La. Aid Discrepancy an Issue of Wind, Water
U.S. Officials Say Fund Was Limited To Flooded Homes

By Peter Whoriskey
Washington Post Staff Writer
Thursday, May 24, 2007

The massive federally funded program for rebuilding hurricane-damaged Louisiana homes is short nearly $3 billion largely because Louisiana officials are compensating thousands of homeowners who were not originally supposed to benefit, according to an analysis by the Bush administration.

The money was supposed to pay for rebuilding flooded homes but not those damaged by wind, said federal officials familiar with the negotiations between the administration and the state officials who designed the program.

The Louisiana administrators of the program, however, are on track to dole out an estimated $2.6 billion to cover damage in homes that were not flooded, federal officials said, and that policy explains why the $6.9 billion program for homeowners is short by nearly half.

State officials responded that it is unfair to compensate some owners but not others, depending on which hurricane phenomenon wrecked their home.

"The Bush Administration has been asking us to discriminate against storm victims since day one," Andy Kopplin, director of the Louisiana Recovery Authority, said in a written statement last night. "We rejected it then and we reject it today. . . . These are American citizens we're talking about, and they've been out of their homes for almost two years now. Enough is enough."

Federal officials said the flood-only provision was meant to ensure that, among other things, the hardest-hit areas would be served first.

"The money was supposed to go to places that were flooded like the Lower Ninth, Gentilly and Lakeview, but it's going elsewhere," said one administration official familiar with the negotiations, who spoke on the condition of anonymity pending a hearing on the issue scheduled for today. "We agreed to one thing, and we come back, and they are running a program that we said federal taxpayers were not going to fund."

The dispute arises amid projections that the "Road Home" program, the largest single fund for Louisiana homeowners and considered a critical link in the recovery, will be short $2.9 billion.

State and federal officials are negotiating over how that gap will be filled as part of a much broader debate over how much the federal government should spend on the recovery, coastal restoration and flood protection of the hurricane-prone state.

Congress has approved more than $120 billion for Gulf Coast recovery.

State officials said they had turned to Washington leaders for more money for the program, but whether that will be forthcoming is unclear.

Donald E. Powell, the Bush administration's Gulf Coast recovery coordinator, said it is "premature" to decide whether more federal money should be spent on the program.

Louisiana Sen. Mary Landrieu (D) scheduled today's hearing to consider the issues, among them, delays in delivering the money to homeowners.

More than 20 months after the Katrina catastrophe, tens of thousands of Louisiana houses remain vacant, in part because of administrative delays in the aid program. As of early May, only 16,000 of 130,000 applicants had received money.

The Road Home program was developed after hurricanes Katrina and Rita by Louisiana Gov. Kathleen Babineaux Blanco and the Louisiana Recovery Authority in negotiations with the White House and Powell.

It provides rebuilding grants of up to $150,000 per home and is expected to benefit more than 130,000 owners.

Kopplin said the federal Department of Housing and Urban Development eventually agreed to cover both flood and wind damage.

But federal officials said that during the negotiations over how much federal money would go into the program, they made it clear that only flood damage should be covered.

The reasoning was that the worst destruction was in areas flooded because of storm surges and levee breaches, and that those areas needed the money most. Moreover, many noted that the federal government bore a special responsibility to pay for flood damage in New Orleans because the flooding there was caused by failures of federal levees and flood walls.

Proponents of the flood-only policy argued that homeowners should have had homeowners insurance to cover wind damage. The federal money is not covering wind-damaged homes in other states affected by the storms, officials said.