[FoCHAT] CHAT: 4 Road Home Bills and Their Fates

Sun Jun 29 12:56:33 PDT 2008

Dear FoCHAT Members,

This newsletter will have an explanation of what happened to SB 740 and related bills.

Please look for our next newsletter about what you can do given the present problems.

Best wishes,

Melanie Ehrlich
Co-Chairman, CHAT

http://chatushome.com

Four Popular Road Home Reform Bills: The Misinformation, Derailing, and Diluting of These Attempts at Reform of the Road Home Program But One Still May Offer Some Help

Summary
The bills: SB 740 (Senate bill, Road Home Applicants’ Bill of Rights); SB 636 (Access to Courts for Road Home applicants); HB 622 (House bill, about LRA Structure, to which a streamlined version of text of SB 740 was amended and then removed); SB 755 (House bill that passed with some needed help for Road Home applicants but subject to unnecessary delays that LRA-OCD introduced into the bill’s language) 

The Players
RH, Road Home Program for homeowners who were victims of Hurricanes Katrina or Rita; 
tens of thousands of RH applicants at financial risk because of failed promises, bungling, and egregious insensitivity to their plight; 
LRA, Louisiana Recovery Authority; 
OCD, Office of Community Development within the Division of Administration, DOA; 
ICF International, the contractor for the Road Home with many subcontractors including First American Title and Shaw Group affiliates and the Jones-Walker legal firm

The Main Common Issue For All Four RH Reform Bills: Mistakes And Stonewalling In Grant Processing And Lack Of Shortchanging Corrections Of Thousands Of Applications
ICF makes an extremely large number of mistakes in grant processing. ICF and some of its subcontractors are non-transparent in their practices and often refuse to correct mistakes and give needed information to applicants about their own application. 
LRA-OCD does not exercise nearly enough applicant-beneficial oversight of ICF and subcontractors to make sure those systemic problems in grant processing are fixed.
LRA-OCD has conflicting policies, some of which deviate greatly from best business practices and even from HUD practices. 
In addition, LRA-OCD often does not follow its own most applicant-friendly policies.
Even in the new appeals process recently announced by LRA, LRA-OCD staff and ICF staff are judging their own mistakes and poor policies without a standard for the basis of judgement.
Therefore, applicants need an independent appeals outlet, substantive appeals reform and access to courts for issues not corrected within the confines of the RH structure.

The Victory
SB 755 passed despite vehement opposition by the Executive branch. It could provide some relief to applicants, including in appeals (see details below).

The Official Position of LRA  and OCD about Access To Courts
LRA-OCD officially stated that the legislature rejected Road Home (RH) applicants having access to courts for unresolved issues with RH.

The Facts About Access To Courts and Appeals Reform That Contradict LRA and OCD’s Official Position
Every one of four RH reform bills had a provision for allowing applicants to get out of the closed circle of mistakes by ICF and subcontractors judged only by ICF/OCD/LRA. Three of the bills had an access-to-court provision. One of these three (SB 636) was passed unanimously by the Senate. However, with LRA-OCD officials present during the House vote, ICF lobbyists heavily at work to defeat it, and a greatly inflated fiscal note with LRA-OCD misinformation, the bill lost by 9 votes in the House.  The access-to-courts text was then added as an amendment to HB 622 and unanimously passed the Senate although it was removed by a conference committee with House Speaker Tucker’s opposition to the bill even though he had previously scheduled a conference call about the amendment with several leaders from CHAT. Then, SB 755 had the access-to-court text from SB 636 added to it as amendment http://www.legis.state.la.us/billdata/streamdocument.asp?did=501550 and
 passed the House 82 to 11 but in conference committee, the bill’s proponents were persuaded to agree to its removal to let the bill pass at the end of the legislative session with its other RH applicant-friendly provisions.

The Not-Enough-Money Excuse from LRA-OCD
One argument that the Administration was using to defeat RH reform is that there is not enough RH money and the proposed reform would have cost hundreds of millions. Hardly any of the allocated $1 billion from the RH grant pot that is to be given for elevation grants has been given out. They could still follow the original promises and rely mostly on available FEMA-HMGP money for elevation grants of up to $60,000 for actual work done without duplication of benefits.

The Legislators Known To CHAT As Champions of Road Home Reform (in alphabetical order)
Sen. Don Cravins, D-Lafayette; Sen. A.G. Crowe, R-Slidell; Rep. Nita Hutter, R-Chalmette; Sen. Cheryl A. Gray, D-New Orleans; Sen. Troy Hebert, D-Jeanerette; Sen. Lydia P. Jackson, D-Shreveport;  Rep. Sam Jones, D-Franklin; Rep. J-P Morrell, D-New Orleans; Sen. Edwin Murray, D-New Orleans; Rep. Cedric Richmond, D-New Orleans; Sen. Derrick Shepherd, D-New Orleans 

Some Explanation of the Major Issues 
Applicants should have the right to go to court for RH issues that they cannot get resolved by RH.
This right is denied by the closing documents that applicants have to sign to get their grant although the same closing documents have a contradictory statement that if an applicant goes to court for a RH issue, they must pay the attorneys fees for the state and its agent (ICF and its subcontractors!) if they lose. This would be the case even if the applicant was promised a grant, signed closing papers, and then was wrongfully denied the money or was asked to pay back a large amount of money because of a fraudulently alleged mistake in grant calculation. 

SB 636 was a bill just for access to court for RH applicants. It was delayed an extraordinary 5 ½ weeks before the House Appropriations Committee finally considered it. The fiscal note (http://www.legis.state.la.us/billdata/streamdocument.asp?did=501302) was $248 million based upon an estimate of 37,021 applicants appealing from LRA-OCD. This incredible estimate shows how much faith the executive branch has in the acceptance by applicants of the accuracy of grant determinations. The funds are not for court settlements but rather to help the contractor and subcontractors as well as OCD with legal preparation (20 hours per case at $175/hour for ICF’s expensive lawyers) and for the Disaster Recovery Unit (OCD is part of this unit) in preparation for the cases (40 hours per case at $75/hour) plus $200 per case for lagniappe work. 

SB 740 would have given this access to court and protection against the unusual requirement mentioned above about an applicant having to pay attorney’s fees of the state and its contractors if the applicant lost. Currently a case is pending on just these issues with Frank Silvestri, CHAT co-chairman, as lead attorney. 

SB 740 would have extended appeals to all applicants under an independent, fair system of administrative judges. These judges used to be at the last level of RH appeal and were well-received by applicants, but were inexplicably dropped from the RH in Nov. 2007. 

Among other provisions, SB 740 offered protection against most payback demands due to RH mistakes. It also required the LRA to follow its own rules of written documentation of applicants’ milestones in grant application processing, giving applicants the highest pre-storm value for their house in the RH file for the applicants, and giving field review appraisals of otherwise rejected applicant-purchased certified appraisals. 

HB 622 (awaiting the Gov. signature or else will become law if he does not sign and does not veto) reduces the size of the LRA Board, makes LRA part of the Division of Administration, and makes two Senators and two Representatives part of the LRA board. It was stripped of its RH reform amendment as advocated by the bill sponsor, House Speaker Tucker. 

SB 755 (waiting for the Gov. signature or else will become law if he does not sign and does not veto; however difficult, delaying hurdles were added to the bill by the Legislative Fiscal Office at the direction of LRA-OCD about extra approvals needed as described below even though these were not required for dozens of changes in LRA-OCD policies similar in scope). See below for details.

The Role of the Legislative Fiscal Office In Defeat of Reform By Incorporating OCD’s Inflated Costs Without Evaluation

See Fiscal Notes 

755 http://www.legis.state.la.us/billdata/streamdocument.asp?did=501647
740 http://www.legis.state.la.us/billdata/streamdocument.asp?did=488434
740 http://www.legis.state.la.us/billdata/streamdocument.asp?did=490699
740 http://www.legis.state.la.us/billdata/streamdocument.asp?did=492628
740 http://www.legis.state.la.us/billdata/streamdocument.asp?did=497732
636 http://www.legis.state.la.us/billdata/streamdocument.asp?did=501302
636 http://www.legis.state.la.us/billdata/streamdocument.asp?did=486202
622 http://www.legis.state.la.us/billdata/streamdocument.asp?did=499662

The first fiscal note for SB 755 had a wildly inflated $3 billion price tag for the bill and did not even distinguish between RH funds and State General Funds for paying this although almost all the costs would be RH (federal dedicated) funds.

The Additional Compensation Grant: LFO (Legislative Fiscal Office), $1.5 billion; corrected to 0.
Apparently, SB740 was misread. There is no additional expense for this provision. It pertains only to “use of unobligated funds” from the Road Home Program (SB740, p. 16, line 1). This $1.5 billion mistake was corrected in later versions of the fiscal note.

Highest of Multiple Valuations had huge price tags in the fiscal notes to SB 740 and SB 755.

Background
Most applicants should have had only one home valuation.

In the fiscal notes, OCD reveals that tens of thousands of applicants had multiple valuations.

Home valuations (pre-storm value, PSV, the starting point for calculation of most RH grants):
1. AVMs (only desk top and very inaccurate);
2. BPOs with drive-by done by real estate agents (a little better but still no one goes inside the house; these cannot be called appraisals because there is very little documentation of how they get the price and certified appraisers are not required; it all depends on comparables and we know from many sources that the comparables they used were often from far-away homes in very different types of neighborhoods when there were appropriate comps easily available);
3. drive-by appraisals (market analyses); these can be called appraisals because they are done by certified appraisers but they only have to drive by the house; not set foot in front of the house nor in it)
4. full certified appraisals (1004) (these are the only reliable ones, they are required by HUD for HUD/FHA financing of homes; they have much documentation; but RH very infrequently uses them and mostly just in appeals).

ICF has done many valuations (sometimes four or more) on a single home without any full certified appraisal (the gold standard that should have sufficed as a single determination). This is not consistent with HUD/FHA policies that require a full certified appraisal for loans.

The fiscal notes for the RH reform bills reveal the extent to which these multiple valuations were done without giving the applicant the highest valuation in their file even though their rules say that applicants will be given the highest valuation. 

The. 

The legislative fiscal office under the advice of LRA-OCD claimed a price of $1.3 billion in 1st fiscal note to give applicants the highest valuation in their file. 
1st fiscal note for SB 740 http://www.legis.state.la.us/billdata/streamdocument.asp?did=488434

Subsequently, this $1.3 billion figure was revised by OCD to $0.5 billion on 5/29/08 after testimony from CHAT at the Senate Finance Committee. 
4th fiscal note for SB 740 and fiscal note for SB 755 http://www.legis.state.la.us/billdata/streamdocument.asp?did=497732 .

At RH’s webpage road2la.org, note that giving the highest valuation is RH official policy, as was true in all previous versions of their policy documents: For appeals and dispute resolution, Road Home Policy Documents in 2007 and 2008 state that Road Home “Provides the applicant with the highest available pre-storm value” (p. 22/30) in http://road2la.org/Docs/policies/Homeowner_Program_Policies%20v5.2_5-6-08.pdf. 

Why was the Legislative Fiscal Office (LFO) under OCD’s advisement stating that it will cost large amounts of money to fix what they are already supposed to be doing? 

Why was the LFO and OCD so inaccurate with numbers as to first use $1.5 billion and then use a number $0.8 billion less? 

In addition, the 1st fiscal note for SB 740 stated that Road Home may have violated this highest valuation policy own policy in 65,000 cases 
There are 156052-14135 (elevation only) = 141917 applicants for whom RH had to do a grant calculation as indicated at RH’s website: http://road2la.org/newsroom/stats.htm.) 
It is implausible that of the 141,917 grants calculated, RH miscalculated by not using the highest valuation for 46% of the applicants eligible for a grant!

The revised $0.5 billion was based upon 25,000 applicants, still a very large number of applicants for whom they may not have been following their own rule cited from their rulebook above.

We know that many applicants had their grants inexplicably decreased just before closing by RH lowering the PSV. For some of these applications, we know that the applicant did not object to the valuation by RH and yet RH did one or more additional valuations and used a later lower one, even though none were the gold standard, full certified appraisal. The contractor, ICF, got more money for every valuation, unnecessary or not, accurate or not.

Why Is There So Much Opposition by LRA-OCD Against Opening Up Appeals To Correct Mistakes? 

The more appeals done by RH, the more the grant money would used for its intended central purpose, grants to homeowner victims of the hurricanes. 

Are LRA-OCD and ICF worried that the more appeals, the more acknowledgement of the mistakes of in grant calculations and the more examples of shortchanging of grants due to inconsistency in LRA-OCD policy? 

Too much RH money is being diverted from the applicants' grants and going instead to contractors and other purposes (projected use of about $1 billion in grant money on housing elevation allowances instead of using a separate and available $1.2 billion FEMA fund, as promised).

It seems like this is part of a pattern of discouraging applicants from continuing appeals (applicants can’t get their elevation grant while appealing) and from initiating appeals under new supposedly better procedures announced recently by LRA.

Limiting appeals might be a way to bury RH mistakes.

Many applicants never were able to appeal in the first place because they were abandoned during dispute resolution by ICF or were not explained the requirements to check a box on a form at closing and to send a formal letter within 90 days of closing. 

Some applicants were erroneously told that they could not appeal by ICF personnel or had papers lost by ICF so that their appeal was not initiated or was aborted. 

Some applicants are inexplicably waiting since the beginning for an award letter; therefore, they have nothing that they are allowed to appeal.

Excepts from SB 755, the RH Reform Bill That Passed (Awaiting Gov. Jindal’s Signature or Lack of Veto) But Subject To Delays in Unnecessary Implementation by LRA-OCD 

We will have to wait to determine how much relief comes to RH applicants as a result of the passage of this bill. The interpretation awaits clarification. 

“In connection with Road Home grant post-closing regulatory
compliance reviews being conducted by the Louisiana Recovery Authority and
the office of community development, as to any Road Home applicant who has
on or before June 10, 2008, exhausted his remedies of appealing to the Road
Home Appeals Panel and further to the office of community development and
for whom a decision was issued by the office of community development on or
before June 10, 2008, denying the relief sought by the Road Home applicant
through his appeal, the Louisiana Recovery Authority and the office of
community development shall provide the applicant the opportunity to have the
applicant's grant file reviewed by the third person or agency contracted by the
division of administration to conduct the post-closing regulatory compliance
reviews. The applicant shall be afforded the opportunity to receive any grant
award or additional disbursement which the review process discloses were
eligible amounts which should have been awarded.

Housing assistance rendered by the Road Home Corporation or the
Louisiana Land Trust or rendered through any other housing assistance
program under the provisions of this Chapter shall be subject to the following:

(1) Any certified property appraisal or market analysis conducted by the
Road Home Corporation or the Louisiana Land Trust shall be binding on the
corporation. If more than one certified property appraisal or market analysis
is rendered, the property owner shall receive assistance based upon the higher
certified appraisal value or the analysis most favorable to the property owner.

(2) No individual shall be required to sell property in excess of five acres
if the property was unimproved land or was regularly used in farming
operations immediately prior to hurricanes Katrina or Rita.

(3) No individual shall be required to sell property in which the
individual holds an undivided ownership interest with family members as legal
heirs to such property.

(4) No individual shall be required to sell property in which the
individual has a divided interest in the property which is contiguous to five or
more acres owned by the individual and his immediate family.” 

Difficult, delaying hurdles were added to the bill by the Legislative Fiscal Office at the direction of LRA-OCD about extra approvals (Action Plan Amendments approved by HUD, Gov. Jindal, the legislature once again). However, these were not required for dozens of other changes in LRA-OCD policies similar in scope. 

“Within thirty days of the effective date of this Act, the Louisiana
Recovery Authority is hereby authorized and directed to prepare an Action Plan Amendment
for implementing the provisions of R.S. 40:600.66(B) as provided in Section 1 of this Act,
which Action Plan Amendment shall be submitted for the review and approval of the
governor, the Joint Legislative Committee on the Budget, and the legislature, all in
accordance with the provisions of P.L. 109-148, P.L. 109-234, or P.L. 110-116 and in
accordance with the provisions of R.S. 49:220.5, which Action Plan Amendment shall be
submitted to the U.S. Department of Housing and Urban Development for its review and
approval.
…This Act shall become effective only if and when such
Action Plan Amendment for implementing the provisions of R.S. 40:600.66(B) as provided
in Section 1 of this Act is approved by the U.S. Department of Housing and Urban
Development.”

 SB740 - 2008 Regular Session

Author: SHEPHERD, cosponsors: Gray, Cravin, Crowe, & Jackson

Status: 
SUBJECT TO CALL - SENATE FINAL PASSAGE 
Updated: 6/16/2008

Summary: RECOVERY AUTHORITY: Creates the Louisiana Road Home Program Applicants' Bill of Rights. (see Act) (RE INCREASE FF EX See Note)

Date

Chamber

Page

Action

06/16/2008

S

57

Read by title. Returned to the calendar subject to call

06/11/2008

S

11

Reported with amendments. Rules suspended, read by title, committee amendments read and adopted. Ordered reengrossed and passed to a third reading.

05/15/2008

S

25

Rules suspended. Read by title and recommitted to the Committee on Finance.

05/13/2008

S

20

Read by title, committee amendments read and adopted. Ordered engrossed and passed to a third reading.

05/12/2008

S

9

Reported with amendments.

04/22/2008

S

14

Rules suspended. Introduced in the Senate; read by title. Rules suspended. Read second time and referred to the Committee on Local and Municipal Affairs.

SB636 - 2008 Regular Session

Author: MURRAY

Status: 
FAILED HOUSE FINAL PASSAGE 
Updated: 6/20/2008

Summary: ADMINISTRATIVE PROCEDURE: Provides for appeals from decisions of the office of community development on Road Home claims. (gov sig) (EG1 INCREASE FF EX See Note)

Date

Chamber

Page

Action

06/20/2008

H

32

Read third time by title, amended, roll called on final passage, yeas 45, nays 54. Failed to pass, motion to reconsider tabled.

06/18/2008

H

47

Read by title, amended, passed to 3rd reading - regular calendar.

06/18/2008

H

47

Rules suspended.

06/18/2008

H

44

Reported with Legislative Bureau amendments.

06/17/2008

H

53

Reported with amendments (9-7) (Regular). Referred to the Legislative Bureau.

05/07/2008

H

6

Read by title, under the rules, referred to the Committee on Appropriations.

05/06/2008

H

30

Received in the House from the Senate, read by title, lies over under the rules

05/06/2008

S

30

Read by title and finally passed by a vote of 37 yeas and 0 nays. The bill was ordered to the House. Motion to reconsider tabled.

04/30/2008

S

9

Read by title, committee amendments read and adopted. Ordered engrossed and passed to a third reading.

04/29/2008

S

8

Reported with amendments.

03/31/2008

S

61

Introduced in the Senate, rules suspended, read first and second time by title and referred to the committee on Judiciary A.

03/21/2008

S

Prefiled and under the rules provisionally referred to the committee on Judiciary A.

HB622 - 2008 Regular Session

Author: TUCKER

Status: 
SENT TO THE GOVERNOR 
Updated: 6/24/2008

Summary: LA RECOVERY AUTH: Provides with respect to the La. Recovery Authority (EN DECREASE GF EX See Note)

Date

Chamber

Page

Action

06/24/2008

H

Sent to the Governor for executive approval.

06/23/2008

S

Signed by the President of the Senate on 06/24.

06/23/2008

H

Enrolled and signed by the Speaker of the House.

06/22/2008

S

Notice House adopted Conference Committee report.

06/22/2008

H

47

Notice of Senate adoption of Conference Committee Report.

06/22/2008

H

26

Conference Committee Report read, roll called, yeas 97, nays 0. The Conference Committee Report was adopted.

06/22/2008

S

Rules suspended; Conference Committee report read. Rules suspended; adopted by a vote of 36 yeas and 0 nays. Motion to reconsider tabled.

06/22/2008

S

Conference committee report received.

06/21/2008

H

146

Conference Committee report received. Lies over under the rules.

06/19/2008

H

62

Notice of Senate conferees appointed.

06/19/2008

S

Senate conference committee appointed: Murray, Chaisson, and Shepherd.

06/19/2008

S

Notice House conferees appointed.

06/19/2008

S

Notice House rejected Senate amendments.

06/19/2008

H

50

House conferees appointed: Tucker, Fannin, and Peterson.

06/19/2008

H

24

Read by title, roll called, yeas 99, nays 0, Senate amendments rejected, conference committee appointment pending.

06/18/2008

H

Scheduled for concurrence on 6/19/08.

06/17/2008

H

51

Received from the Senate with amendments.

06/17/2008

S

41

Rules suspended. Senate floor amendments were read and adopted. The amended bill was read by title and finally passed by a vote of 34 yeas and 0 nays. The bill was ordered returned to the House. Motion to reconsider tabled.

06/11/2008

S

4

Reported without Legislative Bureau amendments, read by title and passed to a third reading.

06/10/2008

S

13

Read by title and referred to the Legislative Bureau.

06/09/2008

S

92

Rules suspended; reported favorably.

04/22/2008

S

3

Received in the Senate. Rules suspended. Read first and second time by title and referred to the Committee on Finance.

04/21/2008

H

28

Read third time by title, amended, roll called on final passage, yeas 104, nays 0. Finally passed, title adopted, ordered to the Senate.

04/18/2008

H

Scheduled for floor debate on 4/21/08.

04/15/2008

H

9

Read by title, amended, ordered engrossed, passed to 3rd reading - regular calendar.

04/14/2008

H

28

Reported with amendments (19-0) (Regular).

03/31/2008

H

68

Read by title, under the rules, referred to the Committee on Appropriations.

03/20/2008

H

Under the rules, provisionally referred to the Committee on Appropriations.

03/20/2008

H

Prefiled.

SB755 - 2008 Regular Session

Author: HEBERT

Status: 
SENT TO THE GOVERNOR 
Updated: 6/23/2008

Summary: HOUSING: Provides relative to the Louisiana Road Home Housing Corporation Act. (gov sig) (EGF INCREASE GF EX See Note)

Date

Chamber

Page

Action

06/23/2008

S

Sent to the Governor for executive approval on 06/24.

06/23/2008

H

Signed by the Speaker of the House.

06/23/2008

S

Enrolled and signed by the President of the Senate on 06/24.

06/23/2008

S

Notice House adopted Conference Committee report.

06/23/2008

H

Notice of Senate adoption of Conference Committee Report.

06/23/2008

H

Rules suspended. Conference Committee Report read, roll called, yeas 93, nays 4. The Conference Committee Report was adopted.

06/23/2008

S

Rules suspended; Conference Committee report read. Rules suspended; adopted by a vote of 36 yeas and 0 nays. Motion to reconsider tabled.

06/23/2008

H

Conference Committee report received.

06/23/2008

S

Notice House conferees appointed.

06/22/2008

H

House conferees appointed: Sam Jones, Fannin, and Peterson.

06/22/2008

H

46

Notice of Senate conferees appointed.

06/22/2008

S

Senate conference committee appointed: Murray, Michot, and Hebert.

06/22/2008

H

45

Notice of Senate rejecting House amendments.

06/22/2008

S

Amendments proposed by the House read and rejected, 20 yeas, and 13 nays. Motion to reconsider tabled.

06/22/2008

S

Rules suspended. Called from the calendar.

06/20/2008

S

Read by title. Returned to the calendar subject to call

06/20/2008

S

Rules suspended

06/20/2008

S

Received from the House with amendments.

06/20/2008

H

34

Read third time by title, amended, roll called on final passage, yeas 82, nays 11. Finally passed, ordered to the Senate.

06/18/2008

H

50

Read by title, amended, passed to 3rd reading - regular calendar.

06/18/2008

H

50

Rules suspended.

06/18/2008

H

44

Reported without Legislative Bureau amendments.

06/17/2008

H

53

Reported with amendments (18-0) (Regular). Referred to the Legislative Bureau.

05/22/2008

H

6

Read by title, under the rules, referred to the Committee on Appropriations.

05/21/2008

H

31

Received in the House from the Senate, read by title, lies over under the rules

05/21/2008

S

25

Read by title and finally passed by a vote of 37 yeas and 0 nays. The bill was ordered to the House. Motion to reconsider tabled.

05/20/2008

S

32

Read by title, committee amendments read and adopted. Ordered engrossed and passed to a third reading.

05/19/2008

S

12

Reported with amendments.

04/22/2008

S

23

Rules suspended. Introduced in the Senate; read by title. Rules suspended. Read second time and referred to the Committee on Local and Municipal Affairs.

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