Katy's Exposure

Posted November 19, 2008

BATON ROUGE (AP) — More than one-third of the $13.4 billion in federal block grant aid given to Louisiana after Hurricanes Katrina and Rita remains unspent, according to information provided Tuesday to the state’s hurricane recovery panel.

Though the money all has been earmarked to specific recovery programs, about $5 billion hasn’t been used three years after the storms, Paul Rainwater, the governor’s hurricane recovery chief, told the Louisiana Recovery Authority board.

“We’re going to try to spend down as much money as we can,” Rainwater said of the existing programs.

But he said he expects about $300 million to $500 million won’t be spent in the ways the dollars were set aside. He said the LRA will look at other ways to allocate the recovery money.

Congress sent Louisiana the pool of flexible aid dollars, called Community Development Block Grant money, after Katrina and Rita devastated New Orleans and the state’s coast in August and September 2005.

Most of the money was set aside for homeowner aid, but some was targeted for business loans and grants, rental property repair, work force training, college education and research programs, and state and local building repairs. Then-Gov. Kathleen Blanco’s administration designed the programs, many of which are continuing under Gov. Bobby Jindal’s administration.

Some of the programs have been bogged down in bureaucracy, have requirements of upfront spending to be reimbursed, or haven’t attracted a lot of interest.

LRA spokeswoman Christina Stephens noted that Louisiana didn’t receive its first appropriation in recovery block grant aid until December 2005, and later installments were received in 2006 and last year. Some of the state’s spending proposals still await federal approvals, so the dollars can’t yet be spent, she said.

“While we certainly want funds to be flowing faster than they are, I don’t know of any other state that has spent this amount of Community Development Block Grants at the pace that we have in Louisiana,” she said.

Much of the unspent aid is slated for housing recovery programs, including $2 billion for the Road Home grant program for homeowners. Several thousand people are awaiting final decisions on grants, and the LRA is asking for permission from state and federal officials to expand the program to include people who sold their homes at a loss after the program’s 2006 launch.

However, the Road Home isn’t expected to spend all the money allocated to it because fewer people received aid than were initially projected.

Among the slowest-spending programs involve rental housing.

Two rental aid programs allocated $1.4 billion of the recovery aid have spent only $172 million.

The complex tax credit and reimbursement programs were supposed to help rebuild rental housing. But some landlords have complained that the programs were unworkable and that they had trouble making the necessary arrangements with banks to participate.

Rep. Karen Carter Peter-son, D-New Orleans, a member of the LRA board, said several recovery programs — particularly the rental housing piece — are moving too slowly and should either be revamped or scrapped.

Rainwater told the LRA board his staff was working on a proposal to overhaul the rental housing recovery programs. He said any program that appears to be underperforming will be reviewed and could be redesigned.

Not all the slow spending falls on the state.

A $700 million program created for communities and parishes to help with their local recovery projects — everything from rebuilding firehouses and police stations to dealing with blighted property — hasn’t spent a dime yet, according to the LRA information.

american press