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Recovery package still taking applications

Last of funds could take years to award

 

Just weeks after Hurricane Katrina laid waste to the Mississippi Gulf Coast in Aug. 2005, the State of Mississippi petitioned Congress for help with the massive cleanup and recovery effort. Gov. Haley Barbour, the state’s congressional delegation and others were successful in securing approximately $5.4 billion in Community Development Block Grant (CDBG) funding.

Community Development Block Grant (CDBG) summary points PDF

Four years after Katrina, a significant amount of that Katrina recovery package has been expended. It is a moving target, but the Mississippi Development Authority (MDA), which administers the CDBG funds through the authority of the U.S. Department of Housing and Urban Development (HUD), reports total expenditures somewhere between $3-$4 billion.

The largest chunk of the state’s package, roughly $2.16 billion, was earmarked for the Homeowners Assistance Program (HAP). Lee Youngblood, communication director of the MDA’s Disaster Recovery Division, said HAP had to have priority as many homeowners faced uncompensated losses.

“These were homeowners who were told they lived outside the flood zone and, thus, didn’t have flood insurance,” Youngblood added.

Combined, phases one and two of HAP awarded 27,710 individual grants totaling approximately $1.85 billion. A modification to phase one awarded another 1,523 grants totaling $114 million, while a modification to Phase 2 has given applicants an additional $25 million.

In the end, demand for HAP funding fell under expectations. In May, with less than 80 applications pending, MDA announced a reallocation of HAP funding totaling $51 million, which was rolled into the recovery package’s public housing, community revitalization and water and wastewater restoration programs. That was a full year earlier than the MDA projected for the closing of HAP.

“Since we have about $1 billion in public housing, community revitalization and water and wastewater recovery projects that have begun in recent months, it’s now very important that we reinforce these construction programs,” said Jon Mabry, COO of the MDA’s Disaster Recovery Division.

The recovery package’s public housing component, totaling $110 million, is also ahead of state forecasts. In April, the state said its goal was to have 600 public housing units available by the end of June. On June 5, the number of units already stood at 900. As of Aug. 14, 1,210 units had been completed. Another 354 units were under construction and 100 were expected to be on line by this fall. In early 2010, MDA hopes to have approximately 3,000 units available, which would be 1,000 units above pre-Katrina.

“We’re not just building back old-style public housing; we’re building a new type of public housing that is attractive to residents, complements the surrounding area and is something in which the entire community can take pride,” said Gov. Haley Barbour.

The two other direct housing components of the CDBG package are small rental ($232.5 million) and long term workforce housing ($350 million). As of Aug, 14, the long term workforce housing program had awarded $244 million to 34 projects. Environmental clearances were ongoing, and $92 million was still available.

Along with elevation grants ($70.5 million) and tax credits ($30 million), these programs constitute what MDA calls the plan’s housing (direct) component. The housing (indirect) component includes water/wastewater infrastructure (approximately $641 million and managed by the Mississippi Department of Environmental Quality), building/code inspector grants ($9.5 million) and ratepayer and wind pool mitigation ($440 million). Thus, the housing components, two-thirds of the total plan, are earmarked approximately $3.971 billion, roughly 72 percent of the entire recovery package.

The rest of the package, roughly $1.352 billion, is earmarked for recovery efforts. These range from economic development grants and loans (approximately $247.2 million) to tourism restoration grants $5 million).

The most significant chunk of the recovery component, $570 million, went to the State Port at Gulfport. Here, the state’s plan has drawn criticism for allocating funds to the port that some felt should go to housing and other issues.

Youngblood counters that any “objective thinker” would see that restoring the port with recovery money, a move that was approved by HUD, was critical to the region’s turn-around, and that the state had tried to be as transparent as possible and sought public input on all plans centering on the port.

Youngblood said CDBG funding had never been used this way before the Katrina recovery package. The state was awarded the funding to use at its discretion — Congress did not want to dictate where the money had to be used. In short, there was nothing improper about earmarking money for the port, and he reiterated that more than 70 percent of the package’s funding went to housing, both directly and indirectly.

Youngblood was also quick to point out that the package’s administrative costs were $157.6 million as of Aug. 14, less than 3 percent of the total CDBG package.

Youngblood said he could give no date as to when all of the CDBG funds would be completely expended.

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