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Katrina Aid Far From Flowing

Times Staff Writers

From the ghostly streets of New Orleans’ abandoned neighborhoods to Mississippi’s downtrodden coastline, the first anniversary of Hurricane Katrina’s onslaught is arriving with emerging signs of federal money at work -- rented trailers parked in the driveways of flood-ravaged homesteads, teams of Army engineers overseeing levee repairs, beaches swept clean of debris.

But the federal government has spent less than half the rebuilding funds that it amassed for Katrina recovery, which has raised sharp questions about the Bush administration’s stewardship of the Gulf Coast’s reconstruction and has provoked a chorus of complaints about excessive delays and government sluggishness.

Despite four emergency spending bills approved by Congress to provide more than $110 billion in aid, federal agencies have spent only $44 billion. Even as President Bush insisted last week and in his radio address Saturday that $110 billion was a strong commitment, he conceded that the recovery effort was plagued with bureaucratic hurdles.

The scale of the catastrophe continues to overwhelm the government’s capacity to respond. Aid agencies are only now contending with the long-term needs of hundreds of thousands of evacuees and with the landscape of shattered houses and public infrastructure that will take years to restore.

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Many homeowners and business owners have waited impatiently for promised grants and loans as federal and state officials have spent months dickering over how much and where to spend aid -- and officials remain at odds over who bears the blame for the inconsistent flow of Katrina aid.

Last week, federal recovery director Donald E. Powell attributed the pace of aid payments to the “balance in attention between getting the money out fast and getting the money out responsibly fast.”

But after a year of fielding constituents’ pleas for help, Sen. Mary L. Landrieu (D-La.) said, “We’re seeing the same thing going on with the recovery as we did with the immediate response. We’re going through another unfolding disaster.”

In the Democratic response to Bush’s radio address Saturday, Landrieu said, “Too often federal agencies are slow to move and encumbered by red tape.”

Some federal agencies acted quickly to help Katrina victims. Flood insurance payments moved early and efficiently, according to Landrieu and others who have analyzed the aid flow. But other agencies proved inflexible and overwhelmed, making little effort to clear bureaucratic obstructions and releasing available aid at a trickle.

In July, Congress’ nonpartisan Government Accountability Office reported that disbursement of Small Business Administration recovery loans was marred by “significant delays.” A report last week from Democrats on the House Small Business Committee said that of $10 billion approved for such loans, just 20% had reached recipients. And the Federal Emergency Management Agency, the administration’s top recovery authority, already attacked for its response to the storm, has again taken heat.

Until last week, when the White House Office of Management and Budget released an agencywide breakdown of recovery spending, the administration had not provided a clear overview of how the money was being doled out. For much of the year, elected officials, government auditors and outside experts had to rely on fragmentary indicators of the pace of recovery spending, which handicapped efforts to monitor the process.

“It’s not only that we don’t know what’s been spent. We haven’t even had an accurate description of what ‘spent’ means,” said Rob Nabors, Democratic staff director for the House Appropriations Committee. “They talk about ‘commitments’ and ‘obligations’ -- they’ve invented new terms for not spending money.”

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Brian M. Riedl, a budget analyst with the conservative Heritage Foundation, said: “The government is barely adequate at counting how much money goes out the door, but it’s terrible when it comes to tracking how much reaches the ground.”

The telltale effects of the unspent billions emerge in the bitter accounts of homeowners who have waited for months for trailers that have not arrived, merchants who agonize over government loans still pending, town officials frustrated by rebuilding efforts stalled by the vagaries of federal regulations.

The toll taken by the government’s slow-motion funding reveals itself in miniature on Flood Street, an aptly named stretch of flood-scarred dwellings in New Orleans’ devastated Lower 9th Ward where the Kent brothers are trying to resettle their family home.

Lonnie Kent applied to FEMA six months ago for a trailer where he and his brother Clark Gable Kent could live while repairing their mother’s mold-infested house, the only one on the block someone has returned to. Only last month did a FEMA agent show up to survey where the trailer would go. But the agent departed without making a commitment, leaving the brothers to wait it out in a house where sheetrock walls are exposed and the roof leaks.

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“They said they couldn’t hook up the trailer because an electrical line was [hanging] too low,” said Lonnie Kent. “But ain’t no trailer that high.”

FEMA officials said more than 19,000 trailers had been delivered to displaced homeowners in New Orleans. But many others are still waiting, including 4,200 in New Orleans and nearly 4,000 in neighboring parishes.

The anxiety of waiting afflicts the city’s affluent as well. Colleen Monaghan, 44, lived in the once-thriving neighborhood of Lakeview, where blocks of water-damaged homes sit vacant and exposed. The wall of floodwater that broke over poorly built levees caused $470,000 in damage to her home.With only $26,000 in insurance coverage, Monaghan turned to the Small Business Administration, which provides loans to homes and businesses damaged in natural disasters. She said she applied for a loan to rebuild her house a month after Katrina struck. In November, the agency informed her she would receive a $200,000 loan. But it was not until Wednesday that Monaghan received the money.

“It’s been an ongoing nightmare for the one whole year,” said Monaghan. “I feel I’m finally beginning to see the light. I’m proud to be an American, but I’ve lost all confidence in our government.”

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Bush administration officials emphasized that the $44 billion paid out so far was not a complete portrait of government efforts. Powell and other senior officials pointed to more than $77 billion in Katrina “obligations” -- a term the administration uses for federal money that has been allocated but not yet disbursed to state governments or through direct loans and grants.

Assessing the government’s recovery efforts depends on how success or failure is defined. Federal officials, for example, promote FEMA’s commitment to spend $35.4 billion out of its Disaster Relief Fund for essential public infrastructure repair and emergency aid, but critics say the agency has managed to actually spend only $21.9 billion of its $42.6 billion allocation.

At times, FEMA’s slowness to provide funds has paralyzed state agencies required under federal law to match 10% of the cost of repair work, said Amy Liu, deputy director of the Metropolitan Policy Program at the nonpartisan Brookings Institution think tank. Local governments confronting damaged roads and buildings have sometimes waited months for funding, Liu said.

“FEMA provided the most cumbersome, reflexively slow response we’ve ever seen when it comes to disaster assistance,” said Liu, a former Clinton administration official who studied the allocations for a recent Brookings assessment of Katrina aid.

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When the Office of Management and Budget released its spending overview last week, the numbers did little to dampen criticism. The figures showed, for example, that the Department of Housing and Urban Development had committed $11.5 billion in block grants, mostly through housing reconstruction programs administered by Louisiana and Mississippi. But the same breakdown showed that HUD had spent only $100 million of its overall $17.1 billion congressional allocation.

The failure to start a full-scale housing reconstruction program until nearly a year after Katrina, critics contend, left thousands of storm and flood victims in the lurch.

A senior Senate Republican aide said the Bush administration was largely to blame for the late start. The administration’s first request for Katrina aid, in October 2005, included only $1.5 billion in HUD block grants. “It was a token,” said the aide, who spoke on condition of anonymity. “By the time we got real money in the pipeline, six months had passed.”

Louisiana’s $10.2 billion in federal housing obligations were not secured until June 15, after a rancorous debate between state and federal officials over how housing money would be administered. More than 100,000 homeowners have since applied for HUD-originated grants under Louisiana’s Road Home program, which is to provide up to 60% of a home’s pre-storm value (capped at $150,000).

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The first money to reach homeowners under that program arrived Friday . Gov. Kathleen Babineaux Blanco announced that 42 homeowners were expected to get $1.5 million in aid “in the next few weeks.”

In neighboring Mississippi, displaced Gulf Coast homeowners are frustrated by the late start of a $5 billion federal block-grant program that is the cornerstone of the state’s recovery plan. About 17,000 Mississippi households have applied for grants of up to $150,000 to repair their homes. But the state has sent out only about two dozen checks so far, said Scott Hamilton, a spokesman for the Mississippi Development Authority.

Some say Gov. Haley Barbour -- a Republican stalwart and Bush ally who designed the rebuilding plan -- could not move any more quickly. “I haven’t seen any of the money here yet, but I feel like Gov. Barbour attacked it in totally the correct way,” said Mayor Billy Skellie of Long Beach, a coastal Mississippi city of 18,000 that saw a third of its 6,000 properties destroyed or damaged in the storm.

But others say that both the federal and state governments paid scant attention to Katrina’s most vulnerable victims. They say the governor unwisely earmarked much of the HUD money for one group of homeowners -- those who lived outside the flood zone and had homeowners’ insurance -- while neglecting owners inside the flood zone, renters and the poor.

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“The people who need it the most are not getting the assistance they deserve,” said Minor Sinclair, U.S. regional grant-making director for Oxfam America, a nonprofit aid group.

The inequities in the flow of federal funding sometimes show up in the contrasting experiences of Katrina victims living just a few miles apart.

Near the Biloxi shoreline last week, Katherine and Walter Blessey had a work crew hammering away on their badly damaged home, which took 6 feet of water and is still missing large sections of its floor.

The Blesseys’ estimated damage was $650,000. But they have already received the maximum of $350,000 allowed under the federal National Flood Insurance Program, which indemnifies homeowners in high-risk flood areas.

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Though FEMA is savaged for its performance in other areas, its flood insurance program is credited with dispensing money rapidly. Congress allowed FEMA to borrow $19 billion to cover Katrina-related claims, and the program has already paid out about $15.6 billion for more than 210,000 claims, said FEMA spokesman Butch Kinerney.

Walter Blessey, an attorney, was annoyed that the government wouldn’t allow him to take out more flood insurance. But the payout, which came in two phases in December and February, was enough for them to start rebuilding. “We were really grateful,” Katherine Blessey said.

A few miles down the coast in east Gulfport, ferry operator Louis Skrmetta has not been so lucky. His sturdy brick home, situated 800 feet from the shore, is still inundated and needs major repairs.

Because Skrmetta lives outside the flood zone drawn up by FEMA, he only purchased regular homeowners insurance, assuming that there was no need to take out FEMA’s national flood policy. After Katrina, having received only minimal coverage from his private insurer, Skrmetta turned early to the HUD block grant money for help.

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He applied in April, but he has yet to hear if he has qualified. He and his wife have done fitful work on the house, raising extra money by selling a 1970 Corvette he had parked in the garage.

Tourism is way down these days, and his ferry business to nearby Ship Island has been suffering. Skrmetta says they’ll have to stop renovations until more money comes in.

“We are the poster child for the grant,” he said. “But now our government is being mysterious about the grant money.”

Simmons reported from New Orleans, Fausset from Biloxi and Gulfport, Miss., and Braun from Washington. Times researcher John Beckham in Chicago contributed to this report.

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