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Baker: Time to start planning for post-Road Home Louisiana

Location: Washington, DC

Baker: Time to start planning for post-Road Home Louisiana

U.S. Rep. Richard Baker, R-Baton Rouge, issued the following statement today in connection to the House Financial Services Committee's hearing on the Federal Housing Response to Hurricane Katrina:

"I want to thank Chairman Frank for convening today's hearing on a topic - housing - that I know is of great interest to him, but which is also of greatest importance to the people of Louisiana. The central housing challenge created by hurricanes Katrina and Rita, of course, was the damage and destruction wrought upon 200,000 homes, but the issue is not confined to that challenge. The debilitation of such a massive amount of housing stock has created another challenge, a shortage of housing, particularly affordable housing, that has impacted not only the areas directly hit by the storms but also throughout south Louisiana where the displaced have settled.

"Those on the committee who have visited Louisiana know, however, that when we talk about post-Katrina and Rita housing, we are also talking about the rebuilding of communities. While we rightfully deplore the fact that - and explore why - greater progress hasn't been made on that score, I for one am not going to play the blame game, an activity for which we already have plenty of specialists. Instead, I will try to stick to a more constructive exercise for the people of Louisiana, and focus on the situation at hand and how it may point to where we go from here.

"That means I will also avoid taking shots at the popular punching bag that has become of the primary vehicle for the deployment of federal housing resources in Louisiana, the state's Road Home program, in favor of offering it a sober assessment. The criticisms of the snail's pace in which the program has been administered are well known. What hasn't been expressed, in relation to the progress of rebuilding communities, is the possibility that the problem isn't just how the program is being implemented; the problem may also be the program itself. That's not to try to knock the Road Home unfairly. The program was never designed to accomplish community redevelopment, but was narrowly tailored in its goal, mainly to offer individual assistance for compensation of losses.

"Despite the early stage of aid distribution, there are three reasons why I believe we can already reasonably expect that even after the last check is finally distributed there will still be many areas that are not on their way to becoming communities again in the fullest sense of that term. First, there is the matter of buyouts. While the percentage of homeowners choosing among the Road Home's buyout options is relatively small, the number of homes estimated to be acquired by the state may still run as high as 15,000, all of which ostensibly will be handed over to local authorities - to do what with the physical and financial burden of these wrecked and abandoned properties, and with what resources, I know not. These questions will be particularly pressing for the recovery of a devastated parish like St. Bernard, where some half of all residents have indicated they will choose a buyout. The second possible obstacle is the already widespread reporting that aid calculations are significantly lower than what people expected to receive based on what they need to fully rebuild their homes. This could result in a great number of properties either being left basically ‘unfinished' or undergoing a substandard, ‘bargain' version of what's needed. Finally, apart from these residential property questions, any severely damaged and abandoned commercial properties, which did not qualify for assistance under the parameters of Road Home, could form barriers to replacing the likes of drug stores, bakeries, and doctors' offices that communities need to be fully functional.

"If this is indeed the kind of situation we can expect to find in a post-Road Home Louisiana, then the time to start planning how to confront it is now. I suspect the complexity of the challenge will require more serious consideration and much tougher decisions than we currently bring ourselves to make.

"Lately we have heard rather dramatic statements designed to point out insufficient ‘federal attention' being paid to Louisiana's recovery. Likewise, Louisiana residents have been honored and grateful for the presence of presidential candidates touring still-devastated neighborhoods, and emerging to decry the lack of progress and to declare that Louisiana has suffered a shortfall of federal resources to improve it. While I agree Louisiana has needed more funds than it has received, I think that when it comes to rebuilding communities it's also fair to ask those calling for more federal attention to tell us what kind of attention they seek. And to those calling for more federal money, how they would bring it to bear on our communities. What would they spend it on and to whom would they give it? Toward what end, and in furtherance of what plan of action? My hunch is that the answer to these questions is that they don't rightly know, which is what makes what they say so easy, but also so simplistic and unhelpful.

"The truth, of course, is that local and regional planning is taking place. The just completed Unified New Orleans Plan (UNOP) is an extraordinarily positive development, and it should be commended for its citizen-focused inclusiveness and consensus building. The challenge, as the planning consultants themselves point out, will be in implementing the plan's various proposals. For example, one responsible and welcome goal of the plan is to help people elevate their homes to FEMA Base Flood Elevations, whose cost, sometimes running into the tens of thousands, is also not covered by the Road Home, which provides assistance to cover damage only. UNOP proposes that the elevation program be voluntary and funded through ‘incentive grants,' but it begs the question where the funding will come from and how it would be distributed, and whether (heaven forbid) something like a ‘Road Home II' would be needed to make sure assistance was handed out fairly and responsibly. An even trickier question would come in gauging the value of such a government investment to satisfy the seemingly arbitrary FEMA standard of an additional three feet for areas where homes took water up to their roofs. Trickiest of all, I imagine, would be justifying the expense to taxpayers when, as the UNOP planners admit, the local political will simply does not exist to restrict development from occurring in any area, no matter how unsafe it is for it to occur there.

"One of the most promising ideas I have heard discussed, and touched upon in UNOP's ‘Housing Solutions for All to Return' proposal, is a program to rehabilitate underutilized, abandoned, and blighted properties. This concept would involve utilizing a strong and professionally governed redevelopment authority, like the New Orleans Redevelopment Authority (NORA), a public-private partnership which would be the recipient of buyout properties from Road Home but which could also assemble, sell, or redevelop itself other blighted properties that stand in the way of neighborhood revitalization.

"I believe the best hope for rebuilding communities may lie in the mobilization of such local redevelopment authorities, but they should not be limited to New Orleans alone, when other parishes hit hard by Katrina like St. Bernard, Plaquemines, Jefferson, Lafourche, Terrebonne, and those similarly hit by Rita like Cameron and Vermillion, face similar challenges. This concept could also be considered valuable for other larger parishes that suffered less damage but face different, housing shortage challenges due to the influx of newcomers, such as St. Tammany, East Baton Rouge, Lafayette, and Calcasieu parishes. Just as an example, East Baton Rouge parish alone contains some 30,000 blighted properties, with about 6,000 of them in adjudication. In their current state, these properties are a strain on local communities, but they also represent the greatest opportunity to meet our growing housing and small commercial development needs. The effort and expense required to turn them around, however, are formidable.

"One approach that could show promise would be to encourage the creation of separate or loosely connected parish redevelopment authorities, perhaps modeled on NORA, throughout south Louisiana but only where a local interest exists for them, with the ability to seek both private financing and direct government assistance. My earlier community redevelopment proposal, the Louisiana Recovery Corporation, which was envisioned to tackle many of the same problems that still hamper progress today, was rejected partly on the grounds that it would entail too much federal bureaucracy and involvement in local rebuilding matters. Local redevelopment authorities would ensure plans are locally driven, while the ability to receive direct funding, similar to that of the post-9/11 Lower Manhattan Development Corporation, would help by-pass the horrible federal-to-state-to-city red tape that has crippled so many other recovery efforts.

"Even with this cursory look at such an approach, it's clear that to be effective, these redevelopment authorities would require significant start-up resources, not only for those that must deal with Road Home buyout properties, but for the expertise and expense required to begin freeing up adjudicated and other blighted properties. Over time, the goal of each redevelopment authority, through property sales and development, should be to achieve self-sustainability. Even so, before exploring this approach any further, I would offer several observations about initial funding sources.

· "Before any new federal investment is considered, thought should be given to the fact that the state of Louisiana will enter into the general legislative session with a surplus of $1.9 billion to spend. Also, given the fact that thirty thousand or so fewer people are participating in the Road Home than were originally budgeted for, coupled with widespread smaller-than-expected payout calculations, it seems likely that the program will have significant resources that could be directed toward this effort.

· "Private capital should be sought through the issuance of bonds, direct investors, or partnerships that utilize New Markets Tax Credits.

· "Consideration should be given to reauthorizing and redirecting to local redevelopment authorities just a tiny fraction of the tens of billions of previously approved FEMA assistance funding that remains unspent.

· "When necessary the redevelopment authorities, in coordination with local governments, should have the ability to access federal CDBG and HOME funds.

· "Congress should identify these professionally governed redevelopment authorities as the target recipient for any possible affordable housing fund financed by Fannie Mae and Freddie Mac.

"In closing I would make clear that I am not proposing such an approach as a specific or detailed policy recommendation. Obviously such a strategy would require a lot of hard work and close coordination with state and local officials throughout south Louisiana. But if after further investigation and consultation with others this idea appears sound then I will hope to shape it into a more fully developed proposal suitable for release. If, on the other hand, the idea lacks merit, then I at least hope it will serve as a conversation starter, calling for substantive ideas instead of political posturing, on the need to do more for our communities than the Road Home can accomplish."

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