Slow Home Grants Stall Progress in New Orleans

The New York Times
Slow Home Grants Stall Progress in New Orleans
By LESLIE EATON

NEW ORLEANS — The $7.5 billion program to rebuild Louisiana by helping residents repair or replace their flooded homes has gotten off to a slow start, frustrating government officials and outraging many homeowners who say they are still in limbo 14 months after Hurricane Katrina hit.

Though nearly 79,000 families have applied to the program, called the Road Home, only 1,721 have been told how much grant money they will receive. And just 22 have received access to the cash, which was provided by federal taxpayers and is being distributed by the state.

“I don’t know of anyone who has actually received any money,” said Cassandra D. Wall, who is active in a group of homeowners from the eastern part of New Orleans. Ms. Wall said she planned to attend a protest Nov. 17 in Baton Rouge, the state capital, “to go public with the outrage and the outcry.”

Many hopes have been pinned on the Road Home program, which is widely considered the most important factor in rebuilding the ruined neighborhoods of New Orleans and is also meant to start an economic boom in southern Louisiana. Homeowners who rebuild or buy new houses in the state are eligible for grants of up to $150,000 to cover their uninsured losses, although the average award has been about $68,000.

The city’s mayor, C. Ray Nagin, is so dissatisfied with the pace of the program that on Nov. 1 he announced that the city was developing a plan to lend money to people waiting for their Road Home grants.

[Officials announced on Nov. 6 that Gov. Kathleen Babineaux Blanco had ordered the contractor managing the program to calculate 10,000 awards by the end of the month.]

“It’s time to kick into high gear,” said Walter Leger, a lawyer and a member of the Louisiana Recovery Authority, which devised the federally financed Road Home program. “It’s time to forget the reasons and excuses” for the slow pace so far.

In some ways, the program’s low-speed beginning reflects an urgent need to avoid the kind of waste and fraud that plagued federal programs after the hurricane. The government, among other things, is demanding that applicants produce details of insurance policies and payouts, proof of title to a house, and, if possible, official assessments of a home’s prestorm value. Many New Orleans residents lost such paperwork in the flood, or never had it in the first place.

But the larger explanation is that the program is, in effect, a giant experiment.

“There is no precedent,” said Andy Kopplin, executive director of the recovery authority. “Louisiana’s version is the single largest housing assistance program ever done anywhere.”

The only similar program is in Mississippi, which got a full Congressional appropriation for its roughly $3 billion plan months before Louisiana got the full $7.5 billion it asked for. The Mississippi program is smaller and differs in many details; fewer people are eligible, for example, and the grants do not have to be used for housing.

But Mississippi’s program has been plagued by some of the same problems, including a slow start that drew public criticism from, among others, Trent Lott, the state’s junior Republican senator. New data from the program show that it has now paid $320.6 million in 5,201 grants — but officials had originally planned to have given out most of the grants by the end of August, the first anniversary of the storm.

Some Louisiana officials also point out that the Mississippi program got a public-relations black eye when it turned out that several state lawmakers had won a lucrative legal contract with the program. No accusations of fraud or conflicts of interest have surfaced in Louisiana’s program.

That is not much comfort to people like Lisa A. Lincoln, a social worker flooded out of New Orleans who now lives about 130 miles away, near Lafayette. Ms. Lincoln applied for a Road Home grant in August. She was interviewed, her house was inspected and her thumbprint was taken as a fraud-prevention measure.

But she still has not heard if she will get a grant to repair her Creole cottage in the Gentilly neighborhood of New Orleans. The house still needs at least $60,000 worth of work, she said; it took all her insurance money, and help from community groups, to gut it and install some wallboard.

The delay appears to be that the program has to verify that she had insurance, and how much it paid her, she said. “And that could take however long to get,” she said. “I’m in limbo.”

Dealing with the insurance companies is just one challenge the program has faced, said Michael Byrne, a former New York City firefighter who is now chief program executive for ICF International, the private company the state hired to run the Road Home program.

Complicated federal regulations bar what is called “duplication of benefits,” so anyone who received insurance money or housing assistance from a different government agency, like the Federal Emergency Management Agency, has to document it and have it subtracted from the Road Home grant. And there have been computer systems to coordinate, documents to verify, hundreds of people to hire and offices to open across the state and, soon, in Houston.

Even figuring out how much a house was worth before the storm — the cap on the amount of a grant — is difficult, slow and often controversial.

Michael M. Homan, a professor of theology at Xavier University, is among the few who has been told how much he can get to repair his badly damaged house in the Mid-City neighborhood. But Professor Homan thinks the amount he was offered, about $64,000, is too low.

That is because the program assigned a prestorm value to his house of $146,000, less than he paid for it in 2002 and about $40,000 less than the appraisal when he refinanced his mortgage the next year. So he has appealed, and is hoping that his grant will be increased. Because he writes about his experiences on the Internet (at michaelhoman.blogspot.com), his results are being anxiously watched by other applicants.

Professor Homan said he was not dissatisfied with the program, compared with his other experiences after the storm. It has been, he said, “a year of incredible frustration,” starting when the levees broke. He had flood insurance, but is suing his insurance company, which denied his claim for wind damage.

It is not just the financial strain. As anyone here will tell you, trying to live in New Orleans is hard. Professor Homan, his wife and two children are living in the second story of their tilted house and in a FEMA trailer parked out front. Around them, some houses look abandoned, and a few have waist-high weeds in their yards.

Because housing in New Orleans has traditionally been relatively inexpensive, limiting grants to the prestorm value of a house may keep many people from rebuilding, said Melanie Ehrlich, a professor at Tulane University who is a founder of Citizens Road Home Action Team, a group that is pushing for changes in the state program.

Dr. Ehrlich, a molecular biologist, cites statistics suggesting that before the storm, about 10 percent of the city’s houses were valued at less than $50,000, and about two-thirds were valued at less than $125,000, far less than it would cost to build them from scratch. State officials say that low-income homeowners will be eligible for special loans that will be forgiven if they live in their houses for five years.

Salvatore S. Barone may be a test case, of sorts. Mr. Barone and his sister inherited a house in the eastern part of New Orleans after their mother died in 2000. Mr. Barone said that the house was valued at about $72,000, and that a contractor told him it would cost $52,000 to fix the flood damage.

But his situation, like many here, is complicated. His sister, who lived in the house before the storm, failed to pay the insurance or tax bills, probably because she was suffering from dementia, Mr. Barone said, adding that she was now in a nursing home.

A former driver for United Cabs in New Orleans, Mr. Barone said he was disabled by a stroke a decade ago and lives on $699 a month in federal benefits. He is staying in a trailer in rural Mississippi.

Though he has applied for a Road Home grant, Mr. Barone must first get his name on the title to the house, a common problem in New Orleans, lawyers there say.

Paul Tuttle, the pro bono counsel for Southeast Louisiana Legal Services, said that since the storm, his office had heard from hundreds of people living in family homes that they suddenly have to prove they own.

And the issue is critical. In Mr. Barone’s case, he said, “I’ll be living in a cardboard box under the Interstate if I don’t get this grant.”