The Old Man and the Storm
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The "Road Home" Program

Assessing the roots of the major problems and delays in this state-run, federally funded housing assistance plan.

Sean Reilly
Board member, Louisiana Recovery Authority

Sean Reilly

The state was staking its recovery plans on a bill called the Baker Bill, which involved a tremendous federal response, a federal corporation much like the RTC [Resolution Trust Corporation] after the savings and loan disaster. The White House was resisting that, and so the state and the White House were going back and forth on that plan. Chairman [of Gulf Coast Rebuilding Don] Powell came into the state and said, "Look, we're not doing the Baker Bill; it's not going to happen." And there was a lot of consternation, a lot of finger-pointing, editorializing about, "Why won't you help the state?"

This is now seven months after the event, so February 2006, basically.

Correct. ... So I took the opportunity to call Don Powell back-channel. ... I said, "Look, can we get together and just talk about possibilities?" And we had a delightful full-day meeting in Amarillo, [Texas]. He picked me up in his red pickup truck, and we went to a restaurant and spent about three or four hours talking about various components of damage and plans that might address the damage. ...

You were sketching this out on a napkin or somewhere?

Not a napkin. We went to a restaurant that had a paper tablecloth. ... At the end of the day, the most important thing about that meeting was it got the dialogue going in a constructive direction. ... And then we went arm in arm to lobby Congress for $4.2 billion. So I'd say that was a very successful cooperative endeavor between the state and Chairman Powell's office.

You based the numbers for the Road Home program, as I understand it, on assessments that were made by FEMA [Federal Emergency Management Agency] of the number of houses that were actually destroyed. Where did those numbers come from? ...

FEMA, after the disaster, runs the public assistance programs and the private assistance programs. And through that process, they actually do assessments, because they're trying to figure out how much you're going to get reimbursed on your private assistance side. It was the best available data we had at the time.

And they told you how many houses?

Give or take 118,000, somewhere in that neighborhood, and they broke it out by level of damage: severe, major, minor. There were also cost estimates associated to each level of damage. ...

As it turns out, there were about 50,000 more houses in the major-to-severe category, at least in terms of applications. ... The levels of damage were a little more. The cost estimates were off. Now, that didn't surprise me. Anybody that's remodeled a house knows ... it can go wrong. ...

One thing that is problematic and that really needs more analysis: Less private insurance came in than we thought. ... That number has been surprisingly low, and people need to get to the bottom of that. ...

Do you know what the number is? ...

... What we're seeing is about $800 million less than what we thought is coming in. That's contributing to the shortfall in the Road Home. ...

The biggest contributor to the shortfall, however, has not been the gap in insurance. It's been the number of houses that have applied versus the early estimates. ...

At what point did you find out that somebody in Washington had an issue with the fact that the Road Home was paying out for wind damage?

I found out about it when the shortfall was announced, which was in the spring of 2007. Chairman Powell said, "It's because you covered wind, and you weren't supposed to." ...

It came as a bit of a surprise. ... The Road Home had been in design and implementation for almost 15 months. We were off the diving board. And all of the language in the HUD [Department of Housing and Urban Development] application said that damage from whatever source, whatever cause, was going to be covered. ... No one came right out and said, "Don't cover wind." ...

I think Chairman Powell and his staff are probably in good faith when they say, "We did model it, and in our models we didn't cover it." But that's different from saying, "Thou shalt not." That's where I think there was a disconnect in communication. At the end of the day, if we're going to rebuild New Orleans, if we're going to rebuild South Louisiana, you can't say wind and water. People will not understand that. ...

You've sort of hammered off this agreement with Washington, and then you hire a company that has never done this sort of work before. What was the LRA's role in that process?

This is a very frustrating thing for members of the board of the LRA. We were kept out of the process of hiring [the Road Home contractor] ICF [International]. It was a decision that was made by the Division of Administration, which is a separate branch of government. ...

We've been highly critical of them. As a matter of fact, we were given the opportunity by the Division of Administration to step in and renegotiate their contract to enhance the penalties if they don't perform up to par.

Did you?

We absolutely did. ... The performance matrixes in that contract were something that I would not have signed as a businessman. I've said that publicly, and I maintain it today. ...

What do you mean when you talk about performance matrixes?

You have to have so many closings a month; you have to have so many interviews a month; you have to have so many people in the pipeline per month; you have to handle your dispute resolution in an expedited manner. All of those things are common-sense business benchmarks that should have been in the contract from the beginning. ...

Now, all that being said, I believe they've hit their stride. I think they're turning out great numbers now.

Donald Powell
Federal coordinator of Gulf Coast rebuilding, 2005-08

Donald Powell

... The most important thing to me was, how many homes were destroyed? Who had that data? Was it reliable data? ... What was the source of that damage? Was it 50 percent or more? And so we talked to our friends at FEMA. We talked to the SBA [Small Business Administration]. We had satellite images. We talked to people in the insurance business. We came to a consensus about how many of those homes were destroyed and what the need would be.

And yet there seemed to be a continuing need to keep going back to Congress and ask for an additional supplemental.

... Congress allocated and the president signed the bill for an additional $3 billion because of the shortfall. That shortfall was because ... [of an expansion of] the program, unilaterally by the state, to include wind [damage] versus just those homes that were destroyed by the water. ...

Sean [Reilly] claims that ... you all didn't have a conversation about wind versus water; you had a conversation about a supplemental program that would help make people whole regardless of wind and water.

... What we've agreed to about the state is a documented deal, but I think it's also important to move forward. ... The most important thing is, now they've got the money; it's important that they spend it wisely and that they use the money that the taxpayers have been ... generous with in a very effective way.

Walter Leger
Board member, Louisiana Recovery Authority; chairs the LRA's Housing Task Force

Walter Leger

You go out and say, "We are going to design a program to help people come back, but we don't want to have a government bureaucracy do it, so we are going to hire a private company to do it." Why hire one that has never done it before?

... Nobody has ever done it before. Nothing like this has ever been done before. What happened was a committee was created by the Office of Community Development, which the LRA was not involved in, to select the contractor, and we were so conscious of the suggestions of Washington and other parts of the country that it couldn't be done honestly and without corruption in Louisiana, we were perhaps overly conscious. We wanted to prove that that wasn't true. ...

I probably have been critical as anyone has been. It is my belief that at the beginning, they made a number of fundamental mistakes. ... They didn't staff it up quickly enough; they didn't staff it up sufficiently. And while they hired good people, they perhaps didn't train them sufficiently.

I don't think they or anyone perhaps understood the massive nature of the undertaking at the time, nor did they understand the impatience of the homeowners. ... I think that history demonstrated they weren't capable of moving as fast as we wanted to and doing it efficiently. And a number of mistakes were made along the way. ...

If the LRA is sort of a distant oversight board, and the governor's office is actually the one leasing the contract, ... where's the stick or the carrot that you have to use with ICF?

The governor [Kathleen Blanco] directed us to have the oversight and to be the critic. ... History will tell that was a good thing, because what she was saying is: "You, LRA, be on the outside and look at things critically so we can make it better. This is not a political thing we are doing." In fact, she demanded that we not be political and partisan. We are rebuilding a community like [no one] has ever been done before, so we have to pick the problems out, publicize them and fix them. And that was what we did. ...

The private contractor is a private company who is trying to make money. ... We are trying to get the product delivered without regard to whether we are making money or not. So they are kind of competing forces.

I think what people are really upset about is in September, I think, they do an IPO [initial public offering] on the $730 million in profit they are going to make. Their executives are getting huge bonuses by Christmastime.

I was pretty upset by that, too. I have taken a year and a half off my job; I was working for free. These guys are getting the big bucks and getting themselves bonuses, and we, the volunteers and staffs of the LRA, were solving and identifying their problems. The homeowners were right to be upset about that. On the other hand, that is what private companies do. That doesn't mean that we homeowners don't have to be upset about it.

Mike Taylor
Former director, Disaster Recovery Unit, Louisiana Office of Community Development; oversaw ICF International's administration of the Road Home

Mike Taylor

How did you work with ICF in order to make this all happen? How do you get the water through the other end of the hose faster?

You push really, really hard. ... Keep in mind, we were building a process to deliver the largest amount of federal funds ever delivered on any single program, probably four times larger than HUD does in a typical year. There were no regulations, no policies, no procedures, no mechanics to deliver any of that. So we literally built this system on the fly. ...

I've heard time and time again from people, ... particularly in New Orleans: "It's not our fault these levees broke. It was the federal government's fault. Why can't they just give us the money and let us rebuild our homes? ... Why does it have to be this hard?"

Yeah, and possibly the federal government could have designed a program that said just that. That's sort of a 50,000- or 100,000-foot view of a very simple way of doing it, to just say: "Here's a check. We know you had some problems; here's a check." But how do you determine the fairness of a process like that? There may be people that needed more money than they received, and then there may be families out there that get a windfall.

This was being, I think, financial stewards as dictated by the federal government with some strings that they put on the money, and delivering the funds within the processes and policies developed by LRA. This was the best way we could find to do it.

The criticism has been made that there were so many checks and balances put into this program, ... it's almost as if you've designed a bureaucracy to eliminate applicants as opposed to give people money.

I wouldn't agree with that. It's a complex process, but I think the checks and balances were put in for valid reasons. But the system was designed to work in the background, to not overly burden the families and the homeowners but to protect them. ...

And we know that we had to fight a national image that we're more corrupt than other states. I personally don't believe that's true; we've had 12 years of state government that has shown it's done a good job of protecting the public resources. But one thing we heard loud and clear from Congress was that if we give you this money, you've got to spend it right. ...

If you had to build it again from scratch, how would you do it differently?

Simplify. We need to make sure that we have as simple and as easy a process as possible. ... The thing that we want to be able to do -- we didn't do; nobody was able to do -- was manage the public expectations. ... The public expectation was, the money's appropriated, we should have it. And I entirely sympathize with that. We probably should have done a better job of saying, "That's a great expectation, but here's exactly why it won't be quite that fast." ...

Tanya Harris
New Orleans ACORN (Association of Community Organizations for Reform Now)

Tanya Harris

The Road Home program has its flaws, but the one thing that ACORN did encourage people to do is apply, because what happened was people said: "My uncle, my cousin, my neighbor didn't get any money. These people are not going to give me any money. This isn't going to work for me. I'm not going to apply."

The first that I would say is: "You're crazy. Apply whether you think you're going to get something or not. Apply, and if you need help, we're here to help you." Because the bottom line is, it is available. God knows a lot of people have a lot of problems with it, but you want to make sure that as many people as possible apply for it [whether] they didn't get something or not, because a lot of people been very surprised on both ends. ...

We've heard from a lot of people who are very dissatisfied with the program. They may have expedited certain things, they may have gotten more efficient in their dealings with the cases, but the fact is that nothing has been done about the assessment process. ... If my check is not enough for me -- it's not sufficient, and it certainly doesn't reflect what [the home] was worth -- then you just expedited nothing for me, because now I'm still in need here. I think that many people were really concerned about how the assessment process was done. ...

So what does this all say to you?

It says that the return of our residents is going to be slowed down tremendously. It says that a lot people will be discouraged from coming back to New Orleans. A lot of people not only will be discouraged; a lot won't financially be able to do that. Coupled with the fact that we have insurance issues and cost-of-living issues, utilities going up every five minutes, it's going to make it tremendously difficult for a lot of people to return to the city of New Orleans.

Jed Horne
Former metro editor, New Orleans Times-Picayune; author, Breach of Faith

Jed Horne

It has proven terribly slow. In hindsight, it's possible to say, "Of course it was going to prove terribly slow." The job was unprecedented in scale. There was no company in the United States that had ever done anything like this, certainly no company in the world. ...

Part of the problem, of course, is that Washington, though it quickly threw money at Mississippi for its compensation plan, stalled on the Louisiana money for many reasons that people see as partisan: Democrat Louisiana, Republican Mississippi. So it really wasn't until June [2006], ... almost a year later, before Congress had the money available to Louisiana. ... Here we are a year later, August 2007, and money has begun to flow in significant amounts, but there are still people who are, incredibly, waiting in line to claim their checks.

Has anybody figured out just how many people cannot come back because of the fact they haven't gotten Road Home money or insurance money?

I've not seen [those] statistics. The amazing thing to me -- and this speaks to the resilience of New Orleans -- is that so many people have come back anyway. Clawed and fought their way back here, lived in cars, lived in sheds, lived in these ghastly trailers, and rebuilt their houses by pawning Grandma's jewelry, I have to assume for lack of meaningful government support, two years after Washington vowed to do everything on God's green earth to make the city come back. But they're here, perhaps as many as 290,000 of them, based on the latest optimistic numbers on population rebound, down from 450,000 at the time of the storm. ...

Most of them just doing it all on their own.

Some have collected insurance money. ... The terrible tragedy that may lie out there is that if [Mayor Ray] Nagin is wrong and the city can't sustain an infrastructure that goes all the way out to its full original footprint. [Then] people who boldly or faithfully or foolishly [were] rebuilding homes that were badly devastated, hoping upon hope that they can live there one day, if they wind up with houses that they can't either insure or resell because the city infrastructure can't support itself with a population that [is] sharply reduced, they've been twice victimized: once by the storm and once by government ineptitude that tolerated the rebuilding of unsafe parts of the city. That remains to be seen.

The family that we're following, Herbert Gettridge, ... he's in the Lower Ninth, about three blocks from where the breach was.

It's at once wonderful and disturbing that somebody like Herbert Gettridge is down there doing that, because he may be caught short. This may be Herbert's last hurrah, and he ends up with a house in an uninhabitable part of town because there wasn't the strength of vision or political courage at the municipal level to say: "Herbert, we've got to move you. You have to get with the program here and go to a part of the city that we see some viability in."

But let's hope for a better outcome, because people like Herbert Gettridge deserve a break.

posted january 6, 2009

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