$700 Million From Hurricane Katrina Relief Fund Went To Waste: Federal Audit
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As much as $700 million in federal aid intended to fortify homes after the Hurricane Katrina disaster in 2005 have been either squandered or misspent, said the U.S. Department of Housing and Urban Development (HUD) on Wednesday, who claimed that likelihood of recovering the money was “slim, at best.”
As much as $700 million in federal aid intended to fortify homes after the Hurricane Katrina disaster in 2005 have been either squandered or misspent, said the U.S. Department of Housing and Urban Development (HUD) on Wednesday, who claimed that likelihood of recovering the money was “slim, at best.”
A report by the HUD’s inspector general found that some homeowners in the state of Louisiana got grants of up to $30,000 to rebuild their homes, but used the money for something else. Other homeowners also could not provide sufficient documents to demonstrate that any work was done.
“We have $700 million that we can’t account for and that certainly did not go to elevating homes and preventing future damage from storms,” told David Montoya, the inspector general of the agency, to ABC News.
[quote]”This is money we can’t afford to lose. This is money that we don’t get back and this is money that we can’t put toward other disaster victims,” Montoya added.[/quote]The HUD highlighted that both errant homeowners and the State government was to blame for failing to ensure that the money was used properly. The Louisiana Road Home program, which allocated $1 billion to repair and protect homes from future flooding and storms, was part of the $29 billion Hurricane Katrina relief effort approved at the time by Congress.
HUD’s investigation found that 70 percent of the money has not been accounted for.
[quote]”There is fault all the way around. Clearly the homeowner accepting up to $30,000 to elevate their home is at fault for not using the money that it was intended for,” Montoya said; And “clearly the state’s [also] at fault for not doing a better job of due diligence if you will for ensuring that these homes were being elevated.”[/quote]Louisiana Office of Community Development Executive Director Pat Forbes told the Wall Street Journal that state authorities were now working to get homeowners to document their compliance with the program.
“We are working aggressively with HUD to get the remaining 19,000 homeowners in compliance,” Forbes said.
HUD spokesman Jason Kravitz also said that the federal agency would be more stringent in its aid programs, particularly for last year’s Superstorm Sandy disaster, after seeing similar results in other audits across the nation as well.
[quote]”In the years since Hurricane Katrina, HUD has already implemented a number of the recommendations made by the inspector general, including additional controls to ensure recovery funds are used appropriately,” Kravitz said.[/quote]Related: Katrina’s Impact on the US Economy
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Meanwhile, Senator Tom Coburn (R-Oklahoma), a member of the Homeland Security and Governmental Affairs Committee and a long-time critic of government spending, urged the Obama administration to take further steps to avoid a repeat.
“I commend HUD for discovering that millions of dollars that were intended to elevate homes along the Gulf Coast were either pocketed or squandered. As the federal government prepares to spend nearly $16 billion on recovery efforts related to Sandy; this is a mistake taxpayers, and citizens affected by the storm, can’t afford to see repeated.”
Montoya, on the other hand, told ABC News that such programs were essential to the community, but perhaps the owners should receive the money after they have completed their work on their property.
[quote]”Before you pay out funding such as this, up to $30,000 with a promise to do something,” Montoya said, “we’d like to see the disbursement of these funds happen after the projects are done; almost a reimbursement to the state where inspections have been done to ensure that the homes were elevated.”[/quote]
