The Department of Housing and Urban Development also announced that it would disburse $1 billion for hurricane-related housing needs to Mississippi, Texas, Alabama and Florida, and called on those states to apply for that additional money.
Deputy secretary Roy A. Bernardi scheduled a Tuesday afternoon briefing with Louisiana Gov. Kathleen Blanco in New Orleans to announce the grants.
"It was clear to me that Louisiana desperately needs this additional funding to implement its plans to bring its citizens back home," Bernardi said in a joint federal and state press release obtained prior to the announcement by The Associated Press. "HUD will work very closely with Gov. Blanco and the Louisiana Recovery Authority to help pave the road home for thousands of residents desperate to rebuild their own lives."
Louisiana's "Road Home" plan provides grants to cover repair costs above what was covered by insurance policies and FEMA grants.
There are about 123,000 home owners eligible for the program, state officials have said. Owners of about 80,000 apartments also could be eligible for grants to help restore south Louisiana's decimated rental market.
A registry for homeowners who may qualify is already set up, and so far about 90,000 homeowners have signed up. Blanco has said that the Louisiana Recovery Authority, which oversees the program, expects eligible homeowners to begin getting checks by late summer.
"Never before in American history has any state been forced to rebuild so many homes so quickly," Blanco said. "This $4.2 billion means homeowners have real options — options to repair, rebuild or sell their homes. Rental housing is equally important. We will work to help restore affordable quality apartments and duplexes for our families to come home to."
Apartment shortages, combined with increasing insurance premiums for those who own buildings in areas hard-hit by Hurricane Katrina on Aug. 29 or Rita on Sept. 24, have caused rents on units that survived last hurricane season to increase 20 percent or more in many cases.
While some homeowners may use the money to rebuild, others may choose government buyouts. For those who sell their property, but who also can demonstrate continued permanent residence in the state, the grants cover the amount by which a home's pre-storm value exceeded insurance settlements and FEMA grants, unless the difference is more than the $150,000 cap.
The program includes incentives for people to remain in the state. Those who take the "sell" option and have relocated out of state can only get 60 percent of their home's pre-storm value. So if insurance payments or FEMA grants already meet that threshold, they get no additional money.
Louisiana already had about $5 billion in hand for the program, but had pressed for approval of full funding so it would not have to lower grants. The amount of federal relief money provided to Mississippi, which had tens of thousands fewer residents affected by storm damage, allowed for up to $150,000 for certain homeowners, the same figure called for in Louisiana's plan.
The state has hired Virginia-based ICF Consultants to run the program, which requires grant applicants to certify the dollar amount of storm damages as well as the pre-storm market values of their homes.