Thousands of homeowners took Road Home funds and didn't rebuild

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wwltv.com

Posted on November 26, 2013 at 11:39 PM

Updated Wednesday, Nov 27 at 5:11 AM

David Hammer / Eyewitness News
Email: dhammer@wwltv.com | Twitter: @davidhammerWWL

Gordon Russell / The Advocate
Email: grussell@theadvocate.com | Twitter: @GordonRussell1

NEW ORLEANS – Barbara Braxton looks out from her front porch every day and sees a broken promise.

Several of them, in fact.

Across from the tidy ranch house she and her husband have owned for decades on Kennon Avenue in Gentilly are four properties in various states of disarray. Two have been torn down, but tall grass and weeds have overtaken the lots so spectacularly that the sidewalk is no longer visible. The other two houses are vacant, boarded up and unkempt.

Three of the four property owners got renovation grants from the Road Home program, meaning they all agreed to fix up their houses and occupy them within three years. Obviously, none has done so, and Braxton has little reason to hope that will change anytime soon. Some of those who got the grants have died; others apparently absconded with the money. None of the current property owners live in town, according to Braxton.

Save for the recent demolition of two of the four properties, there hasn’t been any progress for years, and Braxton and her neighbors are beyond discouraged.

“I came back in 2006 and it’s now 2013, and it’s a helluva mess,” Braxton said. “We built a porch for our senior years so we could envision talking to our neighbors across the street. Now we talk to weeds.”

“If we wanted to, we could not sell our property because, I mean, who wants to live across the street from that? You wouldn’t want to. I know, if I had it to do over again, I wouldn’t have come back if I had known it was going to be like this.”

Blight analysis: A fifth got grants

The bleak situation in the 4300 block of Kennon Avenue is perhaps the starkest illustration of how blight and the Road Home program intersect. But similar examples can be seen all over town.

Across New Orleans, according to a joint investigation by The New Orleans Advocate, WWL-TV and whodata.org, nearly one in five properties the city deems blighted also got Road Home grants. Recent estimates have put the city’s portfolio of blight at about 30,000 properties. According to the news organizations’ analysis, about 6,000 of those likely got Road Home grants, about one in five.

(Click the map to see an in-depth look at Road Home blight by neighborhood in New Orleans)

Put simply, a large chunk of the city’s blight epidemic is attributable to dilapidated homes the government paid to fix.

The neighborhoods most affected, predictably, are those where Road Home grants were most plentiful, though high poverty also appears to be a contributing factor. In the Lower 9th Ward, for instance, 1,400 properties received Road Home grants; one out of every nine is now on the city’s blight list. About the same number of grants went to Lakeview homeowners, but there, only one in 40 has landed on the blight list.

Middle-class enclaves like the Fillmore section of Gentilly, where the Braxtons live, are somewhere in between, with about one in every 15 Road Home properties listed as blighted.

Blanco’s protections axed

It’s no real surprise so many Road Home properties have gone unrenovated. In fact, many people, starting with then-Gov. Kathleen Blanco, predicted just such an outcome seven years ago, and she feels unhappily vindicated by what she sees now.

Blanco’s administration had a different vision for the Road Home than what they wound up with. She wanted it to be a reimbursement program, where the state put money in escrow that would be drawn down in installments as contractors completed the work. In fact, the Road Home operated that way for its first six months.

“We tried to engage the banking community to set up an accountability system, much like if you’re making a loan at the bank to build a house,” Blanco recalled in a recent interview. “They front a third, and you build it and show the receipts and they front the next money, and the final stage. And the house is actually built with the money; they don’t just give you a check.”

But the Bush administration had other ideas, and White House officials abruptly forced the state to redraw the Road Home as a grant program.

“The program as it was originally designed would have avoided this whole issue of enforcement today,” said lawyer Walter Leger, a member of the Louisiana Recovery Authority, which helped craft the Road Home.

The original model, which was slow in getting money to homeowners, was widely derided as too bureaucratic and too paternalistic.

“There were screams from politicians in Louisiana, ‘Write ‘em checks, write ‘em checks, write ‘em checks!’” Leger remembered. “The concern about writing checks was, if you write checks with no restrictions, many people would just take the money and leave the blighted property and move on.”

To keep that from happening, the federal government let Louisiana draft covenants to try and make sure the money was used for rebuilding. But the state lost its partnership with the banks, and some of them forced homeowners to use their lump-sum grants to pay off their mortgages. The new design also made it easier for unscrupulous contractors to get upfront payments and then disappear.

Trying to address the issue

The state is keenly aware that many people haven’t honored their Road Home covenants, though its Office of Community Development is still trying to assess the scope of the problem. It’s most acute in New Orleans, according to OCD’s research.

In its most recent weekly report, the office estimated that 4,678 Road Home properties in the city were “not likely to rebuild.” That’s 70 percent of the statewide total in that category.

The state also labels another 16,982 properties in Orleans Parish as “likely rebuild” and 456 as “unknown.” OCD director Pat Forbes said he’s confident most in the first category are in compliance; many homeowners just haven’t filled out all the necessary paperwork. It’s less clear what lands a property in the “unknown” category, and whether those properties will end up being fixed.

Officials have come up with a patch they hope will address the issue, at least in part – new grants that will help people who can prove they were victimized by contractor fraud, contaminated Chinese drywall, or a mortgage company that forced them to use their grant to pay off their loan principal. Already, they say, thousands of people have applied for the aid.

“I think for some people, they really want to get home,” said Connie Uddo, director of the St. Paul’s Homecoming Center, a nonprofit focused on rebuilding in Gentilly. “And this is the last hope for them.”

For those who don’t qualify for the replacement grants, one potential fix would be to get property owners to convert from Road Home’s Option 1 – which offered the largest grants – to Option 2 or 3, which allowed them to sell to the state. And, of course, the state can try and recoup the money from those who absconded.

Both solutions would require the state to track down and possibly sue thousands of homeowners – and, possibly, their heirs – many of whom, like Braxton’s neighbors, now live in other states. In the case of converting Option 1 grants to Option 2 or 3, recipients would have to pay back the difference between the two grant amounts.

Leger, who now heads the Louisiana Land Trust, a public entity set up to be the owner of properties purchased by the state through the Road Home, figures many of the non-renovated Option 1 properties will end up in the trust’s hands.

“We believe we’re gonna get a few thousand of those properties,” Leger said, though he’s not sure when.

Douglas Baker, a spokesman for the Office of Community Development, said the state is trying “to get as many homeowners back into their homes as possible” by getting them additonal money or encouraging them to sell to the state.

But, he added, anyone who had not provided information showing they were compliant by Nov. 25 “will be moved into the grant recovery process, including Option 1 grant recipients who have not submitted proof of occupancy. We take seriously the commitment to the U.S. taxpayers that these funds be used in the manner they were intended.”

 

(Click map to see an exact Road Home properties cited for blight and surveyed by the state)

Enforcement: A state and local problem

The glut of blighted Road Home properties in New Orleans is a problem that arguably belongs to the state as much as to the city. If a homeowner doesn’t rebuild, the state is on the hook to pay the money back to the federal government – whether or not it can be recouped from the homeowner.

That setup, some observers have noted, could put the city and state at cross-purposes. For the state, every home deemed non-compliant represents a major headache, and possibly a cost. Determining that a homeowner met his obligations makes the state’s problem go away.

The city, conversely, has an interest in determining that every homeowner is held to the full extent of the covenants. Otherwise, the blight is the city’s mess to clean up.

Still, in an interview with The Advocate earlier this year, New Orleans Redevelopment Authority director Jeff Hebert said he was not worried that the state will overlook blight in the interest of closing its files.

“We’ve actually been working collaboratively on this very issue with the state,” Hebert said.

In fact, he said, a Road Home property generally can’t be cited for blight until city officials check with the state. Because some Road Home grants took so long to arrive, homeowners can use their Road Home status as a defense for the condition of the property – to a point.

“When someone gets a blight judgment, they’ll say, ‘I’m in Road Home.’ And we’ll go to the state and find out they’re not in good standing,” Hebert said. “If they are not in good standing with Road Home, we go ahead and put a blight judgment on the property.”

Hebert, like Leger, expects a raft of the unrenovated Road Home properties to end up in public hands – meaning they’ll probably eventually belong to NORA, the agency he runs. NORA has had some success disposing of vacant properties through the Lot Next Door program, which allows neighbors first dibs on lots that adjoin theirs.

The Landrieu administration declined to make anyone available for an interview for this story, instead sending a statement touting the administration’s blight-reduction strategies.

“We expect all property owners to comply with the law, including those who received Road Home grants,” the statement said in part. “We will use every enforcement method available to hold these property owners accountable and to revitalize our community.”

A neighbor’s anger

Braxton would like to see an aggressive clawback effort by the city and state – at least in the cases where grant recipients simply left, making no effort to renovate.

“I can realize the government made mistakes,” she said. “However, I do hope that (the state) will make every effort to get this money back because it’s unfair to us, the citizens of New Orleans, to now have to pay extra taxes to pay this money back that people took are enjoying in other places, other states.”

She’s still stung by the lack of effort by some of her former neighbors, people she once counted as close friends. She and her husband were among the first people back in late 2005. Braxton personally lobbied many people on the block to come back and rebuild, and most of them did.

“We all came back and rebuilt our homes and it was a struggle,” she said. “For people to get the money and not do a thing with it … I was very angry.”

Braxton’s anger is aimed at those she feels bailed on the neighborhood and the city. For instance, one property across the street now belongs to a woman who siphoned money, and the Road Home grant, from her now-deceased parents, according to Braxton.

Another neighbor is living comfortably in a nice neighborhood in Austin, Texas, while her home on Kennon Avenue rots.

But Braxton has sympathy for a man down the street who got a Road Home grant but was victimized by a crooked contractor. He’s still around, and he still seems to be trying to make it work.

Elected official among noncompliant

The Braxtons also have no ill will toward their politically prominent next-door neighbor, Clerk of Civil Court Dale Atkins (pictured left). Atkins got Road Home grants totaling $56,000, but has yet to renovate or occupy her house.

But Braxton notes that Atkins keeps the grass cut and the yard tidy. From the outside, while the house still sports its Katrina tattoo and looks unoccupied, it’s not necessarily blighted.
Atkins said in an interview that she’s still trying to figure out what to do with the house, where she lived for years before the storm.

“I recently got a quote from a contractor on work that needs to be done,” she said. “I plan on rebuilding the home and I don’t know what I’m going to do with it after that. I’m going to speak to Road Home because I haven’t spent the money that I received. I have it in a CD at First NBC Bank.”

She’s leaning towards just giving it back, she said Monday.

“My home’s not blighted and if I have no other option I will return the money to Road Home,” she said. “I was trying to keep my home because I’m fond of the neighborhood. That’s where I grew up. But it hasn’t worked out. But I realized I’m at a point where I have to make a decision. But I’m not selling it to the state. I’m just going to return the money to the Road Home.”

On Tuesday, Atkins said she had had returned the first $36,000 of the money to the Road Home “and notified the program of my decision to finish rebuilding my home on my own.” She said she’d send the next $20,000 soon. She said her house is “well maintained” and promised that it “will be finished in due course,” adding:  “I do still want to be a part of that neighborhood.”

The Braxtons will still be on Kennon Avenue either way, hoping they eventually get a chance to really enjoy that front porch they built after Katrina. Right now, that day seems a long way off.

“Sometimes I lay in bed at night and I wonder, what’s going to happen?” Braxton said. “You know, how long will we have to deal with this and live with this? And why do we have to live with this?”

 

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