Nearly 1,500 additional homeowners will get more Road Home money and an additional year to rebuild their storm-damaged homes, thanks to a $62 million settlement approved by the federal government that ends a long-running legal battle about racial discrimination in the disaster-aid program.
With the pot of Road Home money dwindling, housing advocates and policymakers debated how to best use the money for the most people and ended up leaving out a distinct group of underpaid homeowners: those who are back in their homes, even if getting back took all of their savings or a new mortgage. Roughly 5,000 households that received grants using the allegedly discriminatory calculation will not get any additional help.
“Most people would agree that this is the greatest good that can be done with the amount of money that was left,” said James Perry, head of the Greater New Orleans Fair Housing Action Center, which partnered with the NAACP Legal Defense Fund in 2008 to file suit in U.S. District Court in Washington, D.C. on behalf of several African American homeowners. “But we wish we could have achieved more.”
Davida Finger, an attorney with the Loyola University Katrina Law Clinic, also used a somber tone to acknowledge the lawsuit’s endpoint. “Our community has learned painful lessons because of this,” she said.
The $62 million is part of nearly $100 million left over in the $10 billion Road Home program, which was in its waning stages even as the suit was filed.
Those involved had to make decisions about targeting the remaining money “to make sure it went to the most needy,” said U.S. Department of Housing and Urban Development Secretary Shaun Donovan, who has proven to be a booster for the city since taking office. Donovan pledged to “keep fighting to make sure we continue to take the steps to bring justice to those who have been left behind.”
Of the 1,460 targeted homeowners, an estimated 1,200 are in Orleans Parish while 170 are in St. Bernard and a dozen each in Plaquemines and Cameron parishes, Donovan said.
At issue are the grants that Road Home paid to an estimated 25,000 families based on property values, rather than the higher costs of repairs. Because repair costs are the same regardless of neighborhood, the suit argued that payments based on pre-storm property values punished homeowners, regardless of race, who lived in traditionally black neighborhoods where home values were generally lower.
Basically, two homes identical in size and quality would cost the same to rebuild, but the homeowner in the black neighborhood got less money because of home-value differences.
Two years ago, in response to the lawsuit, the U.S. Department of Housing and Urban Development approved an earlier amendment to the state’s Road Home plan that lifted a payment cap and paid an additional amount to applicants with modest incomes. The state budgeted $600 million for those payments and has so far paid $473 million to 13,361 homeowners.
A district court judge last August agreed that there was a “strong inference” of discrimination and that the housing advocates were likely to prove their case. The judge ordered the state of Louisiana to stop using the pre-storm value to calculate any future Road Home grants, although he did not order the recalculation of grants already awarded. The state subsequently won a favorable ruling from a federal appeals court.
In April, both sides notified the court that they were working toward a settlement.
Then in May, the state announced it would again amend its plan, to create $62 million worth of supplemental Road Home rebuilding grants for owners with houses with depressed market values in four hard-hit parishes: Orleans, St. Bernard, Plaquemines and Cameron.
On Wednesday, HUD approved that amendment, called the Blight Reduction Grant Adjustment program. Road Home has identified homeowners that may be eligible and will send out letters over coming weeks, state spokeswoman Christina Stephens said.
Homeowners who pick up their mail everyday but are not back home may have been overlooked because they had an active home-delivery address, said HUD’s disaster specialist, Fred Tombar. “But those folks would be every bit as eligible,” he said, advising that anyone who meets the criteria should call the Road Home hotline at 1.888.762.3252.
Under what could be called the amendment’s “back-home exclusion,” the new money is not available to people who are back in their homes as of May 1. Grants are only available for homeowners who haven’t been able to return or who live in their homes even though city codes would find it uninhabitable.
“We recognize that the formula and the way Road Home was implemented was a piece of the problem,” Donovan said, and then described the wide range of other barriers that some homeowners faced, including Chinese drywall and contractor fraud. As a result, he noted, the grant provides “construction advisory services” to each of the households, to make sure they’re able to get back in their homes without further setbacks.
“Clearly we’ve heard a million stories of what happened to folks. We have to make sure we’re meeting the needs of these particular stories,” Donovan said.
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