HUD Settles Racial Discrimination Lawsuit With Another $62 Million for Post-Katrina Rebuilding

Susan Jones | July 7, 2011 | 10:24am EDT
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( - The Road Home program, described as the largest home rebuilding effort in American history, has paid around $8.8 billion to 128,278 Louisianans whose homes were damaged or destroyed by Hurricanes Katrina and Rita, but apparently it's not enough.

On Wednesday, the Obama administration announced that 1,300 homeowners in four parishes will receive $62 million in additional compensation as the result of a racial discrimination lawsuit.

Those 1,300 homeowners, many poor and black, were unable to complete their home repairs because they received relatively low grant awards, based on the pre-storm value of their damaged homes.

Nearly six years after Hurricane Katrina, the parishes of Cameron, Orleans, Plaquemines, and St. Bernard continue to struggle with blight more than all other parishes damaged by Hurricanes Katrina or Rita, the Department of Housing and Urban Development said on Wednesday, as it announced the extra $62 million.

“This agreement is a huge help to families who clearly want to get back into in their homes but continue to struggle to make the needed repairs to their properties,” said HUD Secretary Shaun Donovan. “While this additional compensation goes a long way to helping folks complete their recovery, we’re also going to make sure that those who left their blighted properties behind are held accountable.”

The Road Home Program offered up to $150,000 to families whose properties were damaged or destroyed and who committed to rebuilding their homes in Louisiana and reoccupying them within three years. 

Civil rights groups, including the Greater New Orleans Fair Housing Action Center, National Fair Housing Alliance and several African-American homeowners, sued HUD and the State of Louisiana, arguing that African-Americans were more likely than whites to have their Road Home grants based on the lower pre-storm value of their homes, rather than on the estimated cost to repair their homes.

The National Fair Housing Alliance offered the example of one African-American plaintiff whose rebuilding grant was based on the pre-storm value of her home. She received a $1,400 grant to rebuild; but the Alliance says she would have received a grant of $150,000 if her rebuilding grant had been based on the estimated cost of damage to the home.

"These types of shortfalls played a key role in slowing down the recovery effort," the Alliance said. "Under the terms of the settlement, HUD and the State of Louisiana will direct additional funds to individuals in heavily-affected parishes whose grants were based upon pre-storm value."

Paul Rainwater, the Road Home grant administrator in Louisiana, said the goal of the program has always been to help Hurricane victims return home, regardless of race or status. Rainwater previously has rejected claims that the program discriminated, calling those claims "unfounded." The settlement announced on Wednesday does not include an admission of discrimination.

Federal funding for the Road Home program flows from Community Development Block Grants.

The $62 million will be distributed to existing Road Home applicants who meet certain criteria -- including a requirement to participate in a "construction advisory services program" offered by the State of Louisiana. The program guides homeowners "in the continued efforts to restore their lives."

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