HUD PROVIDES CLARITY FOR LOUISIANA'S ROAD HOME ELEVATION INCENTIVE PROGRAM

WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) today announced it has worked with the State of Louisiana on a series of proposed amendments to its Road Home Elevation Incentive Program to provide certain homeowners relief from having to pay back funds intended to help elevate their homes. Under this approach, the State of Louisiana will identify qualified homeowners who used their elevation grants to rehabilitate their homes or for interim housing expenses. If any of the estimated 16,000 homeowners can demonstrate to the State that their elevation grants were used for remaining unmet housing needs, HUD will no longer hold the State liable for repayment.

In 2013, HUD's Office of the Inspector General (OIG) issued a report on Louisiana's Road Home Elevation Incentive Program (RHEI) which found widespread noncompliance among a sampling of cases. HUD's OIG recommended HUD determine the scale of this noncompliance and consider requiring the State to recover funds from homeowners who received elevation incentive payments, but have yet to elevate their homes. HUD has been working with State officials over the past two years to address these issues.

"We believe there are a significant number of responsible homeowners who participated in this program in good faith but ultimately lacked sufficient resources to repair their damaged homes," said Harriet Tregoning, HUD's Principal Deputy Assistant Secretary for Community Planning and Development. "We won't victimize people who made an honest effort to do the right thing. We intend to work very closely with our Inspector General and the State to overcome the original design flaws in this program to further housing recovery in Louisiana. We are pleased to see that the State is committed to finishing the job for homeowners whose properties still need to be elevated and made more resilient to future storms."

The Road Home Elevation Incentive Program:

HUD allocated to Louisiana a total of $13.4 billion through its Community Development Block Grant Disaster Recovery (CDBG-DR) Program to support the long-term recovery in the State following Hurricane Katrina. Using these funds, the State established multiple recovery programs, including the RHEI Program. This incentive program was intended to encourage qualified homeowners living in high-risk areas to elevate their homes to the Federal Emergency Management Agency (FEMA) base flood elevation standards by offering grants of up to $30,000. In return, participating homeowners signed a covenant to elevate their home to these standards and to reside in the home for at least three years. The grants were provided as an incentive to elevate and were never expected to be enough to cover the full cost of elevation in all cases; however, many homeowners were unable to secure private financing or other funds to fill the gap.

Following the Inspector General's report, the State of Louisiana estimated that approximately 16,000 households who received elevation incentive payments did not elevate their homes. The majority of these households were lower income or senior citizens who did not have sufficient resources to either rehabilitate their homes or to elevate them, and many appear to have chosen to apply their elevation grants toward the repairs to their properties or interim living expenses while rebuilding.

To overcome this design flaw and to address the concerns expressed by the Office of the Inspector General, HUD is now requiring the State to perform on-site inspections to verify how noncompliant households actually spent their elevation grants. If the State can determine that these households used the funds to repair their properties or to sustain themselves in rental housing, HUD will consider these households compliant with the overarching policy goals of long-term recovery, and they will not have to repay their elevation grants.

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