In his letter to Gov. Haley Barbour, Housing and Urban Development Secretary Alphonso Jackson said that although he's concerned about using the housing money for the port project, congressional language associated with the use of block grant funds "allows me little discretion."
"I'm sure that you share my concern that there may still be significant unmet needs for affordable housing, and I strongly encourage you to prioritize Gulf Coast housing as you move forward," Jackson wrote.
Mississippi plans to restore public infrastructure and publicly owned facilities at the State Port at Gulfport that were destroyed during Katrina, and to improve the port's operating capacity.
The plan has drawn harsh criticism from several groups working on recovery efforts in the region who say housing is too scarce not to devote all possible resources to it.
Kimberly Miller, a policy analyst for Oxfam America, said the state's long-term recovery committees that work with displaced families have 15,000 cases on their waiting lists, and a similar number of people are in temporary housing.
The state's plan "doesn't make any financial sense when you look at the number of people who haven't gotten back into homes," Miller said.
Katrina left the Gulf Coast in tatters in 2005 and many who fled the region have yet to return. Property, rental and insurance prices have soared since the storm. Barbour announced on Tuesday that the state would devote another $100 million toward affordable housing.
Mississippi received $5.4 billion in federal hurricane recovery funding. The $600 million now going to the port originally was allocated for the state's housing assistance program, which provided money to families who lost property to Katrina's storm surge.
In a statement issued after HUD's approval, Barbour said restoration of the port was a key part of the hurricane recovery plan from the beginning.
Barbour said Mississippi has a comprehensive program of recovery "designed to get families back in homes, restore and create new jobs, and rebuild the coast as quickly as possible."
Jackson said Congress eliminated many of the restrictions that would normally accompany federal grants in the name of speeding recovery on the coast. Two members of Congress, however, had urged him to reject Mississippi's plan.
Reps. Barney Frank, D-Mass., and Maxine Waters, D-Calif., told Jackson in a letter that they were prepared to hold oversight hearings about the use of the Community Development and Block Grant funds that HUD had awarded Mississippi in the storm's aftermath.
Frank and Waters said that a recent FEMA report estimated that 40,897 Mississippians remained displaced after the storm as of November 2007. They said only a fraction of the federal assistance has been used to benefit low and moderate-income residents.
Waters said in a telephone interview that she doesn't understand why Jackson doesn't think he had the authority to reject the plan.
"I am suspicious that Barbour receives favored treatment with this administration. He kind of gets his way," Waters said.
State officials said the State Port at Gulfport is the nation's 17th-busiest container port, and the third-busiest on the Gulf of Mexico.
According to the plan submitted to HUD, the port's infrastructure, equipment and facilities were crippled by the storm. The gross maritime revenue dropped from $9.4 million in June 2004 to $4.1 million in June 2007.