[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
                  EXAMINING THE COMMUNITY DEVELOPMENT

                 BLOCK GRANT-DISASTER RECOVERY PROGRAM

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT
                           AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 1, 2017

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 115-51
                           
                           
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                           




                            _________ 

                  U.S. GOVERNMENT PUBLISHING OFFICE
                   
 30-340 PDF                WASHINGTON : 2018      

                           
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
STEVAN PEARCE, New Mexico            GREGORY W. MEEKS, New York
BILL POSEY, Florida                  MICHAEL E. CAPUANO, Massachusetts
BLAINE LUETKEMEYER, Missouri         WM. LACY CLAY, Missouri
BILL HUIZENGA, Michigan              STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin             DAVID SCOTT, Georgia
STEVE STIVERS, Ohio                  AL GREEN, Texas
RANDY HULTGREN, Illinois             EMANUEL CLEAVER, Missouri
DENNIS A. ROSS, Florida              GWEN MOORE, Wisconsin
ROBERT PITTENGER, North Carolina     KEITH ELLISON, Minnesota
ANN WAGNER, Missouri                 ED PERLMUTTER, Colorado
ANDY BARR, Kentucky                  JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania       BILL FOSTER, Illinois
LUKE MESSER, Indiana                 DANIEL T. KILDEE, Michigan
SCOTT TIPTON, Colorado               JOHN K. DELANEY, Maryland
ROGER WILLIAMS, Texas                KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine                JOYCE BEATTY, Ohio
MIA LOVE, Utah                       DENNY HECK, Washington
FRENCH HILL, Arkansas                JUAN VARGAS, California
TOM EMMER, Minnesota                 JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York              VICENTE GONZALEZ, Texas
DAVID A. TROTT, Michigan             CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia            RUBEN KIHUEN, Nevada
ALEXANDER X. MOONEY, West Virginia
THOMAS MacARTHUR, New Jersey
WARREN DAVIDSON, Ohio
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana

                  Kirsten Sutton Mork, Staff Director
              Subcommittee on Oversight and Investigations

                    ANN WAGNER, Missouri, Chairwoman

SCOTT TIPTON, Colorado, Vice         AL GREEN, Texas, Ranking Member
    Chairman                         KEITH ELLISON, Minnesota
PETER T. KING, New York              EMANUEL CLEAVER, Missouri
PATRICK T. McHENRY, North Carolina   JOYCE BEATTY, Ohio
DENNIS A. ROSS, Florida              MICHAEL E. CAPUANO, Massachusetts
LUKE MESSER, Indiana                 GWEN MOORE, Wisconsin
LEE M. ZELDIN, New York              JOSH GOTTHEIMER, New Jersey
DAVID A. TROTT, Michigan             VICENTE GONZALEZ, Texas
BARRY LOUDERMILK, Georgia            CHARLIE CRIST, Florida
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    November 1, 2017.............................................     1
Appendix:
    November 1, 2017.............................................    29

                               WITNESSES
                      Wednesday, November 1, 2017

Albert, Ms. Helen, Acting Inspector General, Office of the 
  Inspector General, U.S. Department of Housing and Urban 
  Development....................................................     5

                                APPENDIX

Prepared statements:
    Albert, Helen................................................    30

              Additional Material Submitted for the Record

Green, Hon. Al:
    Letter to the Chairman requesting a Hearing..................    51
Albert, Helen:
    Written responses to questions for the record submitted by 
      Representative Wagner......................................    53


                        EXAMINING THE COMMUNITY

                        DEVELOPMENT BLOCK GRANT-

                       DISASTER RECOVERY PROGRAM

                              ----------                              


                      Wednesday, November 1, 2017

             U.S. House of Representatives,
                          Subcommittee on Oversight
                                and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.

    The subcommittee met, pursuant to notice, at 10:30 a.m., in 
room 2128, Rayburn House Office Building, Hon. Ann Wagner 
[chairwoman of the subcommittee] presiding.
    Present: Representatives Wagner, Tipton, Ross, Zeldin, 
Trott, Loudermilk, Kustoff, Tenney, Hollingsworth, Green, 
Cleaver, Beatty, and Crist.
    Also present: Representative Velazquez.
    Chairwoman Wagner. I think some members are still wandering 
in here, but we will get started. The Subcommittee on Oversight 
and Investigations will come to order.
    Today's hearing is entitled ``Examining the Community 
Development Block Grant-Disaster Recovery Program.'' Without 
objection, the chair is authorized to declare a recess of the 
subcommittee at any time. Without objection, all members will 
have 5 legislative days within which to submit extraneous 
materials to the chair for inclusion in the record. And without 
objection, the members of the full committee who are not 
members of the subcommittee may participate in today's hearing 
for the purposes of making an opening statement and questioning 
the witness.
    The chair now recognizes herself for 4 minutes for an 
opening statement.
    When a terrible disaster strikes, the Federal Government 
plays an important role when delivering much-needed emergency 
aid. Today's hearing is about a related point upon which we can 
all, I think, agree.
    It is critical to ensure that taxpayer money being spent on 
disaster relief is spent smartly, efficiently, and effectively. 
Every disaster relief dollar that is diverted to an inefficient 
or wasteful use is a dollar that is not going to help 
individuals in need, and that is wrong.
    The Community Development Block Grant-Disaster Recovery 
Program is comprised of relief funds which are designated to 
allow communities to start the recovery process by helping 
those communities and neighborhoods with limited resources to 
rebuild critical infrastructure after a catastrophic event.
    Today's hearing will focus on whether the Department of 
Housing and Urban Development's administration of the CDBG-DR 
program lives up to the ideals I mentioned a moment ago. It 
will also, I hope, initiate a constructive dialog between 
Congress, HUD, and the HUD Office of Inspector General about 
how this CDBG-DR program can be reformed to increase oversight, 
to increase accountability, and ensure disaster relief dollars 
go directly and expeditiously to those who need them the most.
    As we will hear today from our witness, the Acting HUD 
Inspector General, Helen Albert, the HUD OIG has routinely 
identified serious systemic problems with the CDBG-Disaster 
Recovery Program. Money appropriated to this program often 
failed to reach those who need it most and instead was diverted 
to wasteful or inefficient uses.
    As a recent example, a 2017 OIG report on Hurricane Sandy 
revealed $450 million in questionable costs. The HUD OIG's 
important work has also documented instances of grantees who 
regularly failed to maintain proper documentation supporting 
the cost of performed work, as well as awarding duplicate or 
ineligible assistance.
    HUD OIG's work also demonstrates that these problems have 
occurred throughout the Nation. Even in my own home State of 
Missouri, they have seen misuse of some of these funds.
    The OIG's work also reveals another troubling trend: $11.5 
billion of CDBG-DR funds appropriated for disasters, going all 
the way back to September 11, remain unspent.
    While rebuilding communities isn't done overnight and takes 
time, at a certain point it appears that billions of dollars 
are simply sitting lost or forgotten about in grantee bank 
accounts. When put in context with the $7.4 billion Congress 
recently appropriated to HUD in the first relief package for 
Hurricane Harvey and Irma, Congress must do better, a better 
job, recouping the lost money, so to speak, for future 
disasters. Again, disaster funds should go to those who need 
them most.
    And I am so pleased to see that it is not just the HUD OIG 
who recognizes that the Community Development Block Grant-
Disaster Recovery Program needs reforms to ensure disaster 
funds reach disaster victims, but Secretary Carson understands 
these problems exist and is open to working to address them. In 
testimony before the full committee just weeks ago, Secretary 
Carson noted that some of the things done through the CDBG-
Disaster Recovery Program have been, in his words, 
questionable.
    Ms. Albert, I look forward to hearing your testimony and 
recommendations this morning.
    And with that, I yield back the balance of my time.
    I now recognize the gentleman from Texas, Mr. Green, the 
ranking member, for 5 minutes.
    Mr. Green. Thank you, Madam Chair. I thank the witness for 
appearing as well.
    Madam Chair, you can't be the Secretary of HUD without 
being the Secretary of HUD. Let me explain.
    It is an honor to have the witness before us today who will 
talk to us about some of our needs. She will talk to us about a 
good many issues related to waste, fraud, and abuse. She will 
talk about procedures and processes.
    But there are some things that we have to talk about that 
relate to policy. As you indicated, the Secretary was here 
earlier, and he made some comments that would lead me to 
believe that he should return. It is my belief that the 
Secretary should return to this committee and visit with us, be 
prepared to answer questions about certain questionable 
policies related to HUD. And I hope that he will come.
    And such that he will not be surprised, I would like to 
give some indication as to the areas of concern. The areas of 
concern would include options for temporary and long-term 
housing for victims after a national disaster. Types of 
construction standards we should require for public housing in 
areas where we have a history of severe weather or fires. We 
need to know more about the loss of private housing stock as it 
relates to Section 8 choice vouchers.
    We need to know more about the devastation of the housing 
stock in areas like Puerto Rico and the Virgin Islands where we 
have people who are suffering currently. What is happening in 
Puerto Rico and the Virgin Islands is shameful and sinful. We 
need to know more about this.
    Should low-, moderate-income ratio be waived in the wake of 
disasters? The LMI is something that is set at 70 percent. 
Should we lower this, given the lawsuits and settlements that 
we have had in this area?
    Protecting the housing of our Nation's senior citizens when 
we have national disasters. Protecting the housing of the 
disabled when we have national disasters.
    We should talk about providing temporary housing assistance 
to HUD-assisted families that were displaced by storms.
    We should look at the cost, the estimated cost, of HUD 
properties damaged. We need to know what we can do to repair 
and replace properties.
    These are some of the areas of concern that the Secretary 
should be concerned with and should be prepared to address.
    I believe that it is important for us to discuss waste, 
fraud, and abuse, and my hope is that we will have a very 
fruitful discussion today. But I also know that Mr. Long, who 
is the FEMA Director, Mr. Long, Brock Long, FEMA Director, 
appeared before the Senate Homeland Security Committee 
yesterday for a hearing. And he will be appearing tomorrow at 
the Transportation and Infrastructure Committee.
    This is important. There are many things about waste, 
fraud, and abuse associated with FEMA that we can and should 
discuss, and my hope is that they will be discussed in this 
Congress.
    But I also know that his appearance before these committees 
has much to do with what is happening right now as it relates 
to the storms that we have had to encounter. What happened in 
Texas and Florida and the Virgin Islands and Puerto Rico is of 
great importance to us. And just as Mr. Brock Long is 
testifying, the Secretary of HUD should be testifying as well.
    I know that the request was made for this hearing, and it 
has been set for some time. I am OK with that. But I do believe 
that I shall now do something that is important, and that is 
make a request for us to bring the Secretary of HUD before the 
committee so that the Secretary can give some answers to 
questions of concern.
    I would also add this, that I would like, without 
objection, to place a letter in the record requesting that the 
Secretary appear, along with some of the areas of concern that 
we would like for the Secretary to address.
    I opened by saying, you can't be the Secretary of HUD 
without being the Secretary of HUD. This means that you can't 
secret yourself someplace at a time when your presence is 
needed elsewhere. You have to appear and let the public know 
where you stand, where HUD stands, and what some of these 
policies are that we need to help you with.
    If there are things that we need to correct, let's talk 
about the correction process. If there are things that we 
cannot correct and we should eliminate, let's talk about these 
things as well.
    But the point to be made is, we need to talk to the 
Secretary of HUD. You can't be the Secretary of HUD without 
appearing before the Financial Services Committee, which has 
oversight jurisdiction, and this committee, this subcommittee 
has specific oversight jurisdiction, and we do ask that the 
Secretary appear.
    I yield back.
    Chairwoman Wagner. The gentleman yields back. And the 
gentleman's letter will be submitted to the record, without 
objection.
    The chair now recognizes the vice chair of the Oversight 
and Investigations Subcommittee, the gentleman from Colorado, 
Mr. Tipton, for 1 minute for an opening.
    Mr. Tipton. Thank you, Chairman Wagner.
    Providing relief to Americans impacted by natural disaster 
is a critical function of Congress. Disaster relief can help 
Americans and their towns put their lives back on track after 
what are often life-altering disasters. While fulfilling this 
critical function, however, we must also remember to fulfill 
another charge: to be good stewards of taxpayer dollars.
    In my home State of Colorado, Community Development Block 
Grants for Disaster Recovery have been used for flood and fire 
recovery programs. These programs addressing housing, 
infrastructure, planning, and economic development needs have 
proven to be effective tools in responding to the aftermath of 
a disaster.
    In Colorado, the Department of Local Affairs administers 
CDBG-DR funding. I have confidence in the Department of Local 
Affairs to faithfully distribute these funds.
    I also believe that it is important that HUD have the 
ability to be able to track these dollars down to the local 
level, whether it be independently or working with State 
agencies. It is crucial that taxpayer dollars allocated for 
disaster relief are used for their intended purpose. And I look 
forward to learning how Congress can create more accountability 
in these programs here today.
    Thank you. And I yield back.
    Chairwoman Wagner. The gentleman yields back.
    We now welcome today's witness, Ms. Helen Albert. Helen 
Albert was appointed as the Acting Inspector General for the 
U.S. Department of Housing and Urban Development beginning in 
June 2017. Ms. Albert previously served as the Deputy Inspector 
General at HUD and the Assistant Inspector General for 
Management and Policy.
    Prior to joining HUD, Ms. Albert was Director of External 
Operations at the Department of Health and Human Services, 
Office of Inspector General, and spent a decade in the U.S. 
Senate, where she served as chief investigator and professional 
staff for two Senate committees, primarily focusing on 
counternarcotics and fraud-related issues.
    Ms. Albert is a native of New York City and received her 
bachelor of arts from the State University of New York at 
Binghamton.
    Without objection, the witness' written statement will be 
made a part of the record following her oral remarks. Once the 
witness is finished presenting her testimony, each member of 
the subcommittee will have 5 minutes within which to ask 
questions.
    Ms. Albert, on your table there are three lights. Green 
means go, yellow means you have 1 minute left, and red means 
your time is up.
    With that, the witness will be now be recognized for 5 
minutes to give an oral presentation of her testimony.

STATEMENT OF MS. HELEN ALBERT, ACTING INSPECTOR GENERAL, OFFICE 
OF THE INSPECTOR GENERAL, U.S. DEPARTMENT OF HOUSING AND URBAN 
                          DEVELOPMENT

    Ms. Albert. Thank you, Chairman Wagner, Ranking Member 
Green, and members of the subcommittee. I am Helen Albert, the 
Acting Inspector General of the Department of Housing and Urban 
Development. Thank you for the opportunity to highlight our 
perspectives of HUD's oversight of disaster assistance funding, 
particularly in light of the immense challenges faced by this 
Nation to respond to destructive hurricanes and fires.
    This country has never he been hit by multiple hurricanes 
as strong as Harvey, Irma, and Maria, with other hurricanes 
hitting shortly after, in the same season in modern times. This 
has been followed by devastating wildfires, which, like the 
storms, have caused extensive destruction and loss of human 
life.
    As part of our initial response, our special agents, the 
Federal law enforcement side of our agency, assisted in search-
and-rescue efforts in Houston, teamed with disaster medical 
assistant units to be the first into the Keys, and helped 
locate unaccounted-for HUD employees in all affected areas, and 
delivered food and supplies to the elderly.
    Additionally, our auditors and evaluators with our agents 
are currently working to conduct quick capacity reviews to 
determine the ability of local entities to administer funds.
    I could not be more proud of the critical work our IG staff 
is undertaking.
    From 2001 til 2016, Congress appropriated more than $47 
billion in funding to address long-term recovery to HUD in the 
wake of a wide range of disasters, including the terrorist 
attacks of 9/11, Hurricane Katrina in 2005, Hurricanes Ike and 
Gustav in 2008, Hurricane Sandy in 2012, and Hurricane Matthew 
in 2016. In comparison, from 1993 to 1999, HUD disaster funding 
totaled less than $1.7 billion.
    The States primarily use the funding to repair housing, 
compensate homeowners, repair infrastructure, and provide 
economic development. We note, for the last large disaster, now 
exactly 5 years ago, approximately 50 percent of Sandy funds 
are still unexpended.
    Over the years, HUD has gained more experience and has made 
progress with assisting communities, but faces significant 
challenges monitoring funds provided to various grantees, 
including States and cities.
    Oversight is made more different due to the diverse nature 
of projects and the fact that some can take 5 to 10 years to 
complete. HUD must be diligent to ensure grantees have 
identified timelines and are keeping up with them and goals are 
met and expectations are achieved.
    But it continues to face the following challenges in 
administering these grants: ensuring that expenditures are 
eligible and supportive; certifying that grantees are following 
procurement regulations; addressing concerns that citizens 
encounter when seeking assistance; and conducting consistent 
and sufficient monitoring efforts on grants.
    We have developed a series of integrity bulletins aimed at 
providing the grantees with information to help safeguard 
program funds and to ensure that communities get the full 
benefit of funding. The benefits were sent to grantees over the 
last few years and are posted on our website.
    We also recently developed a fraud alert for homeowners, 
which we hope that you will pass out to your constituents, on 
how to avoid scams and where to go if they need help.
    Additionally, our work in capacity studies has begun. We 
are conducting these to bring awareness to potential areas of 
waste, fraud, and abuse specific to the environments the 
Department is about to enter.
    Finally, lessons learned from over 15 years of oversight 
activities lead us to an overarching recommendation to suggest 
codifying a single disaster recovery program at HUD in order to 
ensure a more permanent, formal framework, to reduce the volume 
and provide consistency of notices used to provide informal 
guidance for each disaster, and to mitigate time delays in 
implementing guidance.
    In conclusion, Chairman Wagner, the Department's role has 
greatly increased, as it has had to deal with unanticipated 
disasters and economic crises that have, in addition to its 
other missions, increased its vital role in providing services 
that impact the lives of our citizens.
    My office is strongly committed to working with the 
Department and Congress to ensure that the program operates 
efficiently and effectively and is intended for the benefits of 
Americans now and into the future.
    I look forward to answering all of your questions.
    [The prepared statement of Ms. Albert can be found on page 
30 of the appendix.]
    Chairwoman Wagner. The chair thanks the witness for her 
opening statement. And the chair now recognizes herself for 5 
minutes of questioning.
    Ms. Albert, I wanted to spend my time discussing action 
plans submitted by States and how changes and revisions to 
stated guidelines invite potential misuse of CDBG-Disaster 
Recovery funds.
    In your written testimony, you note that HUD has issued a 
number of waivers and accepted an even greater number of 
amendments or revisions to States' action plans. What are some 
of the issues with allowing HUD and the States to very easily 
revise plans to provide disaster recovery to victims?
    Ms. Albert. The Department under the CDBG program actually 
needs flexibility. It has to have the ability to do things and 
allow localities, depending on the disaster, to be able to 
react in certain ways.
    However, when you allow these waiver upon waivers, and HUD 
has, along with FEMA actually, has waived quite a bit, what 
happens is, is you lose the intended purpose of the program.
    Chairwoman Wagner. Can you speak up a little bit? You are 
saying, lose the intended purpose? Yes.
    Ms. Albert. The intended purpose of the program. So for 
instance, in the State of Louisiana there had been a grant 
program that was designed to elevate homes. A worthy program. 
Moneys had already been given out to homeowners to renovate and 
rebuilt. But in the flood zones they wanted those areas to try 
and elevate so that if there was another flood they could 
withstand it.
    What happened in that instance was we went and did a sample 
audit to see whether the elevation took place. It was about 
$650 million that was given for this intended purpose. We did a 
sample of about 199 homes, and when we went, 148 of the homes 
had not been elevated.
    Chairwoman Wagner. Wow.
    Ms. Albert. So we had spoken to HUD and we had asked them 
to actually recapture the funds, because, frankly, it wasn't 
for the intended purpose.
    HUD cannot recapture, it only can recapture from the 
States, because it signs an agreement with the grantee. What 
HUD did in that instance was they decided to change the intent 
of the program. So they said: If you can prove to us that you 
actually rehabilitated your home and/or elevated, we will 
accept that, although the name of the program was Home 
Elevation.
    So then we went back and we said: Then show us the 
documentation to show that the money was actually used to 
rehabilitate, because they that received other moneys to do 
that. They could not do that.
    So after a variety of different changing of the intended 
purposes, of waiving what had been put in the action plan to 
begin with, we ended up closing down that evaluation because we 
could not close out the finding and recommendation because it 
kept changing.
    Chairwoman Wagner. In your written testimony you note that 
for Hurricanes Katrina and Rita, HUD accepted 66 amendments 
from Louisiana for Hurricane Sandy--yes, for Hurricane Sandy--
accepted 17 amendments from New York. Are these extreme cases 
or do States so frequently amend their action plans? And how 
often does HUD reject action plans or ask States to revise and 
resubmit them for review?
    Ms. Albert. Sometimes they do reject. In one of the cases 
that I know, Ranking Member Green mentioned, had to do with low 
and moderate income. In the case of Texas, they actually did 
reject southern Texas' action plan in the valley because it did 
not meet some of the low-and moderate-income requirements. 
There were lawsuits, as he mentioned, and other things that had 
occurred.
    But they don't tend to do that often. They tend to accept 
the amendments. They believe that there is something called 
maximum feasible deference, which means that the locality or 
the grantee or the State, whoever is administering it, has 
deference to do with it pretty much as they think they need to, 
except in certain instances like LMI where they sought action, 
but that is not typical.
    Chairwoman Wagner. Ms. Albert, and I have so many more 
questions, I will have to submit some for the record or do it 
in a second round. But let me ask one final question.
    Once a State has submitted an action plan and HUD accepts 
it, should HUD require unused funds under the action plan to be 
returned rather than have those dollars repurposed or the 
action plan amended to allow for more spending for a new 
purpose?
    Ms. Albert. As a law enforcement agency and an auditing 
agency, we typically see that it usually takes about 6 to 8 
years for redevelopment to take place. As money ages beyond 
that, that is when you start seeing more problems with the 
funds, more improper uses, more repurposing, finding uses for 
the money that is sitting there. There is $360 million still 
sitting from 9/11, which is now 16 years ago.
    Chairwoman Wagner. Wow.
    Ms. Albert. At some point you have to say what was the 
intended purpose? And that is a whole other story about the 
action plans, whether HUD is going back and seeing that the 
expectations were actually met.
    But that is a very complicated issue, and we do believe 
that some funding after a certain amount of time should be 
either recaptured or repurposed.
    Chairwoman Wagner. Recaptured or repurposed. Thank you very 
much.
    The chair now recognizes my friend and the distinguished 
gentleman from Missouri, Mr. Cleaver, for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chair.
    Thank you, Ms. Albert.
    My goal today is to hopefully get all of us thinking toward 
making some corrections and some improvements. And I do think 
that the HUD program for disaster relief has been successful 
and is something that we don't need to discontinue unless we 
find something better.
    Here is the problem. When there is a disaster, particularly 
in the Midwest, it is usually going to be a tornado, and in 
some instances the Mississippi or the Missouri will come out of 
its banks and we will have some flooding, nothing like what 
happened on the Gulf Coast or Superstorm Sandy.
    So what happens is that we have all of these nonentitlement 
cities that will experience a major problem that devastates and 
decimates the community, and then FEMA can't step in because 
the threshold is $8 million. So you get a little town like 
Orrick, which you probably never heard of, which is in my 
congressional district. There are 800 people. You could wipe 
out the whole town and not meet the FEMA threshold.
    So what we have to do then is depend on the State, that the 
nonentitlement dollars that come to the States would be 
disbursed. That creates a problem if you are talking about 
trying to respond quickly.
    And the other problem is the entitlement cities, Kansas 
City, largest, St. Louis, second, Springfield, Independence, I 
think those are the only entitlement cities in the State. So 
the money that goes to the State in Jefferson City began to 
dwindle, and they are not--the State is not getting the dollars 
at a level that the cities are getting anyway. So it reduces 
the opportunity for HUD dollars to be used in the other small 
towns.
    So if you live in a small town, you get slapped with an 
event, and then you get slapped because you have to go to the 
State. And I think that is a problem. I think there is some 
kind of way FEMA and HUD, we need to work this out so that we 
don't discriminate against small towns, and that is exactly 
what is happening right now.
    Can you fix that? We have 2 minutes for you to fix it.
    Ms. Albert. As the Inspector General, I will try to talk 
about it in the framework of what I do.
    It is interesting because Community Development Block 
Grants for disaster recovery actually don't go to entitlement 
communities, they go to--the normal funding goes to--
    Mr. Cleaver. Yes, I know that. Maybe I wasn't clear. I know 
it doesn't go--
    Ms. Albert. Right.
    Mr. Cleaver. That is not the problem. The entitlement 
cities, they would probably go--as a former mayor, we probably 
would go to our rainy day fund. And if there is some housing 
issue, we would probably go to CDBG. So that is not what I am 
saying.
    What I am saying is, small towns get hit, if the damage is 
$5 million, they are in trouble in terms of some assistance. 
They have to go to the State. If they get the State money it is 
reducing the State pot, which was not designed just for 
disaster relief.
    Ms. Albert. Right.
    Mr. Cleaver. It is for all CDBG programs, including 108 
funds and everything else. So small towns get hit. Is this 
not--do I need to fix it some more?
    Ms. Albert. Let me say this from the jurisdiction of HUD as 
it relates to FEMA. One of the things that we are advocating is 
actually a synthesization of more of the program, for at least 
HUD's perspective, as a statutory codification. And these 
issues could be talked about as HUD makes this a statutory 
program: What type of funding from CDBG should go to what 
areas?
    So if there is an inequity between small and large and who 
gets more. This is sort of the problem in Puerto Rico right 
now, that the determination has been made that the power goes 
to the larger cities, and so the smaller areas are not getting 
it.
    But these are things that Congress can get involved with it 
if it takes up our recommendation, which is to codify the 
program, put in statute some sort of language from HUD's 
perspective, and then you can get those issues addressed.
    Mr. Cleaver. We are on the same page. Maybe we will get it.
    Thank you. I yield back.
    Chairwoman Wagner. The gentleman yields back.
    The chair now recognizes the vice chair of the Oversight 
and Investigations Subcommittee, the gentleman from Colorado, 
Mr. Tipton, for 5 minutes.
    Mr. Tipton. Thank you, Madam Chair.
    And thank you, Ms. Albert, for taking time to be here.
    I wanted to follow up a little bit on one of the answers 
that you had to Chairman Wagner. You made the comment that HUD 
likes to see if the money was used for the intended purposes. 
And we have noted in the State of Colorado that you have pretty 
much the policy of maximum feasible deference to the State's 
interpretation of the statutory requirement.
    Would you see a benefit, from HUD's perspective, in terms 
of being able to establish formal regulations for the CDBG-DR 
requirements? Would that be helpful to HUD in terms of 
executing the mission when it comes to natural disasters?
    Ms. Albert. Absolutely. So at this juncture, after Harvey 
and Irma hit, we really took a sort of a lessons learned inward 
look, and we said this was an unprecedented time as far as 
disasters, three hurricanes, fires, other hurricanes coming 
that were also destructive, and at this time we felt we really 
need to assess what needs to be done for the future. Because 
for HUD, when I say it is a peripheral mission, I don't mean 
that HUD uses it as a peripheral, but it is not part of its 
core statute and not part of what it was founded on in its 
authorizing language.
    And so what HUD does is it responds to supplementals per 
each disaster and it writes Federal Register notices, and this 
is because Congress hasn't directed it to do so. For instance, 
this happens to be Sandy's. There are 30-something Federal 
Register notices. There are a lot of Federal Register notices. 
It needs to have a codification, a core statutory mission. And 
in that can be described some areas that we know have been 
abusive and that need clarification and others where there is a 
need for flexibility.
    So what we do tend to find is with maximum feasible 
deference there tends to be an overuse of it. And these are 
things that we would hope, as they codify and look to 
rulemaking, that they try to address. We do see that if you do 
end up codifying the CDBG program that you will formalize it, 
get away from these informal guidances, which sometimes are 
inconsistent from disaster to disaster, and will eliminate some 
of the delays in implementation.
    The interesting point is, though, that when we did a 
review, we did an audit of Sandy money with the entire IG 
community that has been involved. The top eight IGs came 
together. It was surprising that HUD actually surpassed FEMA 
and other departments in the amount of money it disbursed. And 
that being so, it really at this juncture needs to codify and 
to accept the fact that, unfortunately, disasters are here to 
stay for this Department and its mission.
    Mr. Tipton. When you are talking about the money exceeding 
what FEMA had even spent, are you comfortable that the dollars 
were well-spent for the intended purpose?
    Ms. Albert. For Sandy money, which is really the last big 
disaster, which is now 5 years ago almost exactly to this 
month, we note that of the $15.2 billion that HUD received from 
Congress in the supplemental legislation, half is still 
unexpended.
    So like I said, in the beginning it can take 6 to 8 years 
to redevelop, but half is a great number.
    Mr. Tipton. Yes. I believe in the State of Colorado we had 
$320 million of moneys that had come in. I believe right now 
$130 million has been disbursed. They are anticipating that the 
balance of that will be done by 2019.
    I think we probably share--I have a little reluctance to 
try and force it because you made the comment of overuse of 
dollars. You don't want them to be directed where they 
shouldn't be going.
    Can you describe maybe your idea in terms of how we get 
that accountability, make sure the dollars are going where they 
need to and are expended in an appropriate period of time?
    Ms. Albert. So I will pick a topic that is important, 
although I don't seem to have a lot of time, and it is a 
lengthy topic. Maybe we can get it with other members.
    But one of the areas that we tend to see a problem is in 
procurement. And procurement is a big area when you are 
delivering moneys out in the supplemental to the States and 
localities. We tend to see abuses with procurement that really 
need to be fixed as we go forward.
    Certainly, the experience that we have all read about in 
the last week with Puerto Rico and the power contract that was 
given there highlights what IGs across the government see. I 
think without exception the top eight IGs that oversee this 
program think that procurement in contracting is probably its 
number 1 topic.
    Mr. Tipton. Thank you. I yield back, Chair.
    Chairwoman Wagner. The gentleman yields back.
    The chair now recognizes the gentlewoman from Ohio, Mrs. 
Beatty, for 5 minutes.
    Mrs. Beatty. Thank you so much, Madam Chairwoman and 
Ranking Member.
    And thank you for being here as our witness today, Ms. 
Albert.
    We have spent a fair amount of time talking about the 
disasters, and I noticed in the beginning of your written 
testimony you acknowledge that the United States has never seen 
a hurricane season like the one we just experienced.
    And for the audience and those who are watching, you are 
probably making reference to Harvey in Texas, that was a 
Category 4, that was in August; and then Irma, that was a 
Category 5, that was in September, hitting Florida, Georgia, 
and South Carolina; and then Maria, of course, in Puerto Rico 
and the Virgin Islands, Category 4 again, in September, just a 
couple weeks apart.
    I know in part how devastating that was. Right before Maria 
hit in Puerto Rico, I was there about 10 days before that, 
having an opportunity to be there and see the beauty of that 
territory. And so you can imagine how devastating it was.
    My executive assistant who works for me in my D.C. office, 
that is his home, his parents are there, his grandparents, his 
godfather, who is the health and human services director there 
and a surgeon, and they have all been devastated by this. And 
not to mention the Members of Congress who live in and have 
families in those States that have been affected by Harvey and 
Irma and Maria, and then, of course, Nate in Mississippi.
    So where I am going with this question, when you talked 
about how devastating financially this is, with that said, do 
you think that HUD has enough resources within the Department 
to adequately administer the CDBG-Disaster Relief Program, in 
your opinion?
    Ms. Albert. No, I don't think they have enough resources.
    Mrs. Beatty. So in your role and being part of that team, 
one of the questions when Secretary Carson was here a few weeks 
ago, as you probably are aware, that he did a minus 15 percent 
reduction request in his budget for this year. So one of the 
questions I asked him--because at that time we knew about 
Harvey and Irma and Maria, so if we don't have enough money, we 
have been devastated.
    As a personal note, for me, when I look at the $58 billion 
that we recently passed for Texas, I also feel there are some 
disparities when you start talking about how communities in 
Puerto Rico and the Virgin Islands are being treated with the 
moneys that are there.
    Just this morning I had an opportunity to listen to the 
mayor of San Juan, and she talked a lot about infrastructure 
and the dollars and what they need. So if you, as a part of the 
team, recognize there is not enough money, I am going to be 
like Congressman Cleaver, you have about a minute and a half to 
tell me how we get the money and how we fix it.
    Ms. Albert. I think there are certain things that can be 
done first. We talked about the codification, which is an 
authorizing issue, that is not an appropriating issue, and I 
think that will create some efficiencies that need to be going 
forward.
    Along with that, once you do authorizing language, which 
this is the committee of authorization, so it would have to 
come from this committee, there will be certain aspects of it 
as you go to codify the program within HUD that can be 
discussed. Such as we really believe that there needs to be 
something like a jump team, like something that you see in the 
military and in law enforcement, where a team of HUD officials 
come in that are dedicated, not from all these different 
organizations, but that are dedicated in HUD to going into 
these localities as these disasters happen.
    There certainly needs to be funding for this. They will be 
able to take some of it from their existing programs and put it 
into that. But if you are going to have an amalgamated team 
that is available to go at any minute, you will have to 
discuss, along with that authorization, some funding.
    Mrs. Beatty. But I am hesitant about making HUD pursue this 
codification in the midst of this disaster effort, because I 
don't know if they have enough resources to accomplish this.
    My time has expired. I yield back.
    Chairwoman Wagner. The gentlelady yields back.
    The chair now recognizes the gentleman from Michigan, Mr. 
Trott, for 5 minutes.
    Mr. Trott. Thank you, Madam Chair.
    And I want to thank the witness for her time this morning.
    And before I get into a few questions, I want to just 
respond to my friend from Texas' opening remarks regarding 
Secretary Carson's appearance before our committee. He was here 
about 4 hours. We have an awful lot of ground to cover. I would 
agree that we need to have him come back.
    But I found his testimony and comments to be some of the 
more productive hearings we have had. He actually listened to 
the questions and did his best to respond to our questions. So 
I can't blame the Secretary for the problems we are discussing 
today necessarily.
    But I think it is important we have this conversation 
because we are talking about a lot of money, these disasters 
are occurring more frequently, and it is almost inevitable that 
when a disaster does strike a community that the response is 
almost always deemed to be inadequate and too slow, certainly 
by the people that are affected by the disaster. So it is 
important.
    And with respect to this program, my concern is it is so 
fragmented and there is a lack of accountability and a lack of 
transparency. And I wonder preliminarily whether the maximum 
feasibility deference standard really puts the Department in a 
position where there is no adequate way to review the States' 
performance.
    Ms. Albert. Let me address the first part of your comment, 
which is fragmentation. I do think that the overall disaster 
scheme, schemata, actually, that has evolved over time with the 
government response has evolved in a fragmentary manner. It has 
evolved where programs were in the government and therefore it 
was siloed within those programs.
    Now, for instance, FEMA, this is their mission. This is all 
they do. This is disaster response. It is emergency response, 
emergency management. But for the other departments, some of 
whom actually surpass FEMA in funding, such as HUD--and, 
believe it or not, the Department of Transportation spends more 
money than FEMA and gets supplemental money more than FEMA, at 
least for Sandy it did--these are tangential missions and so 
they fit within the tranches of whatever they come from.
    When you discuss fragmentation, part of the issue is what 
happens to the homeowner when they have to go to this type of 
amalgamation and congealing of government agencies, and there 
is confusion and there are delays.
    For instance, I will give you one example. When you go to a 
disaster recovery center that FEMA runs and you happen to be a 
resident who has been flooded, you will get funding from FEMA 
first--food, clothing, repairing your home, at least for you to 
live in--and then you will go to SBA, to the Small Business 
Administration.
    There is an alphabet soup of government agencies that the 
residents and homeowners have no idea about. And they then meet 
with SBA. Now, you would think, as I did actually for the 
longest time until my staff actually corrected me, that if you 
got an SBA loan you were a small business. That is not true. 
You can get a homeowner loan from the Small Business 
Administration.
    But here is the problem. If you do, you then are not 
available because there is a sequence that HUD comes to meet 
the unmet needs. You will not be able to get a grant from HUD. 
And a grant is not repayable.
    So there are these confusions that emanate from the 
fragmentation of how the disaster program was set up, and they 
really need to be addressed going forward. That is not to say 
that the government hasn't gotten better at disaster response, 
it has, compared to--I came into HUD from the HHS IG right 
after 9/11, and compared to even Katrina, it is a lot different 
now.
    However, there are real confusions and inefficiencies that 
really need to be streamlined and synthesized, because the 
homeowner suffers when that happens.
    Mr. Trott. So it was a great comment and goes to the heart 
of my concern with this issue as we try and codify a solution. 
So some poor homeowner doesn't get what they need from HUD, and 
they go to FEMA. FEMA says: It is not our area of 
responsibility, you need to call HUD, or you need to call the 
SBA.
    And I know one thing from my days in the business world, if 
you have an important project or mission that is critical, you 
need to have someone in charge. At the end of the day, someone 
needs to be coordinating all of the efforts so that people 
can't point fingers at each other.
    Would you say that is a legitimate concern as we approach 
this problem? Because right now, not only is the poor homeowner 
confused by the myriad of agencies and departments, but there 
is no one accountable.
    Ms. Albert. When you are the homeowner and you go into 
these initial disaster recovery centers--and some of them go 
early. Sometimes going early, you can be penalized. Sometimes 
you are better off waiting. Because the system right now is not 
a linear system, it is actually a circuitous system. And 
depending where you enter can affect where you end up. And 
there is a lot of confusion.
    So I think they have gotten better, but there needs to be 
more done.
    Mr. Trott. I appreciate your comments, and I am out of 
time. But I am interested to hear about any instances of 
criminality that you have discovered in the IG's office as it 
relates to fraud.
    But thank you. I yield back.
    Chairwoman Wagner. The gentleman's time has expired.
    And the chair now recognizes the gentlelady from New York, 
Ms. Velazquez for 5 minutes.
    Ms. Velazquez. Thank you, Madam Chair.
    Ms. Albert, in your answer one of the questions that Mrs. 
Beatty posed to you, you said that more resources are needed to 
HUD. What do you mean by that? Do you mean increasing 
additional staffing?
    Ms. Albert. Yes. I think if you could codify this program 
like we are recommending--and don't forget, we have just come 
to this recommendation.
    Ms. Velazquez. So it is good enough. So one area where we 
could make an improvement, in terms of your recommendations, is 
increasing the staffing for HUD.
    Ms. Albert. For this area.
    Ms. Velazquez. For this area.
    Ms. Albert. Yes.
    Ms. Velazquez. So I am a Puerto Rican American and all my 
family is in Puerto Rico. So what is happening in Puerto Rico, 
there is no other way to describe it. I was just there this 
weekend. The Puerto Rico that I know no longer exists. People 
are dying in Puerto Rico because there is no power being 
restored, 70 percent of the hospitals are operating with power 
generators.
    So my question to you is, I am all for preventing fraud, 
waste, and abuse. I do not support putting people's lives at 
risk when natural disaster strikes just for the sake of 
preventing fraud and abuse. They need our assistance. The 
Federal Government must show up.
    So do you think that failure to document or the failure to 
get an independent cost estimate should be justification enough 
to withhold CDBG-DR funds from the citizens of Puerto Rico, 
many of whom are facing life-threatening conditions, yes or no?
    Ms. Albert. No. There has to be some reasonableness on any 
efforts--
    Ms. Velazquez. But that is the reality. As of yesterday, 
the money from the supplemental has not been allocated to 
Puerto Rico or Texas or Florida because they haven't been able 
to make the estimates regarding Puerto Rico.
    Ms. Albert. Right. So when HUD gets its supplemental 
funding, it goes through a calculation of--my understanding, we 
are not part of that, but from my understanding there are 
internal meetings on how unmet needs are. Because HUD comes 
after FEMA and SBA, it typically isn't there in the beginning, 
although it assists, but it really comes into the unmet needs. 
It will then make a determination based on Puerto Rico's 
situation on what FEMA and the other first responders, in this 
case SBA, would expend and what the disaster is.
    But I want to explain something to you, too. I have staff 
down there. And I have to tell you that it was a very difficult 
road for us as well. Half of my organization is law enforcement 
and the other side are auditors, and I have a presence of both 
in Puerto Rico.
    I spent quite a bit of time the first few weeks getting my 
staff water and getting them food so that they could go out and 
assess the damage for HUD. Because they have law enforcement 
vehicles, they could see what HUD was not able to see. And so 
they didn't have the basic necessities.
    The other side of my organization in the last few weeks has 
been going out to nursing homes and making sure that the 
elderly--this is an unusual role for the HUD IG. We are doing 
what we have to do because it is for the public good.
    So this situation is a real humanitarian crisis, and I 
understand that more than most because my own staff have been 
affected by it.
    Ms. Velazquez. It is very easy to come here and make the 
argument that we must be the steward of taxpayers' money, but 
at what cost? We should not--the issue is--are we looking to 
the real issues when we are dealing with CDBG-DR?
    We are using arguments just to cut the funding for an 
agency that has failed American citizens because of the lack of 
manpower to be able to come up with a report and the estimates 
that we need in order to allocate the money that will make the 
people of Puerto Rico whole. That is the real issue here.
    Ms. Albert. Yes. And I agree with you, they should not be 
cut.
    Chairwoman Wagner. The gentlelady's time has expired.
    The chair now recognizes the gentleman from Georgia, Mr. 
Loudermilk, for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chair.
    And thank you, Ms. Albert, for being here today.
    And I appreciate the comments of my colleagues from New 
York. I have worked in disaster relief and recovery in a 
volunteer basis for many years. I can't even imagine--anybody 
in America imagine--the devastation that Puerto Rico is seeing 
today. And it is bureaucracy that is clearly in the way of 
getting the relief to the people. I am working with some 
nonprofits right now in trying to get some relief to Puerto 
Rico, and because of how things are stalled there, it is even 
hard to get that relief out there.
    On the other hand, without proper oversight also costs 
lives. We have seen it time and time again that when the people 
that the funds are designated to do not receive the funds 
because it is diverted to another area, it costs lives as well.
    This is an extreme example, but you don't have to go any 
further than 1993 in Mogadishu when the U.N. was providing food 
to those that are in need, but the warlords were intercepting 
that food and it was never getting to who it needed to, and it 
resulted in the incident we know as Black Hawk Down. So we have 
to find that way to put that oversight into place.
    I want to make sure I understand this right. So the funds 
are given to a grantee, who may be a State government, a local 
government, a city government, et cetera. Then they can grant 
those funds to a subgrantee. Who might that be? What type of 
entity might that be?
    Ms. Albert. There will be local agencies, developmental 
authorities typical--for instance, if it is in a city, typical 
agencies that would normally deal with economic development and 
other things.
    Mr. Loudermilk. Is it ever a private entity? I know in 
Georgia--
    Ms. Albert. Could be.
    Mr. Loudermilk. It could be, lack of better term, a 
developer who actually builds HUD homes.
    Ms. Albert. Could be. Uh-huh.
    Mr. Loudermilk. And I know that you have said that the 
diversity of HUD projects is part of the problem. So these 
funds could be used for any HUD-type project, is that what I am 
understanding?
    Ms. Albert. They are typically for--in a disaster they are 
typically--because the CDBG program is for an overarching.
    Mr. Loudermilk. Right.
    Ms. Albert. But this is disaster recovery. They will do 
home repair, economic development, infrastructure as well. This 
is typical of what HUD does.
    But I do have to mention, though, one thing as you are 
talking about the money flowing down. When HUD, in the disaster 
recovery, signs an agreement with the State or locality and 
then it goes to, as you said, the subgrantee, it then loses the 
oversight for the subgrantee because it signed the agreement 
with the State or the locality. Therefore, it becomes very 
difficult to monitor the funds when it goes to that level.
    Mr. Loudermilk. So really the challenge is, you can monitor 
the grantee, but is it the grantee who is responsible to 
monitor the subgrantee to make sure the work is done?
    Ms. Albert. They are.
    Mr. Loudermilk. Are they equipped properly to do that in 
every case?
    Ms. Albert. No. Not always. And so we have actually made a 
recommendation from our lessons learned. One of the interesting 
scenarios was after 9/11 when lower Manhattan was devastated. 
The city of New York, particularly their Department of 
Investigations, which is a law enforcement entity, knew that it 
was going to have issues with reconstruction in Lower 
Manhattan. It was very worried about organized crime getting 
involved in the construction of the World Trade Center.
    And so therefore they had had a history of vendor problems 
and had a problem where they had these independent or integrity 
monitors, that they were called, inserted, if they were a large 
enough subgrantee, and monitoring. And then they would go back 
to the States and let them know, with eyes on the ground, what 
they were seeing.
    The only issue with that is that then the State or locality 
gets the viewpoint of the integrity and independent monitor, 
but we in the IG and we in HUD lose that. So we want to make 
sure that if you are going to require these independent 
monitors, which we think are a good idea, that we at least get 
the benefit of knowing what problems they are seeing at the 
subgrantee level.
    Mr. Loudermilk. Within the last few seconds, as we move 
forward to authorize this and put constraints, what else can 
HUD and Congress do besides the monitoring to make sure that 
the funds do go to those who need it and that the proper repair 
or--the money is used for the proper thing?
    Ms. Albert. I think we, at our level, should have oversight 
of subgrantees, too. We should have some sort of tie to be able 
to take action if something happens.
    Mr. Loudermilk. Thank you. I yield back.
    Chairwoman Wagner. The gentleman yields back.
    And the chair now recognizes the gentleman from Florida, 
Mr. Crist, for 5 minutes.
    Mr. Crist. Thank you very much.
    And thank you, Ms. Albert, for being here.
    I would like to talk about duplication of benefits and how 
a well-intentioned practice can sometimes perhaps disadvantage 
homeowners.
    As you know, FEMA is often the first place that natural 
disaster survivors turn for assistance. And during discussions 
with FEMA about the options available to them, many homeowners 
are encouraged to also apply through the Small Business 
Administration for disaster recovery loans.
    Those who choose to apply, are approved for the loan, can 
then begin the process of rebuilding. Months later, however, 
that same homeowner may see his or her neighbor, who did not 
seek immediate assistance from the SBA, rebuilding their home 
with a Community Development Block Grant-Disaster Recovery 
grant, I should say, money that doesn't require a cost share 
nor needs to be paid back.
    But when the homeowner first tries to get the same funding, 
they are denied due to duplication of benefits. Or worse, they 
are mistakenly approved for CDBG-Disaster Recovery, Grant-
Disaster Recovery dollars, only to be audited later and forced 
to repay those funds. In both cases, the homeowner is 
rightfully upset and often feels perhaps duped by the Federal 
Government.
    I fully agree that it is important to guard against waste. 
I think we all would. But this seems inherently unfair to those 
homeowners who seek early assistance in the rebuilding effort, 
often at the direction of the government.
    You recommend that the Department of Housing and Urban 
Development generate guidance to help victims better navigate 
the programs available to them following a disaster. But 
because Community Development Block Grant-Disaster Recovery 
funding almost always comes after FEMA and Small Business 
Administration, shouldn't disaster victims be notified, made 
aware, if you will, of any potential duplication of benefits 
from FEMA and the SBA first?
    Ms. Albert. Yes. Easy answer. This issue of the confusion 
for the homeowner is one that we have brought to the staff here 
right after Harvey and Irma, but before Maria. We know that 
there is confusion between particularly the SBA and HUD that 
needs to be deconflicted. There are inequities that come as a 
result.
    Now, technically the reason that HUD comes after SBA is 
because SBA loans are supposed to go for higher income who can 
afford to repay; and the grants, as Ranking Member Green was 
talking about, are supposed to be given to low and moderate 
income.
    That doesn't always happen. They don't always go to the 
intended. So you could end up with a HUD grant going to 
somebody who is not low and moderate income, and then the 
person who ended up getting the loan is disadvantaged because 
somebody else got a better situation than they did, which is 
not to have to repay the loan.
    We absolutely agree that this deconfliction and seamless 
issue needs to be addressed as you, as the authorizing 
committee, go forward with how you see disaster across the 
government.
    This is a result of what I said is the fragmentation of how 
the disaster program emanated, primarily after 9/11. Whoever 
had what function in what department ended up dealing with 
their program. Some of them overlapped; some of them didn't. 
The government has gotten better at trying to make it more of a 
seamless scenario. However, like I said, it is not a linear 
route; it is a circuitous route. And when you come into it at 
different aspects of it, you could be disadvantaged, and that 
is why I think you need to address that.
    Mr. Crist. We the Congress?
    Ms. Albert. Yes. HUD right now deals, like I said, with it 
in the Federal Register, because it has never been directed in 
a statute. And it will look to the supplemental, and it will 
look to the guidance that comes from the supplemental. 
Sometimes it is very broad and it is very general. This is why 
they give the maximum feasible deference. They won't put a lot 
of specificity in it.
    And so you will end up with the inequities that are already 
built into the system if you don't have at least the ground 
rules set out.
    Mr. Crist. So it is not in statute currently?
    Ms. Albert. For HUD.
    Mr. Crist. Right. It is a reg?
    Ms. Albert. It is dealt with by Federal Register notices.
    Mr. Crist. Could it be fixed there then?
    Ms. Albert. I think that the more Federal Register notices 
you use, the more inconsistency you will find from disaster to 
disaster.
    Mr. Crist. That is unfortunate. OK. Thank you.
    Chairwoman Wagner. The gentleman's time has expired. And it 
is unfortunate. It is no way to govern, by Federal Register, or 
to have oversight.
    The chair now recognizes the gentleman from Tennessee, Mr. 
Kustoff, for 5 minutes.
    Mr. Kustoff. Thank you, Madam Chair.
    And thank you, Ms. Albert, for being here this morning. If 
you could I will maybe dial it back a little bit, can you 
explain the role of the CDBG-DR and specifically why the 
program exists, considering the number of other programs 
designed to provide similar relief among different agencies?
    Ms. Albert. The CDBG program, which has traditionally been 
the HUD program, is the preeminent Community Development Block 
Grant out there. So while FEMA responds to disasters and 
emergency management eventually they leave and it is HUD that 
really stays. So when you talk about the 6 to 8 years of a 
traditional redevelopment after a disaster, it is really HUD 
that is there, and that is because of the Community Development 
Block Grant which was set to make economic and community 
development.
    Mr. Kustoff. Ms. Albert, are you familiar or can you speak 
to the level of coordination in disaster relief efforts between 
HUD, FEMA, and SBA?
    Ms. Albert. Sure. So when a disaster initially hits, FEMA 
is the first in under the Stafford Act, which is the governing 
statute for disasters. And it will come in and it will set up a 
number of systems: Disaster recovery centers for residents and 
those affected to come into, joint operations command centers, 
and so forth.
    And it will pull in from the Federal Government staff, 
which is exactly what happened to us in the beginning, because, 
as I said, half my organization is law enforcement. We then 
fell under the public safety and security and did sort of 
nontraditional IG roles, but we were, under the Stafford Act, 
required to do that. We went out and did search and rescue. We 
did other functions, including force protection. So that is 
initial.
    Then, as time goes on and you get sort of past the 
immediate after effects, other areas start taking over, and 
that is really where HUD comes in. It is the long-term economic 
development and revitalization of a disaster area. But in the 
initial stages, it is really FEMA; and depending on the various 
support functions, it is different departments. For instance, 
under public safety and security, which is called ESF 13, which 
you always have an acronym in the government, that is ATF that 
coordinates for all the Federal. And they are set up in various 
support functions of who takes over and what.
    But that is very short-term. Eventually, there is the long-
term, which is where we are at with Sandy right now, 5 years 
out, and it is really the CDBG that is there.
    Mr. Kustoff. Again, along those lines, now, I will tell you 
I am a lawyer, was a lawyer before I was elected to Congress. 
And in legal terms, sometimes you talk about forum shopping, 
where you try to pick a court, a particular court that you 
think may be better inclined to handle your matters. Not that I 
ever did anything like that.
    But do you ever see any forum shopping or venue shopping, 
if you will, between grantees seeking the best deal between 
these various agencies?
    Ms. Albert. As a law enforcement agency, we absolutely do 
see fraud, and we see it in a number of different ways.
    First of all, getting to the forms and you saying that you 
are an attorney, one of the things that we really try to 
insist, it doesn't always happen, but HUD has been very good 
when we point it out to them. We want to make sure that those 
forms that people sign, have the correct certifications on them 
that actually say that you are certifying that what you are 
signing for is truthful, that you are the actual homeowner and 
so forth. If those certifications aren't in the form, it is 
very difficult to prosecute later on for actual improper 
activities. So that is a preventative thing.
    But we do see issues of fraud in a variety of different 
ways. You are not supposed to seek moneys to rebuild if your 
home is a vacation home, for instance, but yet we have people 
seeking moneys which were supposed to be for low and moderate 
income who have vacation homes and are saying that their home 
was destroyed and they live there year round and they are low 
and moderate income and so forth. Those absolutely do happen.
    Mr. Kustoff. Thank you, Ms. Albert.
    Now, I see that my time is expiring. I yield back the 
balance of my time, Madam Chairman.
    Chairwoman Wagner. The gentleman yields back his time.
    The chair now recognizes the distinguished ranking member 
Mr. Green for 5 minutes.
    Mr. Green. Thank you, Madam Chair.
    Again, I would like to thank the witness for appearing. I 
have great respect for this witness, and I greatly appreciate 
what you have done in Puerto Rico. You indicated that you 
dispatched some of your personnel to Puerto Rico to acquire 
information such that HUD could react rapidly. Can you say just 
a little bit more about this? I think it is important for us to 
know.
    And by the way, before you do, you don't work for HUD. I 
think the record needs to have a clear indication that you do 
not. Is that a fair statement, you don't work for HUD?
    Ms. Albert. Yes. Inspector generals are independent 
entities within the executive branch, and we are actually sort 
of strange creatures, because we actually report to Congress. 
So we sit and reside in the executive branch, but we have a 
dual responsibility to report to Congress.
    Mr. Green. Thank you. Now, if you would, Puerto Rico and 
some of the things that you have been able to accomplish.
    Ms. Albert. So early on, with the humanitarian crisis that 
was happening in Puerto Rico, we sent--we had a limited staff 
in Puerto Rico, so, unfortunately, over the years our staff 
itself has gone down and so we have had to diminish some of our 
actual field offices, and Puerto Rico was one of them, although 
we still had a presence.
    We were trying quickly, because we knew that HUD was not 
able to get around and, frankly, was having a great deal of 
difficulty even finding its own staff. So we would go out in 
the first days after Maria to try and locate HUD staff, let the 
Department know that its staff was OK--many of them were in 
shelters, they had evacuated--and just let them know that they 
were there and where they were. So that was the very, very 
beginning was actually locating people.
    After that, we went into and did a variety of things. We, 
along with the U.S. Attorney's Office and the FBI, were part of 
the Viejito task force which tried to deal with the issue of 
hoarding, which always happens in a disaster when there is 
limited fuel and supplies. We went into nursing homes, Section 
202 and Section 232 facilities that are HUD but others as well, 
to make sure that the situation that happened with Irma in 
Florida where the horrible nursing home situation happened 
didn't happen in Puerto Rico.
    So we took valued water, supplies, and other things with 
our agents. And we had to go, unfortunately, with our agents, 
because we had to protect the trucks, but not only that, we had 
to navigate the streets, which were dangerous, with downed 
wires and other things, to get those things to the elderly and 
disabled.
    Mr. Green. Let me intercede for just a moment, because your 
list is rather extensive, and I greatly appreciate all that you 
are saying.
    Notwithstanding all that was done, and you have obviously 
made a Herculean effort, but notwithstanding all that is done, 
we can visually see that there is still great work to be done 
in Puerto Rico. I heard General Honore, who was in Louisiana 
after Katrina, literally was in charge of a good amount of the 
disaster recovery effort, he indicated that circumstances such 
as what we see in Puerto Rico might require a lot more 
flexibility. The accountability obviously should be there, but 
it might require a lot more flexibility.
    Now, he used a term that I am not suggesting that we use, 
and I don't think he meant it literally. Maybe he did. But he 
said, listen, let the person who needs to make the request just 
write it out on a piece of paper and just send it in, because 
of the dire circumstances that are having to be dealt with.
    At some point, in places like Puerto Rico, we have to 
dispatch more of our resources and we have to do it in a much 
more expeditious fashion. I appreciate greatly what you are 
trying to do to help acquire the intelligence. Somehow, we 
cannot leave people stranded in the middle of the ocean, as has 
been called to our attention. We really have to find a way to 
get help in as quickly as possible.
    And on that point of getting help to them, in my district 
we had a town meeting. And for us to explain to my constituents 
what was available, we had to bring in nine people, nine people 
to explain. And at the end, I am convinced that people were 
thoroughly confused after having all of this siloed information 
presented. It is just overwhelming. And you are trying to get 
back home. Your kids are at someplace where they are probably 
being kept by someone.
    Somehow we have to do more for Puerto Rico. Can you just 
quickly give some indication, based on your observations, as to 
how we might move expeditiously?
    Ms. Albert. So it is always a balancing act. Obviously, 
there is a great humanitarian crisis in Puerto Rico that exists 
that is unique to that area. And getting people just basic 
necessities--food, electricity, water--is paramount.
    By the same token, we also have to look to the fact that 
the capacity of Puerto Rico to now take the vast amounts of 
billions of dollars that are going to come--that those 
structures that need to be set up--and they do there, because 
they are in bankruptcy and they have some problem agencies--
need to be done quickly but done well, with good accounting 
principles and other things.
    So that--just take the lessons learned. Disasters--you 
don't need to reinvent the wheel--disasters have occurred: 9/
11, Katrina, Sandy. Take those lessons, make sure that you have 
the best of those and put it in place where you know that there 
will be capacity issues.
    Chairwoman Wagner. The gentleman's time has expired.
    The chair now recognizes the gentlelady from New York, Ms. 
Tenney, for 5 minutes.
    Ms. Tenney. Thank you, Chairwoman Wagner.
    And I really appreciate the inspector general, Ms. Albert, 
being here today to discuss and examine the Community 
Development Block Grant-Disaster Recovery Program, which is 
intended to deliver emergency help to communities and 
neighborhoods with limited resources post-natural disaster to 
help rebuild their livelihood. I just want to make that really 
clear. Over the last decade, the Housing and Urban Development 
inspector generals audited grantees, which include States and 
local governments, where they found many areas this program can 
improve on to be run more efficiently.
    And I heard your testimony earlier. Obviously, I have 
numerous sheets of some of the work you have done, which looks 
very comprehensive, and some issues my colleague mentioned 
about some of the Sandy funding not coming out. I am really 
happy to report that with all the natural disasters, and it is 
particularly in the flooding realm, that there are none of my 
local communities or anyone in my district that has been 
reported as not getting their funding out.
    But there are a couple things I just wanted to talk to you 
about as the inspector general, and one of them is the 
thresholds in determining how we get to some of the disaster 
aid for, especially in my community, it seems that the flooding 
and the natural disasters we have almost cruelly go to the 
poorer areas and the poorer neighborhoods, and they are the 
ones that need the most resources. And I have walked through 
the muddy streams. I have walked into cellars where the 
basements are 5 feet of mud, and these people don't have the 
resources.
    How do we get around--I don't want to say get around, but 
get to the threshold so they actually meet--some of them are 
dollar amounts, some are per capita. How would you recommend we 
actually get to some of these people who are caught without 
having--and especially in an area like mine where our values 
are much lower than, say, New York City or other areas.
    Ms. Albert. First of all, to get to your point about that 
some of the poorer communities often flood this, unfortunately, 
is a reality. You saw it with Katrina, New Orleans. Some of the 
areas that have been developed that are the poorer areas were 
in the ninth ward, were flood zones. And this is why they 
flood, they were built in flood zones. We see this, 
unfortunately, even with public housing, that they are built, 
some of them, in flood zones, which gets to another issue which 
we have audited, which is that public housing sometimes doesn't 
buy flood insurance even though they are in a flood zone.
    But as far as the inequities of receiving funding HUD's 
allocation when it gets a supplemental and it goes to CDBG-R, 
CDBG is formula-based, but CDBG-R is a whole different 
allocation. And it looks to FEMA and SBA and the first 
responders and it sees what unmet needs are there, and then it 
makes a decision based on what it has determined the 
destruction has been in a particular area, and then it goes 
into a calculation of what is the unmet need.
    I think that if you feel that there are inequities--again, 
this is not a statutory program. So it is an interpretation by 
them and Federal Register over supplemental language.
    Ms. Tenney. If I may just say, one of my concerns is that 
our local governments have taken a lot of the burden in my 
region, and some of our local officials have actually become 
quite knowledgeable on some of the disasters, especially 
related to flooding.
    And it seems that when the Federal Government comes in, we 
don't take into account their local knowledge and their ability 
to solve the problem. And I am wondering if that is something 
the inspector general can dive in and say, look, these guys 
know what is going on, how can we give them the opportunity to 
provide the solutions, and then better spend the money that is 
coming in.
    And often we find that tens of thousands of dollars come in 
on projects that could have been solved--we have already 
studied these, we have analyzed them, and sometimes our input 
isn't taken into consideration. Is that something that we can 
do through your office or we can fix? Because it is a huge 
problem.
    Ms. Albert. I think that this is an issue you can discuss 
when you talk about codification in an authorizing language, 
because typically under CDBG disaster recovery funding, it will 
go to the States as opposed to an entitlement community, which 
could be lower, a locality, which is where traditional CDBG 
goes.
    So this inequity rises because you have different funding 
streams of who gets the money. And maybe this is something that 
you could discuss while you are dealing with your authorizing 
language.
    Ms. Tenney. Thank you. Because really, we do need to focus 
on so many of these communities. We know what we should have 
done, could have done. It doesn't get done. And then we have a 
few years later a heavy rain, not even a major storm, and we 
are in catastrophic flooding again like we experienced this 
year in my district on July 1st. And where's the Federal 
Government? We are still tied up. We are still not responding 
the way we should be to our needy communities.
    And I do thank you. My time has expired, but I thank you 
very much for your great testimony.
    Chairwoman Wagner. The gentlelady's time has expired.
    And the chair now recognizes the gentleman from Indiana, 
Mr. Hollingsworth, for 5 minutes.
    Mr. Hollingsworth. Good morning. Thank you so much for 
being here. And in addition to thanking you for being here, 
thank you for the hard work that you put in every day, you and 
your team. I know that you do that with a great amount of 
diligence. You can see that in your testimony here today and 
the way that you are thoughtfully answering questions and you 
are focused on ensuring not only that we do everything we can 
to help those that need it, but also that we do everything we 
can to be good, thoughtful stewards of taxpayer dollars.
    From a bigger picture perspective that I wanted to ask 
about, what I kind of heard throughout the course of your 
testimony today and some of the questions my colleagues have 
been asking is in the event that we respond to something like 
this, ``we'' being the Federal Government, there are two big 
risks and concerns, right?
    One is that there is a lot of overlap and duplicative work 
and resources that are put to the same missions. In other 
words, the two circles of the Venn diagram are too much 
overlapped, right? But then there is also another big risk, 
right, that those circles don't overlap at all and people fall 
through the cracks and aren't able to get the resources that 
they want.
    And you and certainly the Department overall are trying to 
find the place where you can marry those two up at exactly the 
point where there is no overlap, no duplicative waste of 
resources, but also that no one falls through the cracks.
    And so really, what I wanted to ask first was, have you 
encountered any challenges inside the Department in being able 
to execute upon your mission of ensuring that there are 
stewards of taxpayer dollars thinking through at each of these 
points? Is there anything that we need to provide you, 
resources or tools, to help you and your office accomplish 
their mission more thoroughly throughout the Department itself?
    Ms. Albert. Thank you for that question. Nobody takes the 
job of an inspector general because they want to win a 
popularity contest. I will be honest with you. It is maybe one 
of the toughest jobs in government, because you are criticizing 
programs, but you are criticizing them in a way that you hope 
to make them better.
    Mr. Hollingsworth. Right.
    Ms. Albert. But, of course, the message is not always one 
that is well-received by many.
    From the inspector general's perspective, it has been a 
tough road for us. Not only have we now had to deal with 
natural disasters, but, frankly, HUD, during the great economic 
crisis after 2011, was, frankly, the major entity supporting 
the economy through housing. I don't know if people realize 
that FHA became 30 percent of the mortgage industry at that 
point for new home sales. And when you add refinances in, it 
was as high as 70 percent.
    Concurrently, while it has had to oversee that, for 
instance, I have to oversee a $1.5 trillion FHA fund and a $1.5 
trillion Ginnie Mae remaining principal balance. That is $3 
trillion, including HUD's $48 billion regular appropriation and 
$47 billion disaster.
    When Sandy started, I had 711 staff. Today, I have 574. So 
you can see that something gives. And while I am very proud of 
our organization--we have returned more than $60 in the last 
few years to the government for every dollar you spend on us--
there is only so much we can look at.
    Mr. Hollingsworth. Is it just a question of resources or do 
you need more of a cultural shift or a push from Congress on 
how important your role is, how important auditing generally 
is, how important the inspector general role can be?
    Ms. Albert. One thing I have to say about this committee, 
this committee has always been, as our authorizing committee, 
very supportive of the inspector general. We have enjoyed a 
great relationship as our authorizers. But I think there are 
more things that this committee, as an authorizing committee, 
could do to help maybe alleviate, and certainly in this area, 
not only just codification, extending our oversight to 
subgrantees ensuring that procurement rules are met, because we 
know there can be great abuse in procurement. These are really 
things that could help facilitate us and would actually help 
our dialog with the Department.
    Now, I can say that I meet regularly with the Secretary. As 
a matter of fact, I have a meeting with him tomorrow. And he 
and I have had conversations about the critical juncture we are 
at right now and the need to do something different.
    Mr. Hollingsworth. I totally agree with that. And I think 
that certainly maybe many people see you and your role as a 
problem; I see it as the key to the solution and ensuring that 
we accomplish the mission that we want, but also do it 
effectively.
    My good friend and colleague that also sits on this 
committee, not this subcommittee, French Hill, this is a matter 
of passion for him as well. I know that he has done a great 
amount of work after Katrina, as president of the Rotary Club, 
Cooperative Baptist Fellowship, and ensuring that homes were 
rebuilt down in Louisiana.
    And he was astounded to see what he felt like was a waste 
of resources and not long-term sustainably helping individuals 
build above the floodplain so they wouldn't have this issue 
again. And so he and I are going to continue to work together 
to do everything we can to support you in your role and the 
Department generally in accomplishing its mission, but also in 
being a good steward.
    With that, I yield back.
    Chairwoman Wagner. The gentleman's time has expired.
    I am going to take a point of privilege from the chair and 
recognize my good friend from Missouri, Mr. Cleaver, for a 
quick follow up question, please.
    Mr. Cleaver. Thank you. Let me thank you, Madam Chair, for 
the hearing, and thank the IG for being here.
    In many ways, some of the questions, maybe the majority of 
the questions we ask were not what you do. We put you in the 
position in defending HUD.
    But I want to go back to what you might be able to do. You 
talked about the fragmentation, which is what I was trying to 
talk about earlier. Again, if Mayview is hit by a disaster, 
Mayview, Missouri, in my district, 222 people, if we followed 
the law of the CDBG--I know a little bit about CDBG, so I know 
the requirements. If we followed the regulations, before 
Mayview can get Federal assistance, there is supposed to be a 
Presidential declaration. There has not been a Presidential 
declaration for any of these small towns that have had 
disasters.
    And there is also a requirement, a HUD requirement for a 
community hearing. And I think you guys probably are the people 
that check up on this. There is supposed to be a community 
hearing. You are supposed to have a written notice of the 
hearing, and the plan is supposed to be presented. None of that 
happens.
    We have a problem. I have seen it firsthand. I have talked 
about it. I don't know what we can do. Looking at your 
recommendations, your legislative recommendations, and maybe it 
is all entangled into your recommendations, but there needs to 
probably be some clarity.
    This is a problem, and it is just a matter of time we are 
going to have another situation where in Biloxi, Mississippi, 
the ranking member and I went down there right after Katrina. 
They had rebuilt a yacht dock for yachts. People--downtown, the 
windows were still out of stores. Anyway, this is frustrating.
    Thank you so much for being here.
    Thank you, Madam Chair, for allowing me to follow up.
    Ms. Albert. Can I make one point, though? You are 
absolutely right that for HUD, you have to have a 
Presidentially declared disaster zone for them to come in, 
traditionally, after FEMA and SBA.
    FEMA can come in--I don't know if I have this title 
correct--when there is an emergency zone created, so that they 
can preposition and get in before the disaster. So like when 
Harvey was hitting, they would get in there before.
    This is why I am recommending that HUD actually have these 
jump teams, so that they can get in and do what they have to. 
And this may be part of your authorizing languages. When does 
HUD come in? Does it have to wait for the declared zone.
    Chairwoman Wagner. I thank the gentleman for his secondary 
question. And I thank you, Ms. Albert, for your testimony today 
and the wonderful collaboration between your office and the 
Oversight and Investigation Committee here of Financial 
Services. I know we have varied in some of our questioning here 
today with you.
    And knowing that Congress thus far in the 115th Congress 
has only authorized and appropriated, in fact, $7.5 billion in 
Community Development Block Grant-Disaster Recovery funds, and 
they were specifically I know for Harvey and Irma. Many of us 
spoke today about the horrific conditions and tragedy and 
devastation in Puerto Rico. Knowing that there are not specific 
CDBG-DR funds that have been appropriated there yet, I just 
thank you for your perspective on some of the ways that we can 
work together to reform the system.
    The ranking member and I are committed to working together 
to come up to some of your recommendations, some of your 
thoughts about how we can streamline this so that in the end, 
this money does, in fact, reach those who need it the most and 
that we are--while remaining good stewards of the taxpayers' 
dollars.
    So I thank you, Ms. Albert.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    And this hearing is now adjourned.
    [Whereupon, at 12:01 p.m., the subcommittee was adjourned.]


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                            November 1, 2017
                            
                            
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