[FoCHAT] The Baton Rouge Advocate: article about yesterday's LRA meeting with new info

Fri May 11 10:38:37 PDT 2007

http://www.2theadvocate.com/news/neworleans/7454706.html?showAll=y&c=y

      Road Home deficit growing

   By JOE GYAN JR.
  Advocate New Orleans bureau 
  Published: May 11, 2007 - Page: 7a 

  The state’s embattled “Road Home’’ hurricane repair and buyout program is facing a projected $2.9 billion shortfall even as homeowner applications continue to pour in daily, the executive director of the Louisiana Recovery Authority told the board Thursday.

  To make matters worse, the housing program could be short an additional $1.2 billion — essentially making the deficit $4.1 billion — if the federal government does not allow the state to use hazard mitigation funds in the $7.5 billion program, LRA executive director Andy Kopplin said.

  “That money (the $1.2 billion) exists. We just can’t spend it,’’ he said during the LRA’s monthly meeting at Baton Rouge Community College.

  Kopplin reminded the board that Gov. Kathleen Blanco’s administration initially requested $9.4 billion from the federal government for the Road Home program, which provides rebuilding grants of up to $150,000 per home.

  Kopplin said the shortfall is the result of more homeowners than expected — with more damage than expected — applying for grants. He also said insurance has not covered as much of the losses as expected.

  U.S. Sen. Mary Landrieu, D-La., who chairs the Disaster Recovery Subcommittee of the Senate Homeland Security and Governmental Affairs Committee, is scheduled to hold a hearing May 24 in Washington to probe the budget shortfall and other obstacles to recovery in the Road Home program.

  Meanwhile, Melanie Ehrlich, founder and co-chair of the grassroots Citizens’ Road Home Action Team, or CHAT, asked the LRA board Thursday to order a thorough, independent review of the program.

  “We need action,’’ she said, charging that Road Home applications are “aging’’ while homeowners are being “left behind in the dust.’’

  Also Thursday, the LRA:

  Directed its chief financial officer to research contractual provisions regarding performance penalties and incentives that can be included in the state’s contract with ICF International, the private contractor hired by Blanco’s staff to run the Road Home program. The board wants those findings by June 7. The state hired ICF in June 2006. The state Division of Administration’s Office of Community Development has indicated it will renegotiate ICF’s current performance standards and penalties beginning in July. 
  Approved a measure to adopt a Road Home “Statement of Principles’’ — developed in conjunction with the grassroots Citizens’ Road Home Action Team, or CHAT — that homeowners can use as a resource as they progress through the program. The principles affirm that all program participants should have access to a fair and swift resolution of errors, disputes and appeals and that the calculation of program benefits should be consistent, fair and accurate. The New Orleans City Council and the Jefferson and St. Bernard Parish councils already have adopted the CHAT-drafted principles. 
  Approved the Louisiana Speaks Regional Plan, a comprehensive strategy for the state’s post-hurricane recovery that calls for, among other things, high-speed rail linking Baton Rouge and New Orleans, controlling development in fast-growing areas and barring development in high-risk areas, creating more affordable housing and increasing the minimum wage.

  Road Home issues dominated much of Thursday’s meeting.

  The state originally expected about 123,000 homeowners to apply for assistance under the program, but as of Wednesday nearly 135,000 applications had been received. Some 600 new applications came in Wednesday alone.

  The program has calculated $5.7 billion in awards for more than 75,300 applicants with the average award exceeding $75,600 — well above the initial projected average of $60,100. Nearly 15,600 homeowners have closed on their grants, which LRA member Walter Leger said is double the number reported at the board’s last meeting on April 10.

  Kopplin said the $2.9 billion shortfall was calculated by ICF. Blanco has been in contact with President Bush’s Gulf Coast recovery czar, Donald Powell, about the projected deficit.

  “It’s going to take a team effort to secure those resources,’’ Kopplin told the LRA board.

  LRA chairman Norman Francis said the state must go back to the federal government for more money.

  The Road Home budget shortfall was not the only horror story the LRA board heard Thursday. Joseph Bistes II, a real estate executive who lost his New Oleans East home to Katrina’s flood waters and is renting in Metairie, said he accepted a state buyout but agreed to remain in the state — which is the second of three benefit options offered by the Road Home.

  But when Bistes and his wife went to their grant closing May 4, they were told they must buy a new house within 90 days or lose most of their grant. So they walked out on the closing without signing any papers.

  “Ninety days is just ridiculous,’’ Bistes told the board. “Three months, six months is not enough. I would like to request a three-year period.’’

  That is how long a homeowner has if he chooses Option 1 — keep his home and repair it or rebuild in place. Option 2 — sell but stay in Louisiana, and Option 3 — sell and move out of state.

  Option 3 carries a 40 percent penalty that is waived for the elderly and military.

  LRA member Virgil Robinson expressed concern for the 4,600 other homeowners who have chosen Option 2 so far, and said he wants to make sure they are not treated as Bistes was.

  LRA member David Richard said he lost his Lake Charles home to Hurricane Rita and said even 180 days is not enough time to buy a new home in the post-storm market, a market that Bistes said is plagued with availability and affordability issues.

  Sample closing documents indicate that, under Option 2, the Road Home program pays 60 percent of a grant up front and the rest only after homeowners prove they have purchased and moved into a home within 90 days.

  It will waive the penalty for applicants who already have a new house lined up and need the grant to buy it, or who are more than 65 years old.

  The LRA, which expressed concern for applicants who have come before Bistes and those who will come after, resolved to examine the matter.

  Francis instructed the LRA staff to research and recommend to the Office of Community Development a more appropriate timeline for Option 2 applicants.

  The current program guidance says there will be a time limit placed on how long a homeowner has to buy a second home. It also suggests that the time frame be negotiated with each homeowner, but not to exceed 180 days.

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