Two recent scathing audits have forced the state Office of Community Development to change its stance on recovering Road Home grants and other Katrina housing aid.
The state agency announced Tuesday that it has asked financial consulting firm CohnReznick and CGI Technologies and Solutions Inc. to review the state's compliance and collection procedures as it confronts millions in possibly misspent federal aid.
For years, surveys and audits have found significant numbers of homeowners who got Road Home grants to rebuild, elevation grants to lift their homes or forgivable loans to fix up affordable rental units were not meeting requirements for using the money.
Those concerns intensified last week when the U.S. Department of Housing and Urban Development found that 85 percent of Road Home recipients who got $30,000 elevation incentive grants were not able to prove that they properly elevated their homes. That meant as many as 24,000 homeowners may have not used the money correctly.
HUD called on the state to aggressively take back the money, but the state maintained that it was using other funding, such as the Hazard Mitigation grants from FEMA, to help struggling homeowners get over lingering financial hurdles.
Then, on Monday, the state legislative auditor came out with another report, this time looking at a sample of 45 Road Home grants and finding that nearly half of them were not able to show that they had complied with covenants they signed when they got their rebuilding money back in 2007 or 2008. The report went on to echo HUD by saying the state's grant recovery efforts had been insufficient.
It noted that not one of the 21 non-compliant homeowners the legislative auditor had identified had been forced to give the money back.
The state audit also identified millions in potentially ineligible grants in the FEMA-financed Hazard Mitigation program and in the Small Rental program for mom-and-pop landlords.
State Community Development Director Pat Forbes continued to strike an empathic tone, and promised modifications in the programs within the next six weeks to get more non-compliant Road Home recipients back in their homes.
But he also ramped up his language about taking money back from those who can't or won't spend it the right way.
'We know that a non-compliant applicant represents not only a family that is not back in their home, but likely a blighted property in a neighborhood,' Forbes said. 'While grant recipient compliance is our primary goal, grant recapture and recovery is also ongoing, and will continue as more applicants are identified as non-compliant and unable to be assisted through other compliance means.'
The legislative auditor expressed skepticism of the state's enforcement efforts so far, saying the delays in real grant recovery was only making the job harder: 'Although the department is actively working with HUD to resolve compliance issues, we would like to reemphasize that the longer program regulations are modified and enforcement actions delayed, the less chance the state has to recover award payments from recipients that did not spend the money appropriately, and the state could be liable to repay those funds to the federal government.'