2010 GAO Report Provides Advice for Disaster Assistance in 2017

A 2010 report from the Government Accountability Office (GAO) examined federal disaster assistance after Hurricanes Katrina and Rita in Louisiana and Mississippi. The report found that a disproportionate amount of federal relief went to homeowners. Sixty-two percent of damaged owner-occupied homes received assistance, while just 18% of damaged rental units did. As of the report’s publication, ten federal programs had assisted more than 302,000 owner-occupied units and 43,000 rental units. The lack of affordable housing had serious impacts on rents. Fair Market Rents increased between 2005 and 2009 by 52% in the New Orleans metro area and by 43% in the Gulfport-Biloxi metro area, while rents nationwide increased by about 15% over the same time period.

State agencies administered the majority of federal housing assistance, including $19 billion in Community Development Block Grant (CDBG) Disaster Recovery funds. States had significant flexibility regarding how CDBG-DR funds were spent. Combined, the states allocated $11 billion of CDBG-DR funds to homeowner programs and approximately $1 billion to programs for owners of small rental properties. Louisiana established its CDBG-DR program for homeowners 6 months before its rental housing program, and Mississippi did so 18 months before. A state official in Louisiana reasoned that homeowners were less transient than renters and had lost real property. In addition, the state believed rental property owners were eligible for assistance from other federal resources, like tax credits. In Mississippi, state officials determined that a compensation program for homeowners could be implemented more quickly than a program for renters, because rental construction would need environmental reviews. Other challenges to rental housing included inadequate funding and a program design in both states that required small landlords to incur repair costs for which they were then reimbursed through the rental housing program. Louisiana eventually added an additional option that provided upfront financing to landlords.

The GAO report recommends that Congress provide more direction on how states use CDBG disaster relief funds. The report recommends, for example, that HUD require state agencies to distribute funds based on need, taking into account all available programs and resources. The GAO had previously recommended that HUD issue guidance on acceptable program designs for CDBG disaster relief funds and coordinate with FEMA to clarify options in using CDBG funds with other disaster-related funds. The report suggests that without specific direction on how to better target disaster-related CDBG funds, states may continue to allocate assistance to owners and renters disproportionately.

Federal Assistance for Permanent Housing Primarily Benefited Homeowners; Opportunities Exist to Better Target Rental Housing Needs is available at: http://bit.ly/2y0Brbe