In The News › Editorial: More than a placeholder

Apr 25, 2006

Source: Times-Picayune

Editorial: More than a placeholder

EDITORIAL: More than a placeholder
Tuesday, April 25, 2006

Officials at Gov. Kathleen Blanco’s Louisiana Recovery Authority want to get some kind of
housing aid plan on the books, and it’s easy to see why.

Thousands upon thousands of homeowners in greater New Orleans are in limbo, because they
still have mortgages on houses that are now uninhabitable. The state intends to use billions of
dollars in Community Development Block Grant money to help such homeowners. And the
sooner the terms of a buyout plan become clear, the sooner homeowners can figure out what’s
best for them.

The problem is that Congress hasn’t yet set aside all the money necessary for a buyout plan
proposed by the Blanco administration. Until that money comes through, the state will have to
hold back on the promises it makes.

While the recovery authority was prudent enough to develop a fallback plan, that plan has some
drawbacks, as a recent report by the Bureau of Governmental Research makes clear.

Federal lawmakers have approved $6.2 billion in block grants for the state, and President Bush
is seeking another $4.2 billion. If and when the latter pot of money is approved, Louisiana
officials believe, most homeowners flooded out by Hurricanes Katrina and Rita could be made
whole by the state. Homeowners would have the option of rebuilding their current homes or
selling to the state, and they would receive up to $150,000.

In the absence of the extra money, though, the state has a more modest baseline plan that
would benefit owners of hurricane-ravaged homes outside the flood plain and lower-income
homeowners inside the flood plain. That plan could be adopted as early as Wednesday.
But a housing aid plan that cuts out middle-class homeowners could hurt this metro area’s
recovery. Low-income families aren’t the only ones facing financial ruin if they don’t get help. As
BGR points out, healthy communities depend on the presence of a stable middle class.
The BGR report identifies other potential pitfalls in the baseline plan. The nonprofit watchdog
group suggests, for example, that the plan wouldn’t do enough for owners of doubles, which
provide a significant proportion of greater New Orleans’ housing stock.

LRA officials suggest that critics are rushing to judgment — particularly because they view the
baseline buyout plan as a mere “placeholder” until Congress agrees to spend the extra $4.2
billion. “Let’s not fight now about dividing up the too-small pie,” cautions Andy Kopplin, the
authority’s executive director, “when the bigger pie is on the way.”

The BGR report doesn’t take adequate account of the likelihood that Louisiana will receive more
federal housing aid than the baseline plan projects. State officials figure that Congress and the
White House will approve the extra money by the end of May.

Yet if Congress fails to set aside the money that the state has been promised — which is hardly
unthinkable — the baseline plan will presumably be the state’s buyout plan of record. And while
LRA officials should be commended for their desire to start getting checks to residents as soon
as possible after federal money arrives, the authority should be cautious about approving a
fallback plan that could leave out some flood victims.

The future of flooded-out neighborhoods in greater New Orleans will depend heavily on the
specific terms of a buyout plan. Louisiana deserves every penny — and then some — of the $4.2
billion in extra housing aid. But in Washington as in Baton Rouge, the legislative process
sometimes produces unexpected results, and state officials need to have the fairest Plan B
possible.

Apr 25, 2006

Source: Times-Picayune

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