$700 million in Katrina relief money misused by recipients

$700 million in Katrina relief money misused by recipients
HUD Inspector General David Montoya
HUD inspector general David Montoya

This is why the nation can’t have nice things. A new report released by the Department of Housing and Urban Development reveals that more than 24,000 homeowners who received grants of up to $30,000 in the wake of Hurricane Katrina either misspent or pocketed the money.

The $700 million in taxpayer funds was doled out to Louisiana homeowners for the expressed purpose of helping them elevate and protect their homes against future storms.

Jeff Zeleny of Yahoo! News’s Power Players interviewed the report’s author, HUD inspector general David Montoya, who when asked what happened to the money responded, “Your guess is as good as mine.” Montoya added:

The fact of the matter is that the money they received was for a specific purpose and the specific purpose was to elevate these homes to avoid future catastrophes.

Considering [that] there was just under $1 billion earmarked for this particular program and there’s $700 million that wasn’t used for that, I’d give it a very low D.

Clearly, to give money out on the front end right after a disaster, when many of these people lost everything, with a promise to do something down the road, I think is counterproductive to what the program was designed to do.

A grade of D may be a little generous as an assessment of the government’s role as a steward over its own expenditures. The HUD report notes that Louisiana homeowners were given three years to comply with the terms of the grant by making the necessary improvements to their property. At the end of that time, the state mailed a monitoring survey to determine compliance.

The pie chart below shows that only 17 percent of grant recipients had either complied with the terms agreed to or were currently working with the state at bringing their homes up to code. A whopping 53 percent of homeowners had not complied and another 30 percent failed to respond to the survey.

Graph showing status of homeowner ocmpliance

Montoya says that HUD has learned its lesson. In the future, he avows that his office will recommend(!) that funds are disbursed to individuals only after the project has been completed, as reimbursement.

The HUD report notes that Louisiana has attempted to recover funds from noncompliant recipients but so far has recouped only $2.73 million. A phone call has been placed to HUD’s public affairs division to determine whether the federal government is taking its own steps to collect this debt and if so what measures have been enacted. Look for updates.

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Howard Portnoy

Howard Portnoy

Howard Portnoy has written for The Blaze, HotAir, NewsBusters, Weasel Zippers, Conservative Firing Line, RedCounty, and New York’s Daily News. He has one published novel, Hot Rain, (G. P. Putnam’s Sons), and has been a guest on Radio Vice Online with Jim Vicevich, The Alana Burke Show, Smart Life with Dr. Gina, and The George Espenlaub Show.

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