The New Orleans City Council voted unanimously Thursday to ask the Legislature to reimburse more than 400 families who paid back some or all of their Hurricane Katrina recovery grants to the state after facing legal action for allegedly misusing the money. The state recently forgave thousands of others who had not paid them back.
The resolution, sponsored by Councilman Eugene Green, stemmed from a series of stories by WWL-TV, The Times-Picayune | The Advocate, Verite News and ProPublica that showed how the state — under pressure from the federal government, which funded Road Home — sued thousands of its own residents to recover allegedly misused money.
The stories exposed how Road Home officials acknowledged that $30,000 grants intended to be used for home elevation were not sufficient to raise houses off the ground on footings. In some cases, officials told the homeowners they could use the money to finish repairs. But residents who used the money that way were later accused of misspending the grants.
State leaders said they never wanted to sue the residents in the first place, and in February, Gov. John Bel Edwards, flanked by local and federal officials, announced a deal had been reached with the U.S. Department of Housing and Urban Development, which was demanding the state return misused grant funds to the federal government. The state would use money from a settlement with its third-party contractor and a legislative appropriation. And the suits, which had been widely criticized, would be dropped.
But the deal left out those who had already repaid or partially repaid the state. They would not get any money back; officials in the Edwards administrative have said they're not sure paying those people back would be legal.
“Since the money should have never been collected in the first place, it's only appropriate that the homeowners who paid back monies to avoid liens being placed on their homes be reimbursed,” Green said Thursday.
Earlier this month, the news organizations showed how the state recovered $6.8 million in Road Home elevation grants from 425 families and has declined to reimburse them, even though it agreed to end its lawsuits seeking almost $100 million from about 3,000 other recipients of the Road Home elevation grants.
About 1,400 elevation grant lawsuits, or 40% of the 3,500 lawsuits statewide, were filed against homeowners in New Orleans, according to state data.
Council President JP Morrell called out state leaders for forgiving homeowners who rebuffed the state’s debt collection efforts, but not those who bowed to the pressure.
“The ones who fought tooth and nail because they couldn't afford to pay or just said, ‘I'm not going to do this,’ or were obstinate and rolled the dice, they came out with a windfall because now it's forgiven,” Morrell said. Meanwhile, he said, the ones who “spent all this money to try and do the right thing, now the state tells them to go pound sand.”
Edwards has asked the Legislature to dedicate $20.5 million in taxpayer funds to pay back HUD. That allowed Edwards to announce the end of the lawsuits in February, but he said nothing could be done to help homeowners who had already agreed to pay the money back.
Green said he belives the New Orleans legislative delegation will try to persuade their colleagues to appropriate another $6.8 million to cover that group.
“I hope that they're able to appeal to state officials beyond New Orleans to recognize that this is an issue of fundamental fairness,” he said. “We're not asking for a payment that has no purpose. This is a reimbursement in regards to a program that wasn't working the way it should have been working.”
An appropriations measure, House Bill 551, that only includes the $20.5 million to close out Road Home but no money for reimbursements, sailed through a House committee this week without amendments. It is scheduled to go to the House floor Monday.
Morrell called the Legislature’s inaction so far “beyond reprehensible” when it is sitting on a historic surplus of more than $1.5 billion.
“The amount of money to reimburse these homeowners, it's a drop in the bucket,” Morrell said. “Legislators from around the state need to do the right thing. And I hope this resolution is the first step.”