Class Blasts Post-Katrina Home Grant Program

BATON ROUGE (CN) - Discriminatory housing grant practices in the wake of Hurricane Katrina has kept tens of thousands of black homeowners from rebuilding their ruined homes, a class action claims.

After hurricanes Katrina and Rita tore through the Gulf Coast in 2005, inundating more than 80 percent of the city and decimating 71 percent of the occupied housing units, the Road Home Program was created to distribute $11 billion in homeowner grants to help the displaced rebuild their destroyed homes or build new ones.

Road Home grants were calculated using the lower of two baseline values: the pre-storm value of a home, or the cost of damage to the house. This system created "a discriminatory disparate impact on African American homeowners because home values in predominantly African American communities are generally lower than home values for similar homes in predominantly white communities," the class says.

African American homeowners as a result were more likely to receive Road Home grants based on the pre-storm value of their home than were white homeowners, the class action says, and therefore faced "larger gaps than white families between the grant amount and the cost to rebuild," meaning that an African American family is less likely to be able to rebuild its home and remain in its community than a white family with a comparable home that suffered similar damage.

The Road Home Program was funded by the CDBG Disaster Recovery Grant program, a $19 billion Community Development Block Grant program allocated by Congress for necessary expenses related to disaster relief, long-term recovery, and rebuilding expenses in those areas most affected by hurricanes Rita and Katrina.

More than half a million people were displaced by hurricanes Katrina and Rita and more than 53,000 homes in New Orleans were damaged or destroyed. Hurricane Katrina alone caused an estimated $81.2 billion in damages, making it the costliest hurricane in U.S. history. To date, New Orleans has only recovered 75 percent of its pre-Katrina population, the class action says. While the latest population studies show that 100,000 African Americans are still missing from the city.

The Road Home Homeowner Assistance Program was put in place to help the approximately 150,000 owner-occupied homes that were destroyed or seriously damaged during the hurricanes.

Homeowners who received Road Home grants were given a choice of promising to use the funds to rebuild or repair their homes or of receiving a reduced grant that could be used to obtain housing outside or their home parish or outside Louisiana.

Homeowners were eligible to receive up to $150,000.

Since August, 2010, defendants have been subject to an injunction out of the District of Columbia that bars them from dispersing home grant awards based on the pre-storm value of a home, the lawsuit says.

The requirement that bars Road Home grants from exceeding the pre-storm value of a home (where pre-storm value was less than the cost of damage) had a "discriminatory disparate impact on African Americans living in historically segregated communities," where comparable homes have lower values in predominantly African American communities than in predominantly white communities, the lawsuit says.

Data from the 2000 census shows that nearly 80 percent of homes owned by African Americans in New Orleans were valued at less than $100,000 and 93 percent of homes owned by African Americans were valued at less than $150,000, compared to 55 percent of homes owned by white homeowners, the lawsuit says.

Because the Road Home formula limited grant awards to the pre-storm value of the home where the amount was less than the cost of damage, African American recipients of Road Home grants were more likely than white grantees to have a "gap" between their rebuilding resources and the cost to rebuild, the class action says.

The average rebuilding gap for African American applicants was far larger than the average gap for white applicants, the class says, which "disproportionately burdens African American homeowners and hinders their ability to return to their home," the lawsuit says.

If defendant truly desired to reach its stated intention of helping residents come home, why not simply calculate grants based on the cost of damage to a home, "which would permit the program to achieve its goal of restoring communities and permitting homeowners to rebuild their homes," the lawsuit says. As it stands now, plaintiffs' homes are still under construction due to the fact that damages far exceeded defendant's calculations.

Named defendants are the Louisiana Office of Community Development and the Louisiana Recovery Authority, and Patrick Forbes, in his official capacity as director.

The class action was filed in East Baton Rouge Federal Court by DeVonn Jarrett of New Orleans.

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