Slow pace of payouts wears on Katrina victims

Shirley Labeau longs to move back into her four-bedroom, shotgun-style home from the trailer she and her two sons have occupied since Hurricane Katrina ravaged the house more than a year ago.

But the $7.5-million Road Home program, which provides money to renovate and rebuild storm-damaged homes, hasn’t come through for Labeau yet, and is being widely criticized for the slow pace of its payouts.

The program provides grants of up to $150,000 to cover uninsured losses for homeowners who choose to rebuild or buy a new house in Louisiana. The funds, although federal, are channeled through the Louisiana Recovery Authority.

Almost 80,000 families have applied to Road Home, but as of Monday, money had officially been made available to only 26. Fewer than 2,000 people had received letters notifying them of the amount of their grant, and they must take certain steps -- selecting a contractor, for example -- to gain access to it. The money is released gradually from an account as the work is done.

Officials said Monday that an additional 3,000 awards had been calculated over the last few days, and that those applicants would be receiving notification letters in the next two or three days.

Road Home officials said that they “recognize the frustration” of applicants and that the distribution of funds would now go into overdrive.

The slow start-up stemmed from a need to set up housing assistance centers, hire and train workers, devise an appointment scheduling system and establish the necessary technology, said Mike Byrne, chief program officer.

“What we have been able to do is build a system now that will be able to move much more quickly,” Byrne said.

“This is a complex program,” he said. “We’re dealing with money and we’re dealing with real estate. Those are naturally complex issues that require a certain amount of process.”

Critics cite neighboring Mississippi, where recent statistics show that more than 5,200 grants have been paid under a state rebuilding plan and that at least 7,668 homeowners have been notified of the awards they will soon receive.

Mississippi had money available sooner, its program is smaller, and rules for using the grants differ.

In Louisiana’s program, in an attempt to prevent waste and fraud, homeowners must be fingerprinted and provide proof of title to a house, insurance policy details and, where possible, an appraisal of the property’s pre-storm value. Many residents lost such documents in the storm, and they view the requirements as an added hassle.

“It’s like they’re trying to find every impediment to giving out the money,” said Beth Butler, Louisiana director of ACORN, an advocacy group for low- and moderate-income families.

Labeau, 64, who was laid off from her job as a school bus monitor after Katrina, said her survival depends on the Road Home money. She didn’t have flood insurance and didn’t receive a dime from her homeowner’s policy, she said.

Still, she is obligated to pay the $650 monthly mortgage for a house she can’t live in. Her income consists of her late husband’s pension, Social Security and the disability benefit of one of her sons, who recently had a stroke.

Labeau is hoping to get the full $100,000 she says her house was worth before the storm. Her interview with a Road Home official is scheduled for Dec. 13. But getting an appointment is no guarantee of getting a grant.

LaToya Cantrell, president of the improvement association for New Orleans’ Broadmoor neighborhood, where almost all 2,900 homes were damaged, said homeowners there were relying on the Road Home money “to fill the gap.”

Most residents had insurance, but many were underinsured, Cantrell said. The application process also has posed challenges.

Ernie O’Steen said he applied for the Road Home money in August when the application became available online. He tried to follow up by e-mail and phone.

“But the e-mail address didn’t work, and they quit answering the phone,” O’Steen, 69, said.

When he finally got a letter, it listed a wrong number to call to set up an appointment.

“I don’t know whether I’m going to get money or not. And I’m not depending on it,” said O’Steen, who has rebuilt most of his home using insurance money and personal funds.

Under pressure from Gov. Kathleen Babineaux Blanco to approve rebuilding funds for 10,000 families by the end of the month, Road Home announced last week that homeowners could complete their applications by phone with the help of multilingual staff.

Ten housing assistance centers operate in Louisiana, and an 11th is to open this week in Houston.

Byrne said the average payout for the most recently calculated awards was $72,940. Compensation received by homeowners from insurance companies or any federal housing aid is deducted from each grant.

ACORN helped gut Labeau’s house. She said she was one of three homeowners who decided to return to the block.

Less than three feet separate Labeau’s trailer from a neighboring property that hasn’t been touched since the storm. Cockroaches permeate the wood siding, and at night rats run rampant.

Local officials, community activists and academics widely agree that New Orleans will recover, but the Road Home Program would greatly help bolster the city’s rebirth.

“If the program gets moving more quickly ... it will definitely supplement the recovery, and strengthen it,” said John A. Lovett, an associate professor at Loyola University New Orleans’ School of Law.

“It will be a stronger and much easier transition if the program is a success.”

*

ann.simmons@latimes.com