State may have to pay back nearly $1 billion in Road Home Progra - FOX 8, WVUE,, weather, app, news, saints

State may have to pay back nearly $1 billion in Road Home Program questionable costs

Hurricane Katrina flooded thousands of home in Louisiana. (Source: White House by Paul Morse) Hurricane Katrina flooded thousands of home in Louisiana. (Source: White House by Paul Morse)

In the aftermath of hurricanes Katrina and Rita in 2005, Louisiana homeowners, landlords and contractors applied for relief through the Road Home Program.

The federal program awarded the state $9.5 billion in assistance, but a recent review of the program found some major problems dealing with non-compliance

The legislative auditor said in the last fiscal year, the Office of Community Development found more than 15,000 homeowners who applied for the assistance have not complied with the terms of the program, totaling nearly a billion dollars in questionable costs.

As a result, the state may have to pay the federal government back to the tune of $940 million. About $75 million in costs before that also remain in question.

In some cases, the homeowners received up to $150,000 from the program, but in return, the program required that homeowners provide proof they occupied their homes within three years of the storms.

It also required homeowners to maintain property and flood insurance and conform to flood elevation standards within their parishes.

Beth Davis, a spokesperson for the legislative auditor, said not clear if the federal government will demand repayment. But she said the Office of Community Development has sent these homeowners notices asking for the proper documentation.

To date, the office has not received the documents from the homeowners in question.

"On all of these programs there has been a potential for fraud. I know with a lot of these, they are disaster programs where the state made the decision, in particular the homeowner program, to expedite payments to homeowners in the interest to get them back in their homes," Davis said. "That decision was made to expedite those funds knowing on the back end they may find some non-compliant issues."

In addition to homeowners, the Office of Community Development identified nearly 750 landlords and owners of small rental properties in violation of the programs rules with nearly $60 million in questionable costs.

The agency also identified 282 hazardous mitigation contractors who received over $10 million in grants, yet failed to provide the correct documentation that work had been done properly, or even was done at all.

Davis said it is possible some of these homeowners, property owners and contractors engaged in fraud, but said it is not clear if they will be prosecuted.

Pat Forbes, the executive director of the state's Disaster Recovery Unit said many homeowners who are non-compliant at this point used their money appropriately, but have not handed over the proper paperwork to the state.

"We are implementing new policies, holding outreach events and currently soliciting a contractor to provide assistance to those homeowners so they can prove they are compliant. However, there are individuals who remain non-compliant for not spending these funds properly and are required to repay grant money," Forbes said.

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