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Disaster Recovery Initiative

U.S. Department of Housing and Urban Development (HUD)

[Docket No. FR-5051-N-01]

Federal Register / Volume 71, Number 29

Department of Defense Appropriations Act, 2006

Louisiana Office of Community Development,

Division of Administration

Louisiana Recovery Authority

The Road Home Housing Programs

Action Plan Amendment for Disaster Recovery Funds

Kathleen Babineaux Blanco

Governor

Mitch Landrieu

Lieutenant Governor

Jerry Luke LeBlanc

Commissioner of Administration

Dr. Norman Francis

Chairman, LRA Board

Office of Community Development

1201 North Third Street, Suite 7-270

P.O. Box 94095

Baton Rouge, LA 70804-9095

http://www.LouisianaRebuilds.info

http://www.doa.louisiana.gov/cdbg/cdbg.htm

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TABLE OF CONTENTS

1. Introduction ......................................................................................... 2

2. Assistance to Homeowners................................................................. 5

3. Workforce and Affordable Rental Housing Programs ....................... 17

4. Homeless Housing Programs ........................................................... 25

5. Developer Incentives......................................................................... 26

6. Administration ................................................................................... 29

7. Planning ............................................................................................ 30

8. Technical Assistance ........................................................................ 30

9. Other Requirements.......................................................................... 30

10. Appendix 1 ...................................................................................... 38

11. Appendix 2 ...................................................................................... 40

12. Appendix 3 ...................................................................................... 42

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1. Introduction

Hurricane Katrina hit the State of Louisiana on August 29, 2005, and Rita slammed into

the state on September 24, 2005. They were the second and third Category 5

hurricanes of the 2005 hurricane season. The storms were deadly and costly to

communities throughout the Gulf and particularly destructive to Louisiana. More than

1,100 persons lost their lives in Louisiana; approximately 18,000 businesses were

destroyed; roads, schools, public facilities, medical services were washed away; and

thousands of people were forced to relocate.

In the wake of the storms an unprecedented number of homes were destroyed or

severely damaged.

?? 123,000 homes were destroyed or suffered major damage.

?? 82,000 rental properties were destroyed or suffered major damaged.

?? Housing repair costs are estimated at $32 billion. Some, but not all, of this was

insured.

?? Of the rental and owner occupied units that are now uninhabitable, a substantial

portion were occupied by low income households.

HR 2863 provided $11.5 billion to the states of Mississippi, Louisiana, Alabama, Florida

and Texas through the U.S. Department of Housing and Urban Development's

Community Development Block Grant (CDBG) Program. Louisiana received $6.2 billion

of those funds. President Bush has asked Congress for an additional $4.2 billion in

CDBG for Louisiana, which is pending appropriation, to fund the housing programs

described in this Action Plan amendment.

As the target of investment of this supplemental CDBG assistance, Governor Kathleen

Babineaux Blanco has prioritized housing redevelopment, infrastructure rehabilitation,

and economic development. The CDBG funds are available to the State subject to HUD

approval of action plans which describe how the funds will be used. The Louisiana

Recovery Authority (LRA) has been charged by the Governor and Louisiana Legislature

with statutory responsibility for developing policy and action plans for the CDBG funds.

The Louisiana Office of Community Development, the agency that runs the State's

annual CDBG Program, will administer the supplemental CDBG recovery program.

To promote sound short- and long-term recovery planning at the state and local levels

that impact land use decisions that reflect the need for responsible flood plain

management and growth, the State, through the LRA, is leading community planning

efforts in its most affected parishes. Dubbed "Louisiana Speaks", this effort is a

multifaceted planning process to develop a sustainable, long-term vision for South

Louisiana in the wake of the destruction caused by Hurricanes Katrina and Rita. The

plans developed locally through Louisiana Speaks will be supported by CDBG

allocations. The redevelopment of the housing stock funded partially by CDBG as

described herein will follow the plans derived through Louisiana Speaks and other local

efforts.

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This Action Plan amendment describes The Road Home Housing Programs, consisting

of four sets of programs for the restoration of Louisiana's housing stock and its

communities: Homeowner Assistance Program, Workforce and Affordable Rental

Housing Programs, Homeless Housing Programs, and Developer Incentives. Future

Action Plan amendments will describe other aspects of the State's CDBG recovery

program.

1.1 Goals of The Road Home Housing Programs

The Road Home Housing Programs have several goals. They will:

?? Repair and rebuild quality housing in neighborhoods that are safe to live in;

?? Restore pre-storm value to homeowners who want to return;

?? Provide affordable rental housing opportunities for displaced residents; and

?? Provide housing for the return of critical workforce.

The Road Home Housing Programs will achieve their goals by ensuring, among other

things, that:

?? Neighborhoods are rebuilt pursuant to locally driven plans that emphasize safety

and reduce risks in rebuilding;

?? Homes are rebuilt in ways that ensure safer and smarter construction and meet

the State's codes and the latest available FEMA advisory base flood elevations1;

?? Neighborhoods are rebuilt in a manner that promotes mixed income

communities; and

?? Households with special needs such as the elderly and those with disabilities are

provided housing opportunities;

1.2 Basis for Recommendations

The Road Home Housing Programs are based on the best available information on

housing needs, housing costs, potential public funding and the ability of the programs to

leverage private resources. Funding for The Road Home Housing Programs come from

the supplemental appropriation of Community Development Block Grant Program funds

and Stafford Act Hazard Mitigation Grant Program Funds.

This Action Plan amendment describes funding for The Road Home programs in two

phases: partially funded and fully funded.

The need for assistance among homeowners far exceeds the initial allotment of CDBG

funds made in HR 2863. To meet that need and fully fund The Road Home, Louisiana

has worked with the Bush Administration to request from Congress an additional $4.2

billion in CDBG resources. In this Action Plan amendment, the program allocations

1 FEMA Advisory Based Flood Elevations are the first step in developing new required flood elevations for the

National Flood Insurance Program. Wherever this document refers to advisory base flood elevations, we mean the

most up-to-date flood elevations regulations or guidance from FEMA and the National Flood Insurance Program.

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entitled "fully funded" amount to proposed levels of funding in anticipation of the

appropriation of an additional $4.2 billion for housing needs.

Partial funding levels are based on CDBG funds currently available to Louisiana. The

plan specifically details the allocation of $4.6 billion of the initial $6.2 billion of

supplemental CDBG funds to The Road Home.

Subject to further refinement of the program guidelines and structure of operations,

following are preliminary estimates of housing program costs:

The Road Home Program Budgets2

Partially

Funded

Fully Funded

Assistance to owner-occupants $3,551,600,000 $6,347,400,000

Homeless supports and housing $25,900,000 $25,900,000

Workforce and affordable rental

housing

$892,700,000 $1,535,700,000

Developer incentives and code

enforcement

$32,100,000 $32,100,000

State administrative costs $79,700,000 $120,900,000

Housing costs in Action Plan #1 $18,000,000 $18,000,000

TOTAL $4,600,000,000 $8,080,000,000

The Road Home will be fully funded with a total of $8.08 billion of CDBG funds based

upon damage and demand estimates grounded in the most current FEMA and HUD

damage data. Louisiana's damages exceed that of other states impacted by the

hurricanes of 2005 by three to four times, in nearly every category of damages.

Working with the Federal Coordinator of the Office of Gulf Coast Rebuilding, the LRA

has demonstrated that the cost of recovery based on the damages to owner-occupied

properties, rental properties, and other critical infrastructure such as hospitals, schools,

un-funded state and local infrastructure repairs, and sewer and water infrastructure will

require no less than $12.1 billion. The current supplemental CDBG funding of $6.21

billion, combined with anticipated Hazard Mitigation Grant Program funds available

through the Stafford Act, fall short of this total need by $4.2 billion. Without this

additional CDBG funding, the State of Louisiana cannot fully fund its housing program

for homeowners and renters, to meet the scale of the challenge. President Bush's

commitment to this funding was made in recognition of this need.

The CDBG funds directed to workforce and affordable rental housing will supplement an

estimated $1.7 billion in private equity investments derived from Low Income Housing

Tax Credits allotted to Louisiana through the federal Gulf Opportunity Zone legislation.

In addition, the State will supplement assistance to owner-occupants with an estimated

$1.17 billion in housing-related Hazard Mitigation Grant Program funds.

2 Budgets are exclusive of FEMA Hazard Mitigation Grant Program funds that may be spent on housing.

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The damage from Hurricanes Katrina and Rita disproportionately impacted families with

low to moderate incomes. HUD therefore requires that at least fifty percent of the

supplemental CDBG dollars allocated to Louisiana for recovery be invested in programs

that directly support those families. Accordingly, in both the partially and fully funded

housing programs described herein, the great majority of funds will go to low- and

moderate-income families.

If federal agencies require changes to the State's proposed Action Plan amendment or

program costs exceed projections and available funding, Louisiana will be required to

modify this proposed Action Plan amendment.

2. Assistance to Homeowners3

2.1 Overview of the Homeowner Assistance Program

In the aftermath of Hurricanes Katrina and Rita, an estimated 123,000 owner-occupied

homes were destroyed or suffered major damage, according to FEMA. In response to

this unprecedented disaster, Louisiana will use $3,551,600,000 of current supplemental

CDBG funds and approximately $1.17 billion of Hazard Mitigation funds to help selected

owner-occupants repair or rebuild their homes, buy or build replacement homes, or sell

unwanted properties so they can be redeveloped or converted to open space. In order

to avoid future flood losses, all reconstruction work will meet or exceed the latest

available FEMA advisory base flood elevations and meet the legal requirements under

the State Uniform Construction Code.

Note that the State will require an additional $4.2 billion of CGBG in order to provide the

full proposed assistance to all of the Louisiana homeowners who suffered major or

severe damage. President Bush has requested those additional funds from Congress.

The budget for owner-occupant assistance following that additional appropriation is

anticipated to be $6,347,400,000 in CDBG funds, with additional funds from the State's

Hazard Mitigation Grant Program

The overarching purpose of The Road Home is to rebuild Louisiana's impacted

communities. Devastated communities will be blighted by abandoned homes, clouded

land titles, and disinvestments if a large portion of the financial assistance is not directly

invested in rebuilding homes or buying replacement homes in the affected areas.

Therefore, the most comprehensive financial and technical assistance packages will be

made available to those pre-Katrina and Rita homeowners who make the effort and take

the risks to move back to play a part in rebuilding Louisiana.

3 For the purpose of this Action Plan amendment homeowner and owner occupant are used interchangeably.

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Financial incentives and advisory services will be available for homeowners who wish

to:

?? Repair - incentives to promote rehabilitation

?? Rebuild - financial incentives to reconstruct on the same site if repair is infeasible

or not economically viable;

?? Buyout/Relocate - purchase of the home by the program in exchange for an

agreement to resettle in Louisiana; or

?? Sell - voluntary sale of the home with no requirements to resettle or otherwise

remain in the community.

2.2 Eligibility for Homeowner Assistance

To be eligible for the Homeowner Assistance Program:

?? The owner must be able to prove that he or she owned and occupied the

property as a primary residence at the time of the Katrina/Rita disasters, prior to

August 29, 2005;

?? The home must in be a single-unit or double-unit structure4; and

?? The owner must have registered for FEMA Individual Assistance and the home

must be categorized by FEMA as having been "destroyed" or having suffered

"major" damage. Homeowners who were approved by FEMA for $5,200 or more

in FEMA home repair assistance (a component of the Individual Assistance

Program) will fall into one of these categories. In certain cases, FEMA may fail to

notify a homeowner that the home has been classified as destroyed or suffering

major damage, or FEMA has declared a home with such damage ineligible for its

home repair assistance program because the home was covered by insurance.

These homeowners will still be eligible for assistance, though damage severity

that meets the FEMA damage classification at the destroyed and major damage

levels will be verified through alternative means.

Applicants must meet all of the above requirements to receive assistance. Homeowners

that believe they have suffered major or severe damage, but did not qualify for FEMA

assistance will be able to appeal their eligibility for The Road Home. Homeowners who




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believe they will be eligible for the program are currently encouraged to register with

The Road Home registry at www.LouisianaRebuilds.info or by calling 1-888-ROAD-2-

LA.

During the process of reviewing applications to The Road Home, the LRA shall make

available information about the repair, rebuilding and relocation preferences of

applicants in order to inform local planning processes. In areas where a high proportion

4 If the Homeowner Assistance Program is chosen, the full double-unit structure will serve as the basis for

calculation of assistance up to the program cap of $150,000. For all other owner-occupied multi-unit

structures, if the homeowner chooses the Homeowner Assistance Program, funding of up to $150,000 is

available, but is based only on the damages to and value of the unit in which the owner resides. The

owner occupant landlord may also choose the Small Rental Property Repair Program instead.

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of homeowners are choosing not to invest, state or local authorities may limit access

only to Buyout/Relocate and Sell programs.

2.3 Requirements for Receiving Homeowner Assistance

To accomplish the State's goal to resurrect damaged communities, the LRA proposes to

encourage homeowners' investment of federal recovery funds in Louisiana. To that end,

homeowners that make the decision to reinvest in Louisiana will be eligible for the most

generous levels of assistance. They will be required to demonstrate that commitment to

the State by signing a legally binding covenant described below.

In exchange for financial incentives, homeowners must:

?? Be willing to sign a release so that information given to FEMA can be verified by

the Program;

?? Independently from FEMA, agree to verification of their ownership status and the

amount of disaster-related damage to the home;

?? Swear to the accuracy and completeness of all information provided to the

Program under penalty of law;

?? Agree in legally binding documents to follow through on certain actions related to

a home in exchange for compensation, including but not limited to the following:

o Ensure that the home they occupy meets the legal requirements under

the State Uniform Construction Code,5 complies with local zoning, and

complies with the latest available FEMA guidance for base flood

elevations unless exceptions are granted by the LRA based on

reasonable alternatives where safety is not minimzed;6

o Assure the home will remain owner-occupied for at least three years

after the completion of repairs/replacement or new home purchase;

o Maintain residential hazard insurance;

o Maintain flood insurance if the home was previously flooded or is

located in a flood zone;

o Agree to subrogate claims for unpaid and outstanding insurance claims

back to the Program;

o If relocating, move to another home in Louisiana;

o Ensure mitigation efforts are undertaken, if mitigation can be done to

make a home safer and are cost beneficial to undertake, and if the

homeowner's eligible assistance allows funds for such purposes; and

o If selling the property to the State and the home has no historic value or

is not salvageable, convey the property as a cleared site, agree in

5 A number of communities have not yet adopted or implemented the State Uniform Construction Code. Pursuant to the State's

commitment to rebuild safer and stronger communities, homeowner assistance provided by The Road Home will be contingent

upon local enforcement of and individual compliance with all legal requirements under the code.

6 Federal and state law may require homes in historic districts to meet additional standards.

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writing to allow the Army Corps of Engineers or another governmental

entity to clear the property, or provide funds from the sale proceeds for

demolition and clearance by the acquiring entity.

The above terms and conditions apply to the home that is repaired, rebuilt or purchased

using program funds. Homeowners that fail to meet all of these terms and conditions

will forfeit the property that is repaired, rebuilt or purchased using program funds and/or

be required to repay the financial assistance provided through this program.

2.4 Amounts and Forms of Homeowner Assistance

2.4.1 Maximum Assistance

The maximum financial assistance from all program resources for owner occupants is

up to $150,000. The proposed ceiling assumes that:

?? All federal funds currently allocated to and sought for the program will be

available, including the additional $4.2 billion that will fully fund The Road Home;

and

?? Estimates of likely demand for assistance derived from HUD, FEMA and SBA

data are accurate.

The partial funding levels for programs contained herein are based on the current

supplemental CDBG appropriation. If sufficient funds are ultimately unavailable to fully

fund the proposed program or demand exceeds estimates, the maximum amount of

financial assistance per household must be lowered. Because Congress has not yet

fully funded The Road Home, this Action Plan amendment proposes to provide an initial

installment of assistance to homeowners toward their full assistance of up to $150,000.

To provide this installment, a homeowner's eligible assistance will be calculated under

the fully funded program design and then allocated as half of that amount.

It is the intent of the program to provide a homeowner the resources to get into a home,

based upon the homeowner's financial means, needs, and the pre-storm value of the

damaged home. Not every homeowner is necessarily entitled to the maximum amount

of financial assistance, however, and in many cases The Road Home will not provide

100% of the required resources for repair, rebuilding or resettlement. This is true for

many reasons, such as the fact that assistance is capped, and that assistance will be

reduced by any insurance payments for damage to the structure of the home, by any

FEMA assistance for home repairs or replacement, and by other compensation for the

loss.

2.4.2 Financial Incentives to Repair/Rebuild

The program will provide financial incentives for homeowners that repair or rebuild their

homes on the same site. Homeowners will receive varying amounts of assistance

depending on the condition of their home and the compensation received from other

sources.

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Homeowners remaining in Louisiana will be eligible for assistance in three tiers: an

incentive grant to cover uninsured, uncompensated losses to the home and restore prestorm

value; a hazard mitigation grant, whenever the home can be repaired or rebuilt

with cost-effective mitigation measures; and, where a homeowner cannot secure

conventional financing, an affordable incentive loan, structured within the homeowner's

financial means, for any gap between the damaged home's pre-storm value and

allowed repair/rebuilding costs.

Pursuant to federal statute and HUD requirements for the CDBG program, homeowner

assistance may not duplicate any benefits, derived from any source, that are received

by the homeowner as a result of damages incurred during Hurricanes Katrina and Rita.

Thus the State must not duplicate insurance of any type, FEMA, or other payments

received by the homeowner for structural repairs required for such damages.

An explanation of the calculation of financial assistance under the fully funded

Homeowner Asssistance Program follows below. Appendix 2 provides two examples of

how hypothetical households might be assisted to repair or rebuild their home.

Homeowners will first calculate their personal Eligible Assistance Amount using the

following formula.

Eligible assistance does not represent an entitlement to the homeowner, under any

circumstances.

The Eligible Assistance Amount will generally be paid in three tiers.

?? The first tier will be an Incentive Grant that is intended to restore the pre-storm

value of the property. The Incentive Grant will be made under the conditions

attached to the legal instrument described in Section 2.3. The amount is

calculated as follows:

Incentive Grant = Lesser of

Eligible Assistance Amount

Eligible Assistance Amount to Repair/Rebuild equals

Lesser of:

Pre-storm value of the home (times) Percent damage to

the home (plus) Eligible Mitigation costs (plus) Gap to

meet allowed repair/rebuilding costs

(minus) Insurance (minus) FEMA Repair Payment

(minus) any Other financial assistance for repair

OR

$150,000

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OR

Pre-Storm Value x Loss Percentage (minus) Insurance, FEMA Repair Payments and

Other Financial Assistance for Repair

The State will enlist inspectors, through the private contractor administering the

program, to determine the appropriate level of damages to the home. It is the

State's policy that participants in the Homeowner Assistance Program deserve a

fair and independent estimate of projection of damages from the storm,

regardless of cause of damage. The program also reserves the right to use

damage estimates catalogued by FEMA and insurance companies where those

estimates are deemed reliable.




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To accurately calculate homeowner's loss, the program must base assistance on

a fair and equitable pre-storm valuation of the home. There are several sources

of valuation available, each of which has benefits and drawbacks, including fair

market values determined through Automated Valuation Methods (AVM) and

other alternative methods such as insured value, a recent pre-storm appraisal, or

assessed value for property tax purposes. The Louisiana Recovery Authority

and Office of Community Development will determine the final method for

calculation of pre-storm value in conjunction with the private professional

services firm responsible for administering homeowner assistance, when full

consideration can be given to the capacity and expertise of the firm and any

subcontractors brought on to perform valuations.

While the program must apply a common method for valuation to all homes

qualifying for assistance to efficiently address all applications, there will be cases

in which the homeowner believes the standard assessment does not accurately

reflect the pre-storm value, due to unaccounted structural improvements or other

factors. In such cases, homeowners will be able to appeal the valuation by

presenting a valid alternative assessment or other evidence. The process and

requirements for appeal will be determined in conjunction with the private

administrator.

Note that The Road Home is not an entitlement program and cannot go over

budget. If costs exceed budgeted projections, grant assistance to homeowners

will have to be reduced, and the program would pro-rate benefits to all

homeowners.

Finally, for homeowners who did not carry the type of insurance required for the

home (for example, those who were living in a flood plain but did not have flood

insurance), the Incentive Grant will be reduced by 30%.

?? The second tier will consist of mitigation assistance, with funding from either the

Hazard Mitigation Grant Program, provided through the federal Stafford Act, or

CDBG. These funds will complement CDBG assistance for homes that are in

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flood plains or otherwise eligible for FEMA-funded hazard mitigation assistance.

The amount of the hazard mitigation grant will be calculated as follows:

Mitigation Grant = Eligible Mitigation Costs

OR

Eligible Assistance Amount - Incentive Grant

?? If additional funds are required to help the homeowner get into a home and

funding needs fall within the eligible assistance amount, the third tier will be an

Incentive Loan. When conventional financing options exceed homeowners'

financial means under HUD guidelines for the monthly amount a homeowner can

afford to pay for housing, and the homeowner demonstrates that they have

pursued conventional financing and have been denied, the Incentive Loan will be

offered to provide an affordable way for homeowners to return to a home when

the Incentive and Mitigation Grants do not meet repair or replacement costs. The

Incentive Loan will include an allocation for soft second mortgages repayable on

sale of the property. Additionally, it will leverage private capital to create larger

pools of affordable loan investment capital through the use of mechanisms such

as a loan loss guarantee pool and below market interest rates through rate

reduction buy-down features. For those cases where it is necessary to do so, the

amount of Incentive Loan will be calculated as follows:

Incentive Loan = Eligible Assistance Amount (minus) Incentive, Mitigation

Grants

As in the determination of pre-storm value, the procedures used to determine the

reasonable additional costs to repair or rebuild a home will be established in conjunction

with the capacity and expertise of the administering contractor.

The State may also offer additional incentives for homeowners who choose to repair or

rebuild within the same parish.

For instances in which the sum of remaining pre-storm loans and the Incentive Loan

exceed the market value of the home, the program will develop policies to mitigate the

impacts of "negative equity" positions on the home and homeowner by adjusting the

repayment terms.

In addition, the program shall give recognition and consideration during implementation

to homeowners who may have been in a position of negative replacement value prior to

the storms. This occurs when a homeowner's pre-storm value would not have

sufficiently covered their pre-storm rebuilding costs.

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2.4.3 Buyout/Relocate

Homeowners choosing to move elsewhere in Louisiana will be able to sell their homes

to the State and receive assistance under the guidelines described for homeowners that

rebuild on the same site. Owners choosing this option must meet the same eligibility

requirements and agree to the same legally binding actions applicable to those




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choosing to repair or rebuild. Those requirements are described in Sections 2.2 and 2.3

of this Action Plan amendment. For these buyouts to occur, a lien holder may be asked

to write off a portion of the current outstanding principal balances of the loan or other

lien, and to give consideration to potential lost equity of the homeowner.

Homeowners who help to shoulder the burden of community recovery by choosing to

rebuild within their parish will always be the highest priority of the program. The State

may also offer additional incentives for homeowners who choose a buyout but relocate

within the same parish.

2.4.4 Sale

Some owner-occupants may choose none of the basic options: to repair, rebuild or

relocate in Louisiana. In these instances, the State will compensate the homeowner for

60% of the home's pre-storm value, less insurance and FEMA repair funds. Sale

compensation will not exceed repair or rebuilding costs for the home. For these buyouts

to occur, a lien holder may be asked to write off a portion of the current outstanding

principal balances of the loan or other lien.

2.5 Redevelopment of Purchased Property

Properties purchased through The Road Home Homeowner Assistance program will be

either redeveloped to be returned to commerce or preserved as green space, in a

manner which is consistent with local land use plans and direction. Pursuant to a

primary goal of the Homeowner Assistance Program, purchased land will not be left to

blight and disrepair. The LRA recognizes two distinct options for assigning responsibility

for management of land assets. Land acquisition, maintenance and redevelopment can

be managed by a:

Compensation for Selling Home

With No Other Obligations equals

Lesser Of:

60% of Pre-storm value (minus) insurance (minus) FEMA repair

payments (minus) Other repair assistance

OR

Incentive Grant for which they would otherwise be eligible

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1. State Agency - Assign these properties to a new or existing state agency which

will be charged with working in ways consistent with local land use plans and

direction, packaging the properties for redevelopment, offering them for

redevelopment through competitive bids, and overseeing the redevelopment of

the property consistent with local plans. Any proceeds derived through the sale

of the property that exceed approved expenses associated with the

redevelopment of the property would be returned to the Supplemental CDBG

program.

2. Local redevelopment authority - Transfer specific properties from the state to a

local redevelopment agency upon approval by the LRA of the authority's

redevelopment plan that takes into account local land use guidelines. The local

authority would package the properties, offer them up for redevelopment through

competitive bids, and oversee the redevelopment of the property. Any proceeds

derived through the sale of the property that exceed approved expenses

associated with the redevelopment of the property would be returned to the

Supplemental CDBG program.

For properties that are to become green space as a result of a decision by local

authorities, those properties will be transferred to the appropriate local land

management agency which will operate and maintain them.

The LRA has endorsed the findings and recommendations of the American Institute of

Architects and the American Planning Association planning conference held on behalf

of the LRA in November 2005. Consistent with those recommendations, for properties

that are acquired by the Homeowner Assistance Program or other land assembly

program for redevelopment, the State will insure that 25% of the properties are used for

affordable housing according to HUD guidelines for the HOME program.

Whether properties are managed by a state agency or local redevelopment authority,

the properties acquired by the Homeowner Assistance Program or other land assembly

programs must retain the affordability requirements defined by this program after their

transfer. The State should monitor the property to assure the requirements are met and

maintained.

The final assignment of redevelopment authority will be resolved during the month of

May by the State through ongoing deliberations with the Louisiana Congressional

delegation, state legislators, local authorities, and civic leaders.

Under either scenario, the LRA recognizes the potential for a significant return on

investment in property redevelopment, a scenario demonstrated with research in a

recent report of the Gerson Lehrman Group. The LRA is committed to reinvesting these

proceeds in the comprehensive community redevelopment activities already supported

by Supplemental CDBG funds allocated through state programs, including The Road

Home. The priorities of recycled funds shall include housing restoration, affordable

14

housing for homeowners and renters, infrastructure enhancements, and economic

development activities designed to help recreate strong communities which are closely

tied to transit, jobs, and public services.

2.6 Treatment of Homeowners with Special Circumstances

Assignability: Subsequent to the launch of The Road Home, the State will allow an

owner to sell his or her home on the open market and to assign rights to program

assistance to the new buyer. Assigned grants will require the new buyer to carry the

same three-year owner-occupancy requirement and other legally binding terms and

conditions that govern the repair and rebuild options. The new owner to whom

assistance benefits have been assigned will be eligible only for the repair/rebuild option.

Death or Infirmity of Eligible Owner: In the event that a homeowner has died since the

time of the storms, an heir must have been placed into legal possession of the property

to be eligible for homeowner assistance in place of the deceased owner. If a

homeowner is incapacitated due to illness or other infirmity, someone with a legal right

to bind that person legally, such as is provided by a power of attorney, is eligible to

apply for assistance on behalf of the homeowner.

If a homeowner who has received assistance from The Road Home dies after receiving

assistance and signing the required legally binding commitments, the owner-occupancy

requirement between the State and the homeowner will remain applicable to the

property repaired, rebuilt or acquired using program funds. If the homeowner received

a soft second loan as the Incentive Loan, a transfer of the property as a result of death

or infirmity will not trigger the repayment of the loan by the legal heir, unless some

portion of the succession transaction is a cash transaction for a share of the property.

Owner-Occupants Who Have Already Sold Their Principal Residence: Some

homeowners may have chosen to sell their homes prior to launch of the Homeowner

Assistance Program. It is the goal of The Road Home to ensure that damaged

properties qualifying under the Homeowner Assistance Program do not remain blighted

and undeveloped. If the development goals of the program are met for the damaged

property, a homeowner that can demonstrate that he or she remains in a loss situation

after selling the damaged property to another party may receive assistance under the

program to compensate for remaining losses.

Owners Who Have Started or Completed Repairs: Assistance will be provided to

owners who have already commenced or completed home repairs or the construction of

replacement homes, so long as all the requirements of the Program are met. Policies

will be set for discounting assistance amounts for any grants or below-market interest

rate loans from government agencies that may have been received by an owner from

for these purposes.

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Owners Who Have Received Other Assistance: Policies will be set for discounting

compensation amounts for any grants or below-market interest rate loans from

government agencies that may have been received by an owner for these purposes.

Pursuant to federal statute, assistance from The Road Home must be used to repay any

loans from the Small Business Administration (SBA) that a homeowner has received for

the same losses.

Owners of Manufactured Housing: In order to qualify for homeowner assistance, the

owner of a manufactured home must also own the land on which the damaged home

was located.

Any homeowner may appeal the decision related to eligibility, damage assessments,

amount of assistance and grant offsets made by the program.

2.7 Accounts for Receipt of Funds

To help ensure that Program incentive grants, incentive loans, insurance payments and

FEMA household assistance payments provided to homeowners are invested in

housing, owners will be encouraged and assisted, and may be required, to open deposit

accounts in the owner's name. The Program will work with financial institutions to set up

standard terms for managing such accounts and payouts from them.

2.8 Homeowner Assistance Centers - Process for Receiving Assistance

Louisiana has initiated a Call Center to allow former homeowners to indicate their

interest in returning to their neighborhoods and investing in their homes. The Call

Center is the first step in what will be an aggressive campaign to solicit applications for

the Homeowner Assistance Programs.

To open lines of contact between displaced Louisiana residents and The Road Home,

citizens may now register key information about their damaged homes by calling 1-888-

ROAD-2-LA (888-762-3252; TTY 1-800-566-4224 ) to submit that data to the State's

registry, or logging on to a one-stop web portal - www.LouisianaRebuilds.info. This

registry pertains only to homes that were occupied by homeowners and damaged by

hurricanes Katrina or Rita.

When the program commences, eligible homeowners will be notified by mail, email

and/or telephone to the greatest extent possible of the opportunity to apply for

assistance. Information about financing programs and counseling services will be

posted on public websites as well as provided through other resources such as

Assistance Centers that will be established in various locations.

The Program will not publish application forms or detailed

descriptions of the process for receiving assistance until the

comment period has ended and the State of Louisiana has

determined the amount of federal funds that will be available for all

recovery programs.

16

In order to rebuild, most homeowners will have to navigate a maze of obstacles such as

negotiating insurance settlements, dealing with mortgage issues, understanding the

implications of new flood maps, and dealing with building contractors. Before the

amount of program financial compensation can be determined, an owner will have to

make decisions on whether to repair their home, replace it on-site, accept a buyout and

relocate in the parish or state, or sell. If an owner has been unable to return to the

community, he or she will likely need help finding temporary housing to live in while

managing this process. While some homeowners can overcome these barriers

themselves, many homeowners will need expert, trustworthy advisors, in addition to

receiving financial assistance.

To respond to these needs, Assistance Centers will be the "storefronts" where

homeowners can apply for assistance and gain access to advisory services. Rebuilding

Advisors will help homeowners accomplish the following:

Provide information to help homeowners evaluate the four assistance options-

repair, replace, relocate or sell-and the amount of financial assistance allowed

for each;

Provide information to owners on how to deal with mortgage issues, or refinance

if necessary;

Provide information to assist owners in selecting professional services providers

such as home inspectors, architects, surveyors (for replacement homes) to

design and prepare for repairing or replacing homes;

Provide information to assist owners in selecting repair contractors, homebuilders

and manufactured housing companies; and

Provide information about fair housing rights and protections against housing

discrimination.

The Assistance Centers will help mitigate the potential for misunderstanding and abuse

by providing standardized, structured, and guided relationships between homeowners

and service providers. In addition, the Assistance Centers will maintain registries of

professional service providers and building contractors.

Through the Solicitation for Offer, Assistance Centers will be directed by the selected

management firm and staffed by contracted experts, which may include non-profit

organizations specializing in providing advisory services to homeowners. See Section 5

for more details.

17

Registrants calling The Road Home or logging onto www.LouisianaRebuilds.info will be

asked to provide important information, including the resident's name, current address

and the location of the affected home, phone numbers, mortgage information, the status

of any insurance settlements and any FEMA or U.S. Small Business Association (SBA)

applications or assistance.

3. Workforce and Affordable Rental Housing

Programs

Approximately 82,000 rental housing units received major or severe damage in

Hurricanes Katrina and Rita. Replacement of the damaged or destroyed rental housing

in the hurricane ravaged areas is vital to the return of a strong workforce, and is a

lynchpin of Louisiana's economic recovery. All sectors of the economy have reported a

workforce shortage due to a lack of affordable housing. Rental housing stock is also

imperative to support the return of the high proportion of residents that were renters

prior to the storms, particularly in New Orleans, as well as the return of homeowners

transitioning into repaired and rebuilt homes over the coming months.

For these reasons, several programs are proposed to support the redevelopment of

rental housing in the storm-impacted areas. To support the programs, the State has set

aside a total of $892,700,000 of currently available CDBG funds, and proposed to be

increased to $1,535,700,000 upon the appropriation of the additional CDBG funds

pending in Congress.

The Road Home Workforce and Affordable Rental Housing Programs have four broad

goals:

?? To ensure that the workforce needed to accommodate full economic recovery

has access to affordable rental housing;

?? To provide affordable rental housing to low income households who could not

otherwise afford to return to their communities;

?? To ensure that affordable rental housing is provided in the context of high-quality,

sustainable mixed-income communities; and

?? To ensure that a portion of affordable rental units will host supportive services for

families with special needs or high risks following their extended displacement.

To achieve these four goals, the programs described below prioritize deep affordability

of rental units and the balanced allocation of these deeply affordable units within mixedincome

communities. The program will create an estimated 36,000 to 51,000 units, in

a broad mixture of deeply affordable units, mixed income development, small rental

properties, and other tax credit projects.

Summary of Rental Units Built or Restored and Program

Dollars for Fully Funded Program

18

Program Number of Units CDBG Dollars

LIHTC/CDBG Piggyback

Market Rate Units

Below Market Rate

Very Low Income

18,000 - 33,000

5,000 - 15,000

13,000 - 18,000

6,000 - 9,000

$552,410,000

$0

$0

$552,410,000

Supportive Housing Services 0 units built; 3,000 served $72,730,000

Flexible Developer Incentives N/A $41,560,000

Small Rental Properties

Market Rate Units

Below Market Rate

18,000

~ 6,000

~ 12,000

$869,000,000

TOTAL 36,000 - 51,000 units $1,535,700,000

Deep affordability refers to units reserved for individuals with incomes as low as 20% of

the area median. Mixed-income communities will be prioritized when they are

developments with market rate rental units or single family homes in the same

development with a range of affordable and deeply affordable rental units, for renters

20% to 60% of the area median income.

Based on current estimates, the Workforce and Affordable Rental Housing Programs

and the Gulf Opportunity Zone's Low Income Housing Tax Credits may create between

25,000 and 30,000 units available for citizens at or below 60% of the area median

income for the next twenty years. The State expects that as many as half of those units

may rent at or below 50% of the area median income level for the next twenty years.

The LRA will allocate these funds for the Workforce and Affordable Rental Programs by

formula to ensure that those parishes with the most damaged or destroyed rental

housing have adequate resources to replace significant numbers of affordable rental

units. It is the strong recommendation of the LRA that the Low Income Housing Tax

Credits should also follow this geographic allocation formula and prioritization to meet

affordability and mixed-income development goals, such that all projects benefiting from

tax credit projects should be directed to include units of deeper affordability for very low

income families.

The State proposes these rental programs as a means to focus on the housing needs of

low to moderate income people in the most heavily damaged areas. According to the

National Low Income Housing Coalition Research Note #05-02:

"Forty-seven percent of the housing units in the entire Katrina affected area [of the Gulf

Coast] were rental units. In New Orleans, 55% were rental units. Fully 20% of the rental

units lost in New Orleans were affordable to extremely low income households, i.e.




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households earning 30% of AMI or less, amounting to 16,000 units. This percentage

was 16%, 22,000 units, for all Katrina affected areas. Thus, 73% of all the rental units

affordable to extremely low income households in the Katrina affected areas were in

New Orleans and likely destroyed."

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The table below summarizes the budget for all rental programs:

Budgets for Rental Housing Programs

Rental Program Partially Funded Fully Funded

LIHTC/CDBG Piggyback $311,690,000 $552,410,000

Supportive Housing $46,750,000 $72,730,000

Flexible Developer

Incentives

$41,560,000 $41,560,000

Small Rental Properties $492,700,000 $869,000,000

TOTAL $892,700,000 $1,535,700,000

3.1 Low-Income Housing Tax Credit (LIHTC) "Piggyback" Program

Through legislation creating the Gulf Opportunity Zone (GO Zone), Congress has

authorized a special allocation of Low Income Housing Tax Credits (LIHTC) that are

expected to generate an estimated $1.7 billion over three years in private investment in

the repair and new construction of affordable rental housing. The combination of LIHTC

incentives and CDBG funds that piggyback the tax credits will promote the twin goals of

dramatically increasing the supply of rental units affordable to a wide range of low- to

moderate-income families and expanding rental housing supply as a part of stable

mixed-income developments and neighborhoods.

When The Road Home is fully funded, the State proposes to combine the resources of

the LIHTC incentives, CDBG Piggyback funding, available HOME funds, Section 8

housing vouchers, and leveraged private investments to generate between 18,000 and

33,000 new or restored rental units, of which an estimated 5,000 to 15,000 units will be

rented at market rates and 13,000 to 18,000 will have below-market rents. In any single

unit, other federal subsidies shall not duplicate assistance to the same beneficiary.

To support the development of mixed income communities and to ensure the restoration

of rental housing in the most heavily impacted parishes, the LRA will work with the

Louisiana Housing Finance Agency, which administers the LIHTC Program, to assure

that all approved GO Zone LIHTC projects integrate multiple tiers of affordable rental

units and prioritize the integration of affordable units with market-rate rental units. The

intent of this program is to use the powerful financial incentives of the LIHTC program,

CDBG Piggyback funding and the flexible incentives program described in Section 4.3

to motivate developers to build new mixed-income communities that accommodate

families from across the income spectrum. If LIHTC applications without this deeper

tiering of affordable units are able to qualify for tax credits, then it will be hard for the

goals of this piggyback program to be met. Furthermore, to ensure the success of the

CDBG Piggyback Program, the LRA strongly urges the Louisiana Housing Finance

Agency to direct that GO Zone LIHTC benefits be similarly targeted to parishes which

suffered the most damaged or destroyed rental properties as described for the

Workforce and Affordable Rental Housing programs above.

20

Though units developed under the LIHTC must by law be affordable to households with

incomes as high as 60% of area median income, the extra investment incentives built

into the special GO Zone allocation of LIHTC mean that, by State estimates, rents for

LIHTC units in Louisiana can be made affordable to families with incomes between 45%

and 60% of area median income. The LRA will work with the Louisiana Housing

Finance Agency to develop future Qualified Allocation Plans (QAP) for LIHTC to give

preference to and fund projects that meet deeper affordability goals than the required

60% of area median income7, and that use the full capacity of the Piggyback Program.

Louisiana intends to accommodate families with incomes below 45% AMI, however. In

order for the LIHTC program to create a rental supply for such very low-income

households, additional subsidies are needed. The State will therefore make available

CDBG funds to provide incentives to investors so that, when the program is fully funded

by the anticipated $4.2 billion appropriation, an estimated 6,000 to 9,000 of the

estimated 13,000 to 18,000 affordable rental units produced under the LIHTC program

can be reserved for-and made affordable to-working families with incomes between

20% and 40% of AMI. It is the strong intention of the State to reserve all CDBG money

devoted to very affordable rental units for units that are built as a part of mixed-income

developments, with a priority given to those including market rate units.

Furthermore, under the current partially funded program, the State proposes that a

portion of the estimated 6,000 to 9,000 units targeted to very low-income families be

made available to households with special needs such as persons with disabilities,

families with disabled family members, and the elderly. The funding for such supportive

services is outlined in Section 4.2 of this document.

Project Eligibility and Estimated Budgets8

Developers will be eligible for supplemental CDBG funding for approved LIHTC rental

projects on which they agree to certain limitations on rents and occupant income for the

first twenty years of the project. When The Road Home is fully funded, CDBG piggyback

funds aimed at increasing the supply of units available to very low income households

for renters, with incomes between 20% and 40% of the area median, is estimated in the

table below.

Target

Household

Income

Target Number of

Units

Total Estimated CDBG

Funding

20% AMI 2,000-3,000 $263,460,000

30% AMI 2,000-3,000 $184,140,000

7 Area Median Income is defined annually by the federal Department of Housing and Urban Development for each metropolitan

area and non-metropolitan parish in the United States. FY2006 income estimates for Louisiana can be found at

http://www.huduser.org/Datasets/IL/IL06/la_fy2006.pdf.

8 Calculations used to determine the demand for CDBG funds based on assumed rents and income targets are available from

the LRA.

21

40% AMI 2,000-3,000 $104,810,000

50% AMI 3,500- 4,500 $0

60% AMI 3,500-4,500 $0

Above 60% AMI 5,000-15,000 $0

TOTAL 18,000-33,000 $552,410,000

Among the CDBG financing mechanisms being considered to make it feasible for

developers to provide the estimated 6,000 to 9,000 units that will be available to and

rented by very low income tenants are:

Gap financing to reduce the costs of debt service, so that lower rents (and lower

cash flow) can be made feasible; and

Funding of operating reserves for projects to enable rental property owners to

charge lower rents.

The project costs for affordable units and LIHTC projects are likely to vary greatly

because of the uncertainty of many cost factors and market conditions. The State will

prepare clear criteria by which projects will be ranked, such as quality of the

development and units, experience of the development firm, the per-unit subsidies

sought at varying levels of affordability between 20% and 60%, and the financial

strength of the firm. Proposals should be selected by the State based on the most

competitive proposals that maximize these identified criteria. Further, each application

should be scrutinized by underwriters in light of the criteria and proposed project costs.

The State should negotiate with applicants to seek the best possible outcomes for each

project.

Officers of the LRA, Louisiana Office of Community Development, and Louisiana

Housing Finance Agency will work together each year to propose affordability targets for

specific numbers of housing units, integrate their targets into the annual Qualified

Allocation Plan criteria for the LIHTC program, and set aside CDBG funds to be

matched to those tax credit goals to meet overall program objectives. These officers will

likewise evaluate actual numbers of units delivered annually. In the event of any

shortfall versus those targets during a calendar year, those funds and targets will be

added to the subsequent year's goals and allocations.

The State will direct that strong preference be given by development groups which are

awarded Piggyback incentives to offer their properties to hurricane-displaced renters

from the affected areas of Louisiana. In doing so, the State will require that developers

promote their available units through the proposed Renter's Registry described Section

3.5 below.

3.2 Services Funding for Supportive Housing

Under the partially funded plan, the State intends to use CDBG funds or other financial

resources that can be obtained to fund supportive services for approximately 1,870

22

supportive housing units, the development of which will be financed by the LIHTC and

CDBG piggyback program described above. Under the fully funded program, the

program will support an estimated 3,000 units with supportive housing services. Other

HUD programs such as the McKinney Vento Act, Project Based Section 8 Vouchers,

Section 811, and Section 202 program funds may supplement supportive efforts.

The supportive housing units will serve individuals and families with special needs, most

importantly, renter households who are returning to Louisiana after having endured,

very often, traumatic relocations from shelter to shelter, to hotels, and to other

temporary living arrangements in other cities. Supportive housing units are also needed

for returning families and individuals who are disabled, frail elderly, or have other

special needs.

Supportive services will be provided in 30% of the 6,000 to 9,000 rental units targeted to

households with incomes at or below 40% of area median income. In order to provide

that level of services, the State proposes to allocate $46,750,0009 of the currently

available CDBG funds to help pay for the services. This program component and use of

CDBG funds for supportive services is proposed with the recognition that the number of

supportive housing units that can be developed in Louisiana over the next few years will

be severely limited by the scarcity of public and private funding for the necessary

resident services.

When the expected $4.2 billion in additional CDBG funds are appropriated for The Road

Home, the budget for supportive housing services will be increased to $72,730,000 to

fund services for an estimated 3,000 units.

3.3 Flexible Incentives for Mixed-Income Development

For mixed-income residential developments to occur on a larger scale-even if the

affordable housing units are receiving supplemental CDBG funding as described

above-the State recognizes that additional incentives may be required in certain

instances to successfully promote market-rate housing to be mixed with affordable

housing. Therefore, the State proposes to use $41,560,000 of CDBG funds to

supplement mixed-income housing projects. These flexible subsidies will be used

primarily in conjunction with the LIHTC incentives, but they will also be available for

other projects offering rents or sale prices affordable to families both above and below

80% of AMI.

The primary mechanism for providing these incentives will be recoverable grants

provided to reduce the costs of land and infrastructure. Such grants will be offered on a

competitive basis. Grants will be made subject to requirements that will be specific to

each project, such as minimum requirements for providing a mix of rents or sale prices.

9 Assumes 1,870 units with services costing an average of $5,000 per unit per year over five years.

23

Grants will be recovered if all mixed-income requirements set for selected projects are

not met. Operating costs of this program will be covered through operating budgets for

other housing programs described herein, such as the CDBG/LIHTC Piggyback

Program or the Housing Development Loan Fund.

3.4 Small Rental Property Repair Program

Before the disaster, a large portion of very low income working families resided in

single-family homes, "doubles" and small, multi-family buildings with ten or fewer units

that were owned and operated by small-scale landlords. A sizeable number of these

properties were underinsured or uninsured and no longer available for occupancy. The

State proposes to provide gap financing for the repair of an estimated 10,500 small

rental units in the partially funded program, and an estimated 18,000 rental housing

units when the program is fully funded. The primary purposes of the gap financing are to

enable repairs to occur and to limit the amount of debt (and therefore debt service)

required for the properties, so that the owners will be able to charge affordable rents.

The program will, on a competitive basis, provide gap financing up to $25,000 to restore

a rental unit renting at Fair Market Rental rates according to HUD guidelines, with

higher funding amounts up to $75,000 per unit available to qualified landlords who

agree to offer lower rents, with the maximum amount of subsidy going for rental units

where rents are affordable for families with incomes at or below 50% AMI. To spark

immediate development of scattered properties of all rent levels, units offered at Fair

Market Rental rates will be eligible for assistance, but only for the first tier of assistance

of up to $25,000 of incentives. Eligible properties will be selected based upon a strong

preference for well-designed residential communities and infill housing developments

that also include families with incomes higher than the area median. Further, each

application should be scrutinized by underwriters in light of the criteria and proposed

project costs. The State should negotiate with applicants to seek the best possible

outcomes for each project.

In exchange for accepting financial incentives, property owners will be required to

accept limitations on rents (with inflation clauses) and incomes of renters for a period of

10 years, to assure that the assisted housing is as affordable as possible and is

occupied by families with incomes corresponding to several tiers of affordable rents.

The amount of CDBG financing available will be provided in three tiers-$25,000 ,

$50,000 and $75,000 per unit-with the highest amount per unit being available to

property owners who agree to offer the lowest rents. The assistance will be offered as

deferred payment loans at 0% interest, due only upon resale of the property or failure to

comply with the agreed-upon restrictions on rents and household incomes.

The tiers with affordability requirements, representing two thirds of the program funds,

are expected to produce roughly 12,000 units when the program is fully funded.

24

As with the homeowner program, small rental property owners will have access to

expert financial and construction advisors to assist them with refinancing and

reconstruction, or if they so desire, to sell their properties to developers using the LIHTC

program.

Unlike the homeowner program, funds will be insufficient to provide every small-scale

property owner with enough money to repair or replace their rental properties.

Prioritization of properties that will be selected for assistance will be based on factors

including, but not limited to, the following:

Property owners demonstrating financial and technical capacity to obtain matching

market-rate financing, if necessary, to carry out the repairs, and to provide

excellent property management services; and

Properties that are most cost-effective to repair or replace, and located in areas

that have adequate infrastructure and redevelopment activities occurring.

Properties held by small-scale landlords where rental revenue constituted a

majority of household income and/or assets so long as these investor-owners

meet the threshold requirements for capacity necessary to repair or replace, and

then manage their units.

As outlined in the Homeowner Assistance Program guidelines, owner-occupant

program assistance and small rental property assistance cannot be combined in the

same residential property. Where an owner-occupant rents units within a multi-unit

structure, the owner must choose to participate in one program or the other. If the

Homeowner Assistance Program is chosen, the full double-unit structure will serve as

the basis for calculation of assistance up to the program cap of $150,000. For all other

owner-occupied multi-unit structures, funding up to $150,000 is available but is based

on the damages to and value of the unit in which the owner resides. If the owner

selects the Small Rental Property Repair Program and the owner is selected for

assistance, assistance to each unit, including the owner-occupied unit, will be limited to

$25,000 to $75,000, as with all units under the program application, dependent on

affordability levels on each rental unit.

The landlord applying for the Small Rental Property Repair Program will be able to

receive incentives for a unit in the property in which he or she is an owner-occupant.

The formula for the amount of CDBG funding per rental unit is as follows:

Eligible Assistance per Rental Unit = Lesser of:

Allowable Rebuilding Costs + Mitigation Costs (minus)

Insurance (minus) Maximum private financing the

property rents will support

OR

The Maximum CDBG funding amount described above

25

To the extent that property owners do not request or qualify for the higher amounts of

funding per unit, the program will be able to support the repair of more rental units,

albeit at higher rents.

The LRA also proposes to allow variations of this program that will provide incentives,

not only for repairing damaged rental properties, but converting them to owner-occupied

housing. Two pilot programs may be created and expanded if successful. The first pilot

program could allow a landlord to sell a repaired one-family or two-family rental property

to a low- or moderate-income homeowner, rather than rent the home. The second pilot

program would allow low- and moderate-income homebuyers to purchase unrepaired

one-family and two-family rental units and to carry the home through the repair process.

Creating first-time homebuyers will be a priority but the pilot program will also serve

buyers who have previously owned homes. Homeowners who are exercising the "sell"

or "relocate" option may not receive additional financial assistance from the state

through either of these pilot programs. These pilot programs will be funded through the

budget for the Small Rental Property Rental Program. The incentives will be tiered

similarly as above (based on the income of the first occupants), and the rental

affordability requirements (for any rental units in two-family homes) will remain the

same.

A total of $492,700,000 is budgeted for the Small Rental Property Repair Program

under the partially funded budget, including program operating costs. Upon the

additional appropriation of $4.2 billion by Congress, the budget for this competitive

program will increase to $869,000,000.

3.5 Renters' Registry

Because the replacement of rental housing will fall far short of the rental housing lost

due to insufficient funds, and many residents displaced by hurricanes Rita and Katrina

are far from home and inadequately housed, the State will give priority placement to

hurricane displaced residents for all subsidized rental housing units.

A total of $2 million in CDBG funds has been budgeted to provide the following

resources to displaced renters to help facilitate their return home:

?? Louisiana has initiated a Call Center and Homeowner Registry to allow former

homeowners to indicate their interest in returning to their neighborhoods and

investing in their homes. The Call Center/Registry will add a component for

renters to gather information about the current location of displaced renters who

wish to return home. Initially, the Call Center/Registry will refer callers to

emergency housing assistance resources posted on the web portal at

www.LouisianaRebuilds.info. As new or repaired subsidized affordable rental

units come on line, renters will be referred to a web data base where affordable

26

rental housing is listed, and where they can access applications for incomeassisted

housing.

?? When the database referral system commences, eligible renters will be notified

by mail, telephone, and the www.LouisianaRebuilds.info web portal to the

greatest extent possible of the opportunity to access rental information and apply

for assistance. Information about rental programs will be posted on public

websites and at Housing Assistance Centers.

4. Restoration of Homeless Supports and Housing

The State is proposing $25,900,000 of CDBG funds be allocated to address increased

risks and demands related to homelessness. In hurricane-impacted areas, many

organizations serving the homeless lost facilities, housing capacity, shelter beds, and

staff: Thirty-six shelters sustained considerable damage, and capacity to house up to

1,759 homeless individuals (i.e., 1,759 residential "beds" operated by "Continuum of

Care" organizations serving the homeless) was lost. In hurricane-impacted areas, there

are reports that an increased number of persons are living on the streets or in parks,

cars, and abandoned or uninhabitable buildings. Many of these persons were not

homeless prior to the storms. Additionally, many older adults and persons with

disabilities who resided in the community prior to the storms are currently being housed

in nursing homes and other institutions, and many residents cannot be discharged or

transitioned from these settings due to the lack of affordable, barrier-free, and/or

supportive housing. These funds will assist in providing a safe and permanent place for

homeless and at risk of homeless individuals to reside and get the supportive services

they need to remain housed and to be as independent and self-sufficient as possible.

The proposed $25.9 million will support the State's goal to immediately restore and

expand capacity in hurricane impacted areas and provide permanent supportive

housing and assistance for persons and families who are homeless and persons at-risk

of becoming homeless who are low wage workers, unemployed, victims of domestic

violence, low-income seniors, and/or low-income persons with any type of substantial

disability (including physical or sensory disability, cognitive disability, chronic health

problems, mental illness, or addictive disorders).

The proposal allows for funding to be prioritized as follows:

The highest priority for the use of these funds will be to repair and restore shelter

capacity, transitional housing and permanent supportive housing that existed prior to

Hurricanes Katrina and Rita. The cost of restoring this capacity is estimated to be $3

million to $5 million. Priority for these funds will be given to members of the Continuums

of Care. Non-member organizations may apply for funding but should document prestorm

homeless efforts in the community and indicate a commitment to coordinating

with the local Continuums of Care upon receipt of these funds.

27

A second priority will be the acquisition and rehabilitation of new permanent supportive

housing and services by non-profits in the hurricane-affected areas. This priority also

includes the option of funding rental assistance (i.e., "bridge funding") linked to

permanent supportive housing. The prioritization of non-profits is based on the

understanding that some non-profit groups working with homeless and at-risk

populations will not have the capacity to apply for tax credits and supportive services

funds through the "piggyback" program

The third priority will be homeless prevention assistance to serve the hurricane affected

areas, however not to duplicate any existing federal subsidies for this purpose. This

priority includes traditional homeless prevention - such as funding the first month of

rental assistance to avoid homelessness - as well as innovative practices to prevent

homelessness, such as home modifications, repairs not covered by other parts of the

Road Home program, and other supports that help individuals maintain residency in

their home.

The fourth priority is the funding of new transitional housing and services targeted

particularly for families who have experienced significant trauma as a result of the

hurricanes and need the support of transitional housing rather than the groups

addressed in the permanent supportive housing initiatives listed in the second priority.

The fifth priority is the creation and expansion of employment and housing search

services for the homeless in the hurricane affected areas. These funded efforts should

be in coordination with and non-duplicative of other recovery related employment and

housing efforts such as the Louisiana Family Recovery Corps. Applicants will propose

a mechanism to ensure that individuals will not receive duplicative services.

5. Developer Incentives

The State recognizes that communities that lost the most housing due to the Katrina

and Rita disasters will need to have special incentives in place to attract new mixedincome

housing development-to restore both the rental and owner-occupied housing

stocks. Homeowners who elect to take the relocation option will make it necessary to

have a steady and large supply of new homes. Therefore, the following developer

incentives are proposed, with a special focus on the New Orleans metropolitan areas

and other communities with major losses to their housing stock.

These programs and financial tools described in Section 5, and working in combination

with the Workforce and Affordable Rental Housing Programs in Section 3, are proposed

as a well-orchestrated toolkit that-working together-are more likely to encourage

developers to rebuild housing in the areas that suffered the greatest losses. All are

intended to address very specific barriers: Lack of affordable, permanent financing for

mixed-income rentals; the need for more risk-tolerant predevelopment capital; and the

lack of available sites for development where housing development is most needed.

28

The budget for incentives is provided in the table below:

Development Incentives

Program Partially Funded Fully Funded

Development Loan Fund $16,570,000 $16,570,000

Land Assembly $2,070,000 $2,070,000

Capacity Building Grants $2,070,000 $2,070,000

Building Code

Enforcement

$11,390,000 $11,390,000

TOTAL $32,100,000 $32,100,000

5.1 Housing Development Loan Fund

The Housing Development Loan Fund would provide seed funding for a contractor or

state agency to establish one or more loan funds that offer acquisition and

predevelopment financing on flexible terms to developers of the most critically needed

housing. Providing early, high-risk capital will be a powerful incentive for developers to

build mixed-income housing in the communities that lost the most housing. Loans would

be made to nonprofit and for-profit developers of new rental and single-family housing

that is affordable to families with incomes that are below the area median, with a strong

preference for well-designed residential communities and infill housing developments

that also include families with incomes higher than the area median.

The Housing Development Loan Fund would be operated by a state agency or an

experienced community development loan fund manager. A total of $16,570,000 in

CDBG funds, including fund management costs, will be invested as "top loss" capital in

order to leverage an estimated $30 million in additional lending capital. As two priorities,

the loan fund would target developers participating in the rental assistance programs

described in the previous section, as well as developers of mixed-income for-sale

housing. As projects close their construction financing, the acquisition/predevelopment

loans would be repaid and the lending capital would become available for additional

investments. In a three-year period, it is expected that the funds will recycle two to three

times.

As currently planned, the Housing Development Loan Fund would be operated on a

contractual basis by one or more qualified financial institutions that are experienced in

providing early-stage, high-risk property acquisition and predevelopment loans, as an

incentive for developers to rebuild existing housing or build new housing at different

price points, including affordable homes and rental units. These types of loans are

typically not offered by conventional lenders, but instead by the numerous so-called

"community development loan funds" across the country. These loan funds are able to

take higher risks in lending by attracting risk-tolerant capital and guarantees from

foundations and socially motivated investors. The goal should be to lend the funds at

0% and to subordinate these loans to the private capital in order to provide a strong

incentive for developers and to leverage private capital. Many such funds receive some

29

of their capital as grants from the Community Development Financial Institutions (CDFI)

Fund of the Department of Treasury.

Congress specifically directed the states receiving supplemental CDBG funding should

consider the use of up to $20 million to fund recovery activities of two organizations that

are experienced in operating such loan funds: Enterprise Community Partners, Inc.,

and Local Initiatives Support Corporation.

5.2 Land Assembly Operations

As an additional way to jump-start development in the communities that lost the most

housing, the Land Assembly component of the housing program will provide seed

money to acquire multiple properties in good locations for replacement housing and

"package" them for sale or grant to maximize further affordable housing development-

for example, to developers using CDBG-supported LIHTC tax incentives to develop

rental housing, to supportive housing developers, to self-help ownership housing

developers, etc. This program component will operate only in those jurisdictions where:

?? These activities are requested or supported by local governments; and

?? Local governments have substantially engaged in the planning work required to

target areas that are suitable for the development of replacement housing.

A total of $2,070,000 of CDBG funds are budgeted for capital to purchase residential

properties as well as operating costs. The capital used to purchase properties will be

recycled through sales of properties to developers.

As a related activity, properties assembled through buy-out programs, funded through

the State's homeowner assistance program, might be offered at below-market costs to

developers of affordable or special needs housing. One of the targets of these sales of

State-purchased properties would be to encourage the development of mixed income

developments that include renters with incomes below 40% of area median income. If

such assembled properties were not purchased and developed by affordable

developers in accordance with strict income requirements, they still might carry an

inclusionary housing redevelopment requirement that a certain percentage of the units

developed on CDBG assembled land would be affordable with less stringent income

and pricing requirements, but still ensuring that mixed-income developments occur in

redevelopment areas.

However, the $2 million Land Assembly fund is fundamentally different from and should

not be confused with the buyout provisions of the Homeowner Assistance Program.

This budget line item is not intended for purchases of single-family homes. Instead, the

intention is to contract out to one or more qualified organizations that can identify

suitable sites for housing development in the most distressed parishes and obtain

30

options on them. The intention is to address a complicating barrier to housing

developments: the lack of-and high asking prices for-suitable sites that are near

functioning infrastructure and services (public services, retail etc.). The State intends,

through contractual arrangements, to fund a small team of property acquisition experts

who will scout out, analyze and obtain options on suitable sites that are not currently on

the open market. These could include surplus properties held by government agencies,

nonprofits, churches and businesses. Some might be brownfield sites that could be

cleaned up quickly and at feasible costs. This Land Assembly operation would result in

assignable options in the name of the State of Louisiana or some designated quasipublic

entity. These options, in turn, would be offered to developers on an

open, competitive basis.

This Land Assembly operation should not be viewed in isolation. It ties into the

Louisiana Housing Finance Agency's LIHTC program, the proposed CDBG/LIHTC

Piggyback program, the Services Funding for Supportive Housing program, and the

Housing Development Loan Fund.

5.3 Support for Faith-Based and Community-Based Housing Recovery Programs

The State aims to strengthen community nonprofits and faith institutions already

providing housing recovery services through the investment of $2,070,000 of CDBG

funds in their activities. These entities may have opportunities to contract to provide

some services in Housing Assistance Centers. They will be eligible to apply for grants to

build capacity in providing supportive housing services. They will be eligible to apply for

matching grants to supplement charitable fundraising they have done for housing

recovery assisting low and moderate income homeowners in repairing or replacing their

homes, as well as for seed money to develop repair and replacement housing for low

and moderate income households.

These organizations will be encouraged to help expand the supply of supportive

housing, affordable rental housing and affordable homes for sale by participating, as

qualified, in program such as the LIHTC program, the CDBG piggyback program, the




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small rental program (if a nonprofit wishes to buy, repair and operate affordable rental

properties), the flexible incentives program, and the Housing Development Loan Fund.

5.4 Funding of Building Code Enforcement by Local Governments

Without special assistance being provided to local governments, it is expected that a

major impediment to housing development will be the lack of building, electrical and

plumbing inspectors and permit processing staff. In addition, architects and builders will

need inspectors and plan reviewers to help communities adapt to the new State Uniform

Construction Code and to interpret the latest available advisory base flood elevations.

Therefore, the State has budgeted $11,390,000 for hiring such staff for local

government over a number of years, based on the numbers of damaged/destroyed units

in each parish. It is expected that this amount will fund at least 40 field inspectors and

31

plan reviewers, as well as a limited number of support staff. The State will also support

the expansion of code enforcement capacity by sponsoring additional training

opportunities for inspectors, engineers and architects. While building code enforcement

by local authorities will be supported by permitting and inspection fees in the long run,

this initial CDBG funding is necessary to immediately expand enforcement capacity to

expedite the construction of safer and stronger homes where the storm impact was

most concentrated and building activity will be fervent in coming months.

6. Administration

With this amendment, the State is requesting a total of $148.68 million under current,

partial funding levels, which includes the $8,810,400 requested in the first action plan

and $189.880 when the program is fully funded.

7. Planning

With this amendment, the State is requesting $9.5 million of which $0 was requested in

the first action plan.

8. Technical Assistance

With this amendment, the State is requesting $12.420 million, of which $500,000 was

requested in the first action plan.

9. Other Requirements

9.1 Fair Housing Goals

Fair housing must be a goal of the programs described in The Road Home Housing

Program. If a homeowner or renter (from a unit developed through the benefits of this

program) believes that he or she has been the victim of housing discrimination and

suspects that he or she has been treated unfairly because of Race, Color, Religion,

Sex, Age, Familial Status, National Origin, Marital Status, or Disability, he or she may

file a complaint of discrimination with the Louisiana Attorney General's Office, Louisiana

Public Protection Division of the US Department of Housing and Urban Development

Fair Housing Division.

9.2 Program Income

32

Because the allocation of federal resources will not meet the entire need for housing

replacement in Louisiana, and because the costs of replacement housing are escalating

in the storm-impacted areas, the State will recycle all income from sales of properties,

repayments of any program loans, funds recaptured through violations of guidelines,

covenants, or other actions, and any collections of lien payments derived through

actions of these CDBG housing programs. From a regulatory standpoint, recycled

CDBG funds can be used for any eligible CDBG activity as described in the State's

Annual Plans. The revenue generated by the program can effectively be used to

achieve focused long-term housing goals by dedicating and restricting the use of

recycled housing funds for future affordable housing programs. This could, in effect,

create a revenue stream for the Louisiana Permanent Housing Trust Fund., which could

be administered by a public or quasi-public agency at the state or local government

levels. The policies shaping the housing reuse of revenues will be made at a later date,

as detailed operational plans are being developed, but will continue to prioritize

displaced residents and deeply affordable rental housing, and will help to sustain

affordability as terms expire in many of the properties supported through the programs

articulated herein in 10 to 15 20 years.

9.3 Promotion of Short- and Long-Term Recovery Planning

To promote sound short- and long-term recovery planning at the state and local levels

that impact land use decisions that reflect the need for responsible flood plain

management and growth, the State, through the Louisiana Recovery Authority, is

leading community planning efforts in its most affected parishes. Dubbed "Louisiana

Speaks", this effort is a multifaceted planning process to develop a sustainable, longterm

vision for South Louisiana in the wake of the destruction caused by Hurricanes

Katrina and Rita. The community planning process accomplishes the following:

?? Supports a deliberate and democratic process that relies on active participation;

?? Empowers local communities to develop plans that meet individual needs;

?? Establishes priorities at the local level to guide decisions;

?? Supports communities with the best national planning experts working in

partnership with local architects, planners, and engineers; and

?? Provides a user-friendly interface to enable development of individual plans.

The goal of the long-term community planning process is to develop a comprehensive

plan that integrates both parish plans (coordinated with the support of FEMA technical

assistance) and regional recovery plans. The LRA collaborated with planners from

FEMA to develop a parish level planning process to address numerous recovery issues

pertinent to the long-term recovery of severely damaged parishes. A total of 26

parishes throughout Louisiana were identified to participate in this planning process,

which runs from November 2005 through April 2006. Louisiana Recovery Planning Day

was an important part of the parish level planning process. On January 21, 2006, which

was proclaimed Louisiana Recovery Planning Day by Governor Kathleen Babineaux

Blanco, the Louisiana Recovery Authority (LRA) and FEMA's Long-Term Community

Recovery (LTCR) team hosted a series of open houses to provide Louisianans with an

33

opportunity to express their needs and to help define a community-based vision for

Louisiana's recovery.

The parish level planning process will result in the development of initial parish recovery

plans, which will be used to set funding priorities for the recovery effort. The final plans

will include a community baseline, a needs assessment, a recovery strategy including

principles, vision, goals, a set of high value recovery projects and a strategic recovery

timeline. The final section will describe opportunities for the integration of the local plan

with regional and statewide plans. The section will also include an inventory of local

resources, government structures and describe the level of technical expertise needed

to implement the plan. Emphasis in the planning process is on developing plans that

are based on sound land use practices and plans that remain cognizant of the hazards

of rebuilding in areas made more risky by new flood guidelines.

For a more detailed description of Louisiana's long-term and short-term recovery

planning efforts, please visit:

http://www.louisianaspeaks.org/process.html

9.4 High Quality Construction Methods

In a special legislative session in November 2005, Louisiana enacted its first statewide

building code. The law states: "The state uniform construction code shall establish

uniform performance standards providing reasonable safeguards for health, safety,

welfare, comfort, and security balanced with affordability for the residents of this state

who are occupants and users of buildings, and will provide for the use of modern

methods, devices, materials, and techniques. The state uniform construction code will

encourage the use of construction materials of the greatest durability, lower long-term

costs, and provide greater storm resistance." The programs described in this Action

Plan Amendment will adhere to this directive of the Louisiana Legislature.

The State Uniform Construction Code (UCC) sets a minimum statewide standard to

ensure the homes and businesses are rebuilt to withstand the next hurricane. The LRA

and other agencies of state government urge jurisdictions, especially those along the

coast, to adopt all building safety standards in the UCC. Most coastal communities

have begun to enforce the UCC; the entire state must do so on January 1, 2007.

Regardless of the location, however, it remains the State's commitment to rebuild safer

and stronger communities, so all homeowner assistance provided by The Road Home

will be contingent upon enforcement of the code on homes built with program funds.

The state has high standards for energy efficiency in buildings. The State Uniform

Construction Code includes a provision requiring energy saving construction provisions.

Act 12 specifically references the provisions of the International Residential Code which

give direction regarding energy efficiency.

34

Where it is cost effective and improves the quality and sustainability of housing

construction under the programs of this Action Plan Amendment, the State will

encourage mold resistant construction, including modern methods, devices, materials,

and techniques as directed by the State Uniform Construction Code.

RS 51:911.22 and RS 51:911.21 of the Louisiana Revised Statutes contain standards

relative to manufactured housing construction and installation.

Louisiana has adopted HUD standards under the National Manufactured Housing

Construction and Safety Standards Act of 1974, as amended.

Where it is cost effective to do so, the programs in this Action Plan Amendment will

emphasize the quality and sustainability of housing construction, adhering to

sustainable construction techniques emphasized by the federal government. These

federal standards for sustainable construction techniques include:

Optimizing site potential, including in ways that strengthen neighborhoods,

promote economic opportunity, and improve transportation;

Protecting and conserving natural resources, including water, materials, and the

atmosphere;

Expanding renewable energy consumption, and ultimately create net energy;

Effectively and efficiently using materials, and ultimately recover materials for use

in new products and services;

Providing a safe, healthy, and productive built environment for inhabitants and

users;

Reducing facility life-cycle costs and optimizing operations and maintenance

costs; and

Using green products and services.

9.5 Monitoring

The OCD/DOA and the LRA will hire additional employees to carry out the

administrative functions associated with the implementation and monitoring of the

housing programs. The OCD has the staff expertise to train additional employees on

the federal and state regulations governing the CDBG program. In addition, the State

has contracted with ICF Consulting to provide additional training to staff, contractors,

counselors, etc. The LRA has a mandate from the Governor and Louisiana Legislature

to assure the coordinated use of resources toward the recovery and to support the most

efficient and effective use of such resources. The OCD and the LRA will work together

to achieve this goal.

The State has a monitoring plan for the regular CDBG program and will develop a

monitoring guide for staff and contractors for each housing program. The plan will be

revised somewhat to accommodate the waivers given to the State and other provisions

cited in the legislation. The State has contracted with ICF to assist in the development

35

of a monitoring plan for all housing related programs. Particular attention will be paid to

ensuring that the use of funds are disaster related and that funding allocated will not

duplicate other benefits. The State will ensure through its design of programs,

application process, monitoring of recipients, and oversight by the LRA Board's Audit

Committee, that recipients are not receiving duplication of benefits and that funds are

not used for projects or activities that are reimbursable by or for which funds have been

made available by FEMA or by the Army Corps of Engineers and are abiding by state

and federal regulations. The State, drawing upon the resources of the LRA and under

its guidance, will coordinate with FEMA, the Army Corps of Engineers, insurance

companies, and other entities during the application process to ensure there is no

duplication of benefits. Recipients will be asked to sign a waiver of their privacy rights

so that the State can obtain the appropriate information from FEMA and all other federal

agencies.

The State shall hire an independent firm to assist the State in its efforts to achieve the

community benefit requirements of the U. S. Department of Housing and Urban

Development and in verifying that programs are meeting their required targets including

the provisions of Section 3. The firm shall report to OCD and LRA on progress towards

meeting the community benefit requirements. The firm shall also provide community

outreach to low and moderate income citizens to apprise them of the recovery

assistance programs available to them including but not limited to housing programs

and the benefits of the Section 3 provisions.

The State is in the process of developing a Request for Proposal to provide program

management services for the homeowner and rental programs detailed in this Action

Plan amendment. The proposal will seek the best available management firm to assist

in the implementation of these programs. The State will have staff assigned to monitor

the services being provided under the contract.

9.6 Mitigation of Fraud, Waste and Mismanagement

The State has a number of processes and procedures in place to avoid fraud, abuse

and mismanagement. The Legislative Auditor serves as the watchdog of public

spending, overseeing more than 3,500 audits of state and local governments and their

related quasi-public enterprises. Conducting independent financial and performance

audits of the State's agencies, colleges, and universities, auditors find ways to improve

government and identify critical issues to protect public resources and tighten

government control systems. When necessary, they follow up on allegations of fraud,

waste, or abuse. The Legislative Auditor will perform an annual audit of the DOA in

accordance with A-133.

In addition, the State has an established Office of the Inspector General. The office's

mission is to help prevent waste, mismanagement, abuse, fraud and corruption in the

executive branch of state government without regard to partisan politics, allegiances,

status, or influence. The Inspector General is appointed by the Governor.

36

The LRA Board has established an Audit Committee which, in conjunction with its LRA

staff, is charged with ensuring that the work of the recovery is conducted in a manner

consistent with the highest ethical standards. Throughout the recovery, the LRA Audit

Committee and staff will receive and review reports from all governmental entities

working to detect, prevent, and eliminate instances of fraud and abuse. It will serve as

the body to bring together multiple audit and oversight groups to provide an

independent review of the audit efforts themselves.

The Office of Finance and Support Services (OFSS), a section of the DOA, has

established clear designation of responsibilities in order to ensure separation of duties.

This separation of duties, along with other established operational policies and

procedures, provides assurance that fraud cannot be accomplished without collusion

among employees in separate areas.

The OFSS is responsible for payments, federal draw down requests, and state and

federal financial reporting. The OCD is responsible for the day to day administration of

the CDBG program. Their staff reviews all requests for payment and accompanying

invoices to ensure costs are reasonable and within the scope of the activity funded.

Two signatures are required on a request for payment prior to being sent to OFSS for

payment. All payment requests are reviewed for proper authorized signatures prior to

input into the financial system for payment. One employee actually inputs the properly

authorized payment request into the financial system and the request must be approved

in the system by the payment unit supervisor. Through financial system security, no

one person can both input and approve a payment request.

The payment management unit of OFSS provides information to the appropriation

accounting unit so that federal funds can be drawn. The federal draw down request is

reviewed and approved by a supervisor prior to the draw down request being

processed. All funds are electronically transferred to the State Treasurer's central

depository account to be used to liquidate the payables. The financial reporting of the

expenditure and revenue activities is prepared by the appropriation accounting unit. All

reports are prepared by one employee and reviewed by the appropriate manager prior

to release of the report/statement.

In addition, the State will hire an internal auditor who will be placed within the OCD to

oversee the internal functions of this office. The auditor will report to the Commissioner

of Administration and will make reports to the LRA Audit Committee as requested.

The State follows the State Procurement Code and all other sub recipients are required

to follow Title 24 Part 84 and Part 85. The monitoring plan outlines the requirements

that must be followed.

Training and technical assistance will be provided to local governments, contractors,

and any other entity responsible for administering activities under this grant.

9.7 Mitigation of Flood Hazards

37

To mitigate flood risk, the LRA approved an allocation of $250 million in hazard

mitigation funding to help parishes prevent damage from future disasters. Following

approval of the Legislature, the Louisiana Recovery Authority (LRA) authorized the use

of $150 million to help parishes prevent damage from future disasters by directing the

Governor's Office of Homeland Security and Emergency Preparedness (GOSHEP) to

distribute the first hazard mitigation funding available after Hurricanes Katrina and Rita

to parish governments.

According to the formula approved by the LRA:

?? $100 million will be dedicated to elevate and acquire severe repetitive loss

properties.

?? $136 million for other cost-effective acquisition or elevation projects, or for

the retrofit of critical facilities.

?? $14 million for mitigation planning and education.

The LRA has passed resolutions tying benefits and funding for communities and

parishes to the adoption of the most up-to-date flood guidance as part of their floodplain

management ordinances. The LRA has said it will only provide HMGP and CDBG

funding in those parishes that adhere to the State's new building codes and adopt and

enforce FEMA's Base Flood Elevation guidance in the construction or reconstruction of

all homes, businesses, and other structures in the aftermath of Hurricanes Katrina and




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Rita

The LRA determined overall priorities for the use of HMGP funds that will serve as a

tool for elevating projects for funding

The LRA also directed GOHSEP to prepare an application for HMGP funds for a fiveyear

hazard mitigation outreach and education campaign aimed at educating Louisiana

citizens, businesses and units of government about the best use of mitigation dollars

About 1,700 homes, or about one-third of the severely and repetitively damaged homes

in America, are in Louisiana. These are structures that have suffered damages of

$1,000 or more on at least four occasions, or have suffered damages of more than 50

percent of their value on two or more occasions.

To access these hazard mitigation funds, parishes will submit proposals to OHSEP. The

funds, which are provided under the Stafford Disaster Relief and Emergency Assistance

Act, require a 25 percent match from parish governments or state agencies. Distribution

of these funds is subject to a formal review process in accordance with the Inspector

General, Legislative Auditor, Commissioner of Administration and State Treasurer, as

has been done for all funds distributed by GOSHEP since Hurricanes Katrina and Rita.

9.8 Encouragement of Energy Efficiency and Sound Environmental Practices

38

The State will encourage energy efficiency through implementation of its new state

housing codes that include provisions for energy efficient repairs and construction.

Further, the State will provide technical assistance to local governments and private and

for profit developers to educate them on sound practices for eradication of mold and use

of mold resistant materials and construction techniques.

9.9 Removal of Barriers to Reconstruction

Through the proposed Housing Assistance Centers the State will encourage expedited

processing of assistance applications, permits for new construction, and constructions

inspection. The staff of the Assistance Centers will provide feedback to the State on

challenges they are encountering that interfere with the repair and production of

housing. Based on the challenges identified, the State will work with local governments

to expedite investments.

39

APPENDICES

40

APPENDIX 1

ACTION PLAN FEEDBACK FORMAT

First Name:

Last Name:

Organization:

Mailing Address:

Street 1

Street 2

City State Zip code

Phone Number:

E-mail Address:

May we contact you if we have questions about your comments? Yes No

Affiliation: Check any of the following that apply. Are you a:

Evacuee___

Homeowner whose property was damaged ___

Rental Property owner whose property was damaged ___

Local government official ___

Real estate industry professional ____

Other _________________________________________

Comments on Owner Occupied Programs:

1. Eligibility of Homeowners to receive assistance

2. Requirements for receiving homeowner assistance

3. Financial benefits for homeowners to repair and rebuild

4. Financial benefits for homeowners who resettle

5. Financial benefits for homeowners who elect to sell their homes and move away

6. Homeowners assistance centers and program administration

7. Please provide any additional comments that you have on the owner occupant program

Comments on Rental Housing Programs

8. Low-Income Housing "Piggyback" rental program

9. Small scale rental repair program

Comments on Homeless and Supportive Service Program

10. Supportive services housing program

41

11. Homeless shelter repair program

Comments on Other Developer Incentives

12. Housing Development Loan Fund

13. Land assembly initiative

14. Flexible Subsidies - Mixed Income

Other

15. Please provide your comments on other aspects of the Action Plan amendment of

concern to you

42

APPENDIX 2

SAMPLE BENEFIT CALCULATIONS

Case 1 - Insured retired couple

An older couple owns a home with a pre-storm value of $153,000. They bought the house for

$50,000 in 1970 and had not increased their insurance coverage. After receiving an insurance

award of $50,000 and a FEMA assistance grant of $10,500, they still have $17,530 in

uninsured damages. What are their options under The Road Home housing plan?

Homeowner Summary

Pre-storm Value: $153,000

Loss to Home: $153,000 x 51% = $78,030

Insurance: $50,000

FEMA Assistance: $10,500

Cost to elevate home to meet FEMA standards: $30,000

Repair or Rebuild

Eligible Road Home Grant Award = $78,030 - $50,000 - $10,500 = $17,530

Hazard mitigation grant = $30,000

Summary of Costs / Losses Summary of benefits

Damage to Home:

Additional Mitigation Costs:

Total

$78,030

$30,000

$108,030

Insurance:

FEMA:

Road Home:

Mitigation:

Total

$50,000

$10,500

$17,530

$30,000

$108,030

Note: Homeowners may be eligible for an affordable loan to cover the gap if there is a difference

between repair costs and the grant they receive.

Relocate/Buyout

If they want to sell the rights to their home and move somewhere else in Louisiana, the state will

pay them up to the amount of their damages, based on the pre-storm value of their home. They

also may be eligible for an affordable loan to cover the gap if there is a difference between repair

costs and the grant they receive. The grant and loan amounts would be the same as under the

"repair/rebuild" model.

Eligible Road Home Grant Award = $78,030 - $50,000 - $10,500 = $17,530

Summary of Costs / Losses Summary of benefits

43

Damage to Home: $78,030

Insurance:

FEMA:

Road Home:

Total

$50,000

$10,500

$17,530

$78,030

Note: If required, hazard mitigation funds will be available at the new location. Total Road

Home assistance, including hazard mitigation funds and loan, cannot exceed $150,000.

Sell

If they wish to move somewhere outside of Louisiana, the state will buy their home for 60

percent of its pre-storm value or the amount of eligible assistance under the repair/rebuild

program, whichever is less.

Seller would receive lesser of:

Pre-storm Value: $153,000 X 60% = $91,800

OR

Eligible Road Home Grant under Repair/Rebuild : $17,530

Summary of Costs / Losses Summary of benefits

Pre-storm value of home

sold: $153,000

Insurance:

FEMA:

Road Home:

Total

$50,000

$10,500

$17,530

$78,030

In this case, the seller who relocates out of state is out the difference of $153,000 - $78,030 =

$74,970. The LRA acknowledges that the sell option is generally the least favorable; however,

the goal of the Road Home program is to encourage our citizens to revitalize our communities

here in Louisiana. A more favorable option financially for the homeowner choosing "Sell" could

be to choose to repair to return the property to its original condition, use the assignability option,

and then sell the property on the open market to a new resident homeowner that will agree to the

covenants of the program.

Case 2 - Uninsured single parent

A single parent who inherited a home with a pre-storm value of $110,000 had a damage loss of

30%. She was uninsured and did not pay premiums over the years like her neighbors. She

received a check from FEMA for $5,200. What are their options under The Road Home housing

plan?

Homeowner Summary

Pre-storm Value: $110,000

Loss to Home: $110,000 x 30% = $33,000

Insurance: $0

FEMA Assistance: $5,200

44

Cost to elevate home to meet FEMA standards: $35,000

Repair or Rebuild

Eligible Road Home Grant Award = ($33,000 - $5,200) x 70% = $19,460

Note that a 30% penalty applies to those who failed to purchase insurance for their homes.

Penalty applies to those without flood insurance in a designated flood plane and those without

hazard insurance that were outside the flood plane.

Hazard mitigation grant = $35,000

Summary of Costs / Losses Summary of benefits

Damage to Home:

Additional Mitigation Costs:

Total

$33,000

$35,000

$68,000

FEMA:

Road Home:

Mitigation:

Total

$5,200

$19,460

$35,000

$59,660

In this case, there remains an uncompensated gap of $8,340 due to the homeowner's lack of

insurance. The loan program is available to provide capital to fill this gap plus additional repair

costs beyond the amount of loss.

Relocate/Buyout

If you want to sell the rights to your home and move somewhere else in Louisiana, the state will

pay you up to the amount of your damages, based on the pre-storm value of your home. You also

may be eligible for an affordable loan to cover the gap if there is a difference between repair

costs and the grant you receive. The grant and loan amounts would be the same as under the

"repair/rebuild" model.

Eligible Road Home Grant Award = ($33,000 - $5,200) x 70% = $19,460

Summary of Costs / Losses Summary of benefits

Damage to Home:

$33,000

FEMA:

Road Home:

Total

$5,200

$19,460

$24,660

If required, hazard mitigation funds will be available at the new location. Total Road Home

assistance, including hazard mitigation funds and loan, cannot exceed $150,000. Generally, for a

person with only 30% damage, the relocate option is much less attractive than the repair

program.

Sell

If they wish to move somewhere outside of Louisiana, the state will buy their home for 60

percent of its pre-storm value or the amount of eligible assistance under the repair/rebuild

program, whichever is less.

45

Seller would receive lesser of:

Pre-storm Value: $110,000 X 60% = $66,000

OR

Eligible Road Home Grant under Repair/Rebuild : $19,460

Summary of Costs / Losses Summary of benefits

Pre-storm value of home

sold:

$110,000

FEMA:

Road Home:

Total

$5,200

$19,460

$24,660

In this case, the seller who relocates out of state is out the difference of $110,000 - $24,660 =

$85,340. The sell program is especially unfavorable to those with only limited damage (in this

case 30%). It is unlikely that anyone that has less than severe damage will take this option. The

LRA acknowledges that the sell option is generally the least favorable; however, the goal of the

Road Home program is to encourage our citizens to revitalize our communities here in

Louisiana. The seller could use the assignability option and use the repair/rebuild program to

return the property to its original condition, and then sell the property on the open market to a

new resident homeowner that will agree to the covenants of the program.

Case 3 - Insured family of four

A two-income family of four with a home with a pre-storm value of $250,000 had a damage loss

of 70%. They received an insurance payment of $150,000 and received a check from FEMA for

$5,200. What are their options under The Road Home housing plan?

Homeowner Summary

Pre-storm Value: $250,000

Loss to Home: $250,000 x 70% = $175,000

Insurance: $150,000

FEMA Assistance: $5,200

Cost to elevate home to meet FEMA standards: $40,000

Repair or Rebuild

Eligible Road Home Grant Award = $175,000 - $150,000 - $5,200 = $19,800

Hazard mitigation grant = $40,000

Summary of Costs / Losses Summary of benefits

Damage to Home:

Additional Mitigation Costs:

Total

$175,000

$40,000

$215,000

Insurance:

FEMA:

Road Home:

Mitigation:

Total

$150,000

$5,200

$19,800

$40,000

$215,000

Note: Homeowners may be eligible for an affordable loan to cover the gap if there is a difference

between repair costs and the grant they receive.

Relocate/Buyout

46

If you want to sell the rights to your home and move somewhere else in Louisiana, the state will

pay you up to the amount of your damages, based on the pre-storm value of your home. You also

may be eligible for an affordable loan to cover the gap if there is a difference between repair

costs and the grant you receive. The grant and loan amounts would be the same as under the

"repair/rebuild" model.

Eligible Road Home Grant Award = $175,000 - $150,000 - $5,200 = $19,800

Summary of Costs / Losses Summary of benefits

Damage to Home:

$175,000

Insurance:

FEMA:

Road Home:

Total

$150,000

$5,200

$19,800

$175,000

If required, hazard mitigation funds will be available at the new location. Total Road Home

assistance, including hazard mitigation funds and loan, cannot exceed $150,000.

Sell

If they wish to move somewhere outside of Louisiana, the state will buy their home for 60

percent of its pre-storm value or the amount of eligible assistance under the repair/rebuild

program,, whichever is less.

Seller would receive lesser of:

Pre-storm Value: $250,000 X 60% = $150,000

OR

Eligible Road Home Grant under Repair/Rebuild : $19,800

Summary of Costs / Losses Summary of benefits

Pre-storm value of home

sold:

$250,000

Insurance:

FEMA:

Road Home:

Total

$150,000

$5,200

$19,800

$175,000

In this case, the seller who relocates out of state is out the difference of $250,000 - $175,000

= $75,000. The LRA acknowledges that the sell option is generally the least favorable; however,

the goal of the Road Home program is to encourage our citizens to revitalize our communities

here in Louisiana. The seller could use the assignability option and use the repair/rebuild

program to return the property to its original condition, and then sell the property on the open

market to a new resident homeowner that will agree to the covenants of the program.

47

APPENDIX 3

ELIGIBLE ACTIVITIES AND NATIONAL OBJECTIVES

The funds used to support activities in this Action Plan are CDBG eligible activities and

will meet one of the three CDBG National Objectives. The Eligible Activities and

National Objectives are:

Eligible Activities Regulatory Citation Statute 42USC5305

Acquisition 570.201(a) Section 105(a) (1)

Homeowner

compensation and

incentives

Pending waiver Pending waiver

New construction Pending waiver Pending waiver

Housing Advisory services

to property owners

570.201(k) Section 105(20)

Rehabilitation 570.202 Section 104(d)

Reconstruction P.l. 104-234

amendments to

Section 105(a)(4) of

42USC5305

Code enforcement 570.202(c) Section 105(a) (3)

Planning, Administration,

and Technical Assistance

570.205 and 570.206 and

570.201(p)

Section 105(12),

105(13), 105(19)

National Objectives

Activities benefiting L/M

persons

570.483 (b)

Activities which aid in the

prevention or elimination

of blight

570.483 (c)

Activities that meet

particular urgency

570.483 (d)



Links...
Louisiana Recovery Authority
www.lra.louisiana.gov/
Louisiana Rebuilds.info, Your first stop on the way home.
www.LouisianaRebuilds.info

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Urban Renovations Inc.



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