area. And to my left is Paul Rice, who is the district director for basically the coastal area of California. Mr. Rice is involved, through the district office, in the administration of our multifamily housing program and community programs in this area.

I also apologize with not catching up with the change in times; I did my travel this morning, so I was on the road, so you could not reach me.

In any case, I did bring prepared testimony and certainly would like to answer questions at the end of this hearing.

The Farmers Home Administration or FmHA

Chairman TORRES. Mr. Mallory, I received your testimony, and it will be placed in the record and printed as such. I would only ask that you would attempt at this point to summarize, maybe 5 minutes, and please give us the salient points here.

Mr. MALLORY. I can do that easily.

Chairman TORRES. Thank you.

Mr. MALLORY. Basically, Congressman, Farmers Home Administration came to tell you and this committee a little bit about us as we are involved in housing loan programs and in farm loan programs in rural areas. That is our limit and our specialty, rural areas. The programs that you are probably most familiar with are the single-family housing loan program and the low-income farm loan program. I think that many folks are not as aware that we have a community program that makes loans to cities and towns, and also, at the direction of Congress and the Administration, we have been turning toward guarantees in loan making in all of our programs over the years.

In terms of emergency response, I think that the key point that we were made aware of is that there are some significant limits in what we do in terms of emergency. We do have an emergency farm ownership loan program. In housing, we do have the Section 504 Program for repair of single-family dwellings. For elderly individuals, we have a Section 504 Repair Program grant. For low-income individuals, we have a 1 percent interest program. But those programs are limited in area of Watsonville in the aspect that they have to be in a rural area, which Watsonville is not.

Mr. Cairo did bring, I believe, an eligibility area handout if the committee is interested, so that the residents of this area can see which areas are within and without the eligibility boundaries. Generally speaking, the city of Watsonville, because it is larger than a population of 20,000 is ineligible.

The other limit, I think, that we have on our disaster program is because we are a loan making agency generally, we are limited by people coming to the doors of our offices and asking us to do something. We are not an agency that goes out and builds housing or moves in mobile homes; we are not the first strike of a disaster response. We are longer-term; we are based on either the affected individuals coming to us with a plan and then carrying it out with us providing financing and supervision, or an individual or entity, such as the Labor Housing Project under the auspices of the county, asking for a loan to build or repair labor housing projects. We are responsive in that sense.

We did include in the testimony a several-page discussion of the actions we took to get our information to local area communities,

to participate in meetings that were provided in the community and for the community. We participated with FEMA in the activities that they undertook with Santa Cruz County and their housing task force. We participated in the weekly information meetings held by Congressman Panetta, which was very effective, I thought, in Watsonville and Santa Cruz. In all of those areas, we basically passed out our program information in both English and Spanish for affected individuals of the earthquake disaster.

We do take a lot of pride in the fact that we have been very active. We think that we, as an agency, have been one of the most active forces in terms of providing low-income housing in this area and throughout California for many years. We do have some comments which I will cite for the record here, regarding what we have accomplished to the present day in this area.

In Santa Cruz County, for example, we financed 3 farm labor housing projects-71 units-and 61 home ownership loans. In Monterey County, we have financed 6 farm labor projects-290 units-2 rural rental housing projects, which are what we call section 515 programs, totaling 110 units, and approximately 735 single-family home loans. Also, we have made about 4 or 5 farm program loans, which we spoke about, and one housing repair loan which was a direct response to the earthquake.

In San Benito County, 4 low-income rental housing projects—8 two-family units and 34 units for the elderly-and 384 single-family home loans.

In Santa Clara County, three farm labor projects with 56 units, and 4 single-family housing loans.

What I would like to talk about in the conclusion of my presentation is that we do have several farm labor housing projects in the city of Watsonville. Our labor housing project program is not restricted by eligible area size restrictions, so we can finance labor housing projects in the city of Watsonville.

[The prepared statement of Mr. Mallory can be found in the appendix.]

Chairman TORRES. You say that you can?

Mr. MALLORY. We can. We have loans for Casa Pajaro I and II for a total of 35 units. That unit did suffer some very minor structural damage in the quake.

Chairman TORRES. And these are specifically farm labor structures, you say?

Mr. MALLORY. Right.

Chairman TORRES. Seventy-one in total?

Mr. MALLORY. Thirty-five.

Chairman TORRES. Thirty-five, sorry.

Mr. MALLORY. We also are processing a repair loan on Casa Pajaro I and II, and it is all but obligated.

We also have been working, and Paul Rice and his staff have been working, very much with the county and nonprofit housing organizations in this area, and basically trying to encourage and solicit applications for labor housing.

Chairman TORRES. Mr. Mallory, I wonder if you would yield to me for a minute.

Mr. MALLORY. Surely.

Chairman TORRES. I am going to ask for intervention here. Ms. Dolores Huerta, could you join us at the table? She is the vice president of the farm workers organization. She obviously has a great interest in the farm labor housing aspect. And just so that the record reflects her concerns and your comments, I hope that she will entertain raising some issues here relative to farm workers' homes.

Delores, you have heard Mr. Mallory comment on those questions. How does your organization see this whole picture?

Ms. HUERTA. We would be concerned about the cost.

Mr. MALLORY. I would just say that the only difference between the 515 program which is the family program, and the labor housing program is that in the labor housing program, the head of the household has to earn his or her income primarily from harvesting or working in production agriculture-not a cannery, generally speaking-but in production agriculture.

In the 515 program, their income can be from any source. So, the legislative limits on the program is that Watsonville is ineligible for the 515 program funding. Certainly, if it were eligible, we would be happy to entertain applications for that program.

Ms. HUERTA. These people cannot afford to buy housing in those areas. Waiver of that $20,000 limit is needed to make them eligible for these programs.

Mr. MALLORY. Right. I think that the intent of Congress was that they were attempting to allocate scarce resources. Cities like Watsonville are unique in that they are very much agricultural cities, but they exceed the legislative size requirements. I agree with you totally.

Ms. HUERTA. So that policy needs to be changed.

Mr. MALLORY. That is right. I agree with you that Watsonville has unique needs.

Chairman TORRES. Thank you. Thank you, Ms. Huerta, for your intervention at this point.

Mr. Mallory, do you believe that the Farmers Home Administration's rural population eligibility criteria should be waived in disastrous circumstances?

Mr. MALLORY. I am not certain that I would make a broad statement on that subject. I would say that in specific instances like Watsonville, where there is a broad range of low-income people who work in agriculture, maybe there is merit to such a waiver. But as you know, Congressman, when you get back to the halls of Congress and propose something like that, there are many individuals who want it extended to other areas. And that would break the bank. We do not have enough money to parcel out.

For example, in California alone, if we were to raise the eligible area up to anything, say, less than 60,000 population, we could probably double or triple the amount of money that we presently use in our housing loan program. And I do not think that Congress is prepared to allocate those kinds of funds. So, it is kind of a double-edged sword. I guess that I am saying that I see the merit for Watsonville, but to legislatively extend the rule across the board have all kinds of problems in terms of finding funds to cover the need.

Chairman TORRES. Does the supervisor have any comments to make on this question?

Mr. CAIRO. I would like to add that in terms of Ms. Huerta was talking about, there currently is a proposal for a subdivision outside of Watsonville.

Chairman TORRES. Mr. Supervisor, let me take this moment to ask you to identify yourself for the record.

Mr. CAIRO. My name is Gus Cairo. I am the supervisor of the Salinis County office of the Farmers Home Administration.

Chairman TORRES. How do you spell your last name?

Mr. CAIRO. C-A-I-R-O.

Chairman TORRES. Thank you, sir.

Mr. CAIRO. A developer has contacted me; he brought me over, I brought my supervisor over, and we looked at this property. This proposal is coming in possibly on Monday for these single-family units. We have not received the proposal. We do not know if we are going to receive the proposal but we are certainly excited to work on it.

Chairman TORRES. You made official requests for such a proposal to be submitted to you?

Mr. CAIRO. The developer has contacted me and brought me over to the property. It is his move next to give us something that we can act on. We have not yet received it.

Chairman TORRES. Describe for me, if you will, for the record, specifically what this project will do and how you envision it.

Mr. CAIRO. This project, as I understand, is a large project. It is supposed to have 1,200 rental units. There are proposed 246 fourflex units, 205 single-family units for a total of 441 units. Of the 205 single-family units, the developer has told me that he plans to put in 105 of our section 502 low-income home ownership type loans, which would go to very low income families. And I want to make it very clear that we are not talking about so-called affordable; we are talking about very low and low income families.

Chairman TORRES. Mr. Cairo, not specifically to this project, what is your estimate of the housing assistance that is needed in the Watsonville area?

Mr. CAIRO. What I think is that the need has never been as great in the 18 years that I have been involved with this.

Chairman TORRES. It took an earthquake?

Mr. CAIRO. It took an earthquake to get people involved. Even though some have been involved, not as much as we have here

now.

Chairman TORRES. So, you could not give me an estimate of the kind of housing assistance that is really needed?

Mr. CAIRO. Well, they need both rental types of farm worker housing. There is definitely that need here; that need has been addressed here today. And then, the need of home ownership. And again, we have been unable to do anything here because of the criteria.

Chairman TORRES. Let me ask Ms. Huerta, based on your statement that there has not been a need to really address this, would you concur with that?

Ms. HUERTA. In this area, here, they have issued study groups in Watsonville specifically who indicated that there is a tremendous need for low-income housing.

Chairman TORRES. Thank you. Mr. Mallory, any further comments that you wish to make?

Mr. MALLORY. I just would like to say that I do think that Mr. Cairo is doing an outstanding job in this area. I think that he has the reputation of helping a lot of low-income people in finding home ownership. We all take a lot of pride in that.

Chairman TORRES. Thank you very much for your testimony today and your interventions, Mr. Cairo, Ms. Huerta, and Mr. Rice. I will now excuse you. Thank you.

We keep prolonging lunch, keep saying that we are going to forego the lunch period because we want to hear from the next group. We are moving so well along with this hearing that I will again postpone lunch and go into our next panel because I know that they are anxiously waiting. And they have waited a long time to testify before the ad hoc committee.

So at this time, I want to present and bring forth the next panel. I will call you in this order and hope that you can testify in this order. Ms. Kathleen Bernard, the executive director of the Pajaro Valley Affordable Housing Cooperation; Mr. Luther Perry, the chairman of the county of Santa Cruz Housing Recovery Task Force; Ms. Mary James, the executive director of the housing authority of the county of Santa Cruz; and Kathryn Coe Aguras, executive director of the housing authority of the county of Monterey. Ms. Bernard is not going to be here with us today, I gather?

Mr. BERNARD. She had been here since 10. She got different signals and left to take care of chores. She will be back momentarily, I hope. I have been with her and I know what is going on.

Chairman TORRES. All right. Mr. Bernard, would you wish that I not raise your name at this point?

Mr. BERNARD. Yes.

Chairman TORRES. Ms. James, then.

As I have told everybody and perhaps it is worth repeating, we will accept your statements without objection. They will be entered into the record and printed into the record in their entirety, along with any supplemental information that you have. But I would request that you make your statement in a summary form, 5 minutes or less, if possible, so that we can have time for questions.

STATEMENT OF MARY JAMES, EXECUTIVE DIRECTOR, HOUSING AUTHORITY OF THE COUNTY OF SANTA CRUZ, CAPITOLA, CA Ms. JAMES. I will pick out a few highlights from my written testimony, and I will also add some notes that I have listed from this morning.

As well as being executive director of the Santa Cruz County Housing Authority, we also have authority for San Benito and Monterey Counties. I will not address those counties today.

The immediate concerns we have are most of all for housing. Mr. Mallory today said that Farmers Home are not the first strike. FEMA said that they are not the first strike. There are a lot of strikes and there are gaps in there.