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Jul 7, 2011 5:52 AM by Lauren Wilson & AP

HUD settles suit over Katrina housing program

NEW ORLEANS (AP) - The U.S. Department of Housing and Urban Development said Wednesday that it would hand out $62 million to 1,460 Louisiana homeowners to settle a lawsuit that alleged a Hurricane Katrina rebuilding program was unfair to blacks and left many people unable to rebuild in neighborhoods like the Lower 9th Ward after the 2005 storm.
The agreement ends a lawsuit filed in 2008 in federal court in Washington, D.C., by five homeowners and housing advocates over the way grants were handed out by the Road Home program. The suit alleged Road Home discriminated against blacks because it calculated the worth of a home on housing values prior to Katrina's assault on the Gulf Coast.
Many blacks lived in neighborhoods such as the Lower 9th Ward where housing values were depressed before Katrina and therefore did not get enough money to rebuild after the storm when the price of materials and labor skyrocketed.
"One of the things we recognize here is that the way the Road Home was implemented was a piece of the problem," said Shaun Donovan, the HUD secretary. "Coming up on six years (since Katrina hit) is simply too long to wait to get back into your home."
Donovan said the new funds would help 1,460 homeowners in four Louisiana parishes - Orleans, Plaquemines, St. Bernard and Cameron. He said 1,200 of the homeowners to get help are in New Orleans. People in Cameron Parish were hit by another storm, Hurricane Rita, which struck western Louisiana about a month after Katrina.
The suit was filed against HUD and the Louisiana Recovery Authority, a state agency set up to handle recovery dollars and rebuilding plans after Katrina struck the Gulf Coast on Aug. 29, 2005. Katrina demolished inadequate levees and floodwalls built by the Army Corps of Engineers that protected New Orleans and parts of the surrounding metropolitan area. Most of New Orleans was flooded and remained under water for weeks.
In the wake of the storm, Congress set aside billions of dollars to help the region rebuild and the Road Home program was a critical part of rebuilding plans. Under the program, residents could apply for up to $150,000 to help them rebuild their homes. So far, about $8.8 billion has been handed out to 128,568 homeowners, according to state figures.
But the Road Home program was beset with a multitude of problems and bureaucratic delays. Among the problems, many hurricane victims said the grants were inadequate to fix their homes and many residents complained that the program's grant formula was flawed.
"The Road Home, in our opinion, was a road block to many New Orleanians," said James Perry, the head of the Greater New Orleans Fair Housing Action Center, a housing advocacy group that backed the suit.
His group cited as an example one of the black plaintiffs who received a $1,400 Road Home grant for her home.
In the past two years, the Obama administration and state officials have tweaked the program's requirements to help thousands of homeowners get the money they needed to finish rebuilding their homes, Donovan said. For example, he said thousands of homeowners were helped when a $50,000 cap on additional Road Home funds was lifted for low-income applicants struggling to rebuild.
Paul Rainwater, Louisiana's commissioner of administration, said lifting the cap and pushing other programs helped scores of hurricane victims rebuild.
"In neighborhoods all across south Louisiana - but particularly in New Orleans - rebuilt homes are sprouting up, returning people to their communities, jobs and schools," he said.
Although much of New Orleans has been reoccupied and rebuilt, many neighborhoods remain scarred by Katrina.
Perry, the housing advocate, said thousands of hurricane victims would not be helped by the new funds. He estimated between 5,000 and 20,000 homeowners remain in need of more help to rebuild.
But aid is running out, he said. He said that about $28 million will be left over in Road Home funds once the $62 million is spent to settle the suit.
"It will require creativity to help people as these funds continue to wane," he said.
U.S. Rep. Cedric Richmond, D-La., welcomed the HUD settlement but said much more needs to be done. "The settlement represents progress on this issue," he said. "Unfortunately, for some storm survivors, this decision is too little too late."

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