Becky Houtman

Who really holds the keys?

I had to wonder whether it was with deliberate irony that yesterday’s Times Picayune placed the article N.O.’s plan for rebuilding passes Muster with LRA immediately beneath LRA feeds Road Home kitty, with it’s handy inset showing of the approximately $1 billion the state is adding to the Road Home program, $577.5 million is coming from CDBG funds previously slated for infrastructure repairs, and another $50 million was “carved out of other recovery spending areas” by the LRA. (The amount to be doled out for New Orleans rebuilding is $117 million – of the $1.1 billion that “officials” (whoever they are these days) say we need.) Oh, and that doesn’t count the $513 million the LRA now has access to since the 10% match of federal funds requirement was waived – $513 million the LRA had earmarked for parish recovery projects, of which New Orleans was to receive $324 million – so they can sit on it in case the state needs to ante up even more cash to help close the Road Home gap.

Today’s TP editorial, A good faith effort, claims that “repairs to storm-damaged state buildings and construction of a replacement for Charity Hospital in New Orleans,” which were to be paid out of the $577.5 million would be paid out of the state’s budget, but forgive me if I’m skeptical.

What really infuriates me is the nearly blind eye being turned to the source of a sizable chunk of the Road Home gap: insurance underpayment, to the estimate tune of $2.7 billion. To be fair, in May Blanco and Walter Leger recommended that the state pursue claims on the behalf of cheated policyholders – after all, what hope can individuals have suing the colossi piecemeal (the insurance industry is the only other field besides Major League Baseball exempt from antitrust regulation, making the combined insurers a pretty daunting monolith). But it looks like, yet again, insurers have passed the buck to taxpayers, and worse, the state and federal governments have chosen to bleed the programs that are underfunded already. Big surprise.

This is yet another instance of why the entire state and nation should be taking heed of Louisiana’s and Mississippi’s situation. Insurers – property, health, auto, etc. – are as consequence free everywhere as they are here. The number of ways in which the system is scandalously broken is too great for me to digest, but PLEASE check out the Insurance Transparency Project for much more – inspired by, but not exclusive to, Katrina’s insurance aftermath.

Mockingbird, by Bob Hines, United States Fish and Wildlife Service

“The process on how damage percentages is determined is the estimate of the cost of repair compared to the replacement cost of the home, if you had to build it from scratch,” [Robert Evans, Allied American‘s chief operating officer] said. – The Mississippi Press, 8/14/2006

With all the recent fuss over “rebuilding” vs “compensation” regarding Road Home payments and CDBG regulations, I was surprised to hear yesterday that Phase II of Mississippi’s Homeowner Assistance Program (HAP) is basing its grant calculations on cost to rebuild.

I wrote about the “worst of both worlds” scenario Louisiana’s Road Home Program was facing the other day at Think New Orleans: in a nutshell, the LRA was allegedly told when designing the RHP that they had to cap awards at the pre-Katrina appraised value of the home even if the estimated cost to repair/rebuild was greater, because basing awards on rebuilding costs would make it, aptly enough, a “rebuilding program” and thereby trigger torrents of onerous requirements and regulations. And just lately, HUD “discovered” that the method of Road Home payments constituted a “rebuilding program” as well – maximum burden for the minimum award.

Mississippi’s HAP is using a phased approach: Phase I was for homeowners with homeowners insurance (although not necessarily flood insurance) living outside the pre-Katrina FEMA designated flood zone. Like the Road Home, it also had an ultimate $150,000 cap, and beneath that cap, the upper limit was based on the value of the home – in this case, the insured value of the home, plus 35%. Meaning that, should the damage estimate, determined by the method described above, exceed the insured value of the home (or the appraised value, for that matter), a higher award could be calculated. What exactly is being “compensated” here, that’s not compensable in Louisiana?

Phase II is directed at homeowners with a household income beneath 120% AMI with Hurricane Katrina storm surge damage. The HUD-approved action plan makes no mention of insured or appraised value. This award is capped at $100,000, but up to that amount, the award is based exclusively on the official damage assessment – insured homeowners receiving 100% of the estimate, uninsured receiving 70%. And yet, “In consultation with HUD, and due to the nature and design of the Homeowner Assistance Grant Program, the State has determined through its environmental review that project level actions are categorically excluded and not subject to related laws for Phase II.” No NEPA.

I don’t begrudge Mississippians any additional money they may be awarded via their damage assessments; I also wouldn’t be surprised if the assessments were erratic or out of sync with today’s real costs of rebuilding, as the rest of the Mississippi Press article cited above suggests. But I’d really like to understand why Louisiana can’t have similar latitude for the Road Home. Granted, there are a number of other differences between the programs, some of which may influence which requirements might apply, but on their faces, both states’ programs have very explicit rebuilding components, sometimes favoring rebuilding over relocating, and as far as I can tell, the only difference between “rebuilding” (i.e. triggers-multitudes-of-onerous-regulations) and “compensation” (i.e. you-might-get-some-money-in-this-lifetime) is smoke and mirrors.

Was the LRA Housing Committee really too thick to rephrase their “compensation” package to permit greater consideration of rebuilding costs? Is there some secret catch to Mississippi’s plan that would make its rebuilding-cost “compensatory” provisions unfavorable to Louisianans somehow? Or does the fact that the nebulous nature of CDBGs requires negotiating with HUD, currently headed by Alphonso “heck of a crony” Jackson, mean that our marginally-Blue State will be held to a different standard no matter what we do? Or is it some combintion of all three?

Or am I completely missing the point?