More than nine years after hurricanes Katrina and Rita decimated parts of Louisiana, the state has identified nearly $1 billion in federal housing aid where recipients failed to comply with the rules, Legislative Auditor Daryl Purpera said Monday.
Purpera said the problems were discovered by the state Division of Administration. They totaled $939 million and involved 15,095 homeowners.
That is on top of $75 million in questionable costs identified earlier.
In addition, the auditor said his own office’s review of 45 homeowners who got the aid showed that 10, whose awards totaled nearly another $1 million, failed to provide adequate evidence that they were complying with regulations.
That means they failed to offer proof that the home was being repaired or evidence of flood or other insurance, among other things.
The problems could put the state on the hook to repay money to the federal government, Purpera said.
The money in dispute includes both people who clearly are required to repay the money and others who have yet to provide necessary paperwork, said Patrick Forbes, who helps oversee the program.
The source of the aid is called the Community Development Block Grant Homeowner Assistance Program, or HAP. It was aimed at helping families get back in their homes after the storms struck New Orleans and the Lake Charles area in 2005.
A total of $8.6 billion has been allocated through the program since 2007, which makes it the largest single housing recovery program in U.S. history, according to the report.
The review says Louisiana was awarded the money to administer the program as part of its Road Home effort launched under former Gov. Kathleen Blanco.
Under the rules, eligible homeowners were able to collect up to $150,000 in compensation for their damaged property.
In exchange, they were required to agree in legal papers to comply with a variety of requirements in the future, including providing evidence that they would occupy their damaged or replacement property within three years of the closing date.
Recipients also were required to maintain homeowners’ insurance on their property, carry flood insurance if necessary and meet any parish elevation rules.
Under the state plan, homeowners who failed to comply faced the loss of benefits or having to repay some or all the money they collected.
Purpera’s report said that, in the early stages of the recovery effort, state officials decided to make payments to homeowners as quickly as possible and accept any risks for those who failed to follow the rules.
The view at the time was that any ineligible or incorrect payments “would be detected and corrected” by the state later.
Blanco on Tuesday disputed that view, saying the only reason the state offered lump-sum payments instead of allocating the aid money in three payments after the work was verified was because it was required to do so by officials of the U. S. Department of Housing and Urban Development.
“The state didn’t make that decision,” she said. “The state was forced to do that.”
Last year, federal officials approved three additional options for recipients of the funds who have not returned to their homes years after the storms turned lives upside down.
New state procedures have also been set up to help other homeowners comply with terms of the aid, according to the review.
Forbes, who is executive director of the state Office of Community Development, said many aid recipients listed as failing to comply with the rules have simply fallen short on the paperwork.
“We are implementing new policies, holding outreach events and currently soliciting a contractor to provide assistance to those homeowners so they can prove they are compliant,” Forbes said in a prepared statement.
In a written response to Purpera, he said 93 percent of homeowners have reoccupied their homes.
“However, there are individuals who remain non-compliant for not spending these funds properly and are required to repay grant money,” Forbes said in his statement. “We’ve made significant progress in recovering those funds over the last year, increasing the number of files in recovery by 700 percent.”
He said state officials plan to travel to Washington and meet with Louisiana’s congressional delegation and federal officials “so we can efficiently close out the Road Home program without harming the people this program was created to help.”