Federal Money Trickles to Katrina Homeowners

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Close to 120,000 homeowners in Louisiana and Mississippi have applied for federal funds to help pay for the cost of rebuilding their homes after Hurricane Katrina. The government has given the states billions of dollars for this purpose. Yet only a few people have received any money.

RENEE MONTAGNE, host:

It's MORNING EDITION from NPR News. I'm Renee Montagne.

STEVE INSKEEP, host:

And I'm Steve Inskeep. Good morning. Here's a footnote to this week's commemorations of Hurricane Katrina. As President Bush and other officials spoke of the money committed to rebuilding, many residents were still waiting to see it. Close to 120,000 residents of Mississippi and Louisiana have applied for rebuilding grants. The states are supposed to distribute the grants, but only a few people have received them.

NPR's John Ydstie continues our series on where the money went after Katrina.

JOHN YDSTIE reporting:

Of the $100 billion Congress has authorized in response to Hurricane Katrina, nearly $11 billion have been funneled to state programs designed to help residents whose homes were damaged or destroyed by the storm. In Mississippi two days ago, President Bush praised progress made by that state.

President GEORGE W. BUSH: The checks have begun to roll. They're beginning to move. And the governor and his staff are on top of it.

YDSTIE: But despite getting $3.4 billion from Congress for its program last December, Mississippi has actually managed to issue only 41 checks to homeowners. That's out of 17,000 homeowners who've applied for funds. Lee Smith, who's rebuilding his house in East Biloxi, is one of those who's been waiting.

Mr. LEE SMITH: They tell us one thing and do another. They said that people would be receiving money in two weeks. That was last month. Nobody got anything.

YDSTIE: Scott Hamilton - spokesman for the Mississippi Development Authority, which is administering the program - defends the state's record.

Mr. SCOTT HAMILTON (Spokesman, Mississippi Development Authority): Well, of course, it's been eight months since Congress approved this money, but we had to develop the systems and the plans and so on and everything to actually administer the program. We walk a fine tightrope between getting funds to people as soon as possible and doing so in a way that makes sure that the money is used as it was intended.

YDSTIE: The potential for fraud has been of great concern to officials. Hamilton also says in addition to the 41 checks that have been issued, another 7,100 homeowner grants have been approved.

Along with criticism for being too slow, Mississippi's program has taken heat for leaving too many needy homeowners out. So far, the program only provides grants up to $150,000 to people whose homes were outside the official flood zone and who had homeowners insurance. Biloxi City Councilman Bill Stallworth says the program leaves out those in the greatest need: old and poor residents of East Biloxi that took the biggest hit from Katrina's 30-foot storm surge. Stallworth says many couldn't afford insurance.

Mr. BILL STALLWORTH (Biloxi City Councilman): The choices get to be, hmm, I can pay my insurance note on my house or I can buy my diabetes medicine. Which one do you think is going to win out? I can put food on my table, or I can maybe purchase some flood insurance. These are the kind of real decisions that have to be made by people.

YDSTIE: Mississippi's Scott Hamilton acknowledges that many needy residents have been left out. He says the state is now working to develop plans to help them, too. He admits it could be many months before they receive assistance.

Louisiana has developed a much broader program which President Bush commended yesterday. It gives up to $150,000 for rebuilding to any homeowner hurt by the storm, minus FEMA rebuilding grants or payments already received from insurance companies. But there's also a lot of frustration among Louisiana residents that the relief hasn't started flowing.

Andy Kopplin - director of the Louisiana Recovery Authority - blames the Congress, which didn't fully fund the state's program until June - six months after Mississippi got its funds.

Mr. ANDY KOPPLIN (Director, Louisiana Recovery Authority): The fact that we had to wait till the middle of June to get a fully funded housing program is unacceptable. It was not appropriate for Louisiana homeowners to have to wait that long, and we're just as frustrated as they are.

YDSTIE: Louisiana got $7.5 billion from the Congress for what it calls its Road Home program. So far, only two checks have been issued under the Road Home pilot program. Forty more are expected to be issued by the end of the week.

A dozen housing assistance centers are being set up around the state. They're beginning to process applications from the more than 100,000 Louisiana residents seeking money to rebuild their homes. Many won't receive grants until well into next year.

John Ydstie, NPR News, Washington.

INSKEEP: You can see where Katrina survivors landed and how they're faring by going to our Web site, npr.org.

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