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Audits cite massive waste in Katrina recovery

A hastily improvised $10 billion aid package for Hurricane Katrina recovery has produced vast sums of waste and misspent funds, an array of government audits and outside analysts have concluded.
A FEMA trailer compound constructed near New Orleans is seen from above in this Feb. 23 file photo.
A FEMA trailer compound constructed near New Orleans is seen from above in this Feb. 23 file photo.Alex Brandon / AP file
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

Nearly eight months after Hurricane Katrina triggered the nation's largest housing crisis since the Second World War, a hastily improvised $10 billion effort by the federal government has produced vast sums of waste and misspent funds, an array of government audits and outside analysts have concluded.

As the Federal Emergency Management Agency wraps up the initial phase of its temporary housing program -- ending reliance on cruise ships and hotels for people sent fleeing by the Aug. 29 storm -- the toll of false starts and missed opportunities appears likely to top $1 billion and perhaps much more, according to a series of after-action studies and Department of Homeland Security reports, including one due for release today.

The government's costliest initiative -- $6.4 billion allocated to place storm survivors in temporary trailers and mobile homes -- has ground to a halt around New Orleans this week, in part because of widespread racial and class tensions. Residents of surrounding localities have refused to accept the makeshift communities.

Thousands of trailers unoccupied
Only 71 percent of the 141,000 trailers that FEMA estimates are needed are being occupied.

Meanwhile, the trailer program consumes more than 60 percent of funds FEMA is spending on housing aid -- even though it benefits about 10 percent of the approximately 1 million households getting help, according to agency data and the Brookings Institution, which tracks recovery progress.

By contrast, a rental assistance program is serving 800,000 families, or 80 percent of households, at about one-third the total cost, or more than $3 billion. It was dramatically expanded four weeks after the storm -- a sluggish start, critics said -- after intense pressure from Congress and others who said the administration from the beginning should have taken advantage of such proven programs as low-income Section 8 rental vouchers.

In a recent White House report, Frances Fragos Townsend, President Bush's homeland security and counterterrorism adviser, reserved some of the toughest criticism for FEMA's mass trailer initiative. She said that it "foundered due to inadequate planning and poor coordination," and she recommended that the Department of Housing and Urban Development take over from Homeland Security in future disasters.

Citing lack of training, expertise and engagement with other agencies, Townsend's "Lessons Learned" report stated, "The Federal government's capability to provide housing solutions to the displaced Gulf Coast population has proved to be far too slow, bureaucratic, and inefficient."

FEMA officials say that they could have done better, but that Hurricane Katrina has displaced 1 million families outside their home Zip codes nearly eight months after the storm -- a far greater impact than other recent disasters.

Spokeswoman Natalie Rule said that although FEMA is learning from critical reports, "they do not capture everything that was done well and right." She added that "the innovative housing solutions put into place in the aftermath of Katrina will now become ready solutions we can offer in future catastrophes."

Still, the weight of judgments from White House, Congress and analysts is that the housing effort is a failure with many causes, including institutional neglect, lack of funding, and poor planning, decision making and execution.

Unprecedented demand for aid
Neither FEMA nor its predecessors had ever housed hundreds of thousands of disaster victims for a prolonged period, and the collapse of its initial trailer strategy is part of what Dennis S. Mileti, former director of the National Hazards Center in Colorado, called "the largest disaster-response failure in the history of our country."

Mileti said the United States should focus on helping storm evacuees start over wherever they are living. "You cannot build a temporary housing park for a million people," Mileti said. "If you did, you couldn't call it a trailer park. You'd need to call it a new city."

Arnold R. Hirsch, a University of New Orleans historian of race and housing, called the effort a "shuffleboard" policy "of ad hoc measures . . . susceptible to last-second changes and political influences." He added: "The primary lesson we may walk away from this incident would simply be the negative one -- of what not to do."

According to a 218-page audit by the Department of Homeland Security's inspector general that was obtained by The Washington Post in advance of its scheduled release today, FEMA cited a New Orleans hurricane as a top threat in 2001 but never completed plans because of a lack of funds.

Tale of the tape
Among other things, the report refers to rushed and inefficient decisions in the first weeks after Katrina:

  • FEMA spent $900 million to buy 25,000 manufactured homes and 1,300 modular homes, most of which cannot be used because agency rules say they are too big or unsafe in flood zones.
  • The agency spent $632 million to subsidize hotel rooms for tens of thousands of families at an average cost of $2,400 a month, three times what it later paid families to rent two-bedroom apartments.
  • The agency spent $249 million to secure 8,136 cruise-ship cabins for six months, at a cost that Inspector General Richard L. Skinner estimated at $5,100 a month per passenger. That is six times the cost of renting two-bedroom apartments.

Skinner's report cites a "basic lack of understanding" of FEMA regulations for the $900 million manufactured-housing fiasco and a "fundamental lack of planning" for a makeshift program under which FEMA is reimbursing localities to lease 66,000 apartments for evacuees. It found the cruise ship program "not necessarily efficient."

Dozens of recommendations
Among 38 recommendations, the report calls for FEMA to provide "funding resources and institutional support" to complete catastrophic-disaster plans, develop alternative and long-term housing plans, and tighten contracting procedures.

On Tuesday, at the epicenter of the crisis, New Orleans Mayor C. Ray Nagin carried out an election-season threat and formally suspended development of new FEMA group trailer sites citywide. He asked the federal government to find alternatives.

FEMA officials privately complain that Nagin has failed to move on 108 approved sites. In a letter last week to Homeland Security Secretary Michael Chertoff, Nagin said FEMA has housed only 600 families on 84 approved sites, which could hold 4,200.

But the problem extends beyond the city. In Louisiana, only 32 of 64 parishes are accepting FEMA trailers, and about three-fourths of those parishes permit them only for their own residents, a FEMA spokesman said.

In Baton Rouge, whose population swelled 50 percent after the storm, the welcome mat is also gone. Mayor Melvin "Kip" Holden told reporters at a Feb. 13 Press Club gathering: "We have taken in more FEMA trailers than any county in the USA. We are out of the FEMA trailer business."

NIMBY-ism behind halting progress?
Although Baton Rouge is clearly straining from the burden of providing services to newcomers, people across the region say that social conflicts are feeding the hostility.

"It's the not-in-my-back-yard syndrome," said Jacqueline C. Jones, lead organizer for the Jeremiah Group, a New Orleans community group affiliated with the Industrial Areas Foundation.

At the same time, Jones said, evacuees are having second thoughts about moving into 28-foot trailers. She said they are concerned that another hurricane may strike and hope for more spacious FEMA apartments or modular housing.

Congressional impatience has mounted. Chairman Susan M. Collins (R-Maine) and ranking Democrat Joseph I. Lieberman (Conn.) of the Senate Homeland Security and Governmental Affairs Committee wrote Chertoff last month, characterizing the government's "inability to help thousands of Americans who were forced from their homes" find housing "simply unacceptable," and called for improvements.

They were joined April 5 by the Senate Appropriations Committee, led by Chairman Thad Cochran (R-Miss.), which approved a $27 billion Katrina relief bill that would bar Chertoff from using housing funds until he submits a comprehensive plan. It also expressed continued frustration "with the lack of a housing policy for the Gulf Coast."

Amy Liu of the Brookings Institution said the administration underestimated the scope of the disaster and tried to manage it piecemeal. "They did not deploy all the resources they had," Liu said, referring to 12- or 18-month rental vouchers. "Everyone should have known from Day One that people didn't need two weeks' housing . . . or a month, or three months. It was crazy."

Staff writer Linton Weeks in New Orleans contributed to this report.