Louisiana Deads Lawsuit Against Victims Of Hurricanes Katrina and Rita

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Louisiana is no longer pursuing its lawsuits against homeowners who were victims of hurricanes Katrina and Rita. 

Thousands of lawsuits regarding how Louisianians used their emergency grants during a crisis to rebuild their homes have been dropped, according to The Times-Picayune/ ProPublica investigation. 

On Feb 16, a joint announcement between Gov. John Bel Edwards, Congressman Troy Carter, Housing Secretary Marcia Fudge and New Orleans Mayor LaToya Cantrell declared they were canceling the debt of its residents using Louisiana’s surplus state revenue in its current fiscal year’s budget. 

The other portion will come from the unused $37 million from the recovery program. Another source of revenue, $12 million, will be from the program’s contractor that failed to administer grants.

The state, through a contracted consulting firm, went after displaced homeowners for using federal grants to repair damaged homes instead of elevating them in case of another flood.

The Road Home program was designed 17 years ago to be an elevation grant program. 

Through the grant program, more than 32,000 grantees received $30,000 each, or more than $9 billion went to 130,000 residents, were intended to elevate existing homes, according to The Louisiana Illuminator.

However, some recipients, between 3,200 and 3,500 grantees, used the money on repairs their insurance claims or personal savings did not cover. 

These expenditures, considered to be misspent funds, were discovered in a 2010 HUD internal review. That was when the state decided to sue recovering homeowners through its third-party contractor.

The state received pressure from HUD to recoup $103 million in misspent funds.

In 2006, the Division of Administration’s (DOA) Office of Community Development (OCD), which created the Disaster Recovery Unit to administer the Community Development Block Grants and Disaster Recovery funds, selected a company that specializes in global consulting and technology services called Inner City Fund (ICF) Emergency Management Services.

At the time, ICF had never done a consulting or grant program of this magnitude prior, as reported by The Washington Post, stating the Virginia-based firm, “was eager to prove itself, viewing the roughly $750 million contract as a source of new business, a foundation for future growth.”

However, by 2007, the grants reportedly were delivered slower than expected with then-Gov. Kathleen Babineaux Blanco and then-Sen. Barack Obama expressing disappointment, according to NBC News.

In the summer of 2006, the Road Home pilot program offered homeowners – about 123,000 people were eligible – $150,000 to pay off expenses from insurance or other sources to cover the cost of repairing or replacing a damaged home and fortifying their homes or sell out to the state of Louisiana. 

The Washington Post reported, however, the average grant given was $73,000.

Homeowners like New Orleans resident Mark Samuels, who lived with his three children in a gutted home that was valued at $700,000 before Katrina, his flood insurance gave him $100,000, and Road Home gave him $43,000.

His house was 30 years old at the time, and the repair costs were estimated to cost more than $200,000, NBC reported.

Surviving homeowners endured two deadly and destructive hurricanes within the same year and season, Hurricane Katrina hit on August 29, 2005, flooding more than 80 percent of New Orleans, and Hurricane Rita thrashed the state on September 24.

The incident claimed more than lives, of which 1,800 people succumbed to the destruction. Katrina and Rita caused more than $180 billion in damages, the costliest hurricanes in U.S. history. The Office of Response and Restoration reported, “tens of thousands of drums, storage tanks, and other containers holding oil, chemicals, and other hazardous materials,” trashed the coast and sank thousands of vessels along the Gulf Coast.

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