reinforcing inequalities: the impact of the cdbg program on post-katrina rebuilding
Post on 27-Feb-2017
215 Views
Preview:
TRANSCRIPT
This article was downloaded by: [Bemidji State University]On: 26 October 2014, At: 19:04Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK
Housing Policy DebatePublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/rhpd20
Reinforcing Inequalities: The Impactof the CDBG Program on Post-KatrinaRebuildingKevin Fox Gothama
a Department of Sociology, School of Liberal Arts, TulaneUniversity, New Orleans, LA, USAPublished online: 28 Jan 2014.
To cite this article: Kevin Fox Gotham (2014) Reinforcing Inequalities: The Impact of theCDBG Program on Post-Katrina Rebuilding, Housing Policy Debate, 24:1, 192-212, DOI:10.1080/10511482.2013.840666
To link to this article: http://dx.doi.org/10.1080/10511482.2013.840666
PLEASE SCROLL DOWN FOR ARTICLE
Taylor & Francis makes every effort to ensure the accuracy of all the information (the“Content”) contained in the publications on our platform. However, Taylor & Francis,our agents, and our licensors make no representations or warranties whatsoever as tothe accuracy, completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views of the authors,and are not the views of or endorsed by Taylor & Francis. The accuracy of the Contentshould not be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions, claims,proceedings, demands, costs, expenses, damages, and other liabilities whatsoeveror howsoever caused arising directly or indirectly in connection with, in relation to orarising out of the use of the Content.
This article may be used for research, teaching, and private study purposes. Anysubstantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,systematic supply, or distribution in any form to anyone is expressly forbidden. Terms &Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions
Reinforcing Inequalities: The Impact of the CDBG Programon Post-Katrina Rebuilding
Kevin Fox Gotham*
Department of Sociology, School of Liberal Arts, Tulane University,New Orleans, LA, USA
(Received May 14, 2013; accepted August 30, 2013)
Over the last two decades, the Community Development Block Grant (CDBG) programhas repeatedly been adapted as a vehicle to respond to federal disasters, such as floods,hurricanes, and terrorist strikes. In this article, I describe the use of the CDBG programfor disaster recovery, identify changes in rules governing the use of special disaster-related allocations, and explain the advantages and limitations of using the CDBGprogram to distribute funds to disaster-devastated areas. In particular, I analyze theoperation of CDBG disaster-recovery assistance programs in Louisiana and Mississippifollowing Hurricane Katrina in 2005. I examine how the U.S. Department of Housingand Urban Development–approved CDBG disaster-recovery programs in these stateswere designed and implemented in a class and racially discriminatory manner thatviolated the Fair Housing Act and the low-and-moderate-income rules of the Housingand Community Development Act. In conclusion, I critique the practice of grantingwaivers of CDBG rules and requirements and suggest policy recommendations to betteraddress the needs of disaster-impacted communities in the future.
Keywords: CDBG; Community Development Block Grant; discrimination; home-ownership; housing; HUD; low-income housing; minorities; policy; rental housing
Over the last two decades, the U.S. Congress has appropriated supplemental Community
Development Block Grant–Disaster Recovery (CDBG-DR) funds to assist states and
communities in recovering from major disasters, such as hurricanes, floods, earthquakes,
and tornadoes. Since 1992, CDBG-DR funds have been used for recovery efforts in
Florida following Hurricane Andrew; in Oklahoma City following the bombing of the
Alfred P. Murrah Federal Building in 1995; in the Midwest following major flooding in
1997 and 2008; and in New York City following the terrorist attacks of September
11, 2001 (see Table 1). In response to these and other calamities, Congress has typically
allocated additional CDBG funds to meet three broad categories of disaster-related needs:
short-term disaster relief, mitigation activities, and long-term recovery activities. Short-
term disaster relief can include financing the removal of debris, providing security patrols,
and restoring public services. Mitigation activities may involve provision of funds for
training exercises, public-awareness programs, and buy-outs of property in flood-prone
areas. Forms of assistance for long-term recovery can include business-recovery loans,
infrastructure improvements, small-firm attraction and retention grants, and residential
q 2014 Virginia Polytechnic Institute and State University
*Email: kgotham@tulane.edu, http://www.tulane.edu/,kgotham/gotham.html
Housing Policy Debate, 2014
Vol. 24, No. 1, 192–212, http://dx.doi.org/10.1080/10511482.2013.840666
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
grant assistance to encourage renters and owners to stay in a particular area (Boyd, 2011;
Platt, 1999; Smith, 2012).
The U.S. Department of Housing and Urban Development (HUD) generally awards
noncompetitive, nonrecurring disaster-recovery grants by a formula that takes into account
disaster-recovery needs unmet by other federal disaster programs implemented by the
Federal Emergency Management Agency (FEMA), the Small Business Administration
(SBA), and the U.S. Army Corps of Engineers. Eligible grantees include states, units of
general local governments, Indian tribes, and other areas designated by the president
of the United States as disaster areas. At times, when damage from disasters is
intense and widespread, supplemental appropriations have restricted CDBG funding for
disaster recovery to states rather than local cities or counties. The five most
recent supplemental CDBG disaster-recovery appropriations have awarded funds and
administrative control exclusively to state governments (see Table 1; Boyd, 2011, p. 6).
Eligible disaster-recovery activities must meet the three CDBG program national
objectives: benefiting low- andmoderate-income (LMI) persons, aiding in the prevention or
elimination of slums or blight, andmeeting a need having a particular urgency (referred to as
urgent need; HUD, 2013a).
This article provides a critical analysis of the use and effectiveness of the CDBG
program as a disaster-recovery program, focusing specifically on post-Katrina relief and
rebuilding in Louisiana and Mississippi. Hurricane Katrina made landfall on the Gulf
Coast on August 29, 2005, and was the worst natural disaster in U.S. history in terms of its
geographic scope, the severity of destruction, and the number of persons displaced from their
Table 1. Congressional appropriations for Community Development Block Grant-DisasterRecovery funding, 1993–2013.
Fiscal yearAmount
(millions of current dollars) Disaster(s)
1993 85 Hurricanes Andrew and Iniki, Typhoon Omar1994 425 Earthquake in Southern California, Midwest floods1994 225 Northridge Earthquake1994 180 Tropical Storm Alberto1995 39 Oklahoma City bombing1996 50 Multiple disasters1997 500 Upper Midwest floods1998 130 Multiple disasters1999 20 Multiple disasters2001 700 September 11 attacks2002 2,783 September 11 attacks2005 150 Multiple disasters2006 16,700 Hurricanes Katrina, Rita, and Wilma2008 3,000 Hurricanes Katrina and Rita (supplement to
Louisiana’s Road Home program)2008 300 Midwest floods2008 6,100 Hurricanes Ike, Gustav, and Dolly2010 100 Severe storms and flooding from March 2010
through May 20102012 400 Multiple disasters2013 16,000 Hurricane Sandy
Note. Adapted from “CDBG Disaster Recovery Assistance: Funding Status,” by U.S. Department of Housing andUrban Development, 2013, Washington, DC: Author. Retrieved from http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/programs/drsi.
Housing Policy Debate 193
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
homes. The storm killed over 1,500 people, caused catastrophic property damage along the
GulfCoast, andfloodedover 80%of the city ofNewOrleans,with someparts of the city under
15 feet ofwater duringSeptember 2005.Approximately 90,000 squaremiles of theGulfCoast
region — an area almost as large as the United Kingdom – were designated federal disaster
areas. In New Orleans, Katrina flooded over 12,000 business establishments (41% of the
metropolitan area’s total businesses) and 228,000 occupied housing units (45% of the
metropolitan total). In Louisiana andMississippi, the storm destroyed or made uninhabitable
an estimated 330,000 homes (Brookings Institution, 2005; U.S. Government Accountability
Office [GAO], 2010). In response to the damage and destruction caused by the hurricane,
Congress provided $19.7 billion in CDBG-DR assistance, the largest amount of CDBG-DR
recovery funds in the history of the program. The sheer and unprecedented size of this
expenditure made the CDBG program a major source of federal rebuilding and recovery
assistance for the Gulf Coast after Hurricane Katrina.
In the years sinceHurricaneKatrina devastated theGulfCoast, researchers have debated
the CDBG-DR program’s advantages and shortcomings, and discussions proliferate in
scholarly and planning venues concerning the impact of the program on the pace and
trajectory of rebuilding efforts (R. D. Green, Kouassi, & Mambo, 2011; T. F. Green &
Olshansky, 2012; Kamel, 2012; Landy, 2008; Liu & Anglin, 2011; Norcross & Skriba,
2008). While much attention has focused on the procedural and substantive limitations
of CDBG-DR, few researchers have investigated the inequality-reinforcing aspects of
CDBG program implementation. This article addresses this omission and examines
how class and racial biases and disparities were built into the design and operation
of the CDBG-DR program in Louisiana and Mississippi. In doing so, I point to the
program’s negative impact on renters and African Americans and its role in perpetuating
inequalities.
I first provide a general introduction to the use of the CDBG program for disaster
recovery and identify changes in the rules governing the use of special disaster-related
allocations. Next, I discuss how CDBG-DR funds have been allocated and used over the
last two decades to support post disaster recovery. I then examine the implementation of
CDBG-DR assistance in Louisiana and Mississippi to illustrate the problems of using the
CDBG program to distribute funds to disaster-devastated areas. In conclusion, I take stock
of the CDBG-DR program’s shortcomings and propose policy recommendations to better
address the needs of disaster-impacted communities in the future.
Disaster-Recovery Assistance Through the CDBG Program
In the aftermath of presidentially declared disasters, Congress has used a variety of
funding options (grants, tax credits, loans) and programs to help states and local
governments finance recovery efforts. FEMA offers the Individual Assistance Program,
the Transition Sheltering Assistance Program, the Public Assistance Grant Program, and
the Hazard Mitigation Grant Program. Each program satisfies different needs, including
rental payments for temporary housing, repairing and replacing damaged public facilities,
and grants for home repairs and the replacement of essential household items. The SBA
offers home and personal-property loans and business disaster loans. The Internal Revenue
Service provides tax relief for individuals and businesses, and the U.S. Department of
Labor offers grants to individuals who have lost their jobs. The U.S. Department of
Agriculture provides assistance to farmers, ranchers, and aquaculture operators to cover
production and property losses. Federal funding is also available to state and eligible local
governments and certain private nonprofit organizations on a cost-sharing basis for debris
K. Fox Gotham194
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
removal and emergency protective measures, including direct federal assistance. Finally,
congressional legislation and appropriations have intended CDBG-DR funds to support
short- and long-term recovery from disasters. While short-term emergency assistance is
available through other sources, including FEMA and the SBA, past disaster-relief
legislation has allowed CDBG funds to fill gaps in FEMA and SBA emergency-relief
activities (Boyd, 2011).
CDBG funding for disaster recovery differs in several ways from the regular CDBG
program. Since there are no annual appropriations for CDBG-DR, statutory authority is
provided via supplemental appropriations. Unlike the CDBG program grants awarded
annually, CDBG-DR funds are appropriated by Congress only in extraordinary
circumstances that have resulted in significant unmet needs for long-term recovery
(HUD, 2013a). In addition to any requirements cited in the appropriations statute, the
traditional CDBG regulations apply to CDBG-DR funds. However, CDBG-DR
appropriations generally grant the secretary of HUD broad authority to issue waivers
and alternative requirements, which are identified in a Federal Register notice issued by
HUD shortly after the announcement of allocations. While Congress has granted HUD
significant authority to waive program requirements, other requirements including those
related to nondiscrimination, environmental review, labor standards, and fair housing have
generally been prohibited from modification, suspension, or waiver of statutory or
regulatory provisions (Boyd, 2011).
In addition to CDBG funding assistance, Congress has included other provisions in
past-disaster relief bills to expedite the delivery of aid and resources to needy
communities. Five main provisions have been used over the years. First, Congress has
allowed communities to transfer CDBG funds to other HUD programs and agencies
(e.g., FEMA). Congress included language in appropriations dealing with the 1998
Midwest floods that transferred administrative authority over CDBG funds for land
buyouts from HUD to FEMA as a part of a disaster-mitigation strategy. Second, Congress
has sometimes required communities to meet a financial-match requirement in order to
receive CDBG-funded relief activities. In 1998, Congress awarded states affected by the
Midwest floods CDBG funds on the condition that each state provide 25% in nonfederal
public matching funds. Third, Congress at times has included provisions requiring
quarterly reports on the use and expenditure of CDBG funds in order to monitor use and
ensure accountability. Legislation providing CDBG assistance to New York following the
September 11, 2001, terrorist attacks, the Gulf Coast hurricanes of 2005, and the natural
disasters of 2008 included quarterly-reporting provisions (Boyd, 2011). Since this time,
congressional provisions have included quarterly-report requirements, whereas annual and
semi-annual reports were the norm during the 1990s.
Fourth, Congress has included language in previous disaster-relief appropriations
allowing states to create new offices and contract out disaster-assistance activities to
private and nonprofit organizations. After the Hurricane Katrina disaster, HUD allowed
both Louisiana and Mississippi to create new entities to coordinate and oversee rebuilding
efforts and to serve as policymaking bodies responsible for planning and coordinating
efforts throughout their states (Comfort, Birkland, Cigler, & Nance, 2010; Finger, 2008).
In Louisiana, the governor created the Louisiana Recovery Authority (LRA) to establish
spending priorities and plans for the state’s share of CDBG funds. Similarly, in
Mississippi, the governor created the Governor’s Office of Recovery and Renewal
in January 2006, which served as a policy-oriented body and had the primary
responsibility for designing the state’s various recovery programs (Morse, 2011).
In addition to hiring additional agency staff, both states contracted with private firms to
Housing Policy Debate 195
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
help state development agencies implement and manage their housing-assistance
programs. Both states hired contractors to set up customer-service centers, process
applications, determine and verify eligibility, calculate damage-compensation amounts,
and develop tracking procedures and cost estimates (Turnham, 2010). In Louisiana, the
LRA contracted with ICF International at an initial cost of approximately $756 million and
later (December 2007) at an increased cost of $912 million, when the number of
homeowners estimated to be eligible for assistance increased from 100,000 to 160,000.
Similarly, Mississippi officials contracted with Reznick Group to implement Mississippi’s
Homeowners Assistance Program and manage program operations. Mississippi’s contract
with the firm cost an estimated $88 million (GAO, 2009, 2010).
Fifth, Congress has waived or modified the CDBG program’s income-targeting
provisions, which require grantees to allocate at least 70% of their funds to activities that
benefit LMI persons (McCarty, Perl, & Foote, 2005). For instance, HUD lowered the income-
targeting requirement to 50% in response to the Midwest floods of 1998, 2008, and 2011, the
Gulf Coast hurricanes in 2005 and 2008, and Hurricane Sandy in 2012. Congress permitted
HUD to waive the income-targeting provision completely in response to the 9/11 terrorist
strike (GAO, 2003). Under this waiver, the Lower Manhattan Development Corporation
(LMDC), the chief agency responsible for the implementation of CDBG funds for 9/11
disaster recovery, was not obligated to appropriate any CDBG funds for LMI people affected
by the destruction of the World Trade Center (Gotham & Greenberg, 2008). HUD’s explicit
expectation for New York City was that the LMDC “make a good faith effort to maximize
benefit to low- and moderate-income persons” (Department of Housing and Urban
Development, 2002; see also Goldberg, 2006, p. 71). More recently, in 2011, President
Obama signed into law the Supplemental Appropriations Act of 2010 (P.L. 111–212), which
allowed HUD, at the request of a grantee, to waive any statutes or regulations governing the
CDBG program except for provisions related to environmental review, fair labor standards,
civil rights, and nondiscrimination (Boyd, 2011).
After Congress appropriates disaster-recovery funding, HUD determines the awards
and contacts the grantees to discuss their recovery plans and determine which waivers are
required, if any. Grantees can then draft and submit a disaster-recovery action plan to
HUD. Grantees generally use one of two methods (or a combination thereof) to administer
CDBG-DR funding: (1) the grantee distributes funding to communities based on damage
estimates and/or unmet needs – each community determines what types of activities to
pursue in compliance with the notice; or (2) the grantee designs and administers the
program directly. Once HUD approves the action plan, grantees must conduct a needs
assessment, incorporate performance requirements and penalties into any contracts or
agreements with third parties, and submit quarterly performance reports. Over the course
of the CDBG-DR award, grantees are responsible for updating the action plan as needs
change; ensuring adequacy of internal controls, procurement processes, and procedures to
maintain timely performance and compliance; and providing technical assistance to sub-
grantees. In turn, HUD is responsible for reviewing grantees’ controls, processes and
procedures, and action plans. HUD is also responsible for obligating funds, providing
guidance and technical assistance, and conducting monitoring and oversight to ensure
performance and compliance (McCarty, Perl, & Foote 2005).
There are several reasons why policymakers and elected officials have selected and
used the CDBG program for disaster-recovery assistance. First, increases in the number
and cost of disasters in recent times have motivated officials to boost funding for the
CDBG-DR program. The annual number of billion-dollar disasters in the United States –
earthquakes, floods, fires, hurricanes, and more – has tripled since the 1980s, from two to
K. Fox Gotham196
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
about six per year. In 2011, there were 14 separate $1 billion–plus weather events (Face
the Facts USA, 2013). A recent analysis by the Center for American Progress (Weiss &
Weidman, 2013) found that the federal government spent a total of $136 billion from fiscal
year 2011 to fiscal year 2013 on disaster relief (in constant, inflation-controlled dollars).
This adds up to an average of nearly $400 per household per year.
Figure 1 shows the growth of funds appropriated to CDBG-DR activities since 2001.
The amount of funds appropriated for CDBG-DR activities is very large and has been
increasing over the years. Since 2001, the average amount of funding appropriated to
CDBG-DR has increased from less than $1 billion in 2001 to over $4 billion in 2006, and
$8 billion in 2013 (according to the trendline). Figure 2 provides a funding overview of
current CDBG-DR allocations showing total CDBG-DR funds, amount obligated, and
amount disbursed. In 2013, HUD had over $46 billion in active CDBG-DR grants, with
approximately one-third of this amount distributed to 15 local-government grantees and
two-thirds to 29 state grantees.
Changing policy priorities and administrative changes within HUD also reveal the
growing importance of the CDBG program for disaster relief. From the mid-1990s to
2004, CDBG-DR responsibilities were supported with existing HUD staff. In response to
the damage and destruction caused by the impact of nine hurricanes hitting the United
States in 2004, HUD established a new division, the Disaster Recovery and Special Issues
Division, to manage large grantees ($500 million or more). Other grantees continued to be
managed by HUD Community Planning and Development field offices. Collectively, the
storms of this season caused over 3,250 deaths and $50 billion in damage. It was
the costliest Atlantic hurricane season up to that time, but the following season, Hurricanes
Katrina, Wilma, and Rita caused an estimated $150 billion in damage (Burby, 2006; Kates,
Colten, Laska, and Leatherman, 2006; United States, 2006).
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
FY2001 FY2002 FY2005 FY2006 FY2008 FY2010 FY2012 FY2013
Figure 1. Funding appropriated to CDBG-DR since 2001 (in millions of current dollars).
Note. The chart includes a trendline associated with the data. From “Overview of CDBG Disaster Recovery in2013,” by U.S. Department of Housing and Urban Development, Department of Community Planning andDevelopment (p. 10), 2013, Washington, DC: Author. Retrieved from https://www.onecpd.info/resources/documents/Overview-CDBG-DR-2013-Slides.pdf.
Housing Policy Debate 197
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
Second, the CDBG program is a source of flexible funding that can be applied to many
kinds of disaster situations to assist states in rebuilding their communities (GAO, 2010).
The program can potentially serve either homeowners or renters through grants and
incentives for the repair or replacement of housing. Administratively, the CDBG program
permits states to either implement CDBG programs through existing offices or create new
state offices to design and administer programs funded with CDBG funds. Congress also
allows states to prioritize beneficiaries, design programs, and decide how to allocate
CDBG funds and for what purposes. The fact that CDBG funds have been used to support
recovery efforts in highly urbanized areas and rural areas that span multiple states is a
testament to the program’s flexibility and ability to respond to diverse types of disasters in
different communities (McCarty, Perl, & Foote 2005).
Third, the block-grant nature of the program affords local and state officials a great
deal of discretion in determining which combination of eligible CDBG activities to
undertake when deciding how to rebuild their disaster-affected communities. Eligible
CDBG activities include: buying damaged properties in a flood plain and relocating
residents to safer areas; providing relocation payments for people and businesses displaced
by the disaster; paying for debris removal not covered by FEMA; rehabilitating homes and
buildings damaged by the disaster; buying, constructing, or rehabilitating public facilities
such as streets, neighborhood centers, and water, sewer and drainage systems; enforcing
housing codes; providing assistance to homeowners through down-payment assistance,
interest-rate subsidies, and loan guarantees for disaster victims; paying for public services
(generally limited to no more than 15% of the grant); helping businesses retain or create
jobs in disaster impacted areas; and paying the costs of planning and administration of
CDBG assistance for state and local governments (HUD, 2013a). Since the program can
fund a variety of activities through several different funding mechanisms, it has been
viewed by policymakers as a convenient, expedient, and accessible off-the-shelf tool for
distributing large amounts of federal funds to assist disaster-impacted communities (GAO,
2009, 2010).
Although policymakers have looked to the CDBG as a ready-made device for
allocating disaster funds to communities, critics have assailed the CDBG as an inadequate
0
5
10
15
20
25
30
35
40
45
50
Total CDBG-DR Obligated to activities Disbursed
Status of CDBG-DR Funds (in billions of dollars)
Figure 2. Funding overview of CDBG-DR funds for fiscal year 2013.
Note. From “Overview of CDBG Disaster Recovery in 2013,” by U.S. Department of Housing and UrbanDevelopment, Department of Community Planning and Development (p. 11), 2013, Washington, DC: Author.Retrieved from https://www.onecpd.info/resources/documents/Overview-CDBG-DR-2013-Slides.pdf.
K. Fox Gotham198
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
and ineffective funding-delivery mechanism in disaster recovery. Criticisms of the
CDBG-DR program include insufficient staff and funding; lack of experience among field
officers; ad hoc and uncoordinated resource delivery; poor targeting of disaster assistance;
unclear rules and procedures; and waste and misuse of program funds (Finger, 2008;
T. F. Green & Olshansky, 2012; Kamel, 2012; Lowe, 2012; Moore, 2007). Allegations
have been made that HUD’s approach to disaster assistance is tantamount to “force-fitting
the program rules and regulations applicable to traditional CDBG programs to state
disaster recovery programs,” a process that is impractical and slows the post disaster
recovery and rebuilding (GAO, 2009, p. 32).
This article identifies several procedural and substantive limitations of CDBG-DR and
documents the significantly adverse impact of the program on disadvantaged groups and
African Americans in the Gulf South after the Hurricane Katrina disaster. Both Louisiana
and Mississippi established CDBG-DR–funded programs under the requirement that 50%
of CDBG funds be allocated to activities that primarily benefit LMI persons. The states
were also obligated to affirmatively further fair housing and implement their CDBG-DR
programs in a nondiscriminatory fashion. As I show, however, both states implemented
their HUD-approved programs in a class and racially discriminatory manner that violated
the Fair Housing Act of 1968 (42U.S.C.A. §§ 3601–3631) and the LMI rules of the
Housing and Community Development Act of 1974.1 In doing so, I point to the ways in
which CDBG-DR program design and implementation can reinforce and perpetuate racial
and class inequalities. In conclusion, I present recommendations for addressing the
limitations of CDBG-DR and improving the program as a disaster-recovery tool.
Inequitable Targeting: Rental and Homeownership Recovery
Hurricane Katrina had a particularly devastating impact on housing and infrastructure in
Louisiana and Mississippi, with hundreds of thousands of homes damaged or destroyed
across a huge geographical area. In response, Congress allowed HUD to waive the
threshold outlined in statute that 70% of total funds must be allocated to activities that
primarily benefit LMI persons. Instead, only 50% of the total funds had to be targeted on
this basis. Once HUD allocated CDBG funds—approximately $19.7 billion—to the
affected states, state-level development agencies were responsible for the administration
and management of these funds. In Louisiana and Mississippi, the two states that suffered
the most damage, the authorities in charge of disaster-recovery efforts were the Office of
Community Development and the Mississippi Development Authority (MDA),
respectively. In Louisiana, state officials used $10.5 billion in CDBG funds to create
the Road Home program, which provides homeowners with up to $150,000 to repair or
rebuild damaged homes (for overviews, see U.S. Senate 2007a; 2007b). Homeowners
could also receive Road Home funds to either relocate to a new property or sell their
damaged property to the state of Louisiana (McCarty, Perl, and Foote, 2006). In addition,
in the Emergency Supplemental Appropriations Act of 2006 Congress required states to
use at least $1 billion for the repair, rehabilitation, and reconstruction of affordable rental
housing, including public and other HUD-assisted housing. This requirement was intended
to ensure that states were investing not only in homeownership but in the housing needs of
all affected residents.
In the months of planning leading up to the establishment of the Road Home program,
low-income-housing advocates, civil rights activists, government officials, and policy-
makers discussed and debated program design, procedures, eligibility rules, and financing
mechanisms (Olshansky & Johnson, 2010; Seidman, 2012). On May 12, 2006, Louisiana
Housing Policy Debate 199
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
submitted an action plan to HUD describing the Road Home program, and two weeks later
HUD approved the program. The state did not initiate a rental program, and early program
design focused exclusively on addressing the recovery needs of homeowners (Finger, 2007;
Quigley, 2007). On June 20, 2006, civil rights and low-income-housing activists filed an
administrative complaint with HUD, charging that the state of Louisiana was engaged in
“the planned misuse of federal funds” due to the “refusal to provide adequate resources for
renters.” “At no point in the Louisiana plan,” according to the complaint, “is there a detailed
breakdown of precisely how the CDBG funds are going to be spent to meet the legal 50%
requirement.”2 According to critics, the LRA did not specify, with goals and benchmarks,
how the state would provide recovery assistance for LMI renters, one of the legislative goals
of the CDBG program and one of the stated goals of all HUD activities. A similar critique
was raised by the Public Affairs Council, who noted that the “state is unprepared quite
frankly. We don’t have in place the arsenal of oversight mechanisms [to ensure] the state
will be a trustworthy steward of these funds” (“Group fears state will squander money for
housing project”, 2006). Through 2006, the Road Home program distributed the vast
majority of CDBG funds to homeowners. By November 2006, six months after the start of
the program, Louisiana had allocated nearly 77% of its CDBG funds for housing assistance,
with approximately 80% of this amount directed toward homeowners (GAO, 2009).
In January 2007, aftermuch protest by affordable-housing advocates, the LRAestablished
the Small Rental Property Program (SRRP) to provide incentives to property owners to repair
their storm-damaged rental property (Rodriguez-Dod & Duhart, 2007). Yet, the rules for the
programhampered efforts to revive the rental-housing stock. Participating landlords could not
seek reimbursement from the LRA until they had finished repairs on all eligible units and
provided affordable rent to tenants.Most small landlords, however, could not afford to pay for
repairs up front, which is why they sought the forgivable loans in the first place. By March
2009, rental-property owners had repaired only 1,188 units under the program, well below the
18,000 the state had expected (“The Other Road Home Mess,” 2009). In December 2008, in
response to vehement protest and discontent with the program, the state announced an
additional option for program participants, designed to provide up-front financing to increase
theproductionof rental housingwithCDBGfunds and to accelerate thedistributionof funds to
small rental-property owners. But by November 2009, only 1,024 rental-property owners had
agreed to participate in this option (GAO, 2010).Overall, for thefirst two years afterHurricane
Katrina had devastated New Orleans and created an affordable housing crisis, there were
virtually no rehabilitated rental units funded through the SRRP. By the end of 2009, only 14%
of the 10,115 rental units funded through the SRRP had been completed (GAO, 2010).
In short, CDBG-DR program design and implementation rules diverted funding away
from housing assistance for renters, privileging homeowners and thereby buttressing long-
standing housing inequalities. In Louisiana, more homeowner units than rental units were
damaged, but the proportional damage to the rental stock was greater. An estimated
331,070 homeowners units (29% of homeowner stock) and 184,179 rental units (35% of
rental-housing stock) sustained damage (GAO, 2010). Overall, CDBG-DR resources
addressed the repair and replacement needs of more homeowners than rental-property
owners. In Louisiana, 65% of the damaged homeowner units and 15% of the damaged
rental units received federal assistance (GAO, 2010). In the New Orleans region as a
whole, 45.7% of homes in damaged areas were occupied by renters, compared with 30.9%
in undamaged communities (Logan, 2006). Thus, compared with owner-occupied homes,
a disproportionate number of renter-occupied homes were damaged. Overall, the decision
to prioritize CDBG funds for homeownership rather than for the restoration of rental
housing disadvantaged renters in New Orleans.
K. Fox Gotham200
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
Noncompliance With CDBG Objectives:
The Case of Port Expansion in Mississippi
Another problem associated with the implementation of CDBG-DR was the reallocation
of funds away from programs addressing the housing needs of LMI victims of Hurricane
Katrina toward financing commercial port expansion in Mississippi. HUD rules bar the use
of CDBG for commercial purposes, but in 2008 the state of Mississippi received approval
from HUD to reallocate $570 million of its unused CDBG funds to the Mississippi
Development Authority (MDA) to expand the port in Gulfport, Mississippi (Stuckey,
2008). HUD Secretary Alphonso Jackson stated in a January 2008 letter to Mississippi
Governor Haley Barbour that “Congressional language associated with these CDBG funds
allows me little discretion” and concluded that the MDA was authorized to “reprogram the
$600 million originally intended for the Homeowner Assistance Program to be used for the
Port Restoration Program.”3
Importantly, the MDA’s restoration plan for the Port of Gulfport failed to certify and
demonstrate that the proposed use of CDBG funds would comply with CDBG-DR goals
and the requirement that 50% of CDBG funds benefit low-income households, a policy
decision that marginalized the needs of the poor and most vulnerable residents (U.S. House
of Representatives, 2010, p. 99; Lowe, 2012; National Low-Income Housing Coalition,
2007, 2009). Mississippi was required to develop, and submit for HUD approval, a formal
action plan as a prerequisite to receiving funding. Rather than submit an omnibus disaster-
relief plan that would account for the entire $5.481 billion in allocated appropriations,
Mississippi adopted a piecemeal approach, submitting “partial” action plans for nine
different subject-matter areas, starting on March 31, 2006, and continuing through July
2008.Moreover, several amendments weremade to each partial action plan thatMississippi
submitted toHUD.4 The last amendment concerned the plan to expand the Port ofGulfport.5
TheMDAdid not seek awaiver of the 50%LMI benefit requirement for the Port of Gulfport
Restoration Program; yet, it provided no evidence to support claims that at least 50% of the
grant monies would be used for activities benefiting Mississippi’s LMI residents.
In December 2008, the Mississippi Center for Justice, along with several other public-
interest groups and individual renters and homeowners, filed a lawsuit against the MDA
and HUD in Federal District Court challenging Mississippi’s misuse of CDBG funds for
commercial purposes (Mississippi State Conference NAACP v. U.S. Department of
Housing and Urban Development, 2010). In particular, the complaint detailed the failure
of the State of Mississippi to use the CDBG funds to replenish much-needed affordable
rental-housing stock in three coastal counties directly impacted by Hurricane Katrina
(Mississippi Center for Justice, 2008). After months of data gathering and negotiations
during 2010, an agreement was reached between HUD, the state, and the plaintiffs that
resulted in a new action plan.6 This plan was submitted by the State of Mississippi to HUD
on October 29, 2010, and proposed to reallocate over $132 million in disaster CDBG funds
and other funds to programs designed to address the unmet housing needs of low-income
homeowners and renters (MDA, 2010a, 2010b). On November 8, 2010, HUD approved
the plan, and the parties entered into a memorandum of understanding settling the case.7
In short, Mississippi’s post-Katrina port-expansion plan did not comply with or meet
the CDBG’s LMI benefit requirement. Rather, HUD’s approval of the MDA’s plan was
tantamount to an endorsement of Mississippi’s siphoning funds from housing programs
and reallocating them to pay for a major expansion of the port, a plan that was contrary to
the primary purpose of the congressional CDBG appropriation and that violated the LMI
requirements of the CDBG program. As documented by Lowe (2012), Mississippi not
Housing Policy Debate 201
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
only reduced the amount of CDBG-DR funds allocated to housing from 65% to 52%, but it
also diverted $770 million from affordable-housing restoration to economic-development
activities. It is important to note that this diversion of CDBG funds away from meeting
traditional program objectives was not accidental or unintentional. Rather, officials in
Mississippi, with the approval of HUD, attempted to reallocate CDBG funds to encourage
port expansion and recovery efforts for commercial businesses, thereby engaging in a
planned subversion of the original objectives of the CDBG program (Byrd, 2007; Eaton,
2007; “Mississippi’s Misplaced Priorities,” 2008; Whoriskey, 2007).
Moreover, HUD approved the MDA’s plan to redirect CDBG funds even in the face of
opposition from members of Congress. In two letters to HUD Secretary Alphonso Jackson
in 2007, U.S. House of Representatives members Barney Frank and Maxine Waters urged
him to deny the MDA’s request to use the money for the port. Using CDBG funds for the
port expansion, “when so many families have yet to be able to return home, is misguided
and disregards the continued need for available housing in Mississippi,” the
representatives wrote in October 2007, shortly after the state’s plans to divert the funds
came to light. The two officials escalated their criticism in January 2008, threatening to
hold hearings on “any waivers approved by the [HUD] secretary” (Stuckey, 2008).
As we will see below, Mississippi’s efforts were not an aberrant case or an isolated
episode. Louisiana officials also attempted to reallocate CDBG funds to purposes that had
little to do with furthering CDBG goals and actually violated the spirit and intent of CDBG
legislation.
Accountability Deficits and Discriminatory Impact:The Case of the Louisiana Road Home Program
Louisiana’s Road Home program offers insight into how CDBG-DR program
implementation, combined with HUD waivers, can create accountability deficits and
reinforce and perpetuate racial housing inequalities. In the aftermath of Hurricanes
Katrina and Rita in 2005, HUD allocated $10.41 billion to Louisiana for disaster-
recovery expenses, including funds for the Road Home program. Congress expressly
barred HUD from waiving restrictions on the use of CDBG funds related to fair housing
and nondiscrimination (see 119 Stat. at 2780; 120 Stat. at 472–73). Homeowners who
agreed to use Road Home funds to rebuild or repair their homes were eligible for
rebuilding grants of up to $150,000. The formula for computing the grants, which was
adopted by the LRA and approved by HUD, dictated that the grant amount be the lower
of two values: (1) the home’s prestorm value (minus any other compensation the
applicant received for loss to the structure, such as insurance proceeds); or (2) the cost of
repairing damage to the home (minus any other compensation the applicant received for
loss to the structure). Consistent with the statutory and regulatory framework of the
CDBG-DR program, the LRA proposed and developed this Road Home grant formula
and the details of the Road Home program in consultation with HUD and subject to
HUD’s ongoing approval and oversight.
The Road Home formula used to allocate grants to homeowners had a disproportionate
impact on thousands of African American homeowners by tying recovery dollars to the
depressed values of their pre storm segregated housing instead of the actual cost of
repairing the damage. Figure 3 shows the percentage of homes below market value in New
Orleans, according to race, based on the 2000 Census. Before the storm, 80% of African
American homeowners in New Orleans owned homes worth less than $100,000, compared
with 33% of White homeowners; 89% of African American homeowners owned homes
K. Fox Gotham202
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
worth less than $125,000, compared with 44% of White homeowners; and 93% of African
American homeowners owned homes worth less than $150,000, compared with 55% of
White homeowners. As the figure shows, African Americans living in pre-Katrina New
Orleans were much more likely than Whites to own homes with lower values.
U.S. Census tract data show a strong negative correlation between the prestorm
percentage of African American homeowners in a neighborhood and median home value.
Census tract analyses by Rose, Clark, and Duval-Diop (2008) reveal that almost none of
the census tracts where African Americans owned 60% or more of the homes in 2000 had a
median home value of $150,000 or more, whereas the vast majority of census tracts where
Whites owned 80% or more of the homes had median home values between $150,000 and
$400,000. Similarly, while almost none of the census tracts where Whites owned 80% or
more of the homes had a median home value less than $100,000, almost all census tracts
where African Americans owned 60% or more of the homes had a median home value of
less than $100,000.
The LRA, with the approval of HUD, imposed the Road Home grant formula on a
racially unequal system of home valuation that hardened the color line in housing and
fortified racial disparities in access to rebuilding resources. Since African Americans
owned homes with lower values, they were more likely than Whites to receive Road Home
grant awards based on lower prestorm values and, as a result, more likely to confront costs
of rebuilding their homes that exceeded the size of their grants (and other resources, such
as insurance payouts). As one study reported,
33
80
44
89
55
93
0
10
20
30
40
50
60
70
80
90
100
White African American
< $100,000
< $125,000
< $150,000
Figure 3. Percentage of homes below market value in New Orleans, by race, based on housingvalues from the 2000 Census.
Note. From “Plaintiffs Memorandum and Points of Authorities in Support of Their Motion for a TemporaryRestraining Order and a Preliminary Injunction” (p. 9), filed June 6, 2010, in re Greater New Orleans FairHousing Action Center, et al. v. United States Department of Housing and Urban Development, et al., UnitedStates District Court for the District of Columbia, Case No. 1:08-cv-1938-HHk, Document 50–1.
Housing Policy Debate 203
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
Nearly three-fourths of Road Home applicants had gaps between their rebuilding resourcesand the cost to rebuild. The gap was larger for African American applicants [$39,082 onaverage] than their white counterparts [$30,863]. . . . The grant formula had a more negativeeffect on those whose homes were valued less than their damage estimates. Those whosedamages were greater than their pre storm home value—46.7% of all applicants rebuilding inplace—experienced a gap of nearly $50,000. All the rest had a much lower gap—an averageof about $14,000 (53.3% of all applicants rebuilding in place). (Rose et al., 2008)
The racial disparities at the state level were more intense in New Orleans
neighborhoods, where there were large differences in home values between predominantly
African American and predominantly White neighborhoods. Table 2 shows the average
prestorm value, damage estimate, and Road Home award in the Lower Ninth Ward, a
predominantly African American neighborhood, and Lakeview, a predominantly White
neighborhood. Both neighborhoods were heavily flooded by the levee breaks and suffered
devastating losses. In the Lower Ninth Ward, the average prestorm home value was
$100,739, the average Road Home grant was $93,401, and the average gap between the
cost to rebuild homes and the funds awarded for that purpose was $75,355 (see Table 2). In
the predominantly White neighborhood of Lakeview, the average prestorm home value
was $336,064, the average Road Home grant was $109,777, and the average gap between
the cost to rebuild homes and the amount of funds awarded to do so was $44,405. While
66.1% of the Lower Ninth Ward applicants faced gaps of more than $40,000, only 35.2%
of Lakeview applicants faced a gap of the same magnitude. Even more strikingly, Lower
Ninth Ward homeowners were more likely to face larger gaps in rebuilding resources than
Lakeview homeowners even though, on average, the cost of repairing home damages was
$78,000 less in the Lower Ninth Ward than in Lakeview.
Besides the plethora of primary and secondary evidence of discriminatory design and
implementation, the LRA’s executive director, Paul Rainwater, admitted that the Road
Home grant formula negatively impacted African American homeowners, thereby
violating the nondiscrimination rule of the Housing and Community Development Act. In
an August 2009 hearing before the U.S. House of Representatives Subcommittee on
Housing and Community Opportunity, Rainwater confirmed that the Road Home grant
Table 2. Gaps between home values, rebuilding costs, and Road Home awards in the Lower NinthWard and Lakeview neighborhoods.
Lower Ninth Ward Lakeview
Homeowner demographics, 2000Total population: 14,008Percentage African American: 98.6Total population: 9,122Percentage White: 93.3Average prestorm value $100,739 $336,064Average damage estimate $203,597 $281,537Average Road Home grant award $93,401 $109,777Gap between avg. damage estimate andavg. total resources
$75,355 $44,405
Percentage of homeowners facing a gapof $40,000 or more
66.1 35.2
Note. Average amounts of resources are presented only for closed applicants rebuilding in place. These figuresreflect only applicants for which a neighborhood was indicated. Average damage estimate represents the damageamount used in the grant calculation by Road Home program administrators. Homeowner data based on dataobtained from the Louisiana Recovery Authority. Data represent 84,114 closed applicants rebuilding in place asof June 26, 2008. Analysis performed by PolicyLink (see Rose, Clark, & Duval-Diop, 2008, p. 47).
K. Fox Gotham204
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
formula had an adverse effect on African American homeowners (U.S. House of
Representatives, 2010). He agreed that “home values in predominantly African American
neighborhoods tend to be lower than values in similar houses in predominantly white
neighborhoods” (p. 23). He also agreed that African American homeowners were more
likely to receive the prestorm value for their homes as opposed to the actual cost to repair
them. Rainwater also admitted that most low-income homeowners lacked the resources to
rebuild their damaged homes, agreeing that “9 times out of 10, they cannot save the money
or have the money by which to get these homes [repaired]” (p. 17). Overall, as Rainwater
disclosed, the Road Home grant formula had left a gap between the cost of rebuilding
homes in New Orleans and the grant funds available for that purpose. As he explained, the
LRA’s
analysis showed a gap in homeowner rebuilding resources available in the city of NewOrleans, of between $1.6 billion and $2.3 billion. . . . Many low-to-moderate incomehomeowners may not have the resources to build their homes with the funds available. (p. 90)
On November 12, 2008, the Greater New Orleans Fair Housing Action Center,
National Fair Housing Alliance, and five African American homeowners from New
Orleans filed suit against HUD and the LRA for having developed and implemented the
Road Home program in violation of the nondiscrimination and affirmative fair-housing
provisions of the Fair Housing Act and the Housing and Community Development Act.8
During the presentation of evidence in the case, HUD argued that it lacked the authority to
impose fair-housing conditions on CDBG recipients like the LRA once federal funds had
been disbursed. Moreover, the LRA argued that it was not subject to the requirements of
the Fair Housing Act despite the nondiscrimination requirements of the CDBG program.
Both HUD and the LRA refused to make any changes to the Road Home program and
blamed each other for the racially unequal outcomes of the government-sponsored
program of housing discrimination.9
In July 2011, after more than two years of contentious litigation, the plaintiffs and
defendants reached a settlement under which HUD and the State of Louisiana would direct
additional CDBG funds to individuals in heavily affected parishes whose grants were
based on prestorm value. In response to the plaintiffs’ housing-discrimination lawsuit,
HUD and the State of Louisiana changed the Road Home program’s grant formula to
provide full relief to more than 13,000 homeowners. By virtue of the settlement
agreement, all eligible LMI homeowners received supplemental grant awards totaling
$473 million and based on the estimated cost of damage to their homes, in contrast to the
original grants based merely on the much lower prestorm market value of their homes
(HUD 2011). Despite the higher amounts of aid, many people had been negatively
impacted by the delay. Nevertheless, without the legal intervention from civil rights and
housing advocates, the LRA would have had the freedom and discretion to continue to use
federal funds to design and implement a racially discriminatory post disaster housing-
recovery program.
Conclusions
This article has documented the advantages and limitations of the CDBG as a vehicle for
delivering funds to disaster-impacted areas for recovery and rebuilding. Although the
CDBG is not part of the formal emergency-management system of the federal
government, Congress has turned to the program time and again to deliver resources to
needy communities. The amount of money allocated to the CDBG-DR program has been
Housing Policy Debate 205
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
increasing over time, and the program is likely to remain a central component of federal
involvement in future post disaster rebuilding efforts. With future disasters Congress will
likely have to grapple with a variety of contentious issues, including the appropriate level
of CDBG-DR involvement in state-initiated disaster-recovery programs; the degree of
control of CDBG assistance by individual communities, states, or multistate regional
entities; and the level of grant-requirement discretion and flexibility permitted to states
based on criteria such as type of disaster, level of federal funding, or scope of damage.
Although the CDBG has been widely viewed as an expedient and accessible tool for
distributing federal assistance funds to states, the experience with Hurricane Katrina
suggests that LMI and fair-housing goals can be marginalized and subverted by local and
state officials unless there is effective HUD oversight. In the case of Mississippi, HUD’s
approval of Mississippi’s request for waivers of the LMI requirement resulted in fewer
CDBG dollars being committed to restore critically needed housing for needy residents. In
addition, HUD approved the state’s request to reprogram housing-relief funds for the Port
of Gulfport but did not fulfill federal legal responsibilities to review the proposal to see
how Mississippi officials would affirmatively further fair housing, as required by the Fair
Housing Act. The policy of using CDBG-DR funds for port expansion amounted to a
defunding of activities to benefit LMI people. The cumulative impact was to redistribute
federal resources to commercial interests that heretofore had been barred from using
CDBG funds. This redistribution of funds contradicted the policy and spirit of the CDBG
program.
In the case of Louisiana’s Road Home program, the method of calculating grants
penalized African American homeowners in ways that reproduced longstanding racial
disparities. Moreover, by inscribing discrimination into program design and implemen-
tation, the CDBG-funded Road Home program slowed rebuilding efforts and hampered
the return of African Americans. HUD refused to monitor and provide oversight over the
design and implementation of the program, thereby abdicating its legal duty to ensure that
CDBG-DR funds were being used to further federal nondiscrimination and fair-housing
requirements. In the congressional hearings and suits brought against federal and state
governments by fair-housing advocates, neither HUD nor the State of Louisiana offered a
legitimate reason for using prestorm home values in calculating awards. Interestingly,
when fair-housing officials initially contacted LRA officials about their concerns with the
prestorm valuation formula, LRA officials responded that budgetary constraints caused
them to calculate the grants the way they did, with guidance from HUD, and that they did
not feel there was any unlawful or disproportionate impact on African American
homeowners. Obviously, the fair-housing officials did not agree with that opinion. The
CBDG program funding required that the Road Home program not only refrain from
discrimination but go a step further by affirmatively promoting fair housing. The LRA
chose not to follow this route and created a formula, with HUD’s approval, that linked
housing assistance to the depressed values of African American families’ prestorm
segregated housing.
The procedural and substantive limitations of the CDBG-DR program suggest the need
for statutory, regulatory, and administrative changes to the program, as well as for new
legislation that bolsters enforcement and adds new protections to the Fair Housing Act.
To guard against abuses of CDBG-DR like those we saw in post-Katrina Louisiana and
Mississippi, Congress should provide real penalties for government bodies that receive
CDBG funding but fail to affirmatively further fair housing. It is important to note that
there is no evidence that the entities that received CDBG-DR funds for post-Katrina
recovery supported any fair-housing-related activities, trainings, workshops, events, or
K. Fox Gotham206
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
enforcement. In fact, many of the entities that received CDBG-DR funding did not use it in
such a manner as to promote fair housing but instead were found liable for violating
federal fair-housing laws. Congress could strengthen CDBG requirements so that
governments found liable for illegal housing discrimination would have to forfeit CDBG
and other federal funding. Moreover, Congress should require HUD to strengthen its
enforcement of CDBG-related fair-housing laws by requiring recipients of CDBG money
to provide quarterly reports on their progress toward realizing fair-housing goals.
In addition, HUD should no longer use predisaster home values in calculating the need
for housing assistance. Using prestorm market value or similar market-driven criteria in
determining payouts can have a disproportionate impact on low-income and minority
homeowners because their homes tend to have lower property values as a result of
institutionalized forms of housing discrimination, residential segregation, and redlining. In
2011, HUD officials issued a notice in the Federal Register clarifying that a “rebuilding
project’s cost estimate is often able to serve as the best demonstration of need” (76 Fed.
Reg. 221, p. 71062). This statement appears to acknowledge that using a subjective
criterion such as prestorm value is not the best way to calculate the need for assistance.
Since Hurricane Sandy, HUD has released new “model programs” for use by communities
seeking CDBG-DR funding that refrain from using the flawed design of the Road Home
program (HUD, 2013a). Since HUD never admitted any wrongdoing in the Road Home
case, they have not specifically said how they would remedy the disproportionate impacts,
but recent actions suggest that federal officials are aware of the detrimental effects of using
predisaster home values in determining post disaster housing assistance.
Congress should also maintain (or raise), and vigorously enforce, the 70% LMI
requirement. The maintenance of the 70% LMI requirement will ensure that the CDBG
program primarily benefits LMI persons and is not diverted to other uses such as
commercial development. Poor and marginalized populations have fewer housing choices
and are more likely than more affluent groups to live in areas with a higher exposure to
hazards. Preserving the 70% LMI requirement could begin to address the housing-recovery
needs of LMI people. Moreover, the LMI requirement could ensure a more adequate flow
of funds for rehabilitating multifamily properties in low-income neighborhoods and for
repairing damage sustained by low- and medium-income owners of single-family
properties. Without adequate assistance, the rehabilitation of such properties is likely to
extend over a longer-than-desired period and generate uneven patterns of development that
negatively affect surrounding neighborhoods, creating a “jack-o’-lantern effect” where
renovated homes share space with pockets of blighted and deteriorating structures.
Congress should also seriously consider the potential limitations and negative
consequences of granting generous waivers to HUD in the name of “flexibility” and
“discretion” to expedite the delivery of disaster aid. Researchers have made several
arguments in defense of waivers. One argument is that waivers to CDBG rules and
regulations can provide increased flexibility and control to local communities to use
federal funds at their own discretion (Boyd, 2011). Waivers can also be a means to
circumvent cumbersome government bureaucracy and to overcome regulatory barriers
that can stifle the delivery of disaster resources to communities (Liu, 2010). According to
their proponents, waivers “cut red tape,” thereby enabling the federal government to
expedite funding so that disaster-impacted communities can effectively utilize the
allocated funds and address the needs of disaster victims.
Yet, as this article has pointed out, waivers can generate major accountability deficits
and blur the lines of responsibility for enforcing CDBG-DR rules and achieving
CDBG-DR goals. In both Louisiana and Mississippi, LMI waivers helped establish and
Housing Policy Debate 207
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
legitimate a novel federal–state relationship whereby HUD and state agencies could
insulate themselves from legal obligation to ensure and monitor progress toward CDBG
goals, including allocation of funds for LMI persons and compliance with fair-housing
anti-discrimination statutes. Freed from meaningful HUD oversight and bestowed with
unprecedented “flexibility” and “discretion,” state and local officials designed and
implementation a series of discriminatory programs that undermined the basic rules and
goals of the CDBG program.
Waivers have been identified as problematic by the GAO (2006), and there is little
evidence that waivers actually increased the speed of resource delivery or reduced
administrative and regulatory barriers to program implementation in Louisiana or
Mississippi (Craig-Taylor, 2010). As this article has shown, waivers can generate major
substantive and procedural problems and make it difficult to hold CDBG recipients
accountable for program implementation deficiencies and outright violations of fair-
housing laws. Rather than providing greater flexibility to carry out the intent of
congressional legislation, waivers can create opportunities to evade CDBG-DR rules and
requirements and redirect funds to non-CDBG activities and projects.
In short, the problems identified in this article call for stronger HUD oversight of
CDBG implementation at the state and local levels, stricter reporting requirements for
program recipients, and stronger reporting requirements of HUD to Congress. Without
effective oversight and accountability from Congress, the flexibility of the CDBG program
can allow practices that reinforce racial and class inequality. Receipt of any funding that
requires affirmative fair-housing action needs stricter oversight and requirements—
for example, workshops, trainings—to guard against abuses. While these policy
recommendations would not solve all CDBG-DR program limitations, they could
affirmatively advance fair housing principles and discourage state officials from using
federal funds to perpetuate social inequalities.
Notes
1. Section 3604(a) of the Fair Housing Act makes it unlawful to “make unavailable or deny”housing to any person because of race. Section 3605(a) makes it unlawful to discriminate on thebasis of race in the availability, terms, or conditions of residential real estate-relatedtransactions. Section 3608(e)(5) of Title VIII of the Fair Housing Act requires HUD andrecipients of federal funds to “administer the programs and activities relating to housing andurban development in a manner affirmatively to further” fair housing. Finally, Section 5304(b)(2) of the Housing and Community Development Act requires that the use of all CDBG funds beconducted in a manner that “affirmatively further[s] fair housing.” HUD’s implementingregulations require that grantees submit an action plan to fulfill these obligations (71 Fed. Reg. at7669; 71 Fed. Reg. at 63,338–39; 72 Fed. Reg. 70,472, 70,472–73). In addition to detailing theintended uses of all CDBG-DR funds, the action plan must include assurances that the granteewill comply with the Fair Housing Act and will affirmatively further fair housing.
2. Quigley, Bill (2006). Administrative Complaint, Challenging the Misuse of Federal CommunityDevelopment Block Grants by the State of Louisiana in “Road Home” Expenditures of FederalFunds Because There is No Guarantee of a “Fair Share” for Low and Moderate Income Rentersand Homeowners. (U.S. Department of Housing and Urban Development June 20, 2 2006).Cited in Finger 2007
3. Letter from Alphonso Jackson, HUD secretary, to Governor Haley Barbour, January 25, 2008(cited in U.S. Senate 2009, p. 155).
4. Mississippi State Conference NAACP, Gulf Coast Fair Housing Center, et al., plaintiffs,v. United States Department of Housing and Urban Development, defendant. Re: Complaintfor Declaratory and Injunctive Relief. United States District Court for the District of Columbia.http://www.lawyerscommittee.org/admin/fair_housing/documents/files/0006.pdf
K. Fox Gotham208
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
5. The MDA describes the various partial plans at its website, found at http://www.mississippi.org/content.aspx?url¼ /page/3623.
6. Mississippi State Conference NAACP, Gulf Coast Fair Housing Center, Dorothy Mcclendon,Zelda Williams, Rangisma Dilworth and Pamela Landry, appellants, v. United StatesDepartment of Housing and Urban Development, appellees, on Appeal from the United StatesDistrict Court for the District of Columbia, Brief of Appellants, United States Court of Appealsfor the District of Columbia Circuit No. 10–5055, case 10–5055, document 1,252,274, filed06/28/2010. http://www.lawyerscommittee.org/admin/fair_housing/documents/files/Plaintiffs-Appellant-Brief-for-the-D.C.-Circuit.pdf
7. Letter from Mercedes Marquez, assistant secretary, HUD, to Jon Mabry, chief operating officer,Disaster Recovery Division, MDA, November 8, 2010. Re: Mississippi’s Long-TermWorkforce Housing (LTWH) Action Plan. http://www.lawyerscommittee.org/admin/fair_housing/documents/files/10–29-action-plan.pdf
8. Greater New Orleans Fair Housing Action Center, et al. Plaintiffs v. U.S. Department ofHousing and Urban Development, et al. Defendants. November 12, 2008. Complaint ForDeclaratory and Injunctive Relief. Introductory Statement. United States District Court. http://www.gnofairhousing.org/wp-content/uploads/2012/02/11-12-08_RoadHomeComplaint.pdf
9. Testimony of Matthew Colangelo, director of the Economic Justice Group, NAACP LegalDefense and Educational Fund (U.S. House of Representatives, 2010).
Notes on Contributor
Kevin Fox Gotham, PhD, is a professor of sociology and associate dean of academic affairs in theSchool of Liberal Arts at Tulane University in New Orleans. He has research interests in urbanredevelopment, political economy of tourism, postdisaster rebuilding, risk and vulnerability,resilience, and sustainability studies. He is the author of Race, Real Estate and Uneven Development(SUNY, 2002, 2014 (second edition)), Authentic New Orleans (New York University Press, 2007),Critical Perspectives on Urban Redevelopment (Elsevier, 2001), and Crisis Cities: Disaster andRedevelopment in New York and New Orleans (Oxford, 2014).
References
Boyd, E. (2011). Community Development Block Grant funds in disaster relief and recovery(RL33330). Washington, DC: Congressional Research Service.
Byrd, S. (2007, September 12). Idea to divert Katrina housing funds to port draws fire. AssociatedPress.
Brookings Institution. (2005). New Orleans after the storm: Lessons from the past, a plan for thefuture. Washington, DC: Author.
Burby, R. J. (2006). Hurricane Katrina and the paradoxes of government disaster policy: Bringingabout wise governmental decisions for hazardous areas. Annals of the American Academy ofPolitical and Social Science, 604, 171–191.
Comfort, L. K., Birkland, T. A., Cigler, B. A., & Nance, E. (2010). Retrospectives and prospectiveson Hurricane Katrina: Five years and counting. Public Administration Review, 70, 669–678.
Craig-Taylor, P. (2010). All that glitters is not gold: A critique of waivers and congressionalmandates on Community Development Block Grants. Charlotte Law Review, 2, 145–85.
Department Of Housing And Urban Development. [Docket No. FR-4732-N-04]. Statutory andRegulatory Waivers Granted to New York State for Recovery from the September 11, 2001Terrorist Attacks. Office of Community Planning and Development, HUD. Action: Notice ofwaivers granted. Federal Register Volume 67, Number 99 (Wednesday, May 22, 2002)][Notices] [Pages 36017–36020] From the Federal Register Online via the Government PrintingOffice [www.gpo.gov] [FR Doc No: 02-12715] Retrieved from http://www.gpo.gov/fdsys/pkg/FR-2002-05-22/html/02-12715.htm (accessed April 25, 2013).
Eaton, L. (2007, November 16). In Mississippi, poor lag in hurricane aid. New York Times, p. A-1.Emergency Supplemental Appropriations Act of 2006, Pub. L. 109-234, 120 Stat. 418, June 15,
2006.Face the Facts USA. (2013). Billion-dollar natural disasters now a frequent occurrence. Retrieved
from http://www.facethefactsusa.org/facts/Billion-Dollar-Natural-Disasters-on-the-Increase
Housing Policy Debate 209
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
Finger, D. (2007). Post-hurricane demolition in the city of New Orleans: When is a house no longer ahome? Loyola Law Review, 53, 891–904.
Finger, D. (2008). Stranded and squandered: Lost on the road home. Seattle Journal for SocialJustice, 7, 59–100.
Goldberg, A. C. (2006). In search of the public good: Agenda setting and policy formulation for post-9/11 New York City (Unpublished doctoral dissertation). Department of Political Science,City University of New York.
Gotham, K. F., & Greenberg, M. (2008). From 9/11 to 8/29: Post-disaster recovery and rebuilding inNew York and New Orleans. Social Forces, 87, 1039–1062.
Green, R. D., Kouassi, M., & Mambo, B. (2011). Housing, race, and recovery from HurricaneKatrina. Review of Black Political Economy, 1, 1–19.
Green, T. F., & Olshansky, R. B. (2012). Rebuilding housing in New Orleans: The Road Homeprogram after the Hurricane Katrina disaster. Housing Policy Debate, 22, 75–99.
Group fears state will squander money for housing project. (2006, June 10). Retrieved fromWWLTV.com. http://www.parlouisiana.com/s3web/1002087/docs/par%20news/WWLTV06102006.pdf
Housing and Community Development Act of 1974, Pub. L. No. 93-383, 88 Stat. 633, Aug. 22,1974.
Kamel, N. (2012). Social marginalisation, federal assistance and repopulation patterns in the NewOrleans metropolitan area following Hurricane Katrina. Urban Studies, 49, 3211–3231.
Kates, R. W., Colten, C. E., Laska, S., & Leatherman, S. P. (2006). Reconstruction of New Orleansafter Hurricane Katrina: A research perspective. Proceedings of the National Academy ofSciences, 103, 14653–14660.
Landy, M. (2008). Mega-disasters and federalism. Public Administration Review, 68(s1),S186–S198.
Liu, A. (2010). Federal post disaster recovery. Metropolitan Policy Program at Brookings andWhat Works Collaborative. Retrieved from http://www.urban.org/UploadedPDF/1001384-federal-post.pdf
Liu, A., & Anglin, R. V. (2011). Resilience and opportunity: Lessons from the US Gulf Coast afterKatrina and Rita. Washington, DC: Brookings Institution Press.
Logan, J. R. (2006). The impact of Katrina: Race and class in storm-damaged neighborhoods (pp.131–146). Province, RI: Brown University.
Lowe, J. S. (2012). Policy versus politics: Post-Hurricane Katrina lower-income housing restorationin Mississippi. Housing Policy Debate, 22, 57–73.
McCarty, M., Perl, L., & Foote, B. E. (2005, September). The role of HUD housing programs inresponse to disasters. Washington, DC: Congressional Research Service, Library of Congress.
McCarty, M., Perl, L., & Foote, B. E. (2006, January). HUD’s response to Hurricane Katrina.Washington, DC: Congressional Research Service, Library of Congress.
Mississippi Center for Justice. (2008, December 10). Mississippi housing advocates file suitagainst HUD over diversion of hurricane recovery funds [Press release]. Retrieved from http://www.lawyerscommittee.org/newsroom/press_releases?id=0011
Mississippi Development Authority. (2010a). Katrina Disaster Assistance Program: Long termworkforce housing action plan, Amendment 6, Modification No. 3, unmet needs. CDBG DisasterRecovery Program. Retrieved from http://www.msdisasterrecovery.com/documents/Unmet_Needs_Action_Plan_10-29-10.pdf
Mississippi Development Authority. (2010b). Katrina Disaster Assistance Program: ModificationNo. 17, program funding allocation. CDBG Disaster Recovery Program. Retrieved from http://www.msdisasterrecovery.com/documents/Program_Funding_Allocation_Action_Plan_10-29-10_revised.pdf
Mississippi’s misplaced priorities [Editorial]. (2008, June 26). New York Times.Moore, L. M. (2007). Stranded again: The inadequacy of federal plans to rebuild an affordable New
Orleans after Hurricane Katrina. Boston College Third World Law Journal, 27, 227–262.Retrieved from http://lawdigitalcommons.bc.edu/twlj/vol27/iss1/8
Morse, R. (2011). Come on in this house: Advancing social equity in post-Katrina Mississippi. InA. Liu & R. V. Anglin (Eds.), Resilience and opportunity: Lessons from the US Gulf Coast afterKatrina and Rita. Washington, DC: Brookings Institution Press.
National Low-Income Housing Coalition. (2007). Third set of CDBG disaster waivers further diluteslow income benefit [Memo to members]. Retrieved from http://www.nlihc.org
K. Fox Gotham210
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
National Low-Income Housing Coalition. (2009, June 29). Frank and Waters pressure MS ondisaster CDBG use, Washington, DC: NLIHC.
National Low Income Housing Coalition. “Third set of CDBG disaster waivers further dilutes low-income benefit,” Memo to Members, March 9, 2007, www.nlihc.org/detail/ article.cfm?article_id=3964.
Norcross, E., & Skriba, A. (2008). The road home: Helping homeowners in the Gulf after Katrina(Policy comment No. 19). Arlington, VA: Mercatus Center at George Mason University.
Olshansky, R. B., & Johnson, L. (2010). Clear as mud: Planning for the rebuilding of New Orleans.Washington, DC: American Planning Association.
The other Road Home mess [Editorial]. (2009, April 18). Times Picayune.Platt, R. H. (1999). Disasters and democracy: The politics of extreme natural events. Washington,
DC: Island Press.Quigley, W. P. (2007). Obstacle to opportunity: Housing that working and poor people can afford in
New Orleans since Katrina. Wake Forest Law Review, 42, 393–419.Rodriguez-Dod, E. C., & Duhart, O. (2007). Evaluating Katrina: A snapshot of renters’ rights
following disasters. Nova Law Review, 31, 467–485.Rose, K., Clark, A., & Duval-Diop, D. (2008). A long way home: The state of housing recovery in
Louisiana. Washington, DC: Policy Link. Retrieved December 17, 2013, from http://www.policylink.info/threeyearslater
Seidman, K. F. (2012). Coming home to New Orleans: Neighborhood rebuilding after Katrina. NewYork, NY: Oxford University Press.
Smith, G. (2012). Planning for post disaster recovery: A review of the United States disasterassistance framework. Washington, DC: Island Press.
Stuckey, M. (2008, January 25). Feds OK Mississippi’s Katrina grant diversion. MSNBC.com.Retrieved from http://www.nbcnews.com/id/22805282/ns/us_news-life/t/feds-ok-mississippis-katrina-grant-diversion/#.UrBrIvRDvAk
Supplemental Appropriations Act of 2010, Pub. L. No. 111-212, 124 Stat. 2302, July 29, 2010.Turnham, J., Spader, J., Khadduri, J., & Finkel, M. (2010).Housing recovery in the Gulf Coast phase
1: Results of windshield observations in Louisiana. Washington, DC: Office of PolicyDevelopment and Research, U.S. Department of Housing and Urban Development.
United States: Executive Office of the President and Assistant to the President for HomelandSecurity and Counterterrorism. (2006). The federal response to Hurricane Katrina: Lessonslearned. Washington, DC: Author.
U.S. Government Accountability Office. (2003). September 11: Overview of federal disasterassistance to the New York City area (GAO-04-72). Washington, DC: Author.
U.S. Government Accountability Office. (2006, July). Community Development Block Grants:Program offers recipients flexibility but oversight can be improved (GAO-06-732). Washington,DC: Author.
U.S. Government Accountability Office. (2009). Gulf coast disaster recovery: CommunityDevelopment Block Grant program guidance to states needs to be improved. Report to theCommittee on Homeland Security and Governmental Affairs, U.S. Senate (GAO-09-541).Washington, DC: Author.
U.S. Government Accountability Office. (2010). Disaster assistance: Federal assistance forpermanent housing primarily benefited homeowners; opportunities exist to better target rentalhousing needs. Report to congressional requesters (GAO-10-71). Washington, DC: Author.
U.S. Department of Housing and Urban Development. (2011, July 6). HUD and Louisiana announcesettlement agreement to end legal challenge to Road Home program (Press release No. 11-138).Retrieved from http://portal.hud.gov/hudportal/HUD?src¼ /press/press_releases_media_advisories/2011/HUDNo.11-138
U.S. Department of Housing and Urban Development. (2013a). CDBG disaster recovery assistance.Retrieved from http://portal.hud.gov/hudportal/HUD?src¼ /program_offices/comm_planning/communitydevelopment/programs/drsi
U.S. Department of Housing and Urban Development. (2013b, March 15). HUD releases modelprograms for use by communities seeking CDBG-DR funding (Press release No. 13–036).Retrieved from http://portal.hud.gov/hudportal/HUD?src¼ /press/press_releases_media_advisories/2013/HUDNo.13–036
U.S. House of Representatives. 2010. Implementation of the Road Home Program Four Years AfterHurricane Katrina. Field Hearing before the Subcommittee on Housing and Community
Housing Policy Debate 211
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
Opportunity of the Committee on Financial Services. One Hundred Eleventh Congress. FirstSession. August 20, 2009. Serial No. 111–70. (Washington: GPO, 2010).
U.S. Senate. (2007a). Senate Committee on Homeland Security and Governmental Affairs,Hurricane Katrina: A Nation Still Unprepared, special report, 109th Cong., 2nd sess., S.Rept.Washington, DC: Government Printing Office.
U.S. Senate. (2007b). Senate Committee on Homeland Security and Governmental Affairs,Subcommittee on Disaster Recovery, The Road Home? An Examination of the Goals, Costs,Management and Impediments Facing Louisiana’s Road Home Program, hearings, 110thCong., 1st sess., May 24, 2007. (pp. 109–322), Washington, DC: Government Printing Office.
U.S. Senate. (2009). Far From Home: Deficiencies in Federal Disaster Housing Assistance AfterHurricanes Katrina And Rita and Recommendations For Improvement. Special Report PreparedBy The Ad Hoc Subcommittee on Disaster Recovery of the Committee on Homeland Securityand Governmental Affairs. United States Senate. 111th Congress 1st Session. Washington, DC:Government Printing Office.
Weiss, D. J., & Weidman, J. (2013). Disastrous spending: Federal disaster-relief expenditures riseamid more extreme weather. Washington, DC: Center for American Progress.
Whoriskey, P. (2007, November 25). Biloxi’s recovery shows divide. Washington Post.
K. Fox Gotham212
Dow
nloa
ded
by [
Bem
idji
Stat
e U
nive
rsity
] at
19:
04 2
6 O
ctob
er 2
014
top related