In a study released this month assessing the state of rebuilding in Louisiana in the three years after hurricanes Katrina and Rita, PolicyLink, a national research and action institute, reports that only 30% of the more than 82,000 damaged rental units have been allocated funding for rehabilitation. As of July, only 2,600 rental units – or 3% of the damaged stock – had been completed and deemed ready for occupancy.
The report attributes the slow pace of recovery to both the federal programs charged with rebuilding and to the overall downturn in the housing market. Small landlords seeking assistance through the Small Rental Repair Program (SRRP) must first secure private financing and complete repairs before being reimbursed by the federal government. Due to tighter lending standards and a lack of rental income for these landlords, construction has not even begun on 85% of the 9,000 rental units that this program is supposed to produce or restore.
Roughly 35% of the multi-family rental developments in New Orleans funded through the Large Rental Repair Program (LRRP), which is reliant on housing tax credits and Community Development Block Grant (CDBG) funds, have been unable to secure additional financing required to move their projects forward. Partly attributable to the federal deadline, which requires that units must be occupied by 2010, but also reflecting a decreased demand for tax credits and a depressed national economy, the construction of some 4,600 units in Louisiana is at risk.
For the 330,000 homeowners whose properties were damaged in hurricanes Katrina and Rita, fewer than half (150,000) will eventually receive grants from the Road Home program. For those who have already received their grants, the report estimates that the program did not cover the cost of construction for 81% of recipients in New Orleans, and that the average difference between the cost needed to repair the home and the Road Home grant was $35,865. The shortfall has been particularly pronounced for African American homeowners and in cases where the pre-storm value was lower than the damage estimate.
The report includes many policy recommendations for all levels of government to ensure equitable housing reconstruction in Louisiana, including: converting SRPP from a reimbursement program to upfront grants; extending the deadlines for those living in trailers and using temporary vouchers through 2010 to allow time for more affordable housing construction; and supplementing the Road Home grants for the 58,000 recipients who, as a result of low pre-storm values, have the greatest need for additional funds to rebuild their homes.
A Long Way Home: The State of Housing Recovery in Louisiana 2008 is available at www.policylink.org/threeyearslater/.