$500 million in Ike relief is still unspent. Will Texas do better after Harvey?

In Harvey's Wake

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The billions in long-term disaster relief dollars that will fund Texans’ recovery from Hurricane Harvey’s devastating blow are still far from reaching state coffers. But there’s already tension brewing over how much federal money  should be spent to fix flood victims' homes and how much should go toward repairing government buildings and launching new flood control projects.

Those critical choices will hinge on a key decision: Who will control how the money is spent, the federal government or Texas?

State leaders want as few limitations as possible on what could be the biggest influx of federal recovery money to ever hit the state, arguing that officials in cities and counties battered by the storm know best whether money should go to individual households or public works projects.

The state’s requests for flexibility — followed by Gov. Greg Abbott's Tuesday trip to Washington to deliver a $61 billion wish list predominantly made up of Harvey-related infrastructure projects — have sparked alarm from veterans of previous battles over long-term recovery funding.

With the recent past as their guide, they fear homeowners and impoverished communities will get shortchanged in favor of large-scale infrastructure projects that could have little connection to disaster recovery.

They point to Hurricane Ike, which struck Galveston in 2008 and flooded an estimated 100,000 homes along the Texas coastline not long after Hurricane Dolly hit the Rio Grande Valley.

At the time, the state received $3 billion from the Department of Housing and Urban Development, the federal agency that oversees long-term rebuilding from natural disasters. A Texas Tribune review of projects funded with that money found it went to a wide range of purposes that local officials tied to disaster recovery, including building new community centers in at least eight different counties, replacing lights at a Little League baseball field, putting a new roof on a sports stadium, and restoring a beach pavilion.

Yet almost 10 years later, more than $500 million — most of it earmarked for housing-related projects — for Ike and Dolly recovery still hasn’t been spent.

“The hard truth of this is there aren’t going to be enough resources to make everyone whole, there aren’t going to be enough resources to harden all the infrastructure, there just aren’t,” said Maddie Sloan, a lawyer for Texas Appleseed, an advocacy nonprofit. “So there have to be priorities set, and how priorities get set is a big deal.”

Some local officials have already begun to push for using long-term recovery money from the federal housing department for infrastructure projects.

At a meeting in Houston’s flood-prone Meyerland neighborhood last month, the city’s chief resilience officer told a crowd of hundreds that officials are “actively pursuing” HUD money to use as the local contribution toward flood control projects that would also be funded through other federal sources.

“We can use HUD money for local shares of other stuff,” Stephen Costello said.

Meanwhile, more than 51,000 southeast Texans are still displaced and living in hotel rooms, more than two months after Harvey slammed into the coast, dumped more than 50 inches of rain in some areas and damaged more than 563,000 homes. More than 149,000 people have qualified for rental assistance while they wait out repairs or look for a long-term place to call home. An unknown number are living with family or friends or paying for their own short-term housing needs.

“It’s often the case that the needs of Texans to rebuild and recover don’t rise to the same level of some of those government projects that people have in mind,” said John Henneberger, co-director of the Texas Low Income Housing Information Service.

How the money will flow 

Abbott split long-term disaster recovery efforts between the land office and a commission headed by Texas A&M University Chancellor John Sharp. The two entities have told federal officials they need a collective $121 billion to help cities, counties and families recover, though it's still unclear how much overlap there could be in the two requests. State leaders have also been clear that they aren’t expecting to get all they ask for.

The land office is overseeing housing assistance programs, including long-term recovery dollars that typically go toward rebuilding houses or repairing damaged apartments. But the land office is also overseeing infrastructure projects that could be funded from the same pot of money.

The commission Sharp leads is focusing on flood control, roadways, water services projects and buying out or elevating flood-prone houses. While Sharp’s commission compiled a 301-page report detailing money needed for public works projects across the Texas coast, no state or federal agency has put together a comprehensive account of the damage Harvey did to Texans' homes.

Instead, state officials’ request for long-term housing money is an estimate based on the number of households requesting immediate emergency aid, the average cost of a Texas house and how much money it cost to rebuild houses in previous disasters.

Land office leaders readily admit that many Texans may not receive federal assistance to cover their losses from Harvey. They also say that for the cost of rebuilding a handful of damaged homes, they can pay for projects that can protect many more homes from future floods.

“So the locals need the ability to make that determination on what’s the best way to benefit that particular area,” said Pete Phillips, a senior director with the state’s General Land Office.

But giving local elected leaders that level of discretion is what has some housing advocates worried.

"That’s absolutely what created the problems before,” Henneberger said.

State priorities challenged after Ike, Dolly

In many ways, concerns about the rebuilding process are rooted in Texas’ problematic history of disaster relief spending. 

The lump-sum relief funds HUD gives states and local governments comes with some restrictions on how the money can be used. Those stipulations usually include how long the public has to weigh in on state and local plans for the funds, thresholds for how much must go toward housing rather than infrastructure and a minimum amount that must be spent to help low- and moderate-income disaster victims.

“The goal is not to hand everybody a little bit of money,” Henneberger said. “The goal is to make sure that the limited amount of money can help those who could not otherwise recover.”

After Ike and Dolly, the state put two separate agencies — one for housing and one for non-housing projects — in charge of overseeing local governments' use of the money.

Local officials quickly used that money to rebuild infrastructure, while a large portion of the money that should have gone to help Texans rebuild their homes remains unspent nearly a decade later.

At the time, monitoring reports from the federal housing department blamed that slow trickle of money for housing on bureaucratic chaos at the state level. Gov. Rick Perry blamed the delays on the federal government.

A year after Ike and Dolly hit, Henneberger's and Sloan’s nonprofits accused Texas officials of violating fair housing laws and HUD’s own rules for spending disaster funds.

The advocacy groups said in a complaint to HUD that the state used flawed data in deciding how to split relief money between public works projects and Texans whose homes were damaged by the hurricanes. They also said the state effectively “steered resources away” from hurricane victims by awarding a $16.6 million contract to a consulting firm that helped local governments understand how disaster grants work and identify infrastructure projects that would qualify.

In a May 2010 agreement between the state and the nonprofits, the federal housing department forced Texas to rework its plan for the relief funds. The department also increased the amount of money that Texas was required to spend on lower-income residents and ordered the state to use more than $200 million to rebuild, replace, buy out or construct housing for lower-income Texans.

Today, $297 million of unspent Ike and Dolly money is earmarked for housing recovery. That includes money set aside for public housing in Galveston, where plans for affordable units have been mired in opposition from other residents, politics and federal complaints for years.

While the state holds the money and ensures recipients spend it according to HUD's parameters, it's up to local governments like cities and counties to turn those dollars into construction projects. The General Land Office has managed the funds since 2011, and officials there say they plan to close out remaining projects by the end of 2019.

Sloan, with the Texas Appleseed Project, said the state’s performance has improved since the state land office began overseeing the second round of hurricane relief funding.

“There’ve been dramatic increases in the amount of home repair money going to low-income households, better benefits to renters of different income levels, and the state has said every infrastructure project needs to benefit low- and moderate-income people,” she said.

But Henneberger said the lack of a comprehensive plan to help Texans put their lives back together after Harvey — and the overwhelming focus on infrastructure in the state's wish list released this week — is frustrating and worrisome.  

“We want to see that the money is targeted fairly between infrastructure and individual benefits to disaster survivors who need to recover their lives and rebuild their homes," Henneberger said.

Worry in Meyerland

In the past two months, Congress has agreed to spend more than $51.8 billion on disaster relief following a string of natural calamities including three hurricanes and California's deadly wildfires.

The federal housing department has yet to determine how to divide the money among the affected states and territories, but the agency said it will do so based on which areas have the greatest “unmet need,” said spokesman Brian Sullivan. They make that evaluation using data from insurance claims, FEMA, and the Small Business Administration, which provides disaster relief loans to homeowners.

"Everybody is collecting information about the places that were hit the hardest, who suffered the greatest degree of serious or maybe even severe housing damage, how many families were insured or uninsured, it’s like you’ve got to untangle this ball of yarn,” Sullivan said.

While government officials continue taking stock of the overall impact, hundreds of thousands of Texans are still slogging through their individual recoveries. At last month's meeting in Meyerland about flood control projects, tensions boiled over inside a church packed with hundreds of residents listening to officials discuss infrastructure and federal funding. 

The houses in that neighborhood straddling Houston’s Brays Bayou were inundated with feet of water after Harvey battered southeast Texas — some for the third time in as many years. Many residents are waiting to see if their repeatedly-flooded homes will be targeted for buyouts, while others who flooded for the first time this year are months or years from learning if there will be federal money to help them fully rebuild.

Some Meyerland residents asked officials about particular flood-control projects during the meeting’s question-and-answer portion. Others had more immediate needs on their mind.

“Some people don’t care about long-term plans,” Larry Zomper said once he got a turn at a microphone. “We wanna know how to live now, what decisions to make now.”

Disclosure: Texas Appleseed and Texas A&M University have been financial supporters of The Texas Tribune. A complete list of Tribune donors and sponsors is available here.

This story was produced in partnership with the Ravitch Fiscal Reporting Program at the CUNY Graduate School of Journalism. 

Support for this reporting was provided by the Fund for Investigative Journalism.