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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

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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

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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.

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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

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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

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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

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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.

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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.

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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

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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.

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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

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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

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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.

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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).

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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

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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

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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

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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

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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).

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