Uneven Katrina recovery efforts often offered the most help to the most affluent

By Michael A. Fletcher
Friday, August 27, 2010; 12:12 AM

IN NEW ORLEANS The massive government effort to repair the damage from Hurricane Katrina is fostering a stark divide as the state governments in Louisiana and Mississippi structured the rebuilding programs in ways that often offered the most help to the most affluent residents.

The result, advocates say, has been an uneven recovery, with whites and middle-class people more likely than blacks and low-income people to have rebuilt their lives in the five years since the horrific storm.

"The recovery is really the tale of two recoveries," said James Perry, executive director of the Greater New Orleans Fair Housing Action Center. "For people who were well off before the storm, they are more likely to be back in their homes, back in their jobs and to have access to good health care. For those who were poor or struggling to get by before the storm, the opposite is true."

Louisiana's program to distribute grants to property owners whose homes were damaged or destroyed by Katrina was found by a federal judge this month to discriminate against black homeowners.

Meanwhile, in Mississippi, state officials refused to offer rebuilding grants to property owners who suffered wind damage, explaining that the property owners should have carried private insurance. That rule hit low-income and black homeowners particularly hard, advocates say, because many of them were uninsured, often because they owned property that was passed down through the generations.

The $143 billion federally funded reconstruction effort, one of the largest such projects in the country's history, fortified vulnerable levees, rebuilt hundreds of public buildings, reconstructed miles of roads and bridges, and provided tens of thousands of residents with money to help piece together their shattered lives.

But there is a sharp disparity in how residents view the pace of recovery. A recent poll by the Kaiser Family Foundation found that while seven in 10 New Orleans residents say the rebuilding process is "going in the right direction," a third say their lives are still disrupted by the storm.

African Americans are more than twice as likely as whites to say they have not yet recovered after Katrina, the survey found. And blacks in the city are 2 1/2 times as likely to be low-income than whites.

"I just knew we had a rotten deal," said Edward Randolph, a disabled Vietnam veteran who with his wife, Angela, has been struggling to rebuild their duplex in New Orleans East. "We know we have a lot to do, but we just do not have the money to do it."

The storm propelled them on a years-long odyssey through Port Arthur, Tex., Houston and Arkansas. They did not return to their still-damaged home until 2008.

The federally funded rebuilding program established by Louisiana officials - called Road Home - offered homeowners grants of up to $150,000. But homeowners could not collect more than the pre-storm value of their homes, regardless of the cost of repairs.

The Randolph home was valued at just $135,000, although repair costs were estimated by the state to be $308,000. The Randolphs were awarded a grant of $16,649, to supplement just over $100,000 they received in insurance payments.

This month, a federal judge ruled that the program's formula for calculating grants discriminates against black homeowners, who tend to live in neighborhoods with lower home values.

"We obviously disagree with the judge's action, which has stopped us from paying out some grants, and already have appealed it," said Christina Stephens, a spokeswoman for the Road Home program. "I think it is worth noting that the state did not create this program in a vacuum - the federal government signed off on the design of the program and any major changes we made along the way."

She added that the state has modified the program to pay out an additional $2 billion to more than 45,000 low-income homeowners. Overall, Road Home paid $8.6 billion to more than 127,000 homeowners.

Many of these simmering issues will not be visible when President Obama arrives here Sunday to mark the fifth anniversary of the storm that killed more than 1,800, uprooted more than 1 million Gulf Coast residents, and left 80 percent of this city submerged.

The visit is expected to underscore the president's support for a region still reeling not just from Katrina but from the largest oil spill in the nation's history, which is threatening the region's immediate economic future. A regional group of business and political leaders formed a coalition this week aimed at holding Obama to his promise to restore the Gulf Coast.

Obama's visit will also underscore the strides made since the breached floodwalls and overtopped levees left people here camping on highway overpasses, cowering in attics and retreating to the squalor of the Superdome and the Convention Center to escape the deadly waters.

The surreal landscape of grounded boats, washed-up appliances and mud-choked streets is long gone, and many of the most obvious scars from the catastrophe are healing. The Army Corps of Engineers has rebuilt 220 miles of levees and floodwalls.

The school system, widely viewed as one of the nation's worst before the storm, has been reborn with many charter schools. Though activists have filed a lawsuit alleging that special-needs students are being underserved by the new education structure, 59 percent of city students are in schools that meet state academic standards - more than double the number who attended such schools before Katrina.

The storm ravaged the city's hospital system, leaving many residents in the largely black eastern part of the city a long ambulance ride from emergency health care. At the same time, more than 90 neighborhood health clinics opened and are showing promise at delivering preventive care and helping people manage chronic diseases such as diabetes and hypertension.

But there is concern that many of the health centers, funded with federal grant money that is winding down, are struggling to draw enough insured patients to become self-sufficient.

"Everyone now has to transition to a more sustainable model of health care," said Sarat Raman, associate medical director of Daughters of Charity Services of New Orleans, which operates three clinics that serve 15,000 patients in the area. "You have to have a balance of patients."

Along Mississippi's Gulf Coast, where the violent winds and an unprecedented storm surge overwhelmed homeowners, sheared off roofs and splintered houses, the scene has also improved.

The waterfront casinos that provide a large chunk of this state's revenue are humming. The vast majority of residents are back in their rebuilt homes, although thousands are still struggling to find affordable housing because their recovery checks did not cover the cost of the damage.

Despite the improvements, many gaps remain.

The New Orleans area has regained more than 90 percent of its pre-Katrina population, according to the Greater New Orleans Community Data Center.

But in the city itself, just 78 percent of the population has returned, and a growing share of the region's poor now reside in the suburbs. The city's population drop has been most severe in black neighborhoods, many of which absorbed Katrina's most brutal blows.

Despite well-publicized recovery efforts, including a plan led by actor Brad Pitt to build 150 solar-powered homes, just 24 percent of the Lower Ninth Ward's pre-storm population has returned. There, newly rebuilt homes stand next to vacant lots or crumbling houses. Entire blocks remain desolate five years after the storm.

In middle-class Pontchartrain Park, not far from historically black Dillard University, just 55 percent of households have rebuilt, according to the data center.

Beyond the problems with Road Home, New Orleans has experienced a dramatic spike in rental costs since the storm.

"Many low-cost apartments are gone with the wind and the water," said Laura Tuggle, the outgoing managing attorney of Southeast Louisiana Legal Services. "Now, we're left with New York rents on New Orleans wages."

In Mississippi, where Katrina severely damaged more than 101,000 housing units, many residents face what advocates call a similar inequity. Praised in the aftermath of Katrina for his can-do attitude, Gov. Haley Barbour (R) received a series of waivers from the Bush administration that largely freed Mississippi from the requirement to spend at least half of his state's $5.5 billion in federal block grant money on low- and moderate-income residents. Barbour successfully argued that the waivers were necessary to give the state flexibility to deal effectively with the widespread devastation.

That allowed the state to divert close to $1 billion to help devastated utilities rebuild, to subsidize residents' insurance premiums and to help fund the port and other economic development projects. Meanwhile, advocates say that more than 5,000 low-income Mississippi families have yet to settle in permanent housing since the storm.

State officials say they are expanding the number of public housing units beyond pre-Katrina levels and establishing programs to encourage development of affordable rental housing.

Still, advocates say the more than $3 billion distributed by the state's housing recovery program went disproportionately to more-affluent residents. The plan paid up to $150,000 to homeowners whose properties were damaged by the unprecedented storm surge spawned by Katrina, but nothing to those whose homes suffered wind damage.

To be eligible for the initial grants, families had to have homeowners insurance, although the state later devised a program that paid grants of up to $100,000 to low-income, uninsured homeowners whose properties were damaged by the storm surge.

The rationale, state officials said, was that responsible homeowners had no way to know that they should have flood insurance in areas that federal experts deemed to be outside the flood plain.

"The storm surge was the priority," said Lee Youngblood, communications director of the Mississippi Development Authority. "Mississippi had no intention of compensating people who chose, for whatever reason, not to have wind insurance."

That formula struck some advocates as discriminatory. "The criteria discriminated against black storm victims, who more likely than not were renters, or, if homeowners, more likely than not lacked insurance," said Reilly Morse, co-director of housing policy for the Mississippi Center for Justice.

The state's formula had the effect of freezing out people whose homes were destroyed by the wind, which along much of the Mississippi coast meant black residents who often lived in paid-off homes that had been handed down through the generations. The expensive waterfront property was mostly owned by whites, while inland property, which suffered more wind damage, was owned largely by blacks.

In Gulfport, a railroad embankment that has long served as an informal racial demarcation line became a levee when Katrina hit.

As the surging waters crashed through their patio door and rose five feet in their home, a white couple, Ernest and Doreen Chamberlain, gathered their family and sought refuge on the black side of the tracks.

Coming upon an old, wood-frame house he thought was abandoned, Ernest Chamberlain began trying to break the door down, only to be surprised when it was opened by Irene Walker, an elderly black woman.

"She was like, 'Mister, what are you doing?' " he recalled. "Then she invited us in."

That's where the Chamberlains rode out the storm, even as raw sewage backed up into the Walker home.

Five years later, the Chamberlains are back in their sunny home. Although they had to fight with insurers and contractors, they secured a $150,000 grant from the state to help repair the flood damage, which totaled nearly $200,000.

Meanwhile, the Walker home sits abandoned. A church group installed a new roof, but the interior remains untouched. The 82-year-old Walker, meanwhile, is living with family members a few miles away.

"She hasn't gotten any help from the government for the house," said Occelletta Norwood, Walker's niece. "She got a little money from FEMA at the start, but that was it."

fletcherm@washpost.com Research editor Alice R. Crites contributed to this report.

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