A new audit released Monday by the Louisiana Legislative Auditor says the state could be on the hook for hundreds of millions in disaster relief payback. The money was supposed to help property owners recover from Hurricanes Rita and Katrina.
"The grants come with a covenant," says Legislative Auditor Daryl Purpura. "Whenever you receive the funds you had to re-occupy, rebuild, get insurance and prove to the state that you had done these things."
The Legislative Auditor's review of the Office of Community Development, which oversees the Road Home program, showed potentially huge paybacks for money obtained illegally.
"An individual has received the funds and he's not met the covenant, then they owe the state," says Purpura. "But ultimately the state is the grantee so the federal government is going to be looking for the state to recover the funds."
Below is the response from OCD Director Patrick Forbes.
"The state takes seriously its commitment to restore the residential property damaged by hurricanes Katrina and Rita and seeing that residents who so desire are able to return home. OCD-DRU also takes seriously its fiduciary responsibility both to the state and federal taxpayers. We know that a non-compliant applicant represents not only a family that is not back in their home, but also likely a blighted property in a neighborhood. 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.
"To continue to improve compliance, we have been in discussions with HUD on modifying Road Home programs to assist some of these homeowners who have not yet completed their construction, and we are working aggressively with HUD to ensure that homeowners get in compliance. We expect these programs to be reviewed by HUD within the next six weeks. We expect these program modifications to help a number of currently non-compliant Road Home applicants become compliant, so proceeding with recovery on these files would be premature at this point.
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