Mississippi's plan to divert $600 million in hurricane housing relief to a port expansion project won federal approval Friday, despite vigorous opposition from those who said the needs of thousands of people displaced by Hurricane Katrina had not been met.
Housing and Urban Development Secretary Alphonso Jackson, in a letter to Mississippi Gov. Haley Barbour, said he was concerned that Mississippi's plan would shift money from "more pressing recovery needs."
Jackson said he did not have much choice but to approve the plan because congressional language on block-grant funds allowed him "little discretion" to tell states how to spend federal money.
"I'm sure that you share my concern that there may still be significant unmet needs for affordable housing," Jackson wrote, "and I strongly encourage you to prioritize Gulf Coast housing as you move forward."
The port plan, which will use the last of the housing recovery money allocated by Congress after Katrina, has been greatly contested on the Mississippi coast, where more than 30,000 people still live in Federal Emergency Management Agency trailers and mobile homes.
Officials said expanding the port at Gulfport, which sustained an estimated $50 million in damage in the hurricane, would fuel the economy and create 1,300 jobs in the next 10 years.
Critics said the state had failed to commit a sufficient amount of money to rebuild rental housing and assist homeowners whose properties were damaged.
Despite Jackson's approval of the plan, the battle over Mississippi's hurricane recovery money may not be over.
This week, Democratic Reps. Barney Frank of Massachusetts and Maxine Waters of Los Angeles -- who say the port expansion violates Congress' intended use of the money -- told Jackson that they were prepared to hold oversight hearings on the matter.
In a telephone interview Friday, Frank said he suspected Jackson's decision to approve the plan was motivated more by politics than by the law. Frank said a congressional subcommittee might look into whether Jackson could have blocked the plan.
"Haley Barbour is a very powerful Republican politician," Frank said. "My fear is that he went over the HUD secretary's head and the White House intervened."
Mississippi officials said the $600 million was not enough to restore or rebuild all of the 169,000 homes that were damaged or destroyed. They said the money would be best invested in the port.
Established in 1974 to improve housing and economic opportunities for the poor, the Community Development Block Grant program requires that at least 70% of grant money benefit people with low or moderate incomes. Congress lowered the requirement to 50% for Katrina emergency relief, on the basis that the disaster affected all residents.
Mississippi, the poorest state in the nation, has requested that the 50% requirement be applied to all of its federal grants. After turning down the state's request three times, Jackson's agency has approved waivers on a piecemeal basis for 80% of the state's emergency programs.
In his letter to Barbour, Jackson said he was pleased to learn about Mississippi's announcement that it would add $100 million of federal aid to a program to develop workforce housing.
But the news has not quelled criticism in Mississippi that money is being diverted from the poor.
Critics said the $100 million for workforce housing was being transferred from another program that was supposed to give grants to low-income homeowners whose houses had flooded.
"You cannot walk around here without seeing people struggling to get back in homes," said James W. Crowell, president of the Biloxi, Miss., branch of the National Assn. for the Advancement of Colored People. "The governor was given the money to help people, and now he has taken it away. I just pray that one day we can say our local government and national government saw fit to get us back to our homes."