Image: Destroyed Louisiana home
Gerald Herbert  /  AP file
Remnants of homes destroyed by Hurricane Katrina remained in December 2005 at Sheel Beach in St. Bernard Parish, La.
By
msnbc.com and NBC News
updated 8/20/2010 4:55:07 PM ET 2010-08-20T20:55:07

Five years after Hurricane Katrina destroyed more than 200,000 Louisiana homes, the state program established to help families rebuild still hasn’t paid out more than three-quarters of a billion dollars and has come under fire from a federal judge for discriminating against black homeowners.

The Road Home program, which state officials developed in July 2006 to funnel grants of up to $150,000 to Louisianans whose homes were destroyed or damaged by huricanes Katrina and Rita in August and September 2005, has disbursed about $8.6 billion to about 127,000 families.

But officials of the Louisiana Office of Community Development acknowledged this week that more than $777 million remained in the fund as the fifth anniversaries of the devastating storms approach. That money should be going in direct payouts to about 3,000 eligible families and to help cover other recovery costs.

The unallocated Road Home funds have sat around for so long that they’ve outlived the state agency that initially ran the program. Road Home is on its second parent after the Community Development Office’s Disaster Recovery Unit assumed oversight when the Louisiana Recovery Authority — which oversaw rebuilding from the hurricanes — went out of business at the end of June, as planned by legislators in the wake of the storms.

“We’re sitting on almost $800 million in homeowner money that’s not been expended. Is that right?” state Rep. Neil Abramson, a Democrat from New Orleans, disbelievingly asked at a meeting Tuesday night of the Legislature’s Hurricane Recovery Committee, which was packed with angry residents.

“They don’t have no staff,” said one of them, Malcolm Russell. “You call, you can’t get nobody. You can’t get the right answers.”

Patricia Hebert, another frustrated homeowner, said she sent in her application more than a year ago, but “I haven’t heard from anybody since.”

“I sent that letter June 23, 2009,” said Hebert, who said a Road Home agent “looked for it in the computer and said, ‘We don’t have that.’

“Where did it go?” she asked.

Mayor: New Orleans needs more time to rebuild

Judge finds program discriminatory
Robin Keegan, who ran the Louisiana Recovery Authority and is now executive director of the Disaster Recovery Unit, said much of the money remains undistributed because of paperwork issues.

“One of the things we’ve done is brought on legal services into our program in order to help those families having succession issues who need to transfer their title,” Keegan said.

But John Payton, president of the NAACP Legal Defense and Educational Fund, or LDF, said the backlog was also due to a racially discriminatory funding formula used by state officials — a position with which a federal judge agreed Monday.

U.S. District Judge Henry Kennedy ordered state officials to stop using the formula, which calculated payouts using one of two criteria: the pre-storm value of the home or the cost of repairs, whichever is lower.

Kennedy found that the program disproportionately used the pre-storm value when dealing with families from predominantly black neighborhoods while preferring the repair value for families in more affluent, majority-white neighborhoods.

That meant black homeowners’ grants were significantly more likely to be inadequate because home values in those neighborhoods were depressed by historical racial housing patterns — leading to a “strong inference” of racial discrimination, Kennedy said.

The judge rejected a motion by the LDF and other activist groups to recalculate all previous payments using the disputed formula, saying the state had immunity against such “mass tort claims.”

The ruling is largely symbolic, because more than 90 percent of the funds have already been paid out, and that may be why it drew little attention this week. But Payton said it was still an “indictment” of Road Home and said he hoped it was “the first step in truly getting folks on the road home.”

Road Home officials said they planned to close all pending files by the end of this year.

Full payout was never guaranteed, director says
State officials said the unspent $777 million breaks down this way:

  • $285 million in direct grants to homeowners.
  • $195 million in “individual mitigation measures,” which cover safety upgrades like shutter and door repairs.
  • $94 million for property maintenance and demolition of unlivable homes bought outright by the state.
  • $5 million in contaminated drywall assistance.
  • $41 million in administrative costs.
  • $156 million in blight remediation and other unspecified “unmet needs.”

Keegan defended Road Home against criticism from residents who believed they had not gotten their fair share, telling the legislative committee that $150,000 was the cap on individual payments, not a guaranteed payout.

“A lot of the people I’m talking to are telling me they were supposed to receive $150,000. That is not the case,” Keegan said. “We did not receive enough money as a state to recover from the full event. There was never a guarantee every homeowner would get $150,000.”

In fact, the agency said, the average payout has been about $64,000.

Most of the unallocated money comes from $3 billion in federal funds Congress appropriated in 2008 for Road Home. Members of the Hurricane Recovery Committee have criticized the pace of payouts and say they want to redirect most of that money for other uses. Last month, Sen. Mary Landrieu, D-La., successfully blocked a House measure that would have stripped $400 million from the federal contribution.

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Video: Spike Lee on new film, Katrina anniversary and BP

  1. Transcript of: Spike Lee on new film, Katrina anniversary and BP

    OLBERMANN: Government scientists had estimated that only about 25 percent of the Gulf oil spill remained in significant form. But a new study now says it's more like three times that amount and as much as fishermen want to get back to business, they are calling for more and more credible tests of shrimp and fish -- particularly since the FDA measure for dispersants is a smell test. No figure of speech there. This smells like oysters, this smells like Windex .

    Our fourth story: Day 120 of the crisis in the Gulf . The filmmaker Spike Lee joins me in a moment. Scientists at University of Georgia estimate that 70 percent to 79 percent of the spilled oil remains in the Gulf , probably below the surface. The leader of the UGA research group saying, quote, "One major misconception is oil that has dissolved into water is gone and therefore harmless. The oil is still out there and it will likely take years to completely degrade," he said. The UGA study is not yet published or peer-reviewed. But it raises serious questions about the claims of federal scientists. For instance, how much of that oil could have possibly evaporated by this point? And how much might still exist under water? Both the UGA and government reports do agree that oil will continue to break down. But meantime, shrimpers on the Gulf coast opened yesterday's fall season with skepticism, expressing concern that the government's testing was simply not adequate. The FDA and NOAA have tested dozens of fish and shrimp in the region and given the all clear. But the trained experts use a smell test for dispersants. They literally sniff for Windex -like odor. The FDA says it is developing an actual test for dispersants in food. But an official says that dispersants in small doses are similar to what is consumed in toothpaste and other consumer products -- something else for you to worry about. The FDA also says that all seafood samples tested below the level of concern for petroleum compounds, to say nothing of streaky windshields, but David Veal of the American Shrimp Processors Association told the " Washington Post ," members kept calling him with the question, "Are we sure?" His answer, "Well, it's as sure as we can be if we don't trust the FDA and other agencies -- who do you trust?" Louisiana shrimpers have asked BP for millions of dollars to pay for continued testing and requested that federal and local agencies report the results in one central location. Let's bring in now, as promised, filmmaker Spike Lee , who's new HBO documentary, "If God is Willing and Da Creek Don 't Rise ," premiering tonight in New Orleans . The film debuts on HBO beginning Monday of next week, the 23rd. Spike , thanks for your time tonight.

    SPIKE LEE, FILMMAKER: How you doing, Keith ?

    OLBERMANN: Your new documentary, the five-year anniversary of Katrina , with the, obviously, unwelcomed addition of the BP disaster. Tell us what your focus is about --

    LEE: Right.

    OLBERMANN: -- about the documentary, itself, first.

    LEE: Well, Keith , we were finished shooting before April 20th , but when the rig blew up, and, I would say, 11 people got murdered -- we had to rethink the whole thing. So, we made nine trips back. So, the last hour of the four-hour piece is all about BP .

    OLBERMANN: The BP disaster has produced a lot of promises from various quarters, governmentally and not from government, about what's going to be done for the Gulf Coat . Focusing on the aftermath of Katrina and the promises that were made there -- how well did those first set of promises pan out? And what do they tell you about the likelihood of the second set of promises panning out?

    LEE: Well, people here are still waiting for a lot of stuff that was promised from the havoc of Hurricane Katrina and the breach in the levees. And we're getting the same thing from BP . I think only 25 percent of the claims have been settled by BP . And you see these commercials, these PSA commercials, they run day and night. They say, like -- well, we'll decide if you have a legitimate claim. That's like the -- the insurance companies deciding down here. Very few people got their money. So, for me, Keith , what -- the threat between the first documentary when the levees broke and this one, "If God is Willing , Da Creek Don 't Rise " is greed -- is all about greed. And I really think that this is going to bring about the downfall of the United States of America because we have people in office appointed and voted in and people in big business positions who only care about the dollar bill and there are people get harmed, people die. They say that's the cost of doing business .

    So, it was the greed of the United States Army Corps of Engineers who did faulty engineering that brought about the breach in the levees and BP cutting corners down here. That blowout protector cost a half million dollars. Now, who knows how many billions later they're paying out? If they would have just done what they were supposed to do, but MMS was bought out. People are going to Super Bowls , sex orgies, all types of stuff -- so they were corrupt. And so, the whole thing is in disarray down here.

    OLBERMANN: If it is that great a threat to the country -- obviously, the first stage in making sure that doesn't happen is to keep it front in mind of people. Obviously, the timing of the documentary coming out when it does now, when people seem to be getting the impression everything is fine now because the spill is not actively spewing 40 million gallons a day -- at least the timing of the documentary is good. But are you worried this is going to recede away from the consciousness of America in the coming months?

    LEE: Well, I am. That's why I'm so grateful that you have me on tonight, because within the last two weeks, we've been getting reports from these government scientists who say 75 percent of the oil has disappeared. You know, presto, chango, abracadabra, vanish. Well, my thing is 75 percent of the oil on the surface or 75 percent of the oil in the Gulf ? That's the big question. Another thing, Keith , nobody has gotten ads about BP about how many millions gallons of the dispersant -- of the dispersant Corexit has gone into the Gulf ? In five, 10, 15 years from now, we might find out that this Corexit was more -- did more damage to the Gulf than the -- than the crude oil .

    OLBERMANN: So, what do you think of this latest thing that I mentioned from the University of Georgia ? The scientists there are looking at the government numbers, have reinterpreted them and they say that 70 percent to 79 percent of the spilled oil remains in the Gulf below the surface.

    LEE: Well, I believe that, because the same people who were saying that this is the -- the government officials that were saying this is the largest oil disaster of the history of the world , two weeks later made about-face and saying 25 percent of the oil disappeared. And, to me, this shows you -- to me, this shows me the power of BP and the power of the oil and gas industries which make more money than God on this planet. Throughout this whole thing, I feel -- and a lot of those people feel down here -- that BP was dictating the United States government what to do. BP dictated the FAA who could fly over the site. BP dictated to the Coast Guard and Thad Allen which boats can come and go. And BP dictated the EPA -- the EPA sent a letter to BP saying we have serious concerns about your dispersant Corexit . They sent back saying, we're going to use it anyway. So, BP 's been running things.

    OLBERMANN: "If God Is Willing and Da Creek Don't Rise" premiering tonight in New Orleans and on HBO on Monday -- Spike Lee , a pleasure as always to see you. And we've been seeing you a lot recently. Good to see you.

    LEE: And, Keith --

    OLBERMANN: Yes, sir?

    LEE: What you did last night was phenomenal. I was jumping up and down in my kitchen. What you did last night with your "Special Comment" -- much love for you. Much love for you.

    OLBERMANN: I'm honored, sir. See you soon. Thanks again for taking

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