Over the years, Congress has provided several  mechanisms for disaster assistance, including HUD’s CDBG program  funds for recovery. Federal Assistance for Permanent Housing after the 2005 Storms Included Grants, Loans, and Tax Incentives, and States Designed Programs to Award the Majority of This Assistance

After Hurricanes Katrina and Rita, federal assistance for the repair or  replacement of permanent housing was made available to homeowners  and rental property owners in three forms: grants, loans, and tax  incentives. State agencies were responsible for administering two of the three tax  incentive programs that we reviewed. States Created New Programs to Deliver CDBG Funds to Homeowners and Rental Property Owners and Used Their Discretion in Prioritizing Beneficiaries and Designing Programs

Congress provided states broad discretion and flexibility in deciding how  to allocate CDBG funds and for what purposes. Federal Disaster Housing Assistance Addressed the Repair and Replacement Needs of More Homeowner Units than Rental Units, and Progress in Completing Rental Units Has Been Limited

Federal programs we reviewed addressed the repair and replacement  needs of more homeowner units than rental units. In both states, more  homeowner units were damaged than rental units, but the proportional  damage to the rental stock was generally greater. The difference in the level of assistance for homeowner and  rental units was largely due to states’ decisions to allocate most of their  CDBG funds to programs for homeowners. Specifically, federal  programs provided assistance to about 303,000 homeowner units  compared to over 43,000 rental units. When the estimated number of funded units is compared to the estimated  number of damaged units in Louisiana and Mississippi, we found that  federal programs funded about 62 percent of the estimated number of the  damaged homeowner units and about 18 percent of the estimated number  of damaged rental units in both states combined (see fig. These challenges have contributed to  the slow pace of recovery in the Gulf Coast region. 8). Without specific direction on how to  better target disaster-related CDBG funds for the redevelopment of  homeowner and rental units after future disasters, states’ allocation of  assistance to homeowners and rental property owners may again result in  significant differences in the level of assistance provided. Appendix I: Objectives, Scope, and Methodology

Our objectives were to (1) describe how federal disaster-related assistance  for permanent housing has been provided to homeowners and rental  property owners affected by the 2005 Gulf Coast hurricanes; (2) evaluate  the extent to which federally funded programs responded to the needs of  homeowners and rental property owners in repairing or replacing units  damaged by these hurricanes; and (3) describe the challenges that  homeowners and rental property owners have faced in applying for and  using federal assistance, and potential options for addressing these  challenges. Mississippi allocated $1.96 billion for this  program.
Why GAO Did This Study

In response to the 2005 Gulf Coast hurricanes, Congress provided about $130 billion in disaster recovery assistance, including assistance for permanent housing. Congress has expressed an interest in how this assistance has been allocated to homeowners and rental property owners, particularly for state-administered programs. GAO's objectives were to review (1) how federal disaster-related assistance for permanent housing has been provided to homeowners and rental property owners, (2) the extent to which federally funded programs have responded to the needs of homeowners and rental property owners, and (3) the challenges that homeowners and rental property owners have faced in applying for and using federal assistance, and potential options for addressing these challenges. To address these objectives, GAO analyzed documentation for key programs and program data, and interviewed federal, state, and local officials regarding the challenges associated with these programs.

What GAO Found

Federal post-disaster assistance for permanent housing was made available to homeowners and rental property owners following the 2005 Gulf Coast hurricanes through grants, loans, and tax incentives. State agencies were largely responsible for administering the programs that delivered most of the assistance, including the Community Development Block Grant (CDBG) program, the most widely used source of federal funds. Congress provided states with broad flexibility in their use of CDBG funds. Federal programs GAO reviewed addressed the repair and replacement needs of more homeowner units than rental units. In both Louisiana and Mississippi, more homeowner units were damaged than rental units, but the proportional damage to the rental stock was generally greater. Programs GAO reviewed provided about $13 billion in assistance for the repair and replacement of about 303,000 homeowner units, and about $1.8 billion for over 43,000 rental units. When the estimated number of assisted units is compared to the estimated number of damaged units, 62 percent of damaged homeowner units and 18 percent of damaged rental units were assisted. The difference in the level of assistance for homeowner and rental units was largely due to states' decisions to award the majority of their CDBG funds to programs for homeowners. When attempting to use the programs GAO reviewed, both homeowners and rental property owners encountered delays in funding availability and other challenges, which have likely contributed to the slow pace of recovery in some areas and fewer affordable units for renters. GAO and others have previously recommended options to minimize these challenges. However, without specific direction on how to better target disaster-related CDBG funds for the redevelopment of homeowner and rental units after future disasters, states' allocation of assistance to homeowners and rental property owners may again result in significant differences in the level of assistance provided.