Amid Finger-Pointing, Hurricane Relief Lags

Nearly four years after Hurricanes Ike and Dolly wreaked havoc on the Texas coast, thousands of Texans are still waiting for housing assistance. The long-term disaster recovery effort financed by the federal government has made little headway. But where two state agencies faltered, another is stepping in.

According to a state report to the U.S. Department of Housing and Urban Development at the end of June, none of the 4,100 homes expected to be rebuilt or reconstructed with federal money were completed. And by October, the state had only spent 10 percent of the federal money for long-term recovery.

“I can’t even let anyone in the house, it’s just too shameful,” said Orison Bolden of Houston, whose home was damaged by Ike. A blue tarp still covers her house in the Third Ward, a historically black neighborhood south of downtown. Although discouraged, she still hopes to receive assistance. “Just fix my roof,” she said. “I will try to go and find a job and fix the rest of my house piece by piece.”

In the wake of the 2008 storms, the state estimated that $3.4 billion was needed to repair or replace housing for thousands of uninsured Texans. It was also estimated that local governments would need $1.9 billion to fix damage to infrastructure, such as streets, water and sewage systems, and emergency equipment.

After emergency crews had rolled out, Congress appropriated $3 billion to Texas to help finance the infrastructure and housing recovery. Texas received the first round of money, $1.3 billion, in March 2009.

What followed, however, was a different kind of disaster, with long delays in money going out for housing.

Texas was “the worst-performing state in the country on expenditure of funds and disaster money,” said Mercedes Márquez, the assistant secretary at HUD, which administers the program on the federal level. She said the way the money was managed was a mistake.

Gov. Rick Perry’s office said the federal government caused the delay in allocating funds by not doling out the second round quickly.

Perry wanted communities under the direction of local governments to control how federal money was used, so the state devised a financing allocation process that turned over decision-making to regional councils of local government officials. The state’s role was to oversee the process.

More than 200 local governments and nonprofits, still dealing with the emotions of the disaster, became responsible for executing recovery projects — and complying with complex federal requirements on spending the money. If they did not get it right, they risked not receiving reimbursements.

Perry divided the administration of the program between two state agencies. The now-dissolved Texas Department of Rural Affairs, which usually oversaw federal grants for rural development, was in charge of nonhousing projects. The Texas Department of Housing and Community Affairs, which had been criticized over the disaster recovery program it administered after Hurricane Rita in 2005, oversaw the housing projects.

As HUD noted in monitoring reports, the state did not enact standard procedures for how local governments should process applications and write contracts for projects — the result was bureaucratic chaos.

Perry’s office blamed HUD.

“The primary reasons that Texas’ expenditure rate is not faster are due to HUD’s delayed guidelines and bureaucratic micromanaging of the state’s recovery efforts,” Kathy Walt, Perry’s deputy chief of staff, said in a letter to Márquez in November.

In late 2009, HUD rejected Texas’ initial proposal for the second round of funding, $1.7 billion. Walt wrote that HUD had demanded Texas reach an agreement with advocates for low-income housing who had filed complaints against the state before it would release the money.

“I honestly believe the state was headed off a cliff with round one — that they were not compliant with federal law,” said John Henneberger, co-director the Texas Low Income Housing Information Service, which was involved in the negotiations.

Many communities had disproportionately skewed funding toward infrastructure repairs and away from the housing needs of individual families that lacked insurance or the financial means to rebuild after the storms, Henneberger said, despite federal laws requiring that the state direct a certain amount of money toward housing assistance. The poorest people were often left without help, and the state created “a real problem in terms of not fairly serving people of color and persons with disabilities,” he said.

A conciliation agreement reached in May 2010 between the governor’s office and the housing advocates required the state to devote the majority of funding in the second round to housing, put performance measures and benchmarks in the state and local governments’ contracts, and update the analysis the state used to identify poor and damaged areas in need of assistance.

HUD refused to release the second round of financing until the updated analysis was complete. And when HUD accepted the state’s new analysis in May, they again held the funds until local governments completed training on how to interpret and use the document.

In June, Perry shifted the administration of the program to a single state agency, the General Land Office.

“We determined that putting this function, the responsibility for recovery under one single agency that’s headed by a statewide elected official would lead to efficiencies that the other two agencies hadn’t really been able to achieve before,” said Lucy Nashed, a spokeswoman for Perry.

Only 236 houses had been rebuilt with the federal funds when the land office took over, said Gary Hagood, the office’s deputy commissioner of financial management.

In eight months, the GLO helped increase the number of single-family homes rebuilt to 1,455, and 932 homes are under construction.

“This should have taken three or four years, but it just didn’t happen,” Hagood said. Although he is a proponent of local control, he said running the program at the state level would have been faster. But the delays do not fall solely on the state, he added.

HUD can take up to 60 days to respond to submissions by the state, and “you have to work within their process, which is review, after review, after review,” he said.

When he was first brought in to revamp the program in early 2011, Hagood said many of the approved contracts lacked performance measures and benchmarks for completion. “That’s just something we can’t have in a program that really has a limited timeline,” he said.

One contract was particularly alarming.

The Texas Department of Rural Affairs had doubled the size of its multimillion-dollar contract with HNTB, a private engineering firm, in early 2011. Perry had announced that February he wanted to put rural affairs department on the budget chopping block and consolidate its functions into other state agencies. The department laid off the majority of its disaster recovery staff and took a back seat to HNTB, which had taken over administration of the nonhousing portion of the program.

The lowest-rank HNTB employees, interns, were paid $60 an hour by the state — the same amount as the converted hourly rate of the highest-paid salaried employee at the rural affairs department at the time.

HNTB burned through more than half of the administrative funding for nonhousing projects in Round 1 before the GLO took over and terminated the original HNTB contract. Although HNTB is still working with the GLO to finish the nonhousing projects in Round 1, its contract has been rewritten and the firm’s role has been lessened dramatically.

“We’re going to run the show, not a contractor,” Hagood said.

Hagood ensured aggressive timelines were put in the state’s contracts. The program is now scheduled to be complete by the end of 2015, HUD has released the remaining money, and the state is awarding grants to local governments under the rules of the conciliation agreement.

In total, $1.6 billion has been budgeted for housing needs, with $238 million (14 percent) spent. For nonhousing projects, $1.4 billion is budgeted, with $262 million (18.6 percent) spent.

“The state is going to have to belly up and take some responsibility here and put in place a better way to do it next time,” Henneberger said, “or God forbid, the next hurricane or other major disaster we’re going to pay once again to learn all these lessons all over again.”