Elevation Program May Get Lift
Two-Party Checks Target Snag in Flow of Aid
The state made a major change to a long-troubled Katrina-recovery program, one it hopes will
speed up payouts
The state's Disaster Recovery Unit will start writing advance payment checks for elevating and
storm-proofing homes, made out jointly to Road Home recipients and their contractors. Homeowners
and contractors have been asking for the two-party checks for Hazard Mitigation grants so both
could be protected from fraud.
The new practice promises to get more of the grants out the door because now, rather than only
paying Road Home recipients half of their grant up front, the state is now willing to pay
80 percent of the award before any work is done.
The hazard mitigation program, which began as a $1.17 billion federal
fund to help recovering homeowners rebuild more safely, languished for
years while the state and federal governments fought over its proper
uses. Not until 2008 did the state find an approved use for the money:
Offering additional grants to recipients of Road Home money for
raising and storm-proofing their restored houses.
But more problems followed. The state tried to get creative, shifting
money around among different funds with different rules. By August
2010, five years after the storm and two years after the state finally
unveiled the program, just $46 million had been paid, less than 5
percent of the available money.
Some state legislators, led by House Speaker Jim Tucker, R-Algiers,
and Rep. Neil Abramson, D-New Orleans, took aim at the program and
threatened to redirect the money it was sitting on to other programs,
such as blight removal. In August, officials from the state's Disaster
Recovery Unit promised to dole out $25 million to $30 million a month,
a promise Abramson considered unimpressive. At that rate, it would
still take until 2013 to pay all the grants, Abramson complained.
The program, which is financed by the Federal Emergency Management
Agency and subject to its review, has since sped up significantly. It
has paid almost $220 million to 5,666 households. More than half the
money has been distributed in the last six months, including $37
million in March alone. But the plan was to eventually pay 37,000
homeowners from the fund, a goal that looks unlikely to be reached.
Still, state spokeswoman Christina Stephens said the new policy of
paying two-party checks should create a burst of larger advance
payments. She hopes that after a few months of the two-party advances,
the vast majority of the approximately $500 million left in the fund
will be in the hands of homeowners and contractors.
"Hopefully, it will reduce fraud in the program," she said. "And now
that we are able to advance 80 percent rather than just 50 percent of
the funds, we're hopeful it will accelerate in the next few months.
The two-party check helps the contractor feel the homeowner will
follow through with the contract and the homeowner can feel protected
from contractor fraud."
Ironically, the state has managed to pay out a total of $1.17 billion
to Road Home recipients for mitigation -- almost exactly the amount
FEMA originally granted for that purpose. But a small portion of the
money has gone through the Hazard Mitigation program.
More than $920 million of the money was paid as elevation grants
folded into Road Home payments to about 31,000 homeowners. But how
much of the money actually was used for mitigation is unclear. About a
year ago, the U.S. Department of Housing and Urban Development's
inspector general found that 80 percent of the elevation-grant
recipients inspected by investigators had not used the money to
By David Hammer