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Program to Help New Orleans Homeowners Moving Slowly

February 26, 2007 at 12:00 AM EDT
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BETTY ANN BOWSER, NewsHour Correspondent: Thirty-year-old Michael Malone has sent his family to Georgia until he can get enough money to repair the flooded family homestead.

MICHAEL MALONE, Hurricane Katrina Victim: This is our empty lot that used to contain…

BETTY ANN BOWSER: K.C. King and his wife have been living for more than a year in a cramped R.V. besides a levy that broke and destroyed their house.

K.C. KING, Hurricane Katrina Victim: Watch your step. This is some of the stuff I was able to salvage.

BETTY ANN BOWSER: And music producer Mark Samuels has begun work on his house, but he’s run out of funds, so, like the other two New Orleans homeowners, he’s stuck, until money from the state-run Road Home program comes through.

MARK SAMUELS, Hurricane Katrina Victim: The Road Home program sounded like it was the right idea and the right thing, you know, to get money into people’s hands so they could rebuild.

BETTY ANN BOWSER: The Road Home was set up with $7.5. billion in federal money to provide up to $150,000 grants to homeowners to rebuild the state’s devastated housing stock. But 18 months after the flooding, only 1,300 homeowners have received a cent out of the 109,000 who’ve applied.

Frank Silvestri is co-chair of the Citizens Road Home Action Team, a watchdog organization.

FRANK SILVESTRI, Citizens’ Road Home Action Team: This city can’t move forward until those people are given their grants. And, at this point after the storm, it’s abysmal.

Congressional criticisms

BETTY ANN BOWSER: The Road Home has ignited controversy all the way to Washington. Last week, California Congresswoman Maxine Waters brought her Housing Subcommittee to New Orleans, with some blistering criticism of the program.

REP. MAXINE WATERS (D), California: ... even though the program could use up to $150,000 per applicant, that it appears that the rules are such that nobody has received $150,000.

BETTY ANN BOWSER: The first witness was Gov. Kathleen Blanco. Waters wanted to know: Why so few awards? Why so many problems?

GOV. KATHLEEN BLANCO (D), Louisiana: This is unacceptable. It's maddening. I am on the phone every day pushing for solutions. The company promises us that, by the end of this month, we will see a rapid increase. I will be satisfied when I see the results.

BETTY ANN BOWSER: It was the governor's office that hired a private contractor, ICF International, to run the Road Home program last June for $756 million. Since then, there have been thousands of complaints, because only 1 percent of the applicants have received money.

Waters asked company official Isabel Reiff what ICF is doing to speed things up.

REP. MAXINE WATERS: Given all of the criticism about the program, what do you recommend can be done to implement this program faster?

ISABEL REIFF, ICF International: Well, why don't I -- why don't I start by telling you some of the things that we have done and...

REP. MAXINE WATERS: No, no, no, no, no, no. Just tell me what you will do to straighten out the program. How do you move the numbers?

ISABEL REIFF: We are calling every one who has had an application...

REP. MAXINE WATERS: Did you hire more people?

ISABEL REIFF: We are calling every individual...

REP. MAXINE WATERS: Did you hire more people?

ISABEL REIFF: Excuse me.

REP. MAXINE WATERS: Did you increase your personnel in order to do this?

ISABEL REIFF: Yes, of course we did.

Trying to get a voice on the phone

BETTY ANN BOWSER: Elected officials are not the only ones frustrated.

MICHAEL MALONE: And just think, I used to call this home.

BETTY ANN BOWSER: Homeowner Michael Malone was told seven months ago he would get $42,000 to fix his house, but there's been no check in the mail and no answer to his many phone calls.

MICHAEL MALONE: It's been a very fatiguing process, you know, not hearing back, not receiving, you know, phone calls, or getting any feedback from anyone.

BETTY ANN BOWSER: You can never get a person on the phone?

MICHAEL MALONE: No, ma'am.

BETTY ANN BOWSER: What do you get?

MICHAEL MALONE: It's a voice recording, and you're instructed to leave a brief, detailed message, and someone will be contacting you within 24 to 48 hours.

BETTY ANN BOWSER: And what happened?

MICHAEL MALONE: But that's never happened.

BETTY ANN BOWSER: And nothing happened?

MICHAEL MALONE: No, ma'am.

MICHAEL BYRNE, ICF International: Our sort of level of tolerance of that is zero.

BETTY ANN BOWSER: Michael Byrne is senior vice president for ICF International, based in Fairfax, Virginia. He says the company recently hired and trained more people to handle phone calls.

MICHAEL BYRNE: Waiting or leaving voice mail messages is something that we, unfortunately, did have to do some weeks ago. That's not happening today. We've hired more people; we've trained the people we've hired to be able to provide more information.

BETTY ANN BOWSER: But Malone says he's still getting voicemail and still has no money.

Smaller-than-expected awards

BETTY ANN BOWSER: K.C. King has a different gripe. He thought the Road Home would give him at least $100,000 to rebuild, so, when his letter came last year, he was stunned.

K.C. KING: They said they were very sorry, but there was no grant available to help me with restoring my home.

BETTY ANN BOWSER: King says officials miscalculated his award.

K.C. KING: I'm a victim of incompetence, and I'm working through each step in the process to get it right.

BETTY ANN BOWSER: Is that number right?

K.C. KING: No.

BETTY ANN BOWSER: They were wrong there?

K.C. KING: They were wrong there.

BETTY ANN BOWSER: OK. And then the estimated damage to your home, is that number right?

K.C. KING: That's wrong by multiples.

BETTY ANN BOWSER: Senior Manager Byrne says the Road Home has made some mistakes.

MICHAEL BYRNE: I think we had a period of time in October and November where we were seeing that our databases weren't lining up, and we weren't getting good information, and we did make some errors, you know. And some of them were significant.

BETTY ANN BOWSER: Now Byrne says the Road Home is correcting those mistakes using better data.

MICHAEL BYRNE: We're improving those capabilities to have more accurate numbers. And I think we're at a place right now where the errors that were made and the mistakes in the numbers that were made early on, we're seeing less and less of those.

BETTY ANN BOWSER: But King says he is still arguing with the company and claims they still don't have all the numbers straight.

Mark Samuels is also fighting with the company for more money.

MARK SAMUELS: I've got the letter now, but it said that, you know, "Congratulations," but that the award was only $43,000. And I was really expecting between $120,000 and $150,000, the maximum. I was really expecting that much.

BETTY ANN BOWSER: What could you do with $43,000?

MARK SAMUELS: Well, I've already spent $43,000, and as you can see my house is not even -- I've already spent that.

Problems in the system

BETTY ANN BOWSER: Walter Leger is an official with the Louisiana Recovery Authority that sets policy for the Road Home program. Leger says one of the stumbling blocks is federal bureaucracy.

WALTER LEGER, Louisiana Recovery Authority: The money that they send is wrapped in red tape, and it's got strings that lead back to Washington. And to spend the monies they send us, we've got to meet federal red tape.

BETTY ANN BOWSER: But Leger has also been critical of the contractor and has been pushing them to improve their record.

WALTER LEGER: The point I've made to ICF many times is: We need to be more like Federal Express. We have to get every package delivered. We can't make one mistake, and we have to attend to every single one.

BETTY ANN BOWSER: ICF says so far the average award calculated to homeowners has been about $80,000. But when the state designed the program, it figured the average award would be closer to $58,000, which raises the question: Could the program run out of money?

MICHAEL BYRNE: If the average award remained at $58,000, then they would have enough money for the whole program. So your looking at this is, is correct. At $80,000, at this junction, point in time of what we know, it would not be sufficient funds.

BETTY ANN BOWSER: At the hearing, New Orleans Mayor Ray Nagin said he wants to take over the entire program from the state.

RAY NAGIN, Mayor of New Orleans: The Road Home program in its current format will not work. I don't care what they do with that program right now. It's overwhelmed, undermanned, and technically flawed.

Let's take New Orleans, all the people who have registered for the Road Home program, whatever step, stage they're in, and let us administer the program with the banking institutions. And I think we could get it done for you pretty quickly.

BETTY ANN BOWSER: ICF has promised to meet its goal of 2,300 awards by Wednesday.

REP. MAXINE WATERS: If you do not get it, would you be willing to try and back out of that contract and find another way by which to implement the program?

GOV. KATHLEEN BLANCO: If this cannot happen or does not happen, we are certainly going to take measures to put in a new operation.

BETTY ANN BOWSER: Meanwhile, Waters has promised Louisiana officials she will do all she can to eliminate federal red tape, in the hopes that that will get more money into the hands of homeowners who want to move more quickly down the road home.