[StBernard] Stafford Act behind slow moving recovery funds

[Westley Annis]

Show us the money. 
It’s a mantra New Orleans residents have heard from Mayor C. Ray Nagin, complaining that nearly $12 billion in federal relief money is stuck in state bureaucracy. Gov. Kathleen Babineaux Blanco contends the city never requested the funds. Amid the rampant finger pointing, it turns out both statements are true. But the rationale behind these words is much more complicated. 
State agencies have received a total of $4.9 billion in recovery money from community development block grants, the state’s Road Home program and the Federal Emergency Management Agency. That money will ultimately trickle down to the public. But the remaining $7 billion — the bulk being Road Home money — awaits approval from state and federal agencies, such as the U.S. Department of Housing and Urban Development and Louisiana’s Division of Administration, before it can be disbursed, according to HUD and state officials. 
Stafford Act slowdown 
Put aside the Road Home’s newest dilemma — how it will pay homeowners in a timely manner — and the main culprit for the molasses-like movement of relief funds is the federal Stafford Act, which determines how disaster funding filters down to municipal governments, city and state officials say. 
“The Stafford Act is designed to be a reimbursement program,” said Mark Smith, spokesman for the Governor’s Office of Homeland Security and Emergency Preparedness, which disburses FEMA money. 
In a catastrophe such as Hurricane Katrina with entire economic systems seriously damaged or obliterated, such as St. Bernard Parish and the city of New Orleans, there is no way for local governments to build up enough cash to pay for the work up front and collect a reimbursement later, Smith said. 
“The Stafford Act assumes you have the funds to make yourself whole,” he said. “It doesn’t provide for working capital and that’s been a huge issue through the course of the disaster.” 
Cary Grant, assistant chief administrative officer for the city of New Orleans, said Nagin and Ed Blakely, the city’s executive director of recovery management, have been working on raising capital in New York and on Wall Street, as well as examining the city’s bonded debt to finalize some of its 800 rebuilding projects. 
“There’s been a lot of work with Congress to change the Stafford Act but that hasn’t been done,” Grant said. “I think we’re really at a point where we all need to pull together our oars in the water going the same way. Everything is going to take time and a lot of funding.” 
“We are working on options like loans and bonds ... to improve the liquidity of some of these applicants,” said Pat Forbes, disaster recovery manager in the state’s Office of Community Development, the branch of the Division of Administration handling The Road Home and other relief funds. 
Road Home setback 
The Road Home’s quandary over whether it is legally required to pay homeowners in a lump sum or installments has caused another major funding setback. 
Relief money totaling $135 million, which the Louisiana Recovery Authority recommended be used to reconstruct state buildings, mostly in New Orleans, is tied to the state’s $4.2 billion Action Plan 2, the mechanism the state uses to distribute relief money. The state must present documents that reflect the fine-tuning to keep Road Home a compensation program rather than a rehabilitation program, he said. 
Action Plan 2 can’t move forward until HUD receives the state’s Road Home payment modifications, said HUD spokesman Brian Sullivan. 
“Until we put that question to bed we can’t move forward with Action Plan 2, which that $135 million is tied to,” Sullivan said. “We thought we’d see (the revised documents) by now and we haven’t. It’s really up to them. They’re making the changes.” 
“I have not been officially told that Action Plan 2 is being held until (HUD) agrees to our next method,” said Mike Spletto, Senior Housing manager for OCD’s Disaster Unit. 
New Orleans’ primary rebuilding priorities of 298 buildings and 400 other public facilities include the Criminal District Court on Tulane Avenue and Broad Street and the other damaged public safety buildings, said Grant. 
In addition to the reimbursement problem, red tape will continue to plague the recovery, Grant said. 
“This is at least my seventh or eighth major (disaster) event and this is the first one that has had the bureaucratic nightmares that any (other disasters) have had,” said Grant, a 22-year veteran of New Orleans city government. “I know everybody’s got their stake in this. The federal government and the state have the fiduciary responsibility and we don’t have any problem helping out with (the copious documentation). But it’s almost to the level it grinds to a halt because you have to elaborate on everything over and over. It bogs everything down.”•