[StBernard] Katrina Aid Program Is $2.9 Billion Short

[Westley Annis]

Katrina Aid Program Is $2.9 Billion Short
Uncertainty Plagues La. Homeowners

By Peter Whoriskey
Washington Post Staff Writer
Saturday, May 12, 2007; A02



NEW ORLEANS, May 11 -- The massive federally funded program for rebuilding
Louisiana homes is short nearly $3 billion, administrators told a state
legislative panel here today, leaving uncertain for now how the owners of
roughly 100,000 flood-wrecked houses here will be compensated.

The report represented the latest crisis for the aid effort initially
created to distribute $6.9 billion in federal money to the owners of homes
destroyed or damaged by Hurricane Katrina who lacked enough insurance money
to rebuild.

More than 20 months after the Katrina catastrophe, tens of thousands of
houses remain vacant, in part because of administrative delays in the aid
program, the largest single source of direct federal help for homeowners. To
date, only 16,000 of 130,000 applicants have received money.

Now, ICF Consulting, the Fairfax firm hired to administer the claims as part
of Louisiana's Road Home program, projects that the allotted aid budget of
$6.9 billion will fall $2.9 billion short of the claims from homeowners who
have been promised checks.

The report set off a flurry of negotiating and political posturing over the
origins of the shortfall and source of the additional money for the program.

State officials said they had already turned to Washington leaders for more
help, but whether that will be forthcoming is unclear.

Gov. Kathleen Babineaux Blanco (D) met Wednesday with the Bush
administration's Gulf Coast recovery coordinator, Donald E. Powell.

"The first conversation Governor Blanco initiated on this was with Donald
Powell," Andy Kopplin, director of the Louisiana Recovery Authority, a state
agency, said. "To be successful, the recovery effort in Louisiana must have
a multiyear -- over a decade -- commitment from the state and federal
government."

Powell said it is "premature" to decide whether more federal money should be
forthcoming.

"I don't know what the numbers are yet and if there is a gap," he said.

Sen. Mary Landrieu (D-La.), chair of the Senate disaster recovery
subcommittee, has scheduled a hearing for May 24 to focus on what led to the
shortfall and what might be done next.

She said that from the beginning of the effort, she "suspected that
Louisiana received less than its proportional share" of the federal money
spent to rebuild Gulf Coast housing. But she said it is too early to say
what the federal government might be asked to contribute to fill any gap.

"I'm not going to go there," she said.

The Road Home program was developed after hurricanes Rita and Katrina in
negotiations between state officials, the White House and the Gulf Coast
recovery coordinator. After months of delays, it was approved in July 2006.

As designed, the program promised as much as $150,000 for homeowners to
rebuild their storm-wrecked residences here. But then the bureaucratic
delays set in, and they continue today. For months, frustrated applicants,
many of them living in Federal Emergency Management Agency trailers, have
been waiting for a check so that they can complete their repairs.

"We're still waiting," said Kim Arnold, 49, a real estate agent whose New
Orleans East home was flooded for weeks with nearly six feet of water.
"It'll come some day -- well, I hope."

The shortfall arose, state officials said, largely because far more homes
were damaged than had been estimated, and the magnitude of the uninsured
damages has been greater than anticipated, Kopplin said.

In reaching their aid figure, they relied on FEMA estimates that showed
120,000 homes with "major" or "severe" damage. Kopplin added that the state
had asked originally for $9 billion for homeowners, but that fell in
negotiations with Powell.

"FEMA spent a ton of money inspecting houses," Kopplin said. "They had the
most robust data at the time. We negotiated on the basis of 120,000 homes."

By last month, the number of Road Home applicants had exceeded that
estimate. There are now 133,000 applicants, with many more expected. More
than 700 applications were received in a day last week.

Making matters worse, the amount of uninsured flood damage to each home --
essentially the amount the Road Home is supposed to cover -- is far greater
than anticipated.

When the program was launched, administrators assumed the average payout
would be about $60,000 per home; so far, however, the average has been
$74,000.

Powell said he wants to take a closer look at the figures before deciding
what to do. He said the initial estimate of the number of destroyed homes
was based not just on FEMA figures but on data from satellites and the
Department of Housing and Urban Development.

"I feel good about the process that we used," he said. "We want to
understand where the new numbers are coming from."