[StBernard] Panel OKs letting state raise Road Home grants

[Westley Annis]

Insurance money not deducted under bill 
 
Thursday, March 08, 2007 
 
By Bruce Alpert
 
WASHINGTON -- A House committee voted 50-16 Wednesday to approve legislation
that would give Louisiana the authority to waive federal rules that require
Road Home grants be reduced by the amount of insurance payments and federal
assistance to homeowners. 

The bill is expected to be voted on by the full House before the Easter
recess. 
 
Louisiana Recovery Authority Executive Director Andy Kopplin said that while
the state would welcome the chance to pay higher rewards under its Road Home
program, it might not have the money to do so. It's likely, he said, that
paying out grants based on the current formula -- replacement or repair
costs minus insurance payments and certain FEMA payments -- will eat up all
or almost all of the $7.5 billion in federal money provided for the program.
 
Not subtracting insurance payments and FEMA payments could add $5 billion to
$6 billion to the cost of the program, Kopplin said. 
But Rep. Richard Baker, R-Baton Rouge, who wrote the amendment to a Katrina
housing bill passed by the House Financial Services Committee, said he sees
a good chance that the Road Home program will end up with surplus money.
"From what I understand," Baker said, both the number of Road Home
applicants and average awards have been less "than expected." 
In addition, he said, Congress is adding $1.2 billion in unused hazard
mitigation money to the Road Home program without the restrictions
previously imposed by FEMA. 
 
Surplus is doubted 
 
Baker said the state currently must subtract what is described as
duplication of benefits, including flood insurance payments, private
insurance payments other than for a home's contents and some FEMA assistance
payments. If the legislation passed by the House committee clears Congress
and is signed into law by President Bush, the state would be free to waive
those duplication of benefit requirements. 
 
Kopplin said three or four months ago he would have agreed with Baker that
the Road Home program would run a surplus, but that was a before a surge in
applicants increased the caseload from 80,000 to more than 112,000, with 300
to 400 applications still coming in daily. The state had expected a total of
120,000 applications. 
 
Kopplin said that even at the lower 112,000 total, with average benefit
calculations now averaging about $81,000 per applicant, the LRA is
projecting that total spending will come very close to the $7.5 billion
budgeted for the program. 
 
That total, he said, includes the $1.2 billion in hazard mitigation money
referred to by Baker.
 
Rhonda Johnson of Gentilly said she was denied a Road Home grant because her
insurance policies covered the $150,000 in projected costs to rebuild her
flooded home. But with contracting costs "out of sight" throughout the New
Orleans area, her costs were significantly higher, Johnson said. 
 
"I hope they can find a way so that we don't have to offset insurance
payments from the Road home grants," said Johnson, 52, a registered nurse.
"We have nothing left, no savings, and nothing that we had worked 35 years
for and I don't know how we'll ever retire." 
 
Public housing 
 
The bill also would block planned demolition of damaged public housing
developments in New Orleans until the federal government develops a
replacement plan. It says the Department of Housing and Urban Development
should develop a plan to house 3,000 former public housing tenants in New
Orleans by Aug. 1. 
 
Some Republicans said the committee was making a mistake in denying HUD the
chance to replace a housing system that forced tenants to live in
substandard units before Hurricane Katrina. 
 
"If we tell them to put it back the way it was, shame on us," said Rep.
Randy Neugebauer, R-Texas. 
 
But Democrats said it is wrong for HUD to demolish viable housing units at a
time New Orleans has a shortage of affordable rental units.