Bringing Katrina’s Poorest Victims Home: Targeted Federal Assistance Will Be Needed To Give Neediest Evacuees Option To Return To Their Hometowns

PDF of this Report (18pp.)

By Will Fischer and Barbara Sard

November 2, 2005

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Federal policy makers are currently considering plans to assist with the recovery and reconstruction of the areas damaged by Hurricane Katrina. The decisions they make will have serious implications for the tens of thousands of low-income families displaced by the storm. There is a high risk that housing costs will rise sharply in many areas hit by Katrina. Substantial housing assistance will be needed not merely to rebuild homes physically, but to ensure that the rebuilt dwellings are affordable to the region’s low-income inhabitants.

Without such assistance, many of these people — including some of the same families that lacked the resources to flee when the storm first struck — may be excluded from the region’s recovery. Many low-income evacuees who wish to return could find themselves stranded in unfamiliar communities far from home, or unable to leave trailer or mobile home camps being established as temporary housing, because they cannot afford housing in their hometowns. Those who do return could find themselves confined — as many were before the storm — to high-poverty neighborhoods that may have high rates of crime, few jobs, and poor schools.

On September 15, 2005, President Bush committed in a speech from New Orleans to rebuilding the communities affected by Katrina in a manner that leaves them “better and stronger” than they were before the storm, but provided little detail on how low-income households would be included in this vision. The Administration’s most highly touted proposal concerning housing for low-income evacuees who seek to return — an “Urban Homesteading” plan that would allow low-income hurricane victims to build houses on surplus federal land — is unlikely to aid more than a small fraction of the needy families displaced by the storm. Other Administration rebuilding plans, released on October 28, 2005 as part of an Administration request to Congress for a reallocation of Katrina relief funds, offer no assurance that the poorest households will be helped.

Indeed, the Administration has at times appeared resigned to the conclusion that some segments of the evacuee population will not have the opportunity to move back to their hometowns. In late September, for example, HUD Secretary Alphonso Jackson speculated that “New Orleans is not going to be as black as it was for a long time, if ever again.”[1]

Rebuilding should be carried out in a manner that ensures that the region’s poorest residents have the same opportunities as more affluent families to return home if they choose to do so. In addition, rebuilding assistance should be structured in a manner that promotes mixed-income neighborhoods with the employment and educational opportunities poor evacuees will need to rebuild their lives.

Private investors, including owners who have collected insurance payments, may take on a substantial share of the cost of rebuilding the damaged areas. The private market on its own, however, cannot be expected to provide homes for Katrina’s poorest victims or give many of those households the opportunity to live in mixed-income neighborhoods. Achieving these goals will require that policy makers make them a major priority. The federal government, which may bear a major share of the cost of reconstruction, should structure rebuilding assistance in a manner that ensures these goals will be promoted.

  • Restore pre-Katrina housing subsidies. Federal housing subsidies that were in place before Katrina struck — including housing vouchers, public housing units, and subsidies for private owners of affordable housing developments — will be vital to helping low-income families in the storm’s aftermath. For a range of legal and financial reasons, however, these subsidies may not be available to the damaged region without action by Congress or HUD. Pre-Katrina subsidies should be restored, although in some cases it may be appropriate — for reasons of flood or environmental safety, or to ensure that low-income families have access to a range of neighborhoods — to replace a subsidy tied to a particular building with a subsidy that provides a similar level of affordability elsewhere.
  • Use a portion of rebuilding aid to make additional housing affordable to the poorest families. Because Katrina destroyed the homes and belongings and disrupted the livelihoods of so many low-income people, and is likely to lead to a surge in housing costs, existing subsidies will not on their own be able to address more than a small share of the need in the region recovering from Katrina for housing affordable to the poorest families. Expansions of the two most widely used federal low-income housing construction and rehabilitation subsidies — the Low-Income Housing Tax Credit (LIHTC) and the HOME block grant — would help meet this goal, but will not on their own guarantee housing affordable to the neediest families. Assistance should be provided that is specifically targeted on the poorest families and specifically designed to meet their needs. This could be accomplished by requiring that 20 percent of units in each LIHTC- and HOME-funded development be made available to poor families and providing vouchers or other types of subsidies to supplement HOME and LIHTC.
  • Provide for regional administration of housing aid, subject to federal standards. Entities with responsibility for an entire metropolitan area will be better suited than localities to planning housing in mixed-income locations with adequate employment and educational opportunities. These entities should be subject to standards that link the continued provision of funds to performance in meeting federal priorities, including providing affordable housing to poor households and promoting mixed-income housing.

It is important to note that this analysis focuses specifically on the effects of Hurricane Katrina, because of the extraordinary scope of the damage caused by that storm to the homes of Gulf Coast residents generally, and those of low-income families in particular. Many households beyond those covered by the statistics listed in this analysis saw their homes destroyed and their lives disrupted as a result of Hurricanes Rita and Wilma and other recent storms. Aiding the victims of those comparatively less severe disasters will require prompt federal action beyond the measures proposed here, and as with the response to Katrina it is imperative that that assistance meet the needs of low-income households. [2]

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End Notes:

[1] Rodriguez, Lori and Zeke Minaya, “New Orleans’ Racial Makeup Up In Air,” Houston Chronicle, September 29, 2005.

[2] In addition, this analysis is not intended as a comprehensive discussion of the types of recovery assistance that should be provided in the damaged area or of the full range of priorities that should guide federal reconstruction policy. Instead, it addresses only the goals of providing low-income evacuees with the opportunity to return home and live in mixed-income neighborhoods, and the federal policies that could promote those goals.

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