Gulf Coast Rebuilding
Preliminary Observations on Progress to Date and Challenges for the Future Gao ID: GAO-07-574T April 12, 2007The size and scope of the devastation caused by the 2005 Gulf Coast hurricanes presents unprecedented rebuilding challenges. Today, more than a year and a half since the hurricanes made landfall, rebuilding efforts are at a critical turning point. The Gulf Coast must face the daunting challenge of rebuilding its communities and neighborhoods--some from the ground up. This testimony (1) places the federal assistance provided to date in the context of the resources likely needed to rebuild the Gulf Coast, (2) discusses key federal programs currently being used to provide rebuilding assistance, with an emphasis on the Department of Housing and Urban Development's (HUD) Community Development Block Grant (CDBG) program, (3) describes Louisiana's and Mississippi's approach to using CDBG funds, and (4) provides observations on planning activities in Louisiana and Mississippi and the federal government's role in coordinating rebuilding efforts. GAO visited the Gulf Coast region, reviewed state and local documents, and interviewed federal, state, and local officials.
While the federal government has provided billions of dollars in assistance to the Gulf Coast, a substantial portion was directed to short-term needs, leaving a smaller portion for longer-term rebuilding. It may be useful to view this assistance in the context of the costs of damages incurred by the region and the resources necessary to rebuild. Some damage estimates have put capital losses at a range of $70 billion to over $150 billion, while the State of Louisiana estimated that the economic impact on its state alone could reach $200 billion. Such estimates raise important questions regarding additional assistance that will be needed to help the Gulf Coast rebuild in the future. To date, the federal government has provided long-term rebuilding assistance to the Gulf Coast through 2 key programs, which follow different funding models. The Federal Emergency Management Agency's public assistance program provides public infrastructure funding for specific projects that meet program eligibility requirements. HUD's CDBG program, on the other hand, provides funding for neighborhood revitalization and housing rehabilitation activities, affording states broad discretion and flexibility. To date, the affected states have received $16.7 billion in CDBG funding from supplemental appropriations--so far, the largest share of funding targeted to rebuilding. With the vast number of homes that sustained damage in Louisiana and Mississippi, each state allocated the bulk of its CDBG funds to homeowner assistance. Louisiana developed an assistance program to encourage homeowners to return to Louisiana and begin rebuilding while Mississippi developed a program to target homeowners who suffered losses due to Katrina's storm surge that were not covered by insurance. As of March 28, 2007, Louisiana has awarded 4,808 grants to homeowners with an average award amount of $74,250. Mississippi has awarded 11,894 grants with an average award amount of $69,669. Restoring the region's housing and infrastructure is taking place in the context of broader planning and coordination activities. In Louisiana and Mississippi, state and local governments are engaged in both short-and long-term planning efforts. Further, the President established a position within the Department of Homeland Security to coordinate and support rebuilding activities at the federal, state, and local levels. As states and localities begin to develop plans for rebuilding, there are difficult policy decisions Congress will need to make about the federal government's contribution to the rebuilding effort and the role it might play over the long-term in an era of competing priorities. Based on our work, we raise a number of questions the Subcommittee may wish to consider in its oversight of Gulf Coast rebuilding. Such questions relate to the costs for rebuilding the Gulf Coast--including the federal government's share, the effectiveness of current funding delivery mechanisms, and the federal government's efforts to leverage the public investment in rebuilding.
GAO-07-574T, Gulf Coast Rebuilding: Preliminary Observations on Progress to Date and Challenges for the Future
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Testimony:
Before the Subcommittee on Disaster Recovery, Committee on Homeland
Security and Governmental Affairs Committee, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2:00 p.m. EDT:
Thursday, April 12, 2007:
Gulf Coast Rebuilding:
Preliminary Observations on Progress to Date and Challenges for the
Future:
Statement of Stanley J. Czerwinski:
Director, Strategic Issues:
GAO-07-574T:
GAO Highlights:
Highlights of GAO-07-574T, a testimony before the Subcommittee on
Disaster Recovery, Committee on Homeland Security and Governmental
Affairs, U.S. Senate
Why GAO Did This Study:
The size and scope of the devastation caused by the 2005 Gulf Coast
hurricanes presents unprecedented rebuilding challenges. Today, more
than a year and a half since the hurricanes made landfall, rebuilding
efforts are at a critical turning point.The Gulf Coast must face the
daunting challenge of rebuilding its communities and neighborhoods”some
from the ground up.
This testimony (1) places the federal assistance provided to date in
the context of the resources likely needed to rebuild the Gulf Coast,
(2) discusses key federal programs currently being used to provide
rebuilding assistance, with an emphasis on the Department of Housing
and Urban Development‘s (HUD) Community Development Block Grant (CDBG)
program,
(3) describes Louisiana‘s and Mississippi‘s approach to using CDBG
funds, and (4) provides observations on planning activities in
Louisiana and Mississippi and the federal government‘s role in
coordinating rebuilding efforts.
GAO visited the Gulf Coast region, reviewed state and local documents,
and interviewed federal, state, and local officials.
What GAO Found:
While the federal government has provided billions of dollars in
assistance to the Gulf Coast, a substantial portion was directed to
short-term needs, leaving a smaller portion for longer-term rebuilding.
It may be useful to view this assistance in the context of the costs of
damages incurred by the region and the resources necessary to
rebuild.Some damage estimates have put capital losses at a range of $70
billion to over $150 billion, while the State of Louisiana estimated
that the economic impact on its state alone could reach $200
billion.Such estimates raise important questions regarding additional
assistance that will be needed to help the Gulf Coast rebuild in the
future.
To date, the federal government has provided long-term rebuilding
assistance to the Gulf Coast through 2 key programs, which follow
different funding models.The Federal Emergency Management Agency‘s
public assistance program provides public infrastructure funding for
specific projects that meet program eligibility requirements. HUD‘s
CDBG program, on the other hand, provides funding for neighborhood
revitalization and housing rehabilitation activities, affording states
broad discretion and flexibility. To date, the affected states have
received $16.7 billion in CDBG funding from supplemental
appropriations”so far, the largest share of funding targeted to
rebuilding.
With the vast number of homes that sustained damage in Louisiana and
Mississippi, each state allocated the bulk of its CDBG funds to
homeowner assistance. Louisiana developed an assistance program to
encourage homeowners to return to Louisiana and begin rebuilding while
Mississippi developed a program to target homeowners who suffered
losses due to Katrina‘s storm surge that were not covered by insurance.
As of March 28, 2007, Louisiana has awarded 4,808 grants to homeowners
with an average award amount of $74,250. Mississippi has awarded 11,894
grants with an average award amount of $69,669.
Restoring the region‘s housing and infrastructure is taking place in
the context of broader planning and coordination activities. In
Louisiana and Mississippi, state and local governments are engaged in
both short-and long-term planning efforts. Further, the President
established a position within the Department of Homeland Security to
coordinate and support rebuilding activities at the federal, state, and
local levels.
As states and localities begin to develop plans for rebuilding, there
are difficult policy decisions Congress will need to make about the
federal government‘s contribution to the rebuilding effort and the role
it might play over the long-term in an era of competing priorities.
Based on our work, we raise a number of questions the Subcommittee may
wish to consider in its oversight of Gulf Coast rebuilding.Such
questions relate to the costs for rebuilding the Gulf Coast”including
the federal government‘s share, the effectiveness of current funding
delivery mechanisms, and the federal government‘s efforts to leverage
the public investment in rebuilding.
What GAO Recommends:
Although GAO is not making recommendations in this testimony, GAO
raises questions that the Subcommittee may wish to consider in its
oversight of Gulf Coast rebuilding.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-574T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Stanley J. Czerwinski at
(202) 512-6806 or Czerwinskis@gao.gov.
[End of section]
Madam Chair and Members of the Subcommittee:
I appreciate the opportunity to participate in today's hearing to
discuss our preliminary work and observations on Gulf Coast rebuilding
issues. The size and scope of the devastation caused by the Gulf Coast
hurricanes presents the nation with unprecedented rebuilding
challenges.[Footnote 1] Wide swaths of housing, infrastructure, and
businesses were destroyed, leaving more than 1,500 people dead and
hundreds of thousands of others displaced without shelter and
employment. Today, more than a year and a half since the hurricanes
made landfall, rebuilding efforts are at a critical turning point. The
Gulf Coast and the nation must now face the daunting challenges of
rebuilding. Our recent work in southern Louisiana and New Orleans
confirms that some communities are still without basic needs, such as
schools, hospitals, and other infrastructure, while the doors of many
businesses remain closed. Many Gulf Coast neighborhoods and communities
will need to be rebuilt--some from the ground up.
Current rebuilding activities, including the bulk of federal rebuilding
assistance, are directed primarily towards restoring the region's stock
of livable housing and essential infrastructure. Over the coming years,
perhaps decades, significant and complex challenges lie ahead. Major
decisions will need to be made regarding a wide range of issues
including coastal restoration, levee protection, infrastructure, land
use, and economic recovery. All levels of government, together with the
private and nonprofit sectors will need to play a critical role in this
process. Agreeing on what rebuilding will be done, where, how, and--
particularly important--who will bear the costs, will be key to moving
forward with the rebuilding process.
My testimony today will offer some preliminary observations on
rebuilding efforts in the Gulf Coast that may assist you in your
oversight of these activities--now and over the longer term. I would
like to: (1) place the federal assistance provided to date in the
context of the resources likely needed to rebuild the Gulf Coast; (2)
discuss the key federal programs that provide rebuilding assistance,
with an emphasis on the Community Development Block Grant (CDBG)
program; (3) describe some differences in Louisiana's and Mississippi's
approach to using CDBG funds; and (4) provide some observations on
planning activities in Louisiana and Mississippi and the role of the
federal government in coordinating Gulf Coast rebuilding efforts.
Finally, I will raise questions that Congress may wish to consider in
carrying out its critical oversight function in reviewing rebuilding
efforts on the Gulf Coast.
My statement is based largely on our work in Louisiana and Mississippi-
-the two states most directly affected by the Gulf Coast hurricanes.
Specifically, we interviewed state and local officials as well as
representatives from nongovernmental organizations in these two states
and analyzed state and local documentation related to rebuilding
funding and allocations and planning initiatives. We also interviewed
various federal officials from the Federal Emergency Management Agency
(FEMA) and the Coordinator of Federal Support for the Recovery and
Rebuilding of the Gulf Coast Region within the Department of Homeland
Security (DHS)[Footnote 2] and analyzed federal regulations and state
policies regarding Gulf Coast federal funding. We performed our work in
accordance with generally accepted government auditing standards.
A Relatively Small Portion of Federal Gulf Coast Assistance Is Targeted
to Long-Term Rebuilding, While Estimates of Loss Suggest Great Need:
To respond to the Gulf Coast devastation, the federal government has
committed an historically high level of resources--over $110 billion--
through an array of grants, loan subsidies, and tax relief and
incentives. The bulk of this assistance was provided between September
2005 and June 2006 through four emergency supplemental
appropriations.[Footnote 3] A substantial portion of this assistance
was directed to emergency assistance and meeting short-term needs
arising from these hurricanes, such as relocation assistance, emergency
housing, immediate levee repair, and debris removal efforts.
Consequently, a relatively small portion of federal assistance is
available for longer-term rebuilding activities such as the restoration
of the region's housing and infrastructure. Later in this statement, I
will discuss in greater detail the two programs that the federal
government has used so far to provide assistance to the Gulf Coast for
longer-term rebuilding.
It is useful to view the federal assistance provided to the Gulf Coast
within the context of the overall costs of the damages incurred by the
region and the resources necessary to rebuild. Although there are no
definitive or authoritative estimates of these costs, the various
estimates of aspects of these costs offer a sense of their magnitude.
For example, early damage estimates from the Congressional Budget
Office (CBO) put capital losses from Hurricanes Katrina and Rita at a
range of $70 billion to $130 billion[Footnote 4] while another estimate
put losses solely from Hurricane Katrina--including capital losses--at
over $150 billion.[Footnote 5] Further, the state of Louisiana has
estimated that the economic impact on its state alone could reach $200
billion. While the exact costs of damages and rebuilding the Gulf Coast
may never be known, they will likely surpass those from the three other
costliest disasters in recent history--Hurricane Andrew, the September
2001 terrorist attacks, and the 1994 Northridge earthquake.[Footnote 6]
These estimates raise important questions regarding additional
assistance that will be needed to help the Gulf Coast rebuild in the
future--including how the assistance will be provided and by whom.
Two Key Federal Programs That Provide Long-Term Rebuilding Resources
Use Different Approaches:
The federal government has so far used two key programs--FEMA's Public
Assistance and the Department of Housing and Urban Development's (HUD)
CDBG programs--to provide long-term rebuilding assistance to the Gulf
Coast states. These two programs follow different funding models.
Public Assistance provides funding on a project-by-project basis--
involving an assessment of specific proposals to determine eligibility,
while CDBG--a block grant--affords broad discretion and flexibility to
states and localities.
Public Assistance Grants:
FEMA's Disaster Relief Fund (DRF) supports a range of grant programs in
providing federal assistance to state and local governments,
nongovernment organizations, and individuals when a disaster occurs.
One of its largest programs--Public Assistance--provides assistance
primarily to state and local governments to repair and rebuild damaged
public infrastructure and includes activities such as removing debris,
repairing roads, and reconstructing government buildings, and
utilities.[Footnote 7] Pursuant to the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (Stafford Act),[Footnote 8] this
assistance is limited to either a fixed-dollar amount or a percentage
of costs for restoring damaged facilities. Specifically, applicants
submit requests for work which is considered for eligibility and
subsequent funding. FEMA obligates funds for approved projects,
providing specific amounts to complete discrete work segments on
projects, while state and local governments pay the remainder based on
the state's cost share agreement with FEMA. As of March 16, 2007, FEMA
has obligated about $4.6 billion to Louisiana and about $2 billion to
Mississippi through its Public Assistance program.
Community Development Block Grants:
HUD's Community Development Block Grant program--so far, the largest
federal provider of long-term rebuilding assistance--received $16.7
billion in supplemental appropriations to help the Gulf Coast states
rebuild damaged housing and other infrastructure.[Footnote 9] As shown
in figure 1, Louisiana and Mississippi were allocated the largest
shares of the CDBG appropriations, with $10.4 billion allocated to
Louisiana, and another $5.5 billion allocated to Mississippi. Florida,
Alabama, and Texas received the remaining share of CDBG funds.[Footnote
10]
Figure 1: Breakdown of Total CDBG Allocations to Gulf Coast States:
[See PDF for image]
Source: GAO analysis of Louisiana Recovery Authority and Mississippi
Development Authority.
[End of figure]
These formula-based grants afford states and local governments a great
deal of discretion in designing directed neighborhood revitalization,
housing rehabilitation, and economic development activities. In some
instances, Congress has provided even greater flexibility when
allocating additional CDBG funds to affected communities and states to
help them recover from presidentially declared disasters, such as the
Gulf Coast hurricanes.[Footnote 11] The Federal Coordinator for Gulf
Coast Rebuilding has said that the CDBG program allows state leaders
"who are closest to the issues" to make decisions regarding how the
money should be spent.
To receive CDBG funds, HUD required that each state submit an action
plan describing how the funds would be used, including how the funds
would address long-term "recovery and restoration of infrastructure."
This process afforded the states broad discretion in deciding how to
allocate their funding and for what purposes. To coordinate and oversee
the state's rebuilding efforts, Louisiana created the Louisiana
Recovery Authority (LRA) within the state's executive branch.[Footnote
12] As part of its responsibility, the LRA was also charged with
establishing spending priorities and plans for the state's share of
CDBG funds, subject to the approval of Louisiana's state legislature.
Mississippi developed its spending plans through the Mississippi
Development Authority (MDA)--the state's lead economic and community
development agency within its executive branch--and the Governor's
Office of Recovery and Renewal. In contrast to Louisiana, Mississippi's
state legislature was not involved in the approval process for these
state funding decisions. Consistent with HUD requirements, both
Louisiana and Mississippi published their action plans to solicit
public input within their state regarding the planned use of CDBG
funds.
As shown in figure 2, each state allocated the majority of its share of
CDBG funding to housing priorities. The remaining funds were allocated
primarily to economic development and infrastructure priorities.
Figure 2: In Louisiana and Mississippi Most CDBG Rebuilding Funding
Allocated to Housing:
[See PDF for image]
Source: GAO analysis of agency provided data.
[A] In Mississippi, "other" refers to wind insurance mitigation and
funds not yet programmed by the state. In Louisiana, "other" refers to
funding for planning and administrative activities.
[End of figure]
Louisiana and Mississippi Target the Majority of Their CDBG Funds to
Homeowners, but Differ in Policies and Procedures:
With the vast number of homes that sustained damage in Louisiana and
Mississippi, each state had opted to direct the vast majority of their
housing allocations to homeowners, although each state tailored its
program to address the particular conditions in its state. A portion of
these allocations also was directed to other housing programs such as
rental housing and public housing, as well as to projects that will
alleviate costs associated with housing, such as utility and insurance
costs. Louisiana and Mississippi homeowner assistance programs are
similar in that each is designed to compensate homeowners whose homes
were damaged or destroyed by the storms. In each program, the amount of
compensation that homeowners receive depends on the value of their
homes before the storms and the amount of damage that was not covered
by insurance or other forms of assistance.[Footnote 13] However, these
programs differ in their premise and eligibility requirements.
Louisiana's Homeowner Assistance Program Aims to Restore a Displaced
Population:
Louisiana witnessed a significant population loss in the wake of the
Gulf Coast hurricanes, with many residents living in other states and
debating whether to return to Louisiana. The LRA, in consultation with
state and federal agencies, developed a program to restore the housing
infrastructure in Louisiana, using CDBG funds from supplemental
appropriations, as described earlier. Referred to as the Road Home,
this program is designed to encourage homeowners to return to Louisiana
and begin rebuilding.[Footnote 14] Under the program, homeowners who
decide to stay in the state and rebuild in Louisiana are eligible for
the full amount of grant assistance--up to $150,000--while those
leaving the state will receive a lesser share. Accordingly, aside from
the elderly,[Footnote 15] residents who choose to sell their homes and
leave the state will have their grant awards reduced by 40 percent.
Residents who do not have insurance will have their grant awards
reduced by 30 percent. Further, to receive compensation, homeowners
must comply with applicable code and zoning requirements and FEMA
advisory base flood elevations when rebuilding and agree to use their
home as a primary residence at some point during a 3-year period after
closing.
As of March 28, 2007, the Road Home program had received 119,945
applications, of which 60,675 had been verified and an award amount had
been calculated.[Footnote 16] Applicants were then asked to decide how
they wanted to proceed (for example, whether to rebuild or sell). As of
that date, 25,597 applicants notified the program of their decision. Of
those, the program awarded payments to 4,808 homeowners with an average
award amount of $74,250.
Mississippi's Homeowner Assistance Program Aims to Compensate Losses:
In Mississippi, Katrina's storm surge destroyed tens of thousands of
homes, many of which were located outside FEMA's designated flood plain
and not covered by flood insurance. Mississippi developed a two-phase
program to target homeowners who suffered losses due to the storm
surge. Accordingly, Phase I of the program is designed to compensate
homeowners whose properties were located outside the floodplain and
were otherwise fully insured. Eligible for up to $150,000 in
compensation, these homeowners are not subject to a requirement to
rebuild. Phase II of the program, on the other hand, is designed to
award grants to uninsured and underinsured homeowners with incomes at
or below 120 percent of the Area Median Income (AMI). Eligible for up
to $100,000 in grant awards, these homeowners must demonstrate that
they meet current building codes and standards as a condition to
receiving their grants. While they are required to rebuild in south
Mississippi, they are not required to stay in their homes once they
have been rebuilt. In addition, homeowners who do not have insurance
will have their grant reduced by 30 percent, although this penalty does
not apply to the "special needs" populations as defined by the state
(i.e., elderly, disabled, and low income).[Footnote 17]
As of March 28, 2007, Mississippi had received 18,465 applications for
Phase I of its program, of which 14,974 were determined eligible for
consideration.[Footnote 18] Of those, Mississippi awarded payments to
11,894 homeowners with an average award amount of $69,669. Mississippi
has yet to complete processing applications for any of the more than
10,000 uninsured and underinsured homeowners in Phase II of the
program.
It is clear that Louisiana's and Mississippi's homeowner assistance
programs are proceeding at different paces. While we did not assess the
causes for these differences, we have begun work as requested by the
Senate Homeland Security and Governmental Affairs Committee to examine
particular aspects of the CDBG program that may provide important
insights into these issues.
Louisiana and Mississippi Are Engaged in Planning Activities, While the
Federal Government Has Assumed a Coordination Role:
Restoring the region's housing and infrastructure is taking place in
the context of broader planning and coordination activities; in
Louisiana and Mississippi, state and local governments are engaged in
both short-and long-term planning efforts. The federal government--
specifically, the Coordinator of Federal Support for the Recovery and
Rebuilding of the Gulf Coast Region--is responsible for coordinating
the activities of the numerous federal departments and agencies
involved in rebuilding as well as supporting rebuilding efforts at the
state and local level. Based on our preliminary work, I would like to
describe some of these activities being undertaken in Louisiana and
Mississippi as well as the activities of the federal government.
Planning Activities in Louisiana:
What will be rebuilt in many areas of Louisiana remains uncertain, as a
number of planning efforts at the state and local levels are still
evolving. At the state level, the LRA has coordinated a statewide
rebuilding planning effort that included retaining professional
planners and moving towards a comprehensive rebuilding plan. To
facilitate this effort, the LRA endorsed Louisiana Speaks--a
multifaceted process for helping the LRA develop a comprehensive
rebuilding plan for Southern Louisiana and for providing rebuilding
planning resources to homeowners, businesses, communities, and
parishes. For example, Louisiana Speaks developed and distributed a
pattern book for homeowners, architects, and permitting officials about
how to redesign and rebuild commercial and residential buildings.
Through this process, local design workshops--called charrettes--have
been developed to guide neighborhood planning efforts in the impacted
areas, while teams of professional planners, FEMA officials, and LRA
officials and representatives work with affected local parishes to
develop long-term parish recovery plans. Through extensive public
input, Louisiana Speaks also seeks to develop a regional plan for
Southern Louisiana, focusing on a number of critical challenges for the
state's redevelopment. The regional plan will evaluate economic,
environmental, and social issues that affect Southern Louisiana and
explore alternative ways that growth and development can be
accommodated in the context of varying environmental, economic, and
cultural changes. The state of Louisiana will then use the regional
plan to help direct rebuilding policy and Louisiana's long-term
spending over the next 30 years.
Given the central importance of the city to Louisiana's overall
economy, I would like to highlight planning efforts in New Orleans.
After several attempts to develop a rebuilding plan for New Orleans--
including the Bring New Orleans Back Commission, efforts initiated by
the city council, Urban Land Institute, and others--in August 2006, New
Orleans embarked on a comprehensive rebuilding planning process, which
continues to date. Referred to as the Unified New Orleans Plan (UNOP),
this effort was designed as a grassroots approach to planning to
incorporate the vision of neighborhoods and districts into multiple
district-level plans and one citywide plan that establishes goals and
priorities for rebuilding the city. In particular, the citywide plan
will include priority programs and projects for repairing and
rebuilding the city over a 5-to 10-year period and will help to inform
critical funding and resource allocation decisions by state and federal
agencies. The citywide plan is currently under review by the New
Orleans Planning Commission.
Planning Activities in Mississippi:
Mississippi created an overall plan to serve as a framework for
subsequent planning efforts in affected areas of the state. More
specifically, in September 2005--within days of the hurricanes'
landfall--Governor Barbour created the Governor's Commission on
Recovery, Rebuilding and Renewal to identify rebuilding and
redevelopment options for the state. Comprised of over 20 committees,
the Commission held numerous public forums across multiple counties in
an effort to solicit input and public participation from residents
throughout the state. In December 2005, the commission's work
culminated in a final report containing 238 policy recommendations
aimed at addressing a range of rebuilding issues and concerns across
the state, from infrastructure and economic development to human
services and finance.[Footnote 19] The report also addressed potential
financing mechanisms identifying state, local, private, and federal
sources. Further, the recommendations identified parties responsible
for implementing the recommendations, including the creation of new
state and regional entities to oversee selected recommendations. In
addition, Governor Barbour created the Office of Recovery and Renewal
to oversee and coordinate implementation of these recommendations. Also
charged with identifying funding for rebuilding projects, the office
continues to work with public and private entities as well as state and
local governments.
Local governments in south Mississippi are also engaged in rebuilding
planning activities. For example, modeled after the Governor's
Commission on Renewal and Recovery, the city of Biloxi established a
volunteer steering committee to develop a rebuilding plan for the city.
Biloxi's final rebuilding plan resulted in 162 recommendations to
address core issues affecting the city, such as infrastructure,
economic development, human services, and finance. In addition, the
steering committee commissioned a separate rebuilding plan for East
Biloxi--a low-lying area that had been heavily damaged by Hurricane
Katrina--that included 27 recommendations for addressing this area of
the city. A number of other impacted communities in south Mississippi
have undertaken planning initiatives as well.
Coordination at the Federal Level:
In light of the magnitude of the Gulf Coast hurricanes, the
administration recognized the need to provide a mechanism to coordinate
with--and support rebuilding activities at--the federal, state, and
local levels. More specifically, in November 2005, the President issued
executive orders establishing two new entities to help provide a
governmentwide response to federal rebuilding efforts. The first of
these orders created the position of Coordinator of Federal Support for
the Recovery and Rebuilding of the Gulf Coast Region within the
Department of Homeland Security.[Footnote 20] Accordingly, the Federal
Coordinator is responsible for developing principles and goals, leading
the development of federal recovery activities, and monitoring the
implementation of designated federal support. The Coordinator also
serves as the administration's focal point for managing information
flow, requests for actions, and discussions with Congress, state, and
local governments, the private sector, and community leaders.
Our discussions with state and local officials in Louisiana revealed a
largely positive disposition towards the Federal Coordinator and his
role in support of the Gulf Coast. During our field work, for example,
Louisiana state and local officials said the Coordinator had played an
integral role in helping to identify and negotiate an appropriate level
of CDBG funding for the state.
The second executive order established a Gulf Coast Recovery and
Rebuilding Council within the Executive Office of the President for a
period of 3 years.[Footnote 21] Chaired by the Assistant to the
President for Economic Policy, the council includes most members of the
Cabinet and is charged with examining issues related to the furtherance
of the President's policy on recovery and rebuilding of the Gulf Coast.
Selected Questions for Congressional Oversight of Gulf Coast
Rebuilding:
Rebuilding efforts in the Gulf Coast are at a critical turning point--
a time when decisions now being made in community rooms, city halls,
and state houses will have a significant impact on the complexion and
future of the Gulf Coast. As states and localities begin to assume
responsibility for developing plans for rebuilding, there are difficult
policy decisions Congress will need to make about the federal
government's contribution to the rebuilding effort and the role it
might play over the long-term in an era of competing priorities. Based
on the preliminary work I have discussed today, the Subcommittee way
wish to consider the following questions as it continues to carry out
its critical oversight function in reviewing Gulf Coast rebuilding
efforts:
* How much will it cost to rebuild the Gulf Coast and how much of this
cost should the federal government bear?
* How effective are current funding delivery mechanisms--such as Public
Assistance and CDBG--and should they be modified or supplemented by
other mechanisms?
* How can the federal government further partner with state and local
governments and the nonprofit and private sectors to leverage the
public investment in rebuilding?
Madam Chair and Members of the Subcommittee, this concludes my
statement. I would be happy to respond to any questions you or other
members of the Subcommittee may have at this time.
GAO Contacts and Staff Acknowledgments:
For information about this testimony, please contact Stanley J.
Czerwinski, Director, Strategic Issues, at (202) 512-6806 or
Czerwinskis@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
statement. Individuals making key contributions to this testimony
include Charlesetta Bailey, Dean Campbell, Roshni Davé, Peter Del Toro,
Laura Kunz, Brenda Rabinowitz, Michael Springer, and Diana Zinkl.
[End of section]
Related GAO Products:
Hurricanes Katrina and Rita Recovery:
Hurricane Katrina: Allocation and Use of $2 Billion for Medicaid and
Other Health Care Needs. GAO-07-67. February 28, 2007.
Disaster Assistance: Better Planning Needed for Housing Victims of
Catastrophic Disasters. GAO-07-88. February 28, 2007.
Small Business Administration: Additional Steps Needed to Enhance
Agency Preparedness for Future Disasters. GAO-07-114. February 14,
2007.
Small Business Administration: Response to the Gulf Coast Hurricanes
Highlights Need for Enhanced Disaster Preparedness. GAO-07-484T.
February 14, 2007.
Hurricanes Katrina and Rita: Federal Actions Could Enhance Preparedness
of Certain State-Administered Federal Support Programs. GAO-07-219.
February 7, 2007.
Hurricanes Katrina and Rita Disaster Relief: Prevention is the Key to
Minimizing Fraud, Waste, and Abuse in Recovery Effort. GAO-07-418T.
January 29, 2007.
Hurricane Katrina: Status of Hospital Inpatient and Emergency
Departments in the Greater New Orleans Area. GAO-06-1003. September 29,
2006.
Catastrophic Disasters: Enhanced Leadership, Capabilities, and
Accountability Controls Will Improve the Effectiveness of the Nation's
Preparedness, Response, and Recovery System. GAO-06-618. September 6,
2006.
Disaster Relief: Governmentwide Framework Needed to Collect and
Consolidate Information to Report on Billions in Federal Funding for
the 2005 Gulf Coast Hurricanes. GAO-06-834. September 6, 2006.
Coast Guard: Observations on the Preparation, Response, and Recovery
Missions Related to Hurricane Katrina. GAO-06-903. July 31, 2006.
Hurricane Katrina: Improving Federal Contracting Practices in Disaster
Recovery Operations. GAO-06-714T. May 4, 2006.
Hurricane Katrina: Planning for and Management of Federal Disaster
Recovery Contracts. GAO-06-622T. April 10, 2006.
Hurricane Katrina: Status of the Health Care System in New Orleans and
Difficult Decisions Related to Efforts to Rebuild It Approximately 6
Months after Hurricane Katrina. GAO-06-576R. March 28, 2006.
Hurricane Katrina: GAO's Preliminary Observations Regarding
Preparedness, Response, and Recovery. GAO-06-442T. March 8, 2006.
Hurricanes Katrina and Rita: Preliminary Observations on Contracting
for Response and Recovery Efforts. GAO-06-246T. November 8, 2005.
Hurricanes Katrina and Rita: Contracting for Response and Recovery
Efforts. GAO-06-235T. November 2, 2005.
Hurricane Katrina: Providing Oversight of the Nation's Preparedness,
Response, and Recovery Activities. GAO-05-1053T. September 28, 2005.
Other Domestic Disaster Recovery:
Biscuit Fire Recovery Project: Analysis of Project Development, Salvage
Sales, and Other Activities. GAO-06-967. September 18, 2006.
September 11: Overview of Federal Disaster Assistance to the New York
City Area. GAO-04-72. October 31, 2003.
Disaster Assistance: Information on FEMA's Post 9/11 Public Assistance
to the New York City Area. GAO-03-926. August 29, 2003.
Small Business Administration: Response to September 11 Victims and
Performance Measures for Disaster Lending. GAO-03-385. January 29,
2003.
September 11: Small Business Assistance Provided in Lower Manhattan in
Response to the Terrorist Attacks. GAO-03-88. November 1, 2002.
Los Angeles Earthquake: Opinions of Officials on Federal Impediments to
Rebuilding. GAO/RCED-94-193. June 17, 1994.
Hurricane Iniki Expenditures. GAO/RCED-94-132R. April 18, 1994.
Time-Critical Aid: Disaster Reconstruction Assistance--A Better
Delivery System Is Needed. GAO/NSIAD-87-1. October 16, 1986.
Guidelines for Rescuing Large Failing Firms and Municipalities. GAO/
GGD-84-34. March 29, 1984.
International Disaster Recovery:
Rebuilding Iraq: More Comprehensive National Strategy Needed to Help
Achieve U.S. Goals. GAO-06-788. July 11, 2006.
Foreign Assistance: USAID Completed Many Caribbean Disaster Recovery
Activities, but Several Challenges Hampered Efforts. GAO-06-645. May
26, 2006.
Foreign Assistance: USAID Has Begun Tsunami Reconstruction in Indonesia
and Sri Lanka, but Key Projects May Exceed Initial Cost and Schedule
Estimates. GAO-06-488. April 14, 2006.
Foreign Assistance: USAID's Earthquake Recovery Program in El Salvador
Has Made Progress, but Key Activities Are Behind Schedule. GAO-03-656.
May 15, 2003.
Foreign Assistance: Disaster Recovery Program Addressed Intended
Purposes, but USAID Needs Greater Flexibility to Improve Its Response
Capability. GAO-02-787. July 24, 2002.
Foreign Assistance: Implementing Disaster Recovery Assistance in Latin
America. GAO-01-541T. March 21, 2001.
FOOTNOTES
[1] In this report, unless otherwise noted, we refer to hurricanes
Katrina, Rita, and Wilma collectively as the Gulf Coast hurricanes.
[2] Throughout this report and unless otherwise noted, we refer to this
official as the Federal Coordinator for Gulf Coast Rebuilding.
[3] Provided to 23 agencies, these appropriations totaled $88 billion.
Pub. L. No. 109-61, 119 Stat. 1988 (Sept. 2, 2005); Pub. L. No. 109-62,
119 Stat, 1990 (Sept. 8, 2005); Pub. L. No. 109-148, 119 Stat. 2680
(Dec. 30, 2005); and Pub. L. No. 109-234, 120 Stat. 418 (June 15,
2006). Besides these four main supplemental appropriations acts, a
number of authorizations and programs provided the remaining
assistance. Congress increased the borrowing authority of the National
Flood Insurance Program to cover the large number of hurricane-related
claims. Pub. L. No. 109-65, 119 Stat. 1998 (Sept. 20, 2005); Pub. L.
No. 109-106, 119 Stat. 2288 (Nov. 21, 2005); and Pub. L. No. 109-208,
120 Stat. 317 (Mar. 23, 2006). In addition, Congress passed the Gulf
Opportunity Zone Act to provide tax relief benefits and incentives to
affected businesses. Pub. L. No. 109-135, 119 Stat. 2577 (Dec. 21,
2005).
[4] According to CBO, capital losses include housing, consumer durable
goods, and energy, other private-sector and government losses.
[5] This estimate includes damages only to commercial structures and
equipment, residential structures and contents, electrical utilities,
highways, sewer systems, and commercial revenue losses. For more
information see, M.L. Burton and M.J. Hicks, Hurricane Katrina:
Preliminary Estimates of Commercial and Public Sector Damages
(Huntington, W.V.: September 2005).
[6] According to CBO, losses from Hurricane Andrew--a Category 5
hurricane that struck the coast of Florida in 1992--totaled about $38.5
billion in 2005 dollars. The losses from the terrorist attacks on
September 11, 2001, were estimated at $87 billion in 2005 dollars, of
which $35.2 billion were privately insured losses. Further, the
earthquake that struck Northridge, California in 1994,which measured
6.7 on the Richter scale--resulted in $48.7 billion in losses, as
measured in 2005 dollars.
[7] FEMA's Disaster Relief Fund provides grant assistance through its
Individual Assistance Program--which provides aid to individuals
affected by a disaster. Its Hazard Mitigation Program provides grant
assistance to communities to implement long-term hazard mitigation
measures following disasters. In addition to grant assistance, the DRF
also reimburses federal agencies through mission assignments for relief
and recovery work ordered by FEMA.
[8] The Stafford Act, as amended, establishes the primary programs and
processes for the federal government to provide major disaster and
emergency assistance to states, local governments, tribal nations,
individuals, and qualified private nonprofit organizations. 42 U.S.C.
§§ 5121-5207.
[9] Pub. L. No. 109-148, 119 Stat. 2680, 2779-80 (Dec. 30, 2005); Pub.
L. No. 109-234, 119 Stat. 418, 472-73 (June 15, 2006).
[10] Texas received over $503 million, Florida received about $183
million, and Alabama received nearly $96 million. HUD Notice of
Allocations and Waivers. 71 Fed. Reg. 7666 (Feb. 13, 2006); 71 Fed.
Reg. 63,337 (Oct. 30, 2006).
[11] CDBG funds supported recovery efforts in New York City following
the terrorist attacks of September 11, 2001; in Oklahoma City following
the bombing of the Alfred Murrah Building in 1995; and in the city and
county of Los Angeles following the riots of 1992.
[12] The LRA was created at the direction of Governor Blanco by
executive order in October of 2005 and subsequently authorized by the
state legislature in early 2006.
[13] Pursuant to federal statute and HUD requirements for the CDBG
program, homeowner assistance with these funds may not duplicate
benefits derived from any source received by the homeowner as a result
of damages incurred during the hurricanes. Thus, the state with CDBG
funds cannot duplicate insurance, FEMA, or other payments received by
the homeowner.
[14] Although not discussed in this statement, the Road Home program
also provides assistance for rental property owners and renters to
address housing needs of low-to moderate-income individuals in the most
heavily damaged areas. The objectives of the rental assistance
component of the program include providing capital to owners of small
rental properties to repair and reconstruct damaged units, providing
affordable rents for working families, and supporting redevelopment in
impacted communities.
[15] Refers to individuals that are 65 years of age or older.
[16] Louisiana's Road Home Program began accepting applications on
August 29, 2006.
[17] "Low income" homeowners are those with incomes at or below 60
percent of the AMI--which ranges by county.
[18] Mississippi's Homeowner Assistance Program began accepting
applications in April 2006.
[19] Entitled After Katrina: Building Back Better Than Ever, this
report made recommendations to the Governor's Office and a range of
federal, state, and local stakeholders involved in the state's
rebuilding efforts.
[20] "Establishment of a Coordinator of Federal Support for the
Recovery and Rebuilding of the Gulf Coast Region," Exec. Order No.
13,390, 3 C.F.R. 205 (2005).
[21] "Creation of the Gulf Coast Recovery and Rebuilding Council,"
Exec. Order 13,389, 3 C.F.R. 203 (2005).
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