Detours on the Road Home

Serious flaws in the Road Home program have kept many hard-working homeowners from coming back to the Lower 9th Ward. Let’s not repeat them after the next disaster.

When Darrial Sharp was three years old, his father, a longshoreman, took him down to Benton Street in New Orleans’s Lower Ninth Ward. There, while he played in the sand beneath a pair of live oak trees, Darrial watched his father building their new home with his own hands. “I can’t live forever,” his father used to say, “but you all are going to have a place to stay.”

“Now if you keep the lights on—that’s on you.”

After his father died, Darrial moved home to care for his brother, who had never left the house his father built. Clarence Sharp has suffered from poor health his entire life, starting with polio when he was a child, and he now has Alzheimer’s disease.

Before Hurricane Katrina struck, Darrial put Clarence on a plane to safety and drove out of the city with the rest of his family. Ten years later, they still aren’t home. Ten years later, they are still paying rent on an apartment on the other side of the Mississippi River, while the live oaks shade an empty house.

This is the story of why.

The Lower 9th Ward—Then and Now

The federal government spent $9 billion to bring Louisiana homeowners home after Hurricane Katrina. Citywide, 89 percent of the population is back, and 93 percent of homeowners who received some of those billions through Road Home, the program created to distribute them, have returned. But in the Lower 9th Ward, only 37 percent of the population is back, and even among Lower 9th homeowners like the Sharp family who received assistance from Road Home with the goal of returning, only about half are back.

This is not for lack of desire. As soon as the Road Home Program began, Darrial, a forklift operator who helped build the city’s monumental World War II Museum, applied for a grant. When offered the choice of whether he wanted to return to his pre-storm home (Option 1), become a homeowner elsewhere in Louisiana (Option 2), or leave the state (Option 3), he chose Option 1. So did 65 percent of the homeowners from the Lower 9th Ward. Even now, my organization, the Lower 9th Ward Homeownership Association, is working with about 100 families who are still trying to come home, and we’ve seen how flaws in the program unnecessarily delayed and traumatized many of those who have eventually made it home as well.

We first met Darrial almost two years ago, just after the eighth anniversary of the day the levees broke. He and his wife, Lynn, who gets up at dawn every day for her job as a cook at a nursing home, knew each other growing up in the neighborhood. Back then—and still in 2005 before Katrina struck—the Lower 9th Ward was a vibrant, hard-working community where children grew up surrounded by aunts and cousins and grandparents, living in family homes that were passed down from generation to generation. It seems like Lynn is kin to half the people of the Lower 9th Ward—many of them among the great musicians of New Orleans.

We requested Darrial’s Road Home file—which contains a full ream of paper—and discovered that many of the program’s flaws, both in design and administration, had combined to foil all of his efforts to rebuild his home. As a man who works in construction, son of a father who built the family home, Darrial has done most of the work on the house himself, stretching out the money he received as much as possible. But it still hasn’t been enough. “Look like the closer I get, the further I go away,” he said recently, his eyes filling with tears at the thought of his older brother still living across the river.

Here are those flaws and how they kept the Sharps from coming home.

A Formula Based on Market Value of the Home. Darrial’s home sat in 12 feet of water for six weeks. Road Home calculated the repair cost at $199,461, but their appraiser determined that the house’s pre-Katrina market value was $62,000. Since their formula is the cost to repair or the pre-storm market value, whichever is less, Road Home determined that the Sharps were entitled to $62,000—not even a third of the cost to rebuild.

This formula is the biggest reason the Lower 9th Ward—the neighborhood with the greatest damage from the levee failures—has been so slow to recover, and it continues a longstanding pattern of racial discrimination. (It should be noted here that the Lower 9th Ward is not at lower elevation than the rest of the city. In New Orleans, “lower” means down river. The reason the damage was so much greater there was because of catastrophic breaches in poorly built and maintained shipping channels that surrounded the neighborhood, which are now being differently managed.)

In the 1950s, the Lower 9th Ward was an integrated, working-class neighborhood, but in 1960 its elementary school was one of the first two in the Deep South to be desegregated. On Nov. 14, 1960, three little first-grade girls walked into McDonogh 19 Elementary School with an escort of federal marshals. All day they watched as one white child after another was pulled out of their classroom. By the end of the day, they were the only ones left. For that entire year, they were the only children in the school. That’s when the racial makeup of the neighborhood started to change, enabled by federal housing programs that subsidized white families who moved to the suburbs. By the year 2000, the Lower 9th Ward was 98 percent African American—and due to ongoing racial bias, this by itself translated to low property values.

Even so, 59 percent of families in the neighborhood owned their homes—almost 20 percentage points higher than the city average—and more than half of those homeowners, like the Sharps, had no mortgage. Now, many of these families have lost the asset it took their whole lives to build, the place they were going to live in until they died and pass on to their children, the foundation of their family’s economic security.

This is a story that repeats itself over and over again in African-American neighborhoods, from the demolition of homes during urban renewal to discrimination against black veterans in housing programs after World War II. The lasting effects of these losses reach into the next generation.

A 2013 Urban Institute study on the widening wealth gap between races notes that white families now hold six times as much wealth as nonwhite families and that housing constitutes a higher proportion of the wealth of African-American families, leaving them more vulnerable when a housing catastrophe hits. As Professor Tom Shapiro of Brandeis University has said, “That reservoir of what you can dig into for emergencies and contingencies is a lot shallower in communities of color.”

This was precisely the situation in the Lower 9th Ward when the levees failed. Though 72 percent of households were working, wages were low and many households contained elderly members living on Social Security. As a result, the average household income, excluding a few outliers making over $200,000, like Fats Domino, was $24,886 a year.

So not only did the Sharps receive less than their counterparts in well-to-do white neighborhoods would have, even for the same home, but they also had fewer resources of their own to draw on.

Insurance Penalty and FEMA Award. The Sharps didn’t actually even receive $62,000 for repairs. A few months before August 29, Darrial’s stepmother, who had recently moved out of the house, had let their insurance coverage lapse without telling him. This resulted in a 30 percent penalty for the family, though they had carried insurance on the house for decades. It might seem hard to argue with a penalty for not having insurance, but it is a charge that falls more heavily on families with lower, more sporadic incomes.

Darrial Sharp’s Road Home award was also reduced by $10,500 because of a grant he had received from the Federal Emergency Management Agency. Though it came in before rebuilding was possible in the Lower 9th Ward, it was labeled a rebuilding grant instead of a payment for temporary housing and therefore counted as a duplication of benefits.

So Darrial’s “Original Compensation Grant” from Road Home was $36,050. He also received $30,000 to elevate the house, but since elevation would cost much more than that, this money also went into repairs.

Insufficient Blight Reduction Grant Adjustment. In 2011, almost six years after the Sharps’ home was destroyed and after a lawsuit based on racial discrimination, Road Home set up a program to give additional funding to those families whose initial awards were reduced because of the formula based on market values. Perhaps now Darrial would be given the actual cost of repairing his home and he could get Clarence back to the live oak trees on Benton Street? But no. His award was still capped, this time at the median market value of homes in New Orleans. Road Home had determined it would cost $130/square foot to fix his house—and limited his new award to $80.60/square foot.

Documentation Requirements. In any case, Darrial almost didn’t receive this second grant at all. HGI, the contractor hired by Louisiana to run the Road Home Program, reviewed the paperwork Darrial submitted with his original grant application and asked him for proof that he had lived in the house on August 28, 2005—before that 12 feet of water washed away every piece of paper he had.

When Darrial and Lynn had moved back home with Clarence, they certainly weren’t thinking about having to later prove that Darrial lived there, so they left the utility bill in Clarence’s name. Darrial didn’t have a driver’s license, so the car insurance was in Lynn’s name. But Darrial was the only one on the house’s title so, HGI refused to accept these documents as proof that Darrial lived there. It wasn’t until 2014, after months of advocacy by the Lower 9th Ward Homeownership Association on his behalf, and going over HGI’s head to the Road Home Program itself, that his proof was finally accepted.

Concern about fraud by individual homeowners often overwhelms the purpose of Road Home. Files are routinely reviewed to see if a homeowner has been overpaid, but they aren’t reviewed for underpayments. Contractors who erroneously overpay a homeowner are required to repay the wrongful award if the homeowner can’t. But no penalty is leveed if an underpayment is discovered, creating a perverse incentive for the contractor not to make payments. HGI has even instituted additional documentation requirements beyond HUD policies or program rules. Such strict documentation requirements often become barriers to helping homeowners who legitimately qualify for help.

Because there wasn’t enough flexibility in the documentation requirements for the realities of life, Clarence Sharp still isn’t home.

“Duplication” of Benefits and Costs of Delay. Finally, in 2014, Darrial Sharp was approved for a Blight Reduction Grant Adjustment and his Road Home award was recalculated at $103,230. Then the money he had already received was deducted, leaving him with $41,230 to try to finish his house and get home. Darrial had been able to put all of his original award into repairs, but many disaster victims who didn’t receive enough to rebuild their house had to use their initial award just to pay for somewhere else to live. Even in Darrial’s case, in the six years since his original grant ran out, his hard work was compromised by humidity, mold, theft of copper pipes, a leaky roof, and an unstable foundation. In addition, he had spent $51,390 paying rent across the river, depleting any resources of his own that he might have contributed to the rebuilding.

Though the federal Stafford Act prohibits government disaster programs from duplicating benefits, a 2013 HUD policy allows recognition of the costs of delay. Unfortunately, this policy has been implemented in a very restrictive way. It’s not surprising that Darrial’s award, coming nine years after the levee failures, still wasn’t enough to complete the repairs on his home. In fact, because of so many years waiting, the house is now a teardown. After all Darrial’s hard work, and $66,050 in federal government funding that went into the building, it’s now going to be cheaper to use the new grant to demolish the house Darrial’s father built and start all over.

Recommendations

Darrial’s story highlights the particular negative effects of the design and administration of the Road Home Program on lower-income communities and communities of color. Because Hurricane Katrina can be seen as the opening salvo in the climate change century, it is crucially important that we learn how to make sure that the people who need help the most aren’t left behind in future disasters, as they were in this one.

  1. Make sure the formula used for calculating grants will not disadvantage those who need help the most. In Louisiana, grants were based on the market value of homes, favoring those in wealthy, white neighborhoods. In Mississippi, flood damage was covered, but not wind—favoring those with beachfront property over those who lived, literally, on the other side of the railroad tracks.
  2. Don’t blame recipients for flaws in program design. If the original formula is discriminatory or funds are pushed out the door without a proper plan in place or proper controls, as was done with the elevation grant, it is unfair and unrealistic to expect the recipient to achieve the purpose or be able to repay the funds. The program itself must take responsibility for its own flaws.
  3. Keep it simple. For every requirement that must be met, every document that must be submitted, some people who legitimately should be helped will not be. Even if a simple design gives some subset of people somewhat more than would have been strictly required to rebuild their home, the program will still spend less money as a result of savings on administrative costs and the extra money will go to those who need it rather than to government contractors. Simple programs can roll out faster, a major factor in creating a successful disaster recovery program. It’s taken four years to implement HUD’s new duplication of benefits policy—and the final policy change that would get Darrial and Clarence Sharp home has been awaiting approval for a year.
  4. Don’t lose sight of program purposes in the quest to prevent fraud. In the aftermath of a catastrophic event, documents will be missing and people will be traumatized. This is likely to be even more prevalent among those who were more marginalized and had fewer resources. If they are excluded from services or subjected to months of additional delay and trauma and expense while they try to qualify, this thwarts the purpose of the program while saving minimal amounts of money—or actually costing money. Larger-scale fraud, waste, and abuse by government contractors or employees handling major sums should be the focus of anti-fraud efforts. Files should be audited for underpayments as well as overpayments and contractors should be penalized for underpayments as much as for overpayments.
  5. Close the chasm between people in need of services and those making and implementing policies. Government decision-makers can be so involved in making sure policies meet legal requirements that they don’t determine whether they will actually work on the ground. Flaws in program design and administration can often be avoided by meaningful consultation with people who know how they will play out in ordinary people’s lives. The more layers between people on the ground and decision-makers, the harder this is.
  6. Compensate for costs of delay. When the Road Home Program finally corrected its flawed formula, it didn’t take into account that in all the intervening years the homeowners had accrued significant additional costs. As a result, the additional awards often weren’t any more helpful than the original one. This is the biggest reason that 7,000 homeowners still aren’t home in Louisiana, and the failure to acknowledge it sooner will end up costing Road Home millions of additional dollars.
  7. Provide extra help to homeowners with fewer resources. When disaster strikes, people with more resources are able to rebuild their lives more quickly. New Orleans is now whiter and wealthier than it was in 2005—and this makes for a poorer city for us all. If we are to rebuild from future disasters in a just way, it’s essential not just to eliminate discriminatory aspects of program design, but to work affirmatively to make sure sufficient help is reaching vulnerable populations.

Ten Years Is Not the End

In the past year, in a great sign of hope for the Lower 9th Ward, the population has grown by 150 households. Combined with increased public investment in infrastructure in the past few years—including a new community center, a high school, a fire house, a police substation, and newly paved roads, along with St. David Catholic Church’s just-opened elementary school and a CVS in the works—this is the kind of momentum that has the capacity to at long last return the neighborhood to its pre-storm strengths.

Our great fear is that on August 30, 2015, just at the moment when our recovery is taking off, we will be forgotten. Resources for rebuilding New Orleans are dwindling. It would be an American tragedy if this historic neighborhood that was so devastated by the failure of faulty federal levees and left behind as a result of discriminatory government formulas were to finally be lost because of a nation that turns its eyes away.

Darrial Sharp is still trying to get the lights back on for his brother Clarence.

M.A. Sheehan is the director of the House the 9 Program at the Lower 9th Ward Homeownership Association.

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