Civil rights and fair housing groups have filed a federal lawsuit against the U.S. Department of Housing & Urban Development and the Louisiana Recovery Authority.
The suit alleges that the Road Home, Louisiana's Hurricane Katrina recovery program, discriminates against African-American homeowners in New Orleans.
The Road Home, an $11 billion federally funded program, is the largest housing redevelopment program in U.S. history. The suit is being filed in the U.S. District Court for the District of Columbia on behalf of five individuals representing a class of more than 20,000 African-American homeowners and two fair housing organizations, the Greater New Orleans Fair Housing Action Center and the National Fair Housing Alliance.
"Forty years after the passage of the federal Fair Housing Act, residential segregation still permeates New Orleans," said James Perry, executive director of the Greater New Orleans Fair Housing Action Center. "Homes in communities of color still have lower values than those in white communities even when the condition, style and quality of the homes are comparable. Louisiana's program builds on this history of discrimination. Only when housing opportunities are created for all residents of New Orleans will our recovery truly be successful."
HUD is responsible for overseeing Louisiana's use of federal disaster recovery funding and assuring that the funds are used to promote equal housing opportunity.
"HUD has the duty, authority, and ability to make sure Louisiana distributes funds for the Road Home program fairly," said Shanna L. Smith, president and CEO of the National Fair Housing Alliance. "Instead, HUD allowed a formula that is biased and threatens to undermine the recovery efforts of African-American homeowners. As such, it failed to take into account the legacy of racial discrimination in the housing market, which has resulted in systematically lower values for homes in communities of color."
The plaintiffs in the case are represented by the NAACP Legal Defense and Educational Fund, the Washington D.C. plaintiff's law firm, Cohen Milstein, and the Greater New Orleans Fair Housing Action Center.
"African-American homeowners in New Orleans are being unfairly prevented from reclaiming their homes by the discriminatory design and implementation of the Road Home program. African-Americans are facing huge gaps between the amount of their Road Home grant awards versus the cost to rebuild their homes when compared to their white counterparts," said John Payton, LDF president and director-counsel.
According to Cohen Milstein's Joseph M. Sellers, head of the firm's Civil Rights and Employment Practice, "HUD and Louisiana have perpetrated a cruel hoax on African-American victims of the Katrina and Rita hurricanes by offering assistance that Congress intended would permit them to rebuild their destroyed homes but which falls far short of its noble promise by linking it to the depressed values of their pre-storm segregated housing rather than to the cost of reconstruction."
Louisiana Recovery Authority spokesmen Darin Mann said last week that the program has given additional awards to 49,824 applicants earning less than 80 percent of the area median income. The average amount of those additional awards was $26,874, he said.
"When the Road Home program was designed, the state added an additional compensation grant to assist low-income homeowners who may have had low pre-storm values. The Road Home program does not discriminate," Mann wrote in an email.
According to program statistics, $7.3 billion in aid has been disbursed through average awards of $61,344 since its creation in 2006. The maximum award for applicants, even after an additional compensation grant, is $150,000.
About 120,000 people have received grants so far, but as many as 35,000 continue to wait in a program that has been plagued with errors and bureaucratic delays.
Many applicants have decided to rebuild only portions of their home with the grant or seek other sources of funding to complete the job. Others have built less-expensive homes.
The discrimination, in this case, is the result of the formula used to determine Road Home grants, the plaintiffs contend. Grant awards are based on the lower of two-values: The pre-storm value of the home, or the cost of damage. Home values in most predominantly African-American neighborhoods are lower than the values of similar homes in white neighborhoods.
As a result, the grants for African-American homeowners are more likely to be based upon the pre-storm value of their homes, leaving them without enough money to rebuild. In contrast, white homeowners are more likely to receive grants based on the actual cost of repairs. Last week's lawsuit seeks to eliminate this disparity, they said.
While plaintiffs argue that Congress funded the Road Home program in 2006 to provide displaced homeowners with the money they would need to rebuild their homes, a HUD decision last year supported the claim of those who say that Road Home awards were designed to compensate homeowners for uninsured and underinsured losses and was never intended to fully provide for homeowners seeking to be made whole after hurricanes Katrina and Rita.