Lawsuit Claims Discrimination in Katrina Recovery

A group of civil rights attorneys filed a federal lawsuit claiming racial discrimination by the Louisiana Road Home program, an already troubled $10.3 billion effort designed to help Hurricane Katrina victims rebuild their storm-damaged homes.

The lawsuit argues that it was unfair for the program to base grant amounts on pre-storm market value, as opposed to actual rebuilding costs after the 2005 storm.

It claims as many as 20,000 African-American homeowners received diminished grants because the value of a three-bedroom home in a mostly black neighborhood like the Lower 9th Ward fetches thousands less on the market than a home of the same size in mostly white areas. Yet, the rebuilding costs are similar.

“HUD allowed a formula that is biased and threatens to undermine the recovery efforts of African-American homeowners,” said Shanna L. Smith, president and CEO of the National Fair Housing Alliance, one of three groups that has sued seeking class-action status. “It failed to take into account the legacy of racial discrimination in the housing market, which has resulted in systematically lower values for homes in communities of color.”

The lawsuit seeks a recalculation of awards based upon actual rebuilding amounts, an adjustment that plaintiffs acknowledge could cost U.S. taxpayers another $1 billion for the federally funded program.

A Louisiana Road Home spokesmen said the program has given additional awards to 49,824 applicants earning less than 80 percent of the area median income. Those additional awards averaged $26,874, spokesman Darin Mann wrote in an e-mail.

“When the Road Home program was designed, the state added an additional compensation grant to assist low-income homeowners who may have had low pre-storm values. The Road Home program does not discriminate,” Mann wrote.

According to program statistics, $7.3 billion in aid has been disbursed through average awards of $61,344 since its creation in 2006. The maximum award for applicants, even after an additional compensation grant, is $150,000. About 120,000 people have received grants so far, but as many as 35,000 continue to wait in a program that has been plagued with errors and bureaucratic delays.

Many applicants have decided to rebuild only portions of their home with the grant or seek other sources of funding to complete the job. Others have built less-expensive homes.

Matthew Colangelo of the NAACP defense fund, which is also a plaintiff, said the additional compensation doesn’t eliminate racial disparities because the formula is flawed to begin with. The five Katrina victims who are part of the suit remain tens of thousands of dollars short of what is needed to rebuild, he said.

Isabel Medina, a professor at the Loyola University New Orleans College of Law who has specialized in civil rights and immigration cases, said the plaintiffs do not have to prove that discrimination was intentional, only that the program had a statistically averse affect on minorities.

HUD and the state, Medina said, can argue that there were no practical alternatives available other then using pre-storm value estimates. She said they can also argue that the unprecedented nature of the Road Home, created on the fly and the largest single housing program in U.S. history, makes it exempt from the 1960s-era housing discrimination acts in which the suit is based.