[StBernard] New Regional Buyout/repair plan?

[Westley Annis]

BUYOUT IN WORKS

Five parish leaders agree to make thousands whole 
First phase of voluntary program focuses on owner-occupied homes 

By Gordon Russell, Frank Donze 
and Laura Maggi 
Staff writers 

In a major development that could at last provide definitive options to New
Orleans-area homeowners sitting in limbo, the leaders of the five
metropolitan parishes hardest-hit by Hurricane Katrina have signed on to a
plan to offer owners of flood-damaged houses the choice of a buyout at full,
pre-storm market value or a renovation grant to cover most repairs. 

The program, which New Orleans Mayor Ray Nagin has cheekily titled the
"Failed Levees Homeowner Recovery Program," is the most detailed blueprint
for making homeowners whole since the apparent death of legislation by U.S.
Rep. Richard Baker that would have allowed owners of flood-ravaged homes to
recoup 60 percent of their equity. 

The new plan, surprisingly, would be more generous than Baker's in some
cases, although probably not in the case of high-priced homes or homes with
large mortgages. The grants, whether for buyouts or renovations, would be
capped at $150,000, while the Baker legislation would have settled the
mortgages of homeowners who sold, regardless of the size of the mortgage.
Under the new proposal, those with mortgages well above $150,000 might be
more apt to use the money to renovate and continue paying their mortgage,
rather than take the buyout. 

There are still numerous caveats: Most important, the plan needs the
approval of key state officials and the White House. Nagin, who acknowledged
that the initiative is a work in progress, said it is designed to jump-start
the region's moribund economy by putting money in the hands of homeowners
quickly. 

Several state and local representatives attended a meeting at the White
House Sunday to discuss the plan and other items, including banker Joe
Canizaro, a leader of Nagin's rebuilding commission, and Sean Reilly, a key
member of Gov. Kathleen Blanco's Louisiana Recovery Authority. It was
unclear late Sunday how the Bush administration reacted to the plan or what
the next step may be. 

Andy Kopplin, the executive director of the Louisiana Recovery Authority,
said Sunday that he had not been briefed by the local officials. But he said
that the roughly $4 billion total figure that Nagin says would be needed for
the program appears to be a low figure for the housing needs of the New
Orleans metropolitan area. 

State officials have been in what Kopplin characterized as "very in-depth,
detailed" negotiations with Donald Powell, the Gulf Coast recovery czar
appointed by President George W. Bush, to get more money for homeowner
buyouts and repairs. Kopplin said the state is asking for enough money to
help as many people as possible, including those with less severe damage who
would be left out of Nagin's proposal. 

"Right now, we believe the housing challenges based on numbers we are seeing
from Chairman Powell's office warrant considerably more than $4 billion if
we want Louisiana citizens to get treated equitably to Mississippi
citizens," Kopplin said. A key part of the Blanco administration's argument
for more funding is that Mississippi has received substantially more
financing per hurricane-affected household in comparison with Louisiana,
which had much more damage. 

But the five local officials appear to be in support of the latest proposal.
Nagin said he and the others - Jefferson Parish President Aaron Broussard,
Plaquemines Parish President Benny Rousselle, St. Bernard Parish President
Junior Rodriguez and St. Tammany Parish President Kevin Davis - had agreed
to jointly back the deal after a meeting last week. Powell also had a
representative at the meeting. 

Nagin called the unified position a "real regional breakthrough." 

Rousselle said he is impressed with the plan as it's currently laid out and
agreed with Nagin's assessment that there was general consensus to support
the proposal by all parties. 

"Right now I'm on board," Rousselle said Sunday night. "I liked the idea." 

Rousselle said he would like to hear Blanco's views but said the parish
leaders have been unable to schedule a meeting with her. 

"I think this is a good start. Like everyone, I'm concerned about finding
ways to get the public to come back. If we don't hear from the governor, I'm
100 percent on board because right now, there's nothing else out there." 

Broussard, Davis and Rodriguez could not be reached for comment late Sunday.


The new proposal is aimed only at owner-occupied homes. Many Louisianians
who suffered some degree of flooding, including owners of businesses and
rental property, would not be eligible, but Nagin said he hopes that once
the most damaged neighborhoods start to come back to life, the federal
government will see fit to release additional appropriations to address
unmet needs 

In the plan's current form, all owners of homes that were "severely flooded"
- defined as having taken on roughly 2 feet of water or more - would be
eligible for a buyout at full pre-Katrina market value, minus insurance
proceeds. All buyouts would be voluntary; Nagin stressed that the use of
eminent domain, which was contemplated by his Bring New Orleans Back
Commission, is not being considered, even for areas that are not expected to
rebound. 

If a homeowner chose to renovate, the plan would offer them grant money
designed to bridge the gap between insurance payouts and the cost of
repairs. Homeowners of severely damaged homes still would have to meet flood
elevation standards, although the plan does not make clear whether the
current elevations would be used or new, advisory elevations FEMA expects to
release in the spring. Reilly has said the LRA's position is the latest
flood elevation standards will drive how the agency awards federal money. 

Under the working version of the new plan, those with flood insurance would
be eligible for grants of up to 80 percent of the difference between their
renovation cost and their insurance settlement. Those without flood
insurance - regardless of whether they lived in flood zones or not - would
be eligible for grants of up to 60 percent of the gap. 

That section of the plan appears to clash somewhat with Powell's previous
assertions that the government's first responsibility should be to make
whole the unfortunate homeowners who lived outside the flood plain and did
not buy flood policies because they had no expectation of flooding. 

The proposal to place a $150,000 limit on grants to individual homeowners is
designed to stretch the available money as far as possible, Nagin said. The
hope is to raise the percentages available for the renovation grants, but
whether that will be possible will depend on continuing refinement of the
data and the amount of money that's available, he said. 

Ever since Bush withdrew support for the Baker legislation, elected
officials across the region have expressed anxiety that federal aid
earmarked for Louisiana would be insufficient to rebuild or repair the homes
severely damaged by hurricanes Katrina and Rita. 

While the advancement of the new plan could suggest that's not the case,
Nagin emphasized that it should be viewed only as a first step. He and other
officials say the initiative doesn't cover many who deserve help, and their
hope is that the federal government will provide more money later to pay for
new infrastructure and cover homeowners with minimal flooding as well as
owners of rental and commercial property. 

"It's not a perfect solution," Nagin said. "But it takes into account
there's not enough money. The idea is, let's do this first. Do it well. And
go back to Congress and get whatever else we need. 

"But if Congress says we don't have any more money, we have the basis still
to grow our economy, because this will go into areas where you have a heavy
concentration of homeowners." 

A major reason the dollars already allocated could help such a large
percentage of owners of damaged homes owes mainly to better analysis of the
flooding data, officials said. 

The assumptions underpinning the locally driven plan indicate that about
$3.6 billion in federal Community Development Block Grant money could take
care of the roughly 101,000 owner-occupied homes in the five-parish area
that received major flood damage, according to consultant Greg Rigamer, who
has been working with the group. The group includes about 36 percent of the
homeowners in the region. 

Of that number, roughly two-thirds received "severe" damage and would be
eligible for the buyout, Rigamer said. For planning purposes, the proposal
assumes that half of those eligible would choose to sell, though Rigamer
said those estimates are educated guesswork at best. The plan further
assumes that roughly 40,000 insured homeowners in the metropolitan area
would choose to renovate, and another 28,000 uninsured homeowners would
repair their homes. 

The state has been allocated $6.2 billion in CDBG funds thus far to help
Louisianians recover from Hurricanes Katrina and Rita and expects to receive
about $1.5 billion more in hazard mitigation money, of which Blanco has
wants the Legislature to earmark $4.6 billion for housing aid. Another $1
billion would be set aside to help develop affordable housing. 

Nagin said it's not unthinkable that the New Orleans region would get the
bulk of the $4.6 billion because there is general agreement among local,
state and federal leaders that 75 percent of the flood-damaged
owner-occupied homes are in the metro area. 

But the $1 billion left over under Nagin's plan could conflict with the
mandate set by state officials that any proposal to offer direct financial
assistance to homeowners would offer people in every parish the same kind of
benefits based on their level of damage and insurance coverage. 

"Our view is that every Louisiana homeowner who qualifies for assistance
ought to be able to get the same benefit whether he or she is in St.
Bernard, Cameron or Plaquemines parishes," Kopplin said. 

The state has estimated that there is a $10 billion total gap in the ability
of people to rebuild after the storm, based on the insurance coverage of
flood victims, ability to refinance and payments from the Federal Emergency
Management Agency. That figure includes providing incentives to develop
mixed-income and affordable housing. 

The latest federal estimate is that 167,000 homes across the state were
damaged by flooding from the two storms, a number that includes homes with
minor problems as well as those destroyed by the hurricanes. While earlier
estimates by the state were as high as 217,000, Nagin said all parties have
worked together to refine their numbers, resulting in a near consensus. 

State leaders have likewise said that the apparent breakthrough owes to
growing agreement between state and federal officials about the numbers of
damaged homes and the extent of damage they suffered. 

The plan in its current form also envisions a second grant program that is
already available to homeowners - FEMA's increased cost of compliance
program - being made more generous. Homeowners located below federal "base
flood elevations" who wish to make their homes less flood-prone could be
eligible for up to $45,000 in hazard-mitigation money from FEMA, rather than
the $30,000 for which they now qualify. 

"I've been going round and round with this thing for months now and I think
we're getting consensus and some momentum," Nagin said. "I'm just hoping we
punch it over the goal line." 

Of the regional leaders, Nagin said Jefferson Parish President Aaron
Broussard had the most qualms about the plan, because many of the Jefferson
homes that flooded took on less than 2 feet of water. Nagin said the group
urged Broussard to support the plan with the understanding that "Phase Two"
- the hoped-for future federal appropriation - would take care of that
group. 

In addition, Rousselle noted that Jefferson Parish homeowners are more apt
to be fully insured than their counterparts in other parishes, meaning there
is a less urgent need for government aid there. 

In describing the proposal, Nagin articulated for the first time how he
plans to carry out the land-use recommendations of his Bring New Orleans
Back Commission, which called for convening meetings of residents of the
city's 13 planning districts over the next four months to determine in part
which neighborhoods are likely to rebound and which are not. 

The plan further recommended that, in areas not deemed viable, the city use
eminent domain "as a last resort" to buy out homeowners. 

Nagin said Friday that he does not support that provision, which he sees as
a violation of property rights. However, he said he wants the planning
process to proceed, and as an outgrowth of it, he envisions every
neighborhood being categorized as either viable or not viable. 

The grant program Nagin and his colleagues are pushing would go a long way
toward making those determinations, Nagin said. Once homeowners have clear
options, it will be much easier for them to decide whether to sell out or
renovate. Areas in which most homeowners choose the buyout would be likely
to receive the "not viable" designation. 

What does that mean? Nagin said homeowners in such areas will still be able
to access the same renovation grants as those in more viable neighborhoods.
But he expects a limited number will choose to do so. In part, that's
because city officials will make clear that those areas will be less
attractive to live in. They may be considered unsafe in terms of
vulnerability to flooding, and they are likely to have access to limited
city services ranging from schools to garbage pickup and police protection. 

Nagin said he hopes to entice those homeowners who decide against rebuilding
to relocate to other parts of the city by offering them properties the city
owns at half price. 

"The whole concept is to get a whole bunch of money in the economy and then
try to fill up our housing stock and eliminate blight," Nagin said. "That's
what I'm trying to accomplish." 

He believes the state will be in line for more money when Congress considers
a supplemental Gulf Coast appropriation for $18 billion being recommended by
the Bush administration. 

Based on the sheer number of homes damaged, Nagin said Congress has given
Mississippi far more federal aid for the to buyout or repair of flooded
homes. 

"The precedent is set," Nagin said. "As long as we don't screw up, we can go
back to Congress and say, wait as minute. . . 

"I want to make sure we're not six months behind Mississippi. And I want to
give hope and get the economy going right now and that puts us in position
to go back and get the money we need. Because if they're (federal officials)
not going to do Baker, they've got to do something." 


-----Original Message-----


>From nola.com:

 
 
http://www.nola.com/newslogs/tpupdates/index.ssf?/mtlogs/nola_tpupdates/arch
ives/2006_02_12.html#112336
 
Wes, maybe you can do a tiny url or something.
 
http://tinyurl.com/78p78