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WebMemo #866 on Smart Growth

September 28, 2005

After Weeks of Confusion, the Right Course for Evacuee Housing Assistance

By

Since the confused start of the post-Katrina rescue and relief effort, the federal government has provided mixed signals on how it intends to provide housing assistance to the hundreds of thousands of displaced Gulf Coast residents. Temporarily sheltered in sports arenas, convention centers, armories, and church basements in locations far from their homes, most of the aid-dependent evacuees lacked the financial resources and mobility to facilitate their own rescue and relief. With the region's displaced poor temporarily secured in cavernous public facilities, the next stage of the housing assistance effort is to move them to more private and home-like accommodations until they are able to return to their neighborhoods and rebuild their lives. How to do this, however, has been the subject of intense debate over the past three weeks, and at times the debate has taken a troubling coercive turn, as some try to limit assistance to require the displaced poor to return to their communities, whether they want to or not.

 

The False Promise of Trailer Parks

In the first days of the recovery effort, Federal Emergency Management Agency (FEMA) officials talked glowingly about a housing relief effort that relied upon the acquisition of tens of thousands of movable living units that would be shipped to affected areas, much as was done in the aftermath of several past disasters, most recently Florida's Hurricane Charlie in 2004. In the days following Katrina's sweep through the Southeast, FEMA leased  three cruise ships for a period of six months, at total cost of $236 million, and is reported to have purchased hundreds of costly recreational vehicles and thousands of mobile homes and trailers. As quickly became obvious, these physical units would have to be delivered, one at a time, over long distances; once in place, they require the services of a plumber and an electrician to connectto public utilities, many of which have yet to be restored in the damaged areas. As a result, eligible households would have to wait for long periods of time for housing assistance.

 

A Better Way to Help

A broad coalition of public policy organizations, ranging from the Heritage Foundation and Hudson Institute on one side to the Brookings Institution and the Center for Budget and Policy Priorities on the other, criticized the Administration for its reliance on costly and unattractive physical units that would be crowded together in remote locations. They instead urged the government to use an existing federal housing program operated by the Department of Housing and Urban Development (HUD): housing rent vouchers and certificates. Rent certificates were used in California in the aftermath of the 1994 Northridge Earthquake.

 

Created in the early 1970s as a substitute for the expensive and troubled public housing program, HUD rent certificates are now the leading form of housing assistance that the federal government provides to low income households. Operating much like food stamps, a housing certificate possesses the value of the community's "fair market rent" and allows a family holding one to use it to rent the type of apartment that best suits its needs in the neighborhood of its choice, subject to an upper limit on cost that varies from community to community based on the cost of living. At present, the national rental vacancy rate is just over 10 percent-near the highest in history and the vacancy rate in the South is even higher-reflecting a record number of vacant rental units across the country. According to the U.S. Bureau of the Census, 44 percent of these vacant units are being offered for $599 or less per month, a sum certainly below the cost of acquiring and disposing of tens of thousands of mobile homes.[1] Professor Edward Olson of the University of Virginia, one of the country's leading housing experts, notes that there are 1.1 million vacant rental units in the South that rent for less than $700 per month.[2]

 

With rent vouchers, the relief effort can use the hundreds of thousands of vacant units in the region to provide attractive and cost-effective temporary shelter to those whom Katrina displaced. Importantly, rent vouchers will allow the evacuees to remain in the social and economic mainstream-in contrast to what would confront them if relocated to trailers parked in remote, isolated rural areas . With vouchers, evacuees will be able to live in real neighborhoods with nearby schools, jobs, stores, medical facilities and transportation. And when their former communities are ready for their return, the rent voucher can easily be canceled with no further financial obligation on the part of the government.

 

The Federal Government Vacillates

In response to the criticism of its initial proposal, the federal government announced that vouchers would become the main avenue of housing assistance for evacuees and that the physical units already acquired would be used to house relief and reconstruction workers. In his September 15 address to the Nation from Jackson Square in New Orleans, President Bush made note of this change in policy and stated, "We're providing direct assistance to evacuees that allows them to rent apartments." As part of the voucher plan, the Houston Housing Authority provided temporary vouchers for 10,000 apartment units under the city's Katrina Housing Task Force. As of September 19, 9,000 evacuees in the Houston area had signed up for the rental assistance.[3]

 

Despite the President's promised shift from mobile units to rent vouchers, FEMA continued to insist that, with the exception of Houston, the housing relief strategy would rely on mobile homes, trailers, and RVs. On September 17, two days after the President's speech, FEMA reported that it had placed more that 1,300 trailers in 13 Alabama state parks.[4] And according to an Associated Press story, on September 19-four days after the President's promised policy shift-FEMA spokesperson Nicol Andrews said that "at least 30,000 travel trailers would be ready in Louisiana by October 18, with another 170,000 to be installed soon after."[5] On September 20, FEMA's detailed housing resource inventory for the region listed no vouchers or rental assistance beyond the 9,000 to 10,000 vouchers in Houston.[6]

 

Coercing the Poor to Return Home

Despite the severe social and cost disadvantages inherent in a housing relief program based on scores of trailer parks established in remote locations, FEMA appeared determined to implement a strategy that would compel low-income evacuees to accept housing aid only within their home states. In part, this strategy may stem from concerns that many of those receiving assistance may not choose to return to New Orleans or the other damaged communities along the Gulf Coast unless coerced to do so.

 

As press reports have noted and at least one poll has confirmed, many of the low income evacuees now lodged in other metropolitan areas have become attached to their new communities and desire to start over in them, rather than return to the Gulf Coast. Perhaps reflecting this concern and fearing a permanent loss of constituents and voters, Louisiana's congressional delegation has reportedly attempted to alter legislation related to federal relief efforts to limit some assistance to only the displaced who remain in their home state or return from an out-of-state shelter. On the issue of providing a tax credit to help the displaced find employment, a spokesman for Rep. William Jefferson (D-LA) explained, "My boss sees this as less a matter of individual relief than part of an economic revival package to repopulate the city." More bluntly, Rep. Jim McCrery (R-LA) said, "If evacuees decide they want to stay in Houston, Texas, why should we pay an employer to give them a job when we need people back in New Orleans?"[7]     

 

Obviously, giving evacuees access to housing vouchers that can be used in any metropolitan area in the nation will increase the likelihood that many will chose not to return. With vouchers, they will have access to better housing than they had in the slums of New Orleans and will have the choice to remain in communities where they can improve their standard of living and quality of life. Compared to the depressed living conditions and low wage jobs that characterized their life in New Orleans, the likelihood of better job opportunities in Houston, San Antonio, and Washington, D.C., to name just a few of the cities providing shelter, is a compelling choice and will deter many from ever returning to the Gulf Coast.

 

On September 23, the White House attempted once again to clarify its views on housing assistance, again announcing that rental assistance such as vouchers and certificates will take the lead. Despite several weeks of fits and starts, it looks as if FEMA and the White House have finally conceded the issue and enlisted the assistance of HUD to help in the provision of $625 million in housing assistance-much of it through rent vouchers-to those displaced by the storm. This latest effort began on September 24 and those eligible for aid will receive $2,358 for three months rent in the apartment of their choice.[8] It remains to be seen, however, whether a resistant, still enamored of remote trailer parks, FEMA ultimately goes along with this.

 

The Cost of Doing the Wrong Thing

Settling this issue in favor of a voucher-based housing assistance program will have profoundly important implications for the future of the relief effort and for the well-being of low-income households who will need some form of housing assistance over the coming months. Notwithstanding New Orleans' Mayor Ray Nagin's optimism, it will be a long time before the city is able to offer jobs and housing to all who once lived there. With much of the damage to the housing stock concentrated in low-income communities, many of the displaced have nothing to move back to. And because many of the displaced poor were renters, reconstruction efforts may not accommodate the interests of the city's displaced poor renters.

 

If the displaced poor are housed in remote trailer parks and remain wholly dependent upon federal government support for food, housing, education, and health care for the full time that it takes to rebuild New Orleans, these facilities will become places of festering unhappiness. They will no doubt come to symbolize the failure of the relief effort, just as they have in recent weeks with some 1994 Charlie evacuees still living in trailers. While such places were once labeled "Hoovervilles," those now being organized by FEMA would likely take the name of the current President.

 

The result would be a new federal commitment to construct public housing in New Orleans and other wrecked cities as quickly as possible. There would be a mad rush to return isolated evacuees to troubled cities that would offer the poor even fewer economic and educational opportunities than before Katrina. Despite the federal government's efforts since the early 1970s to extract itself from the failed public housing program, and the sordid history of corruption and incompetence that has characterized the New Orleans Public Housing Authority, desperate politicians facing uncertain election prospects in November 2006 will be falling all over each other to do the wrong thing. And then expect the media to pile on about the failure of the federal government to create jobs for those coerced to return to a city still on life support.

 

Lessons Learned

While the government made the right choice in the end (unless FEMA is more intransigent than it appears at the moment), it took more than three weeks for that to happen. It should not take a national catastrophe and public criticism to induce that outcome. As has been apparent, the Katrina relief efforts of all levels of government left much to be desired in the first few weeks, but it is reassuring to see that the appropriate measures and policies are being implemented, at least in the area of housing assistance.

 

Once the current emergency is under control and the federal government can consider how to restructure FEMA, one potential reform would be to team task-specific FEMA staff with those in related federal agencies to determine in advance the federal response to a variety of different emergency scenarios and how the full resources and talents of the federal government can be applied to any relief efforts. For example, HUD gave up on providing physical housing units in the 1970s and shifted its efforts to vouchers. Had HUD staff been more closely involved in FEMA planning, the cost and delay of relearning 50 years of lessons could have been avoided.

 

There are many other aspects of the relief and rebuilding effort in which FEMA will be involved. Hopefully, the lessons learned from its several false starts in housing will encourage it to seek out the advice and counsel of others in the federal government, the private sector, and the academic community before committing itself to specific courses of action.

 

Ronald D. Utt, Ph.D., is Herbert and Joyce Morgan Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.



[1]See U.S. Census Bureau, "Housing Vacancies and Homeownership - Second Quarter 2005: Table 1," July 28, 2005, at   http://www.census.gov/hhes/www/
housing/hvs/qtr205/q205tab1.html
.

[2] Spencer Hsu and Ceci Connolly, "Housing the Displaced Is Full of Obstacles," The Washington Post, September 23, 2005, p. A1.

[3] Lori Rodriguez, "Tireless effort to place the displaced," The Houston Chronicle, September 19, 2005.

[4]"FEMA Notifying Evacuees of Housing Options Available in State Parks, Ft. McClellan," FEMA Press Release, September 17, 2005.

[5] Bill Poovey, "Housing ordered by FEMA", Associated Press, September 24, 2005.

[6] Spencer Hsu and Ceci Connolly, "Housing the Displaced Is Full of Obstacles," The Washington Post, September 23, 2005, p. A1.

[7] David Rogers, "Storm Relief Bill Could Fuel Battle Over Aid Policy," The Wall Street Journal, September 17, 2005, p. A6.

[8] "FEMA Distributes Almost $625 million in Expedited Housing Assistance in First Two Days," FEMA News, September 26, 2005.

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