and more trusting approach adopted by federal response agencies would do much to correct their maligned reputations with probably no more overall cost to the federal government. Recommendation 4: Public agency self-certification. Public facilities appeared to get a very quick response in the initial inspections which were done by the Army Corps of Engineers. Housing Authority property falls into this category. However, even though we used licensed professionals such as our structural engineer and our construction inspector to perform our own inspections and write ups, immediately after the earthquake, we were questioned, second-guessed, denied and re-inspected several times and still, six months after the earthquake have not received one penny of the money to which it was agreed we had a right. I am especially chagrined at this as I was vocally touting how speedy the FEMA response was. Little did I know the Mary James Testimony Public agencies, governed by publicly accountable bodies, covered by sunshine laws and open records acts, audited annually by independent auditors, particularly under the Single Audit Act required by the federal government, ought to be able to self-certify. We lost thousands of dollars in the staff time it took to meet constantly with FEMA inspectors but even more so in the work we did not get done while we met. I know FEMA must have spent equally. Why could we not, as two publicly accountable agencies, accept each others word and get on with it. We, to get on with housing people; FEMA, to get on with assisting other less accountable entities. Recommendation 5: FEMA should charge rent for mobile homes. Much confusion and consternation has been caused by FEMA's mobile homes being rented "free" and sold "for a dollar" at the end of the temporary assistance period. Given the choice of a home rent-free for 18 months, paying market rent or, even paying only 30% of income for rent under a Section 8 voucher, a prudent choice is to take the no-rent mobile home. Many families may not understand that even if the mobile home were free at the end, the cost of moving it, putting in utilities, etc., may be beyond their ability. We are concerned that given these choices families are not using their Section 8 voucher or certificate when it is offered. If the family does not take it, or does not use it, they drop to the bottom of a 5,000 name, six year waiting list. We are just beginning to see this trend and cannot with certainty say how wide spread it is; but if families were paying 30% of their income for rent of the FEMA mobile home just as they would under the Section 8 program, the choice would not be between low rent and no rent, it would be between permanent housing and temporary housing. 30% of income should not be a burden to the family and FEMA would at least recover some of its costs. Recommendation 6: FEMA should cooperate in the development of a disaster handbook The National Association of Housing and Redevelopment Officials was quick to respond to the needs of its members who, in short order, were struck by floods and then by earthquakes. Those of us in California talked with our colleagues in North Carolina and found we were going through the same experiences and frustrations, only a month later. North Carolina would give us tips on how to deal with FEMA and, as we caught up, we would give them similar advice. One thing was certain: we were not clear on the role of the federal emergency response agencies. To us it was all FEMA. A disaster assistance center was all FEMA. It took a long time to differentiate between FEMA, SBA, Army Corps |