Gov't: Katrina Victims Abusing Home Money

Many Louisiana homeowners who received federal money to raise their homes to avoid flood danger after Hurricane Katrina have not jacked up their properties, a federal housing inspector general has found.

A recent report by the inspector general's office for the U.S. Department of Housing and Urban Development found that 158 of the 199 properties it inspected had not been elevated even though they got about $3.8 million for the work.

Those homes accounted for about 10 percent of the 1,906 property owners who got more than $44.4 million in elevation grants in 2006 and 2007 from the Road Home, a program set up to distribute $13 billion in rebuilding money after hurricanes Katrina and Rita devastated Louisiana in 2005. Each homeowner got as much as $30,000.

Homeowners cited a host of reasons for not raising their homes.

Four homeowners denied that they had received elevation funding and four others were unsure if they had, the report said. Others said they did not believe they had to raise their homes with the money and others told inspectors that they had spent the money on repairing their homes rather than raising them, the report said.

Inspectors said they went to 13 properties in the Lower 9th Ward, one of the hardest-hit neighborhoods in New Orleans, and found that only two homes had been elevated. Five of the properties were vacant lots, and the other homes were boarded and empty or occupied by the homeowners but not raised up, the report said.

In New Orleans, homeowner advocates said the report failed to take into consideration the complexities homeowners faced.

The HUD inspectors were "completely oblivious of what the homeowners were dealing with," said K.C. King, a retired engineer who rebuilt his home in Gentilly. He also sits on a housing task force for the Louisiana Recovery Authority, an agency that oversees the Road Home program.

For example, King said Monday that he got $30,000 in elevation funds, but that was hardly enough to cover the $114,000 it cost to raise his new 1,450-square-foot home 11 feet. He made up the difference by drawing on his retirement savings, he said. In all, he said it cost him about $300,000 of his own money to build a new home.

"I would characterize my experience with Road Home and the elevation grant as a personal planning nightmare," King said.

Robin Keegan, a top state recovery official who oversees Road Home, said the state was "aware of the low compliance rate" with the elevation grants and that it was taking action. But Keegan said the Road Home and its contractors did not have the "capacity to inspect all homes."

Keegan added that the $30,000 grant was not enough to cover the costs of elevating a home. She said Road Home was working with homeowners to use funds from the Federal Emergency Management Agency to make up the difference.

The state said 86 of the 158 homeowners cited by the HUD inspectors were interested in the FEMA elevation funding.

Meanwhile, the state was working to recoup money from 28 of the homeowners cited in the HUD report. Under the program's rules, homeowners who do not raise their homes by the middle of this year would be required to give back the money they got unless they are given an extension.

State officials have kept track of homeowners by sending them questionnaires in the mail, through telephone calls and by checking building permits and conducting onsite inspections.

Two surveys by Road Home's contractors, ICF International and Hammer and Gaines, found "a high incidence of nonresponders and indicated low compliance rates," the HUD IG report said.

HUD inspectors said "strong enforcement" was needed to keep the program on track.

Since 2007, the Road Home has handed out $800 million in elevation grants to 27,291 homeowners. To make sure the money is spent properly, the HUD inspector general said the state and HUD would need to do a much better job of monitoring homeowners.

Unless corrected, the "goal of reducing homeowner flood risks from future hurricanes" could fail, the report said.

G. Paul Kemp, a Louisiana coastal expert with the National Audubon Society, said elevating homes should be a key part of the long-term strategy for south Louisiana.

"It can be done in such a short time and at a fairly reasonable cost, and it immediately raises the level of protection, in some cases by hundreds of years," Kemp said. "We've found out that levees are not always reliable.