Secondly, the deductible has to be worked out in such a way that it does not hold back the provision of funds.

And, thirdly, that $100,000 maximum on SBA is too small for any area such as was hit by this earthquake.

In conclusion, I draw to your attention the excellent report prepared by the County Supervisor's Association of California, the Earthquake Relief Legislative Task Force chaired by Fred Keeley. Supervisor Keeley, from Santa Cruz, and I, represent this area in the mountain together.

And last, my colleague, David Dreier asked that I submit with the chairman's kind permission and no objection, his statement. If he is able to be here, he will have words of his own. Otherwise, on his behalf, I'd ask unanimous consent to submit for the record Mr. Dreier's statement.

Chairman TORRES. Without objection, Mr. Campbell. We have Mr. Keeley's statement, as of yesterday, since he did testify before the ad hoc committee, and we will take that as well. Thank you very much.

[Statements of Mr. Keeley and Mr. Dreier can be found in the appendix.]

Chairman TORRES. I now yield the floor to my colleague, Mr. Lehman.

Mr. LEHMAN. Thank you very much, Mr. Chairman. I want to thank you and Congresswoman Pelosi for your hospitality here in San Francisco. And I also want to recognize Mayor Wilson, Mayor Agnos, and Supervisor Perata. I look forward to their testimony this morning. And, as you know, I always accept any invitation to come to the Bay Area and take advantage of the good things here. I am particularly interested this morning about the impact of the earthquake and the subsequent programs the Federal Government initiated with regard to those with very limited incomes. I hope that we can come to some conclusions from the testimony about the effectiveness of our disaster assistance programs, where they're succeeding and where they need improvement. Most importantly, I hope we can come away from this hearing with an understanding of how we can help to resolve the long-term housing needs of low income individuals through the disaster assistance efforts.

As we go forward on this committee with a comprehensive housing bill, and it is our intention to do that this year, I hope we can incorporate some of what we learned here. The current housing crisis has been compounded by a disaster such as this one and Hurricane Hugo in the Carolinas. We need to address the big picture and find a long-term solution to these short term problems. Clearly, disaster assistance programs need to be a part of our overall national housing policy.

Again, I thank you and I really look forward to hearing this testimony.

Chairman TORRES. Thank you, Mr. Lehman.

And now I yield the floor to our host representative here, Representative Nancy Pelosi, whose been most kind in arranging and helping us arrange through her staff, through both her Washington staff and district staff, the facilities here.

Ms. Pelosi, the floor is yours. I will be as chairman running the meeting and being a timekeeper, but I would like in large part

defer my questions and my comments to the representative from this area, Nancy Pelosi.

MS. PELOSI. Thank you, Mr. Chairman.

Again, I am pleased to welcome you to San Francisco as Chair of this ad hoc panel, and welcome also Mr. Lehman and our colleague who shared unfortunately in the disaster, Mr. Campbell.

Most of us represent districts which are prone to earthquakes, and I know that we all want to ensure that people who have lost their housing are rehoused properly. We are here because there's a shortfall between the met and unmet needs of the people that were affected by the earthquake.

I am pleased also to welcome all of our witnesses. I would like to extend special thanks to Mayor Agnos, Mayor Wilson and Supervisor Perata for taking time out of their busy schedules to appear before us. Their leadership immediately after the earthquake galvanized Bay Area communities and the Nation to respond quickly and passionately. We are proud of your leadership. Thank you.

The purpose of this hearing and of yesterday's hearing in Watsonville, is to review and assess the efforts of Federal agencies in delivering housing related services after natural disasters. Now that we have made it past the stage of meeting emergency needs related to the Loma Prieta earthquake, we must recognize longterm needs are still unmet.

Among the basic questions which we will consider today are: does Federal housing disaster assistance meet the needs of a homeowner where property values are high and where the cost of repair or replacement exceeds Federal loan limits? Mr. Campbell addressed this. Mr. Campbell, in addition to the rest of the country needing to be more sympathetic, it is necessary for us to have the Office of Management and Budget be more sympathetic, because that is where they are saying no to SBA to raise the limit.

Moreover, does this process work or is it unduly cumbersome and plagued with red tape? We are also concerned about the impact of the earthquake on low income people and the homeless. They were in the worst shape to begin with and felt the impact of the disaster most severely. As a result of the earthquake, the city of San Francisco alone lost one-third of its single room occupancy units, which you have addressed. The problem was even greater in Alameda County, and you mentioned the number of units lost in San Fran

cisco.

Yesterday, in Watsonville it was interesting that the FEMA representatives mentioned that only 100 people had been refused temporary rental assistance because they did not meet the 30-day requirement of having resided in that place. We have a different experience, and I know that our elected representatives will address that.

After the earthquake, everyone pitched in. You all know the story. Six months later, too many people still have unmet needs and are still not in adequate housing. I believe that we have an obligation to see that long-term shelter needs are met. I also believe we should ensure that Federal agencies keep their promise of aid to victims of the earthquake. It is important for this committee to be sure that the intent of Congress, in the funds that are appropri

ated and the agencies which have charge meet the needs and live up to the promise of earthquake relief.

I look forward to hearing today's witnesses inform us about their experiences in applying for housing disaster assistance, in administering housing disaster assistance, and ensuring that citizens of the Bay Area are housed in safe housing.

Thank you again, Mr. Chairman, for being here and for your leadership and your attention to this very important issue. Thank you.

Chairman TORRES. Thank you very much Ms. Pelosi.

I would like to simply echo the comments made by you, the accolades made by you and Mr. Lehman and Mr. Campbell to the elected officials of this area, Mayor Agnos and Mayor Wilson and, of course, Supervisor Perata, for the exemplary leadership that they showed during this very terrible drama that took place in this part of the country.

We continue to be visited by Mayor Agnos and Mayor Wilson in Washington. Those in the California delegation can attest to you that they carry out the job of lobbying very hard for this area. That is why we are here today in large part, is because of their insistence that the Federal Government, that the Members of Congress, take a greater degree of attention and concern about what has happened here.

So it is my honor at this moment to ask these gentlemen to come before us, before the committee, and make their presentations. I would like to call them in this order: Mayor Agnos, Mayor Wilson, and Supervisor Perata.

And if you could speak in that order, we are advising you that your statements will be entered into the record in their entirety. And we would ask you, if you could, to limit your statements, perhaps summarize them in five minutes or so.

Mayor Agnos, you are first.

STATEMENT OF ART AGNOS, MAYOR, CITY OF SAN FRANCISCO Mr. AGNOS. Thank you very much, Mr. Chairman. I would like to thank you for coming again to the San Francisco Bay Area and holding these hearings. It is very consistent with the kind of concern and generosity that the Congress manifested to all of us who were affected by the earthquake. Immediately, we had congressional visits. I think this is around the sixth or seventh that has happened, as Congresswoman Pelosi, and more immediately, to me, and I know from somewhat of a distance, Congressman Campbell, have been making sure that the Congress did the kind of follow-up on all of the things that were passed by the Congress to make sure that they assisted us. And today's hearing is consistent with that kind of legislative oversight. And we are grateful for it, because we think it will make a big difference.

Next Tuesday, as you know, marks 6 months since we experienced a 7.1 earthquake. And during the last 6 months, I think San Francisco, at least, has made a remarkable recovery. Our city in many respects has returned to normal. But not everyone has shared in that recovery, and not everyone has had their lives return to normal. I believe that this hearing can be very useful in

recharging-I'm emphasizing that word-recharging the energy that we need from the Federal bureaucracy so that the recovery is complete and reaches all of those in need.

The October 17 earthquake came because of fault lines in the earth that have been well documented by all who have looked at those things. The failure of the recovery to reach those who are still in need and deserve assistance is due to a different kind of fault line, one that runs through the Federal bureaucracy and lets critical needs fall through the cracks.

Today, I would like to report to the committee on some of the remaining issues as we see them in San Francisco that we have been discussing with Federal officials ever since the earthquake. These are the areas that we still want action to be taken:

First, damage in some areas of San Francisco were more serious because of soil conditions. On Eighth Avenue, for example, 34 of the 38 homes-and I know Congresswoman Pelosi has personally visited it with me-along a two block area were so severely damaged by the earthquake triggered hillslide, that the homeowners still cannot re-enter their homes. And we are, as I have said, almost 6 months after the earthquake.

The homeowners along that area are waiting for completion of a study that will determine the most efficient and cost effective way to stabilize their homes and the hillside which they are built on. If no hillside stabilization is performed, costs to stabilize and repair the earthquake damage to these homes will average $165,000 to $200,000 per home. If the retaining wall that must be constructed to stabilize the hillside is built, the cost will be about $1.5 million or between $30,000 to $50,000 per house in addition to the average damage that must be repaired on each house.

So I think you get a sense of the astronomical cost just for one two-block area in our city with the high cost of repairs and all that comes with it. Not only would a retaining wall substantially reduce the cost here, but it would also be helpful in reducing the danger to other homes located below the hillside which are currently there but were unaffected necessarily by the earthquake.

The homeowners in this area are largely elderly long-term San Francisco residents who purchased their homes many years ago. And today, many of them are on fixed retirement incomes with no savings to speak of, certainly not in the $200,000 to $300,000 category.

The newer homeowners, people who have moved in recently on the street, are much like other younger couples who have bought their first homes. They borrowed to the limit in the last couple of years. One just before the earthquake, about a month or so if I remember correctly, to pay the $300,000 average market price for these homes.

And so one has borrowed to the limit and cannot get any more in terms of debt. And secondly, the others are on a retirement income. And even though they may have equity in their homes, they do not have the capacity to repay the debt even if they could get it. Neither group can afford the hillside stabilization, which is a separate issue that I spoke of, for $1.5 million.

None of these costs are reimbursable. These costs are not reimbursable either the hillside repair or stabilization is reimbursable

by either FEMA or by the SBA. And we are seeking funds from the President's Discretionary Fund in a request to the Secretary of Housing and Urban Development, Secretary Kemp, but we have not received an answer yet. That is not a negative. It is simply we have not received an answer.

We are also requesting funds for similar financial aid for soil stabilization studies and work in the Marina District and the South of Market. As you know, that area has been landfill, and we need to know, in this time, what exactly we are going to be rebuilding on in terms of the stability of the soil.

The U.S.Geological Survey team is completing a study of the soil in the Marina District. Data will be reviewed by a panel of experts sponsored by the University of California, and they will recommend a soil stabilization program for the neighborhood. But it is clear that the cost involved for the homeowners for those kinds of stabilization of the earth will go beyond their individual capacities. And we believe they also ought to qualify for that kind of assist

ance.

Second, we are requesting that HUD agree to the proposals outlined by their own Regional Administrator and Regional Commissioner, Robert DeMonte, who has been outstanding in working with all of our local communities. Mr. DeMonte has accurately portrayed the critical housing needs we face, and the solutions that the Federal Government could offer if decision makers agree. They include the following steps:

One, an allocation of $44 million from the President's Discretionary Fund to help rebuild affordable housing that has been demolished or severely damaged.

Two, set aside some 2200 short term, section 8 vouchers in addition to the recently allocated 500 vouchers to provide rental assistance payments, which the earthquake displaced, in terms of households that need affordable units that must be repaired or rebuilt. Three, request a future appropriation for some 1500 section 8 certificates in order to support rehabilitation and replacement of permanent affordable housing.

Four, provide Special Project or Technical Assistance funds that we could use to increase our capacity to manage the extra load on our planning and housing development programs because of earthquake preparation.

We would underscore these points that Mr. DeMonte has made on extending FEMA temporary housing assistance payments. Legislation allows FEMA to extend this aid for up to 18 months. But the agency so far has indicated they are only going to give it to us for 12 months. We are asking for the additional 6 months, which the Federal administrator also believes we need, that the law permits.

As Mr. DeMonte reports to Secretary Kemp, it will take between 3 to 8 years to replace or repair the units that serve low and moderate low income households. It is for this reason, in addition to the 6 month extension of rental aid that Mr. DeMonte proposes setting aside additional section 8 vouchers for continued assistance.

A continuing area of disagreement with FEMA has been over replacement of San Francisco's capacity to provide shelter for those who are homeless.