A Big Cut in Katrina's Hotel Bill

Stella Oselem, 78, a Hurricane Katrina evacuee, sorted through her clothes last week after moving into a hotel in Rockville. The emergency housing was made possible by a voucher from the American Red Cross.
Stella Oselem, 78, a Hurricane Katrina evacuee, sorted through her clothes last week after moving into a hotel in Rockville. The emergency housing was made possible by a voucher from the American Red Cross. (By Kevin Clark -- The Washington Post)

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By Jacqueline L. Salmon and Spencer S. Hsu
Washington Post Staff Writers
Wednesday, October 19, 2005

The American Red Cross said yesterday that it has vastly overstated the number -- and potential cost -- of Hurricane Katrina evacuees staying in hotel rooms because of errors in how it interpreted its data.

Embarrassed officials from the charity acknowledged that instead of housing 600,000 displaced people, the hotel program -- paid for by the federal government -- is housing 200,000 storm evacuees.

Red Cross officials attributed the error to the misreading of daily reports from a consultant handling the hotel placements: Staff members mistook a cumulative tally of people who had lived in hotels to date for the daily hotel population.

"Clearly, somewhere we went off the track," said Armond Mascelli, Red Cross vice president for domestic response operations.

Compounding the error, the Federal Emergency Management Agency kept no independent count of the program's beneficiaries or its costs, said FEMA spokeswoman Mary-Margaret Walker. She said FEMA apparently was relying on the erroneous numbers as it searched frantically for other housing options for evacuees.

The revision in the number of people in hotels could cut in half the $425 million estimate for the program. It is also prompting FEMA to reevaluate long-term housing needs for storm evacuees, said spokeswoman Frances Marine. This month, FEMA's acting director, R. David Paulison, estimated that 400,000 to 600,000 households will require mid- to long-term housing.

The Red Cross said yesterday that it now expects the program to cost about $220 million. FEMA does not pay for hotel rooms until it gets receipts, so the error has not cost the agency, Marine said.

FEMA officials said 1.6 million people have registered for assistance because of Hurricane Katrina and 700,000 people have sought help for damage caused by Hurricane Rita.

The hotel program, conceived by the Red Cross as shelters overflowed immediately after Katrina ravaged the Gulf Coast, has become the main housing program for evacuees.

This week, FEMA told housing industry representatives that it plans to move storm evacuees out of hotels and into a less costly rental-assistance program as soon as Dec. 1.

FEMA officials have concluded "that it's going to be quite a while before a lot of people can actually go back. Therefore, keeping people in hotels and motels for any extended period of time doesn't make sense," said Jim Arbury, a senior vice president for the National Apartment Association and National Multi Housing Council.

Red Cross officials said they learned of the error after a New York Times reporter alerted them to it Monday night. It comes as the charity tries to raise $2 billion in private donations to cover its costs of caring for Katrina victims, a figure that does not include the hotel program.

The blunder is a black eye for the Red Cross that could taint the entire nonprofit sector, warned Paul Light, a New York University professor of public service.

"It's hugely embarrassing for the sector," Light said. "I don't believe there is any malfeasance here. But . . . the notion that the Red Cross simply cannot track where the money is going feeds into this growing concern that charities cannot be trusted to spend their money wisely."

Staff writer Elizabeth Williamson contributed to this report.


© 2005 The Washington Post Company

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