Mississippi and Texas are in the hot seat, charged with inadequately allocating Community Development Block Grants (CDBG) disaster recovery funds to benefit low-income residents displaced by hurricanes. While the specific circumstances differ in each state, the underlying contention is the same: The disaster funding is not reaching its rightful owners.
As part of its CDBG program, the U.S. Department of Housing and Urban Development (HUD) provides flexible grants to help cities, counties, and states recover from presidentially-declared disasters, especially in low-income areas. Grantees may use the funds for recovery efforts involving housing, economic development, infrastructure, and prevention of further damage to affected areas, if such use does not duplicate funding available from the Federal Emergency Management Agency (FEMA), the Small Business Administration, and the US Army Corps of Engineers. Eligible governments develop and submit an “Action Plan for Disaster Recovery,” describing the needs, strategies, and projected uses of the funds. The plan must then be approved by HUD.
Trouble in Texas
Texas’ action plan has not made it past HUD’s desk. Back in November 2009, HUD rejected Texas’ amended state plan for the $1.7 billion in CDBG funds for Hurricanes Ike and Dolly recovery, stating that the plan did not adequately describe how the funds were to be distributed within the affected regions and therefore did not allow for genuine public comment as to the amount of assistance each area would receive and who would actually benefit.
Meanwhile, on Dec. 1, the Austin, Texas-based nonprofit Texas Low Income Housing Information Service filed a fair housing complaint with HUD citing several fair housing violations with the plan, arguing that Texas has made housing unavailable on the basis of race, has racially discriminated in the selling and renting of housing, and has failed its federal requirement to affirmatively further fair housing choice.
In late December, HUD urged the state to resubmit its plan in a series of amendments rather than one consolidated amendment, granting the state until February 8 to comply with the request.
“HUD’s rejection of the Texas plan sends a strong message to state and local officials that the new HUD will hold them accountable for how they spend federal housing and community development funds,” says Sheila Crowley, president of the Washington, D.C.-based National Low Income Housing Coalition. “No longer will they be able to spend CDBG and other HUD dollars without regard to federal guidelines and their obligation to serve low-income people and advance fair housing choice.”
In early January, HUD released a visually powerful map highlighting the disparities between where the state proposed to target its funds and those areas with quantifiable ‘unmet’ needs.
“That map was fascinating. It was really a piece of work because it readily shows you the disparity between the actual damage levels and how political people wanted to spread around the wealth,” says Reilly Morse, senior attorney at the Biloxi, Miss.-based public interest law firm Mississippi Center for Justice. “It encapsulates the problem with block grant money … when political leaders are given the money, they treat it like a bonus. The priorities that ought to be there—helping folks who are least able to help themselves—get lost and overwhelmed and trampled by this rush to do this or that economic development project.”
And that is exactly what Morse says is happening in Mississippi. In December 2008, the Mississippi State Conference NAACP and Gulf Coast Fair Housing Center, among others, filed a lawsuit in federal court against HUD, challenging its approval of a plan submitted by Mississippi to divert $600 million of federal hurricane recovery funds from housing programs designed to address the affordable housing crisis in Mississippi caused by Hurricane Katrina to finance the expansion of the Port of Gulfport.
Just last month, on January 9, 2009, a federal judge dismissed the lawsuit stating that the plaintiffs were not personally affected by the state’s diversion of funds and therefore did not have standing to bring the case to court. The judge’s ruling, however, did state that the plaintiffs’ “principled objection” to the diversion of funds “when post-Katrina housing needs in Mississippi are still unmet may indeed be well-founded as a policy matter.”
Morse, who was among the plaintiffs’ legal representation, could not comment on whether an appeal will be filed but contends there’s a direct correlation between what’s happening in Texas and Mississippi. “The rationale that HUD officials gave for rejecting Texas’ proposal raised identical questions of priorities that we raised in the Mississippi litigation,” Morse says. “There are some differences between Texas’ and Mississippi’s plans, but each proposal by the [respective] governor failed to deliver on solving the needs of the most vulnerable first—that is the common thread.”
In May 2009, Morse testified before the Mississippi State Senate on ways to more effectively distribute disaster recovery funding. Morse, along with Texas housing advocates, proposed separating housing disaster recovery funds from economic development disaster recovery funds. “Then you won’t have people fighting to take money out of housing and put it toward economic development and infrastructure repair,” he says.
HUD declined to comment on both state plans.