Corporations Buy Destroyed Homes in New Orleans

A quite plausible plan has been introduced by Rep. Richard Baker, R - Baton Rouge, to help New Orleans’ homeowners and cleaning up the city.

Key Louisiana political leaders lined up behind federal legislation Thursday creating a public corporation to buy some of the thousands of hurricane-damaged homes in metropolitan New Orleans and sell them to developers as part of the rebuilding of the region.

The bill would create the Louisiana Recovery Corporation, which would be financed with federal Treasury bonds so that the state doesn't have to return year after year to Congress seeking financial assistance in a rebuilding process that is expected to take years.

Based on redevelopment plans from state and local officials, the corporation would approach homeowners and offer to buy their property. A critical element -- how the property would be valued -- is still being worked out, but would be based on how much equity homeowners have in the property.

Under the bill, property owners would not be required to sell, but Baker expects that many in heavily damaged areas would want to, especially if they don't have the money to rebuild. Tracts of land would then be packaged and sold to developers who would bid for the right to rebuild them.

Baker said he filed the bill out of concern that homeowners would be forced into bankruptcy if they had to pay mortgages on flooded-out property and that lenders would end up with billions of dollars worth of worthless property on their books.

Opposition for the bill came from members of the Congressional Black Caucus. They claimed that this corporation would be used to get rid of low-income residents who are not property owners.

Baker’s bill sounds like the beginning of something that could be really good for New Orleans or really bad. In theory, the buying up of large chunks of land and clearing it in one go sounds good, but what if a few people in the neighborhood don’t want to sell and feel pressured into doing just that? Also wouldn’t it lead to many people not moving back because they have settled some where else? New Orleans’ economy is likely to suffer a heavy blow if only a third of its previous residents move back.

I’m interested in hearing peoples’ opinions concerning Baker’s bill. Also if some of you don’t mind either creating usernames or signing your posts at the bottom, I would really appreciate it. I would like to know who’s visiting my blog. Thanks, fellow readers.

New Orleans Corruption Update

Apparently the fed has decided to take charge on corruption and fraud following Hurricane Katrina. According to the New Orleans Times Picayune, a St. Tammany Parish Councilman was arrested Tuesday, Nov. 15, for extorting $100,000 kickback in connection with a Hurricane Katrina debris removal contract.

Impastato was arrested during an FBI sting as he accepted two cashier's checks totaling $85,000 from a subcontractor cooperating with authorities, U.S. Attorney Jim Letten said at a news conference Wednesday.

Well I am glad something is starting to be done about the corruption. Baby steps.

Baton Rouge Police receive Red Cross Money

After going over the types of disaster assistance and the eligibility it appears that no one living in Baton Rouge should be eligible for FEMA as well as Red Cross assistance. Baton Rouge was never declared a disaster area by the President. The question still begs: how did ineligible people in Baton Rouge receive disaster relief assistance? For example, police officers in East Baton Rouge Parish.

The District Attorney, Baton Rouge Police and the East Baton Rouge Parish Sheriff's Office have launched a joint investigation to look for any wrongdoing -- and a memo from the Baton Rouge Union of Police might have something to do with it.

The memo, dated Sept. 19, tells union members they can get a Red Cross "gift card," even without having sustained any storm damage to their property, just because they are members. Naturally, it has stirred emotion in the Baton Rouge area.

Union attorney Charles Dirks said the whole thing is just one big misunderstanding.

"This particular person who generated the memorandum, he just did a poor job of taking down information and relaying the information," Dirks said.

Um, how does that happen? The Baton Rouge Union of Police had a meeting with the Red Cross people, and some how this employee left the meeting under the assumption that Baton Rouge police could get free gift cards i.e. free money? Shady business is going to be one of the main topics following post-Katrina clean-up.

A follow up article states that:

The Sept. 19 notice sent via Police Department e-mail referred to the charity's financial assistance debit cards for Hurricane Katrina victims as "gift cards," and insists they were a special benefit for union members.

"If you live in one of the attached Zip Codes you need to go by the Electrical Workers local Hall and get your Red Cross gift card, by Saturday 9/24/05," says the memo, which The Advocate obtained through a Louisiana public records request.

"You get the gift card whether you sustained a loss, or not, do (sic) to the storm, as a result of you being in B.R.U.P. Local 237."

The memo adds that immediate family "also qualifies for the gift card if they live in a separate residence from you in one of the listed Zip Codes (father, mother, brother, sister, aunt, uncle)."

Federal Flood Money

The Times-Picayune had an article today discussing citizens in New Orleans not receiving funds from their flood insurance.

After hearing from constituents that Katrina flood insurance claims were being held up for lack of money, the House voted Wednesday to increase the program's borrowing authority by $5 billion. But similar action in the Senate has been stalled by some members who are looking to make changes in the program.

Rep. Charlie Melancon, D-Napoleonville, said that even more action is needed.

"With today's action by the House we may have headed off one crisis, but a larger one remains," Melancon said. "Thousands of homeowners who lost everything didn't have flood protection because they were never considered a risk. If we're going to rebuild, we have to give people something to rebuild with, and Congress needs to take quick action."

Melancon has pushed for legislation that would allow hurricane victims to retroactively buy into the federal flood insurance program. But the bill has run into considerable opposition from members who say it would cost too much and would send the wrong message by indirectly telling people that they could buy insurance after they suffer a serious loss.

The $5 billion in extended credit, which FEMA hopes to pay back through future insurance premiums, may provide only a short-term solution. Officials with the flood insurance program said that the $5 billion would cover only claims through the Thanksgiving holiday.

If you live below I-10 the major interstate running horizontally across southern Louisiana, you should have flood insurance especially in New Orleans. People in New Orleans who were told that they didn’t need flood insurance were misinformed. There was an article in National Geographic Oct. 2004, which predicted the possibility of the whole of New Orleans going under water.

Thousands drowned in the murky brew that was soon contaminated by sewage and industrial waste. Thousands more who survived the flood later perished from dehydration and disease as they waited to be rescued. It took two months to pump the city dry, and by then the Big Easy was buried under a blanket of putrid sediment, a million people were homeless, and 50,000 were dead. It was the worst natural disaster in the history of the United States.

The prophecy that New Orleans would become a giant lake has been being predicted for years so how could you live in New Orleans and not have flood insurance? Some people were told by their insurance agents that they lived in a no-flood zone, and why wouldn't they believe them? They are the ones who are suppose to know.

I will say I am happy to see that the people who did have flood insurance are getting their money.

Corruption in New Orleans. Who knew?

An article written in the Washington Post last week talks about a New Orleans rife with corruption and racial dissent. Even the reconstruction commission New Orleans mayor Ray Nagen created has been fraught with internal fighting, and there are fears that the commission could be “reduced to irrelevancy because of the state government's own commission and the recent appointment of Donald E. Powell, chairman of the Federal Deposit Insurance Corp., to oversee federal relief work.”

New Orleans's fractured leadership has struggled for years to keep its finances in order and to bolster its clout in Baton Rouge and Washington... In a recent Louisiana State University poll of 419 business executives, corruption was ranked among the worst aspects of doing business in Louisiana. Investors and managers elsewhere are reluctant to come "because they don't want to pay the corruption tax," said Rafael C. Goyeneche, president of the Metropolitan Crime Commission.

"We've seen every type of corruption imaginable," said U.S. Attorney Jim Letten, whose office indicted 44 public officials in the past fiscal year alone. He pointed to skimming, bribery and shakedowns across a spectrum of government employment: judges, police, teachers, administrators and traffic court workers.

In August, FBI agents raided the Washington and New Orleans homes of eight-term Rep. William J. Jefferson (D-La.), suspecting he had illegally pocketed an investor's money. They reportedly found a large amount of cash in a freezer. The same month, a grand jury charged Glenn Haydel, uncle of former mayor Marc Morial, with skimming $550,000 in city money.

In a development that offers little comfort for funders of the post-Katrina rebuilding project, three Louisiana emergency-preparedness officials are awaiting trial on charges that they tried to block federal auditors from uncovering the alleged misuse of Federal Emergency Management Agency funds. FEMA is demanding that the state repay $30 million, alleging that the money was mishandled.

Asked recently how he would make sure the requestedfederal money for rebuilding would be spent wisely, Nagin replied "You know about our colorful past?" and laughed for a full five seconds.

A full five seconds! Because corruption is real funny! Perhaps New Orleans has such horrible crime and ghettos because the money that is supposed to be being spent on urban development is getting pocketed by public officials. The article goes on to talk about the failing school system in New Orleans stating that 73 of the more than 120 city schools are considered to be failing.

A significant uncertainty is how large the city will be, and how many of its more than 450,000 residents will return, given an economic base that has been shrinking for years, especially since the oil and gas business migrated to Houston. The Port of New Orleans, for generations an economic engine, is so mechanized that it needs just 2,500 workers on an average day. New Orleans has one Fortune 500 company.

Analysts doubt that the largely unskilled workforce, even if it does come back, can sustain a prosperous modern economy. One in four adults has no high school diploma. The poverty rate in New Orleans is more than twice the national average, and the crime rate is among the nation's worst. Forty-six percent of Orleans Parish households bring home less than $25,000 per year.

"People are tired of sending money there, and it never goes for what it's intended. Outside New Orleans, they would bet the farm that it would be stolen or wasted," the Baton Rouge political analyst said. "A lot of people ask how Orleans Parish will be a better place based on what we've seen in the last 30 years."

The people in southern Louisiana have been talking about the corruption in New Orleans for decades. Decades! That would suggest that people knew about the problem. So the question is: why wasn’t anything done about it? Because the checks and balances of the city are obviously corrupt. Unfortunately, there cannot be honest government without checks and balances.

FEMA Disaster Assistance

I have heard of many people receiving FEMA money who were not affected by the storm. I wanted to examine the types and requirements for FEMA to see if that might shed some light on this.

Disaster assistance is defined by FEMA as “money or direct assistance to individuals, families and businesses in an area whose property has been damaged or destroyed and whose losses are not covered by insurance. It is meant to help you with critical expenses that cannot be covered in other ways. This assistance is not intended to restore your damaged property to its condition before the disaster.” There are two types of disaster assistance: housing needs and other than housing needs.

Housing needs include:

• Temporary Housing (a place to live for a limited period of time): Money is available to rent a different place to live, or a government provided housing unit when rental properties are not available.
  
• Repair: Money is available to homeowners to repair damage from the disaster to their primary residence that is not covered by insurance. The goal is to make the damaged home safe, sanitary, and functional.
  
• Replacement: Money is available to homeowners to replace their home destroyed in the disaster that is not covered by insurance. The goal is to help the homeowner with the cost of replacing their destroyed home.
  
• Permanent Housing Construction: Direct assistance or money for the construction of a home. This type of help occurs only in insular areas or remote locations specified by FEMA, where no other type of housing assistance is possible.

To obtain housing needs assistance, all of these must be true:

• You have losses in an area that has been declared a disaster by the president.
  
• You have filed for insurance benefits and the damage to your property is not covered by your insurance.
  
• You or someone who lives with you is a citizen of the United States, a non-citizen national, or a qualified alien.
  
• Your home is in an area that has been declared a disaster area by the president.
  
• The home in the disaster area is where you usually live and where you were living at the time of the disaster.
  
• You are not able to live in your home now, you cannot get to your home due to the disaster, or your home requires repairs because of damage from the disaster.

You are not eligible for housing needs assistance, if any one of these is true:

• You have other, adequate rent-free housing that you can use (for example, rental property that is not occupied).
• Your home that was damaged is your secondary or vacation residence.
• Your expenses resulted only from leaving your home as a precaution and you were able to return to your home immediately after the incident.
• You have refused assistance from your insurance provider(s).
• Your only losses are business losses (including farm business other than the farmhouse and self-employment) or items not covered by this program.
• The damaged home where you live is located in a designated flood hazard area and your community is not participating in the National Flood Insurance Program. In this case, the flood damage to your home would not be covered, but you may qualify for rental assistance or items not covered by flood insurance, such as water wells, septic systems, medical, dental, or funeral expenses.

Assistance may be obtained for Other Housing Needs, which include:

• Disaster-related medical and dental costs.
• Disaster-related funeral and burial cost.
• Clothing; household items (room furnishings, appliances); tools (specialized or protective clothing and equipment) required for your job; necessary educational materials (computers, school books, supplies).
• Fuels for primary heat source (heating oil, gas, firewood).
• Clean-up items (wet/dry vacuum, air purifier, dehumidifier).
• Disaster damaged vehicle.
• Moving and storage expenses related to the disaster (moving and storing property to avoid additional disaster damage while disaster-related repairs are being made to the home).
• Other necessary expenses or serious needs as determined by FEMA.

To qualify for Other Housing Needs assistance, all of the following must be true:

• You have losses in an area that has been declared a disaster area by the President.
• You have filed for insurance benefits and the damage to your property is not covered by your insurance. You may be eligible for help from the Individuals & Households Program (IHP) to repair damage to your property.
• You or someone who lives with you is a citizen of the United States, a non-citizen national, or a qualified alien.
• You have necessary expenses or serious needs because of the disaster.
• You have accepted assistance from all other sources for which you are eligible, such as insurance proceeds or Small Business Administration Disaster loans.

Just going over the types of disaster assistance and the eligibility shows that no one living in Baton Rouge should be eligible for FEMA money. Baton Rouge was never declared a disaster area by the President. The question still begs: how did ineligible people in Baton Rouge get FEMA assistance?

A History of FEMA

FEMA has been under a lot of pressure since the hurricanes hit. One of the reasons I started this blog was to discover if FEMA, which is a federal agency, should be getting all this flack from angry citizens, who believe they should be receiving more from the federal government. The

Federal Emergency Management Agency’s job is to coordinate federal, state, and local agencies in responding to floods, hurricanes, earthquakes, and other natural disasters. FEMA provides financial assistance to individuals and governments to rebuild homes, businesses, and public facilities. The agency also trains firefighters and emergency medical professionals, and funds emergency planning throughout the United States and its territories. FEMA has been around for over 200 years under different titles, but essentially doing the same thing. In 1803, a New Hampshire town suffered an extensive fire so the federal government passed the Congressional Act of 1803, which is considered to be the first disaster legislation. Throughout the next 100 years other ad hoc legislation would be passed to assist after hurricanes, earthquakes, tornadoes and other natural disasters.

After the start of the Great Depression in the 1930s, Herbert Hoover began the Reconstruction Finance Corporation. The purpose of this program was to redistribute federal money as loans to banks and commercial institutions hit by a natural disaster. Then in 1934, the Bureau of Public Roads was given authority to help rebuild roads and bridges hit by a natural disaster. The Flood Control Act was passed next, which gave the Army Corp of Engineers greater control over flood control projects.

In the 1960s and 70s, a series of disasters hit including Hurricane Carla in 1962, Hurricane Betsy in 1965, Hurricane Camille in 1969 and Hurricane Agnes in 1972, the Alaskan (Good Friday) Earthquake of 1964 and the San Fernando Earthquake of 1971. The Federal Disaster Assistance Administration was created under the Department of Housing and Urban Development.

In 1979, President Jimmy Carter signed an executive order, which merged many of the separate disaster-related responsibilities into a new Federal Emergency Management Agency (FEMA). FEMA absorbed: the Federal Insurance Administration, the National Fire Prevention and Control Administration, the National Weather Service Community Preparedness Program, the Federal Preparedness Agency of the General Services Administration and the Federal Disaster Assistance Administration. Civil defense responsibilities were also transferred to the new agency from the Defense Department's Defense Civil Preparedness Agency.

After the terrorist attacks on September 11, 2001, President George W. Bush established the Department of Homeland Security (DHS), which was created to coordinated the different federal agencies that deal with law enforcement, disaster preparedness and recovery. FEMA is one of the four agencies under DHS.

The question still remains: once the president declares a state of an emergency to an area how is it decided who gets funds and who does not? In my next post, I will examine the requirements for getting FEMA. Has the federal government been warning these areas to be prepared for these disasters? And if so, should we blame state and local government for not taking notice?