In The News › BGR criticizes housing recovery plan

Apr 14, 2006

Source: Times-Picayune

BGR criticizes housing recovery plan

BGR criticizes housing recovery plan
Proposal excludes middle class, it says
Friday, April 14, 2006
By Bruce Eggler
Staff writer

A New Orleans governmental watchdog group Thursday issued a sharply critical analysis of the draft “Road Home” housing recovery program released last week by the Louisiana Recovery Authority, the group Gov. Kathleen Blanco named to guide the state’s recovery from Hurricanes Katrina and Rita.

The analysis by the nonprofit Bureau of Governmental Research says that under the LRA’s plan for buyouts or rebuilding grants, “the Road Home has been converted from a disaster relief program to an affordable housing program.”

It says the plan’s proposed allocation of disaster recovery money for southeast Louisiana would exclude most of the middle class.

The state has unveiled a two-level version of its plan, depending on how much federal money the state gets: a baseline scenario if the state gets only the $6.2 billion already authorized by Congress, and a more optimistic scenario if it gets an additional $4.2 billion Congress is currently debating.

Under the recovery authority’s baseline plan, the BGR analysis says, the only homeowners eligible for a share of the federal money would be those living “outside the flood plain” or making less than 70 percent of the area median income. Because most homeowners in Orleans, St. Bernard and Plaquemines parishes live in the flood plain, it says, “in those hard-hit parishes, only homeowners making less than $36,610 (a year) would be eligible for compensation.”

“This is unfair and bad public policy” that would “hinder the redevelopment of healthy communities,” the report says. “We strongly recommend that the LRA revise its plan to include all homeowners with major damage or destroyed homes.”

LRA officials could not be reached for comment Thursday. The authority’s executive director, Andy Kopplin, has said Louisiana’s prospects for receiving the additional $4.2 billion for housing are promising.

Besides offering too little to homeowners, the BGR report says, the “Road Home” housing plan is overly “ideological,” promoting mixed-income developments that, “according to advanced social theory,” would “offer remarkable economic and social benefits to low-income residents.”

The report questions that, saying the plan “transfers to developers recovery resources that could otherwise be used to ameliorate the losses and restore the home equity of storm victims. In addition, it concentrates heavy public investment in a small number of affordable units for very low-income people.”

Instead, the BGR report says, “Given the limited amount of funding available and the scope of the need, the mixed-income housing program should be scrapped and the resources redirected to compensating homeowners, encouraging affordable home ownership, or developing smaller, less expensive rental units.”

If mixed-income development is to remain in the plan, the report says, “the program should be changed to reduce the public investment” and favor developers whose plans involve more private money and smaller public subsidies.

Finally, the report says, the LRA plan does not do enough to assist the “unusually high” number of owner-occupied double houses in New Orleans. “To a great degree,” it says, “the revitalization of New Orleans depends on the adequate restoration of these properties. This will be hampered if such homeowners are forced to choose between funding for their homes or loans for their rental unit.”

In releasing its draft plan April 5, the recovery authority opened a 10-day formal comment period that was to be followed by consideration of the plan by the authority and the Legislature. The U.S. Department of Housing and Urban Development must approve the proposal before any federal Community Development Block Grant money can be spent under it.

The Bureau of Governmental Research once released only a handful of reports a year and often spent months or years working on each one. But in recent years, and especially since Hurricane Katrina, it has become much more prolific and timely, responding quickly to breaking events.

The analysis of the state’s housing proposals is the third report the group has released this month. The other two dealt with how New Orleans should award professional service contracts and whether bankruptcy is an option New Orleans should consider.

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Bruce Eggler can be reached at beggler@timespicayune.com or (504) 826-3320.

Apr 14, 2006

Source: Times-Picayune

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