Preliminary Information on Rebuilding Efforts in the Gulf Coast
Gao ID: GAO-07-809R June 29, 2007The size and scope of the devastation caused by the 2005 Gulf Coast hurricanes presents the nation with unprecedented rebuilding challenges. These storms destroyed wide swaths of housing, infrastructure, and businesses and displaced hundreds of thousands of people from their homes. Today, nearly two years since these hurricanes made landfall, rebuilding efforts are at a critical turning point. The Gulf Coast and the nation are facing 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. Over the coming years, perhaps decades, many neighborhoods and communities will need to be rebuilt--some from the ground up. At the same time, major decisions will need to be made regarding a wide range of issues including coastal restoration, levee protection, infrastructure, land use, and economic recovery. 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. To assist Congress in its oversight responsibilities, GAO briefed Congress on several occasions during the past few months on the results of our preliminary work in Louisiana and Mississippi--the two states most directly affected by the 2005 Gulf Coast hurricanes. This letter transmits information provided during those briefings. Specifically, this letter (1) places the federal assistance provided to date in the context of the resources likely needed to rebuild the Gulf Coast; (2) discusses two key federal programs that provide rebuilding assistance to the Gulf Coast states, with an emphasis on the Community Development Block Grant (CDBG) program; (3) describes differences in Louisiana's and Mississippi's approach to using CDBG funds; and (4) provides some observations on planning activities in Louisiana and Mississippi and the role of the federal government in coordinating Gulf Coast rebuilding efforts.
While the federal government has provided billions of dollars in assistance to the Gulf Coast, a substantial portion of this aid was directed to short-term needs, leaving a smaller portion for long-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 that may be needed to rebuild. While there are no definitive or comprehensive estimates of costs, the various estimates of aspects of these costs offer a sense of their magnitude. Such estimates raise important questions regarding additional assistance that will be needed to help the Gulf Coast rebuild--including how the assistance will be provided and by whom. To date, the federal government has provided most long-term rebuilding assistance to the Gulf Coast states through two key programs, which follow different funding models. Specifically, FEMA's Public Assistance program provides funding primarily to state and local governments to repair and rebuild damaged public infrastructure for specific projects that meet program eligibility requirements, as defined by the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act). The Housing and Urban Development's (HUD) CDBG program, on the other hand, provides funding for neighborhood revitalization and housing rehabilitation activities, affording states broad discretion and flexibility in deciding how to allocate these funds and for what purposes. To date, the affected states have received $16.7 billion in CDBG funding from supplemental appropriations--so far, the largest share of funding specifically targeted to long-term rebuilding. With the vast number of homes that sustained damage in Louisiana and Mississippi, both of these states allocated the bulk of their CDBG funds to homeowner assistance. Restoration of the region's housing and infrastructure is taking place in the context of broader planning and coordination activities. 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 the federal government might play over the long-term in an era of competing priorities.
GAO-07-809R, Preliminary Information on Rebuilding Efforts in the Gulf Coast
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June 29, 2007:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
Subject: Preliminary Information on Rebuilding Efforts in the Gulf
Coast:
The size and scope of the devastation caused by the 2005 Gulf Coast
hurricanes presents the nation with unprecedented rebuilding
challenges.[Footnote 1] These storms destroyed wide swaths of housing,
infrastructure, and businesses and displaced hundreds of thousands of
people from their homes. Today, nearly two years since these hurricanes
made landfall, rebuilding efforts are at a critical turning point. The
Gulf Coast and the nation are facing 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.
Over the coming years, perhaps decades, many neighborhoods and
communities will need to be rebuilt--some from the ground up. At the
same time, major decisions will need to be made regarding a wide range
of issues including coastal restoration, levee protection,
infrastructure, land use, and economic recovery. 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.
To assist you in your oversight responsibilities, we briefed your staff
on several occasions during the past few months on the results of our
preliminary work in Louisiana and Mississippi--the two states most
directly affected by the 2005 Gulf Coast hurricanes.[Footnote 2] This
letter transmits information provided during those briefings (see enc.
I). Specifically, these slides (1) place the federal assistance
provided to date in the context of the resources likely needed to
rebuild the Gulf Coast; (2) discuss two key federal programs that
provide rebuilding assistance to the Gulf Coast states, with an
emphasis on the Community Development Block Grant (CDBG) program; (3)
describe 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. We also raise a number of
questions that the committee may wish to consider in carrying out its
oversight function in reviewing rebuilding efforts in the Gulf Coast.
We have since updated some of the information in enclosure I, using new
information, which became available after the briefings.
In 2005, Hurricanes Katrina, Rita, and Wilma battered the Gulf Coast
region, devastating whole communities and neighborhoods, leaving
hundreds of thousands of people without shelter and employment.
Hurricane Katrina--the first of these storms--made landfall in
Mississippi and Louisiana in August 2005 and alone caused more damage
than any other single natural disaster in the history of the United
States. Katrina destroyed over 300,000 homes--nearly ten times the
number of homes destroyed by Hurricanes Camille and Andrew combined--
and affected approximately 90,000 square miles--an area larger than the
size of Great Britain.[Footnote 3] Hurricane Rita followed shortly in
September 2005, making landfall in Texas and Louisiana. Hurricane Wilma
was the last of these disasters to strike the region, making landfall
in southern Florida in October 2005 and inflicting widespread damage
across the state.
Our work largely focused on rebuilding efforts in Louisiana and
Mississippi--the two states most directly affected by the 2005 Gulf
Coast hurricanes. In conducting our work, we toured affected parishes
in southern Louisiana and several affected cities along the coast of
Mississippi. Further, we interviewed officials from the Department of
Homeland Security's (DHS) Office of the Federal Coordinator for Gulf
Coast Rebuilding and from the Federal Emergency Management Agency
(FEMA). We also met with a range of state and local officials in these
states and representatives from private and nongovernment
organizations.
In addition, to place the federal assistance provided to date in the
context of the resources likely needed to rebuild the Gulf Coast, we
reviewed the funds designated for hurricane relief and rebuilding in
the four emergency supplemental appropriations acts enacted between
September 2005 and June 2006. We also drew on our previous work that
examined federal funding for the 2005 Gulf Coast hurricanes.[Footnote
4] Further, we reviewed two studies on the estimated costs of the
impacts of the 2005 hurricanes.[Footnote 5] Although we found no study
that comprehensively estimated costs, these studies--which estimated
selected categories of losses--were generally the broadest in scope
based on our search of readily available studies. We did not
independently verify the accuracy of information included in these
studies.
To discuss two key federal programs that provide rebuilding assistance
to the Gulf Coast states, we reviewed federal statutes and HUD
regulations governing the CDBG program and FEMA written policies and
procedures for disbursing funds to public assistance grantees. We also
obtained data from FEMA on the amount of Public Assistance funds
obligated to Louisiana and Mississippi and reviewed state documentation
from Louisiana and Mississippi related to each state's use or planned
use of CDBG funding. To describe differences in Louisiana's and
Mississippi's approach to using CDBG funds, we analyzed key
documentation from Louisiana and Mississippi regarding each state's
homeowner assistance programs and criteria for disbursing CDBG funding.
We focused on the states' homeowner assistance programs, given that
Louisiana and Mississippi allocated the vast majority of their share of
CDBG funding to homeowner assistance.
To provide observations on planning activities in Louisiana and
Mississippi, we reviewed state and local planning documents on long-and
short-term planning rebuilding activities in each state and met with a
range of representatives from nonprofit and private agencies involved
in various planning efforts across the state. Further, in Louisiana, we
observed local planning meetings in Orleans Parish, while in
Mississippi, we observed planning activities in the city of Biloxi.
We conducted our work between July 2006 and June 2007 in accordance
with generally accepted government auditing standards.
Summary:
While the federal government has provided billions of dollars in
assistance to the Gulf Coast, a substantial portion of this aid was
directed to short-term needs, leaving a smaller portion for long-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 that may
be needed to rebuild. While there are no definitive or comprehensive
estimates of costs, the various estimates of aspects of these costs
offer a sense of their magnitude. For example, estimates from the
Congressional Budget Office (CBO) put capital losses resulting from
Hurricanes Katrina and Rita in the range of $70 billion to $130
billion[Footnote 6] while another estimate from the Center for Business
and Economic Research at Marshall University put losses solely from
Hurricane Katrina--including capital losses--at over $150
billion.[Footnote 7] In addition, the State of Louisiana estimates 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--including how the
assistance will be provided and by whom.
To date, the federal government has provided most long-term rebuilding
assistance to the Gulf Coast states through two key programs, which
follow different funding models. Specifically, FEMA's Public Assistance
program provides funding primarily to state and local governments to
repair and rebuild damaged public infrastructure for specific projects
that meet program eligibility requirements, as defined by the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (Stafford
Act).[Footnote 8] The Housing and Urban Development's (HUD) CDBG
program, on the other hand, provides funding for neighborhood
revitalization and housing rehabilitation activities, affording states
broad discretion and flexibility in deciding how to allocate these
funds and for what purposes. To date, the affected states have received
$16.7 billion in CDBG funding from supplemental appropriations----so
far, the largest share of funding specifically targeted to long-term
rebuilding.[Footnote 9]
With the vast number of homes that sustained damage in Louisiana and
Mississippi, both of these states allocated the bulk of their CDBG
funds to homeowner assistance.[Footnote 10] Specifically, each state
developed an assistance program to compensate homeowners whose homes
were damaged or destroyed by the 2005 hurricanes. With many of its
residents living in other states and debating whether to return to
Louisiana, Louisiana's Road Home program aims to encourage homeowners
to return to the state and begin rebuilding.[Footnote 11] Mississippi's
homeowner assistance program--administered in two phases--aims to
compensate homeowners who suffered losses due to Katrina's storm surge.
Phase I is targeted to homeowners located outside FEMA's designated
flood plain who were otherwise insured, while Phase II is targeted to
uninsured or underinsured homeowners located in or outside the flood
plain. As of May 30, 2007, Louisiana has received 141,235 applications
and awarded 23,043 grants to eligible homeowners. For Phase I of its
program, Mississippi has received 18,965 applications and awarded
payments to 12,950 eligible homeowners. Mississippi has received 11,529
applications for Phase II of its program and awarded 28 grants to
eligible homeowners.
Restoration of 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. For example, the Louisiana
Recovery Authority has coordinated a statewide rebuilding planning
effort and has developed a comprehensive rebuilding plan that will help
direct rebuilding policy and Louisiana's long-term spending over the
next 50 years. Mississippi created an overall plan to serve as a
framework for subsequent planning efforts in affected areas of the
state, based on the work of the Governor's Commission on Recovery,
Rebuilding, and Renewal.[Footnote 12] Moreover, the President
established the position of Coordinator of Federal Support for the
Recovery and Rebuilding of the Gulf Coast Region within the Department
of Homeland Security (DHS) to coordinate and support the 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
the federal government might play over the long-term in an era of
competing priorities. Based on our preliminary work, we raise a number
of questions the Committee may wish to consider in carrying out its
oversight of Gulf Coast rebuilding efforts, to include the following:
* 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?
We provided the Secretary of DHS with a draft of this report on May 11,
2007. In its oral response, DHS informed us that it had no formal
comments on the report. We also provided Louisiana and Mississippi
officials an opportunity to review relevant aspects of this report. Any
technical or clarifying comments that they provided as part of that
review have been incorporated where appropriate.
We are sending copies of this report to the Chairman and Ranking Member
of the Subcommittee on Disaster Recovery, the Secretary of the
Department of Homeland Security, the Federal Coordinator for Gulf Coast
Rebuilding, and interested congressional committees. We will make
copies to others on request. In addition, the report will be available
on GAO's Web site at http://www.gao.gov.
If you or your staff have questions regarding this report, please
contact me at (202) 512-6806 or by email at czerwinskis@gao.gov.
Individuals making key contributions to this report include Charlesetta
Bailey, Dean Campbell, Roshni Davé, Peter Del Toro, Laura Kunz, Brenda
Rabinowitz, Michael Springer, and Diana Zinkl.
Signed by:
Stanley J. Czerwinski:
Director, Strategic Issues:
Enclosure:
[End of section]
Enclosure: Briefing Slides:
Preliminary Information on Gulf Coast Rebuilding:
Objectives:
As agreed, our objectives were to:
(1) place the federal assistance provided to date in the context of the
resources likely needed to rebuild the Gulf Coast;
(2) identify the key federal programs that provide rebuilding
assistance to the Gulf Coast states with an emphasis on the Community
Development Block Grant (CDBG) program;
(3) describe 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.
In addition, we raise a number of questions that Congress may wish to
consider in carrying out its oversight of the Gulf Coast.
Scope and Methodology:
For this work, we:
* Interviewed federal, state, and local officials in Louisiana,
Mississippi, and Washington, D.C.
* Observed local recovery planning meetings in New Orleans, Louisiana,
and Biloxi, Mississippi.
* Reviewed and analyzed federal, state, and local documentation on a
range of issues related to Gulf Coast rebuilding efforts, such as CDBG
funding allocations, state homeowner assistance programs, and state an
local planning efforts.
* Reviewed selected studies related to the budgetary and economic
impacts of Hurricanes Rita and Katrina.
Background: The Impact of Hurricane Camille:
[See PDF for image]
Source: DHS.
[End of figure]
Background: The Impact of Hurricane Andrew:
[See PDF for image]
Source: DHS.
[End of figure]
Background: The Impact of Hurricanes Camille and Andrew Compared to
Hurricane Katrina:
[See PDF for image]
Source: DHS.
[End of figure]
A Relatively Small Portion of Federal Assistance Targeted to Long-Term
Rebuilding, While Loss Estimates Suggest Great Need:
To respond to the Gulf Coast devastation, the federal government
committed over $110 billion in resources through grants, loan
subsidies, and tax relief and incentives.
* The bulk of this assistance was provided to 23 agencies through four
emergency supplemental appropriations totaling $88 billion.[footnote
13]
[See PDF for image]
[End of figure]
A substantial portion of this assistance was directed to emergency and
short-term needs, such as relocation assistance, emergency housing,
immediate levee repair, and debris removal.
Consequently, a relatively small portion of federal assistance provided
thus far is available for longer-term rebuilding activities, such as
the restoration of the region's housing and infrastructure.
Moreover, it may be useful to view this assistance in the context of
the costs of damages incurred by the region and the resources needed to
rebuild.
* Early damage estimates from the Congressional Budget Office (CBO) put
capital losses (to include housing, consumer durable good, and energy
and other private sector and government losses) from Hurricanes Rita
and Katrina at a range of $70 billion to $ 130 billion.[Footnote 14]
* Another estimate from the Center for Business and Economic Research
at Marshall University put losses solely from Hurricane Katrina-to
include capital losses-at over $150 billion. This estimate was limited
to damages affecting commercial structures and equipment, residential
structures and contents, electrical utilities, highways, sewer systems,
and commercial revenue losses.[Footnote 15]
Further, the state of Louisiana estimates 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 costliest
disasters in recent history-Hurricane Andrew, the September 2001
terrorist attacks, and the 1994 Northridge earthquake.
Table:
Disaster: Hurricane Andrew (1992);
Type of disaster: Category 5 hurricane;
Cost in billions(2005 dollars): $38.5.
Disaster: Northridge earthquake (1994);
Type of disaster: Earthquake measuring 6.7 on the Richter scale;
Cost in billions(2005 dollars): $448.7.
Disaster: September 11 attacks (2001);
Type of disaster: Act of terrorism;
Cost in billions(2005 dollars): $87.0.
Source: CBO.
[End of table]
Two Key Federal Programs That Provide Long-Term Rebuilding Assistance
Use Different Approaches:
The federal government has provided long-term rebuilding assistance to
the Gulf Coast states through 2 key programs-FEMA's Public Assistance
and HUD's CDBG programs. Each of these programs follow different
funding models.
Public Assistance:
* Project-based grants that provide 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.
* Pursuant to the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (Stafford Act),[Footnote 16] and FEMA regulations, this
assistance is limited to either a fixed-dollar amount or a percentage
of eligible costs for restoring damaged facilities or other eligible
projects.
To receive public assistance, applicants must submit requests for work
which are then considered for eligibility, based on criteria under the
Stafford Act and FEMA regulations. Specifically,
* Proposed work is considered for eligibility through "project
worksheets"-applications for specific funding amounts to complete
discrete work segments. Among other things, project worksheets document
the scope of the work, cost estimates, damage descriptions and
dimensions, and special considerations for each work segment.
* FEMA obligates funds for approved projects, providing specific
amounts to complete discrete work segments on large projects. States
reimburse applicants for costs that meet the Stafford Act's public
assistance eligibility criteria and FEMA reimburses the states for the
federal share.
As of June 15, 2007, FEMA has obligated over $4.6 billion to Louisiana
and over $2 billion to Mississippi through its public assistance
program.[Footnote 17]
Community Development Block Grant:
Formula-based grants that afford states and local governments a great
deal of discretion in designing directed neighborhood revitalization,
housing rehabilitation, and economic development activities.
During disasters, such as the Gulf Coast hurricanes, Congress has
provided even greater flexibility when allocating additional CDBG funds
to affected communities and states.
* Other examples of CDBG funds supporting recovery efforts during
disasters include: 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.
To date, the affected states have received $16.7 billion in CDBG
funding from the supplemental appropriations-which is, so far, the
largest share of funding specifically targeted to rebuilding.[Footnote
18]
Louisiana and Mississippi were allocated the largest shares of 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 funds.[Footnote 19]
[See PDF for image]
Source: GAO analysis of Louisiana Recovery Authority and Mississippi
Development Authority.
[End of figure]
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 each state broad discretion in deciding how to
allocate its share of CDBG funding and for what purposes. Specifically,
* Louisiana developed its action plans through the Louisiana Recovery
Authority (LRA)-the state agency created at the direction of Governor
Blanco and charged with coordinating and overseeing the state's
rebuilding efforts-and through the state's Office of Community
Development.[Footnote 20] These action plans were subject to the
approval of Louisiana's state legislature.
Mississippi developed its action plans through the Mississippi
Development Authority (MDA)-the state's lead economic and community
development agency-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 have
published plans soliciting public input within their state regarding
the planned use of CDBG funds.
Both Louisiana and Mississippi allocated the majority of their share of
CDBG funding to housing priorities. The remaining funds were allocated
primarily to economic development and infrastructure.
[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 Their Policies:
Both Louisiana and Mississippi directed the vast majority of their CDBG
housing allocations to homeowners-tailoring their programs to address
the particular conditions within their 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. Under 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.
These programs, however, differ in their policies 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 Louisiana Recovery Authority, in close consultation with state and
federal agencies, developed a program to restore the housing
infrastructure in Louisiana, using CDBG funds from the supplemental
appropriations described earlier.
Referred to as the Road Home, this program is designed to encourage
homeowners to return to Louisiana and begin rebuilding.
Under this 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.
* Except for the elderly, residents who choose to sell their homes and
leave the state will have their grant awards reduced by 40 percent.
* Residents who did not have insurance at the time of the hurricanes
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.
The Road Home Program began accepting applications on August 29, 2006.
* As of May 30, 2007, the Road Home program has received 141,235
applications, of which 84,136 have been verified and an award amount
had been calculated.
* As of this date, 42,342 applicants have notified the program and
decided on a course of action (for example, whether to rebuild or
sell).
* The program has awarded payments to 23,043 homeowners with an average
award amount of $74,514.
Mississippi's Homeowner Assistance Program Aims to Compensate
Homeowners for Losses:
In Mississippi, Katrina's storm sure 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. Specifically,
Phase I is designed to compensate homeowners whose properties were
located outside the floodplain and had maintained hazard insurance at a
minimum.
* Eligible for up to $150,000 in compensation, homeowners are not
subject to a requirement to rebuild.
* To receive an award, eligible applicants must place a covenant on
their property, providing that flood insurance will be maintained in
perpetuity, the home will be rebuilt or repaired to local building
codes, and if rebuilt, the home will be elevated to FEMA elevation
standards.
Phase II provides assistance to homeowners who received flood surge
damage, regardless of whether the lived inside or outside the flood
zone or had maintained insurance on their homes. Eligible applicants
must have an annual income at or below 120 percent of the Area Median
Income (which varies by county).
* Eligible for up to $100 000 in grant awards, homeowners are not
subject to a requirement to rebuild.
* To receive an award, eligible applicants-like those in Phase I-must
place a covenant on their property, providing that flood insurance will
be maintained in perpetuity the home will be rebuilt or repaired to
local building codes, and if rebuilt, the home will be elevated to FEMA
elevation standards.
* Homeowners who did not maintain insurance at the time of the storm
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.)
Mississippi's Homeowner Assistance Program began accepting applications
in April 2006.
* As of May 30, 2007, Mississippi had received 18,965 applications for
Phase I of its program, of which 14,381 were determined eligible for
consideration. Of those, Mississippi awarded payments to 12,950
homeowners, while 863 applications were still being processed. The
average grant awarded was $69,669.
* As of this date, Mississippi has received 11,529 applications for
Phase II of its program, of which 4,130 were rolled over from the Phase
I program.[Footnote 21] Mississippi has awarded payments to 28 eligible
homeowners.
Louisiana and Mississippi Are Engaged in Planning Activities, While the
Federal Government Has Assumed a Coordination Role:
In Louisiana, state and local governments are engaged in short-and long-
term planning activities:
At the state level, the LRA is coordinating a number of initiatives to
support redevelopment through a multifaceted planning process that
combines the efforts of federal, state, and local partners, experts and
citizens.
Referred to as Louisiana Speaks, the planning process is led by a team
of professional planners and architects who have been retained to
develop plans and resources for individual homeowners and businesses,
communities and parishes, and the region.
Through Louisiana Speaks:
* an architectural planning tool (referred to as a "pattern book") has
been developed and distributed for homeowners, architects, and
permitting officials about how to redesign and rebuild commercial and
residential buildings.
* local design workshops-called "charrettes"-have been developed to
guide neighborhood planning efforts in the impacted areas.
* teams of professional planners, FEMA and LRA officials and
representatives have worked with impacted parishes to develop long-term
recovery plans.
In addition, through public input, Louisiana Speaks also developed a
regional plan for Southern Louisiana, focusing on a number of critical
challenges for the state's redevelopment.
* The regional plan evaluates economic, environmental, and social
issues that affect Southern Louisiana and explores alternative ways
that growth and development can be accommodated in the context of
varying environmental, economic, and cultural changes. The state of
Louisiana will use the regional plan to help direct rebuilding policy
and Louisiana's long-term spending over the next 50 years.
Figure: Illustration of Louisiana's Planning Process:
[See PDF for image]
Source: Louisiana Speaks.
[End of figure]
Highlights of planning efforts in New Orleans:
After a number of 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.
* UNOP's objective is 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.
* UNOP's final citywide plan-approved by the city's planning commission
in May 2007 and approved by the City Council in June 2007-includes
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.
In Mississippi, state and local governments are engaged in short-and
long-term planning activities:
At the state level Governor Barbour created the Governor's Commission
on Recovery, Rebuilding and Renewal in September 2005 to identify
rebuilding and redevelopment options for the state.
* Comprised of over 20 committees-including both private and public
involvement, the Commission held numerous public forums across multiple
counties in an effort to solicit input and 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 22]
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.
Further, local governments in south Mississippi are also engaged in
rebuilding planning activities.
* For example, the city of Biloxi established a volunteer steering
committee-modeled after the Governor's Commission on Renewal and
Recovery-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.
The administration established a mechanism to coordinate with-and
support rebuilding activities at-the federal, state, and local levels:
In November 2005, the President issued executive orders establishing
two new entities to help provide a governmentwide response to federal
rebuilding efforts.
The first order 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 23] 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 24] 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:
As states and localities beg in 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 our preliminary work and the
issues raised in this report, Congress may wish to consider the
following questions as it continues to carry out its critical oversight
function in reviewing rebuilding efforts on the Gulf Coast:
* 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?
[End of section]
(450576):
FOOTNOTES
[1] In this report, unless otherwise noted, we refer to Hurricanes
Katrina, Rita, and Wilma collectively as the Gulf Coast hurricanes.
[2] We also testified before your Subcommittee on Disaster Recovery on
April 12, 2007, about a number of issues resulting from our preliminary
work in the Gulf Coast. For additional information, see Gulf Coast
Rebuilding: Preliminary Observations on Progress to Date and Challenges
for the Future, GAO-07-574T (Washington D.C.: April 12, 2006).
[3] Hurricane Camille--a category 5 hurricane--struck the Gulf Coast of
Louisiana and Mississippi in 1969. Hurricane Andrew--a category 5
hurricane--made landfall along the coast of Florida in 1992.
[4] See GAO, 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 (Washington,
D.C.: Sept. 6, 2006).
[5] For additional information see, Macroeconomic and Budgetary Effects
of Hurricanes Katrina and Rita, Statement of Douglas Holtz-Eakin,
Director, Congressional Budget Office, before the Committee on the
Budget, U.S. House of Representatives, Oct. 6, 2005, and Mark L. Burton
and Michael J. Hicks, Hurricane Katrina: Preliminary Estimates of
Commercial and Public Sector Damages (Huntington, W.Va.: Marshall
University, September 2005).
[6] According to CBO, capital losses include housing, consumer durable
goods, and energy, other private-sector and government losses. For more
information see, Macroeconomic and Budgetary Effects of Hurricanes
Katrina and Rita, Statement of Douglas Holtz-Eakin, Director,
Congressional Budget Office, before the Committee on the Budget, U.S.
House of Representatives, Oct. 6, 2005.
[7] 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, Mark L. Burton and Michael J. Hicks, Hurricane
Katrina: Preliminary Estimates of Commercial and Public Sector Damages
(Huntington, W.Va.: Marshall University, September 2005).
[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, 120 Stat. 418, 472-73 (June 15, 2006).
[10] A portion of these allocations also was directed to other housing
programs such as rental housing and public housing, as well as to
projects intended to alleviate expenses associated with housing, such
as utility and insurance costs.
[11] Although not discussed in this report, 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.
[12] The commission's work culminated in 238 recommendations that were
included in a final report entitled After Katrina: Building Back Better
Than Ever (Dec. 31, 2005).
[13] 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
and passed the Gulf Opportunity Zone Act to provide tax relief benefits
and incentives to affected entities.
[14] For additional information see, Macroeconomic and Budgetary
Effects of Hurricanes Katrina and Rita, Statement of Douglas Holtz-
Eakin, Director, Congressional Budget Office, before the Committee on
the Budget, U.S. House of Representatives, Oct. 6, 20059:
[15] For additional information see. Mark L. Burton and Michael J.
Hicks, Hurricane Katrina: Preliminary Estimates of Commercial and
Public Sector Damages (Huntington, .Va.: Marshall University, September
2005).
[16] 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.
[17] In both states, a substantial portion of this assistance was
obligated to emergency and response items, such as debris removal.
[18] Pub. L. No. 109-148, 119 Stat. 2680, 2779-80 (Dec. 30, 2005); Pub.
L. No. 109-234, 120 Stat. 418, 472-73 (June 15, 2006).
[19] Texas received over $503 million, Florida received about $183
million, and Alabama received nearly $96 million.
[20] 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.
[21] The 4,130 applicants include: homeowners who have been determined
ineligible for the Phase I program and (2) homeowners who have been
determined eligible e for the Phase I program and have received
assistance, but still have an uncompensated loss. These applicants can
be considered for additional assistance under the Phase II program,
although the total amount of assistance between the two programs is
limited to $150,000.
[22] Entitled After Katrina: Building Back Better Than Ever (December
31, 2005). This report included recommendations to the Governor's
Office and a range of federal, sate, and local stakeholders involved in
the state's rebuilding efforts.
[23] "Establishment of a Coordinator of Federal Support for the
Recovery and Rebuilding of the Gulf Coast Region," Exec. Order No.
13,390, 70 Fed. Reg. 67,327 (Nov. 1, 2005).
[24] "Creation of the Gulf Coast Recovery and Rebuilding Council,"
Exec. Order 13,389, 70 Fed. Reg. 67,325 (Nov. 1, 2005).
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