The state made a major change to a long-troubled Katrina-recovery program, one it hopes will speed up payouts
dramatically.

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 elevate.

By David Hammer
The Times-Picayune