Volume 3 Number 10
November 2006

In this Issue
Funding for Recovery in the Hurricanes' Wake, Part II
Affordable Housing Grows in Central San Joaquin Valley
Forecasts of Housing Demand in 18 Local Markets
In the next issue of ResearchWorks

Funding for Recovery in the Hurricanes' Wake, Part II

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Although it has been over a year since three powerful hurricanes - Katrina, Rita, and Wilma - slammed into the Gulf Coast, their effects still linger. According to a HUD analysis, the storms damaged more than 1.2 million housing units in Louisiana, Texas, Mississippi, Florida, and Alabama, and in 25 percent of these homes, the damage sustained was major or severe. This article, the second of two installments about HUD's role in hurricane recovery in the Gulf, details the innovative process HUD used in the summer of 2006 to allocate $5.2 billion in supplemental recovery funds. (The December 2005 allocation of $11.5 billion was discussed in Part I of this article, which appeared in the October issue of ResearchWorks.)

In June 2006, Congress approved an emergency appropriation of $5.2 billion in Community Development Block Grant (CDBG) assistance for hurricane recovery in the Gulf Coast. The 2006 supplemental legislation, signed into law by President Bush on June 15, 2006, directed CDBG funds "...for necessary expenses related to disaster relief, long-term recovery, and restoration of infrastructure in the most impacted and distressed areas related to the consequences of Hurricane Katrina, Rita, or Wilma in states for which the President declared a major disaster."

HUD's research provided detailed information on the extent and location of hurricane damage in the Gulf Coast.

The law prescribed that no one state could receive more than $4.2 billion. Accordingly, on July 11, 2006, HUD allocated the statutory maximum of $4.2 billion to the state of Louisiana. After the agency reserved $27 million for the program's administrative costs, $973 million was available to address the disaster recovery needs of the remaining four states. The legislation gave precedence to recovery of damaged affordable rental housing stock. HUD then designed a process to allocate funding in a way that would both correspond with state priorities and address other needs the agency had previously documented.

HUD's Methodology

Step one: Analyze needs. The agency's innovative approach to the supplemental CDBG appropriations was built on an analysis HUD conducted in late fall 2005. That analysis provided the states with detailed local-level data on the damage wrought, the recovery resources available, and the level of unmet need. The analysis used data from the Federal Emergency Management Agency (FEMA) and the Small Business Administration on the extent and concentration of housing damage, then it discounted insurance payments and FEMA repair grants. (See the First Quarter 2006 issue of U.S. Housing Market Conditions for more information about HUD's analysis.)

Step two: Invite state input. On July 12, Darlene F. Williams, Assistant Secretary for Policy Development and Research, and Pamela H. Patenaude, Assistant Secretary for Community Planning and Development, invited the governors of Alabama, Florida, Mississippi, and Texas to send representatives to meet with HUD to discuss disaster recovery needs and priorities in their respective states. The invitation to the governors emphasized that discussion would center on their affordable rental housing needs, fair housing needs (particularly the needs of individuals with disabilities), and the needs of evacuees.

Step three: Meet with the states. Four separate meetings took place in late July, during which HUD conferred with representatives from the four states to discuss their unmet recovery needs and priorities. At the meetings, each state presented somewhat different priorities. Texas identified two major priorities: recovery for homes and businesses damaged by Hurricane Rita in East Texas and meeting the needs of evacuees. Mississippi emphasized the need for additional affordable rental housing. Florida gave precedence to "home hardening" of older housing stock, to give older homes high-wind resistance comparable to that required for new construction. These older structures, which are quite expensive to insure without retrofitting, house mostly older and low-income Floridians. Recognizing the needs of these homeowners, the state of Florida had already allocated $250 million from state funds for home hardening. Alabama, which reported the lowest level of unmet need, targeted infrastructure recovery.

HUD staff then organized the data, compiled by HUD and the states, based on several key categories of need:

• Affordable rental housing repair;
• Other housing repair;
• "Hardening" homes that suffered major and severe damage against future storms;
• The evacuees' unmet needs;
• Economic recovery; and
• Infrastructure.

In making the allocations, HUD emphasized the need for affordable rental housing, the unmet needs of evacuees, and business recovery. HUD then applied lower priority weights to the areas of other housing repair, home hardening, and infrastructure.

Allocations

On August 18, 2006, HUD announced the allocation of CDBG assistance to four Gulf Coast states, as follows:

HUD Secretary Alphonso Jackson called this assistance "...another investment in the long-term recovery of the Gulf Coast" by the Bush administration.

The first installment of this article appeared in the October 2006 issue of ResearchWorks at http://www.huduser.org/periodicals/ResearchWorks/oct_06/RW_vol3num9t1.html. "The Impact of Hurricanes Katrina, Rita, and Wilma on the Gulf Coast Housing Stock," from the First Quarter 2006 issue of U.S. Housing Market Conditions, is available as a free download at www.huduser.org/intercept.asp?loc=/periodicals/ushmc/spring06/USHMC_06Q1_ch1.pdf.

See Current Housing Unit Damage Estimates: Hurricanes Katrina, Rita, and Wilma for greater detail; the report can be downloaded for free at www.huduser.org/publications/pdf/GulfCoast_HsngDmgEst.pdf. A full account of HUD's efforts to assist in the recovery effort during the year following the hurricanes is available at www.hud.gov/news/katrina05response.cfm.