More than $872M in Federal Katrina Aid Remains Unspent in Mississippi

Eight years after Hurricane Katrina slammed the Gulf Coast, Mississippi still hasn’t spent almost $1 billion in federal money dedicated to recovery from the storm.

The remaining $872 million is part of $5.5 billion Congress gave the state to rebound from Katrina, which struck in August 2005, killed 238 people in Mississippi and caused tens of billions of dollars in damage, most heavily in coastal counties.

More than half of the unspent money is tied up in a hotly debated plan to expand the state-owned Port of Gulfport, and millions more are allocated for projects that have yet to materialize.

Critics also complain that some projects are far from the Katrina strike zone and don’t seem to have a direct connection to recovery from the hurricane, while others have failed to take root or are not meeting promises of creating jobs.

One of the projects – a parking garage in Starkville near the Mississippi State University football stadium – is more than 200 miles from Katrina’s landfall.

Ashley Edwards, director of the state’s Office of Recovery, said the pace of spending has been partly due to difficulty satisfying federal requirements. Some funding wasn’t released to the state until recently, Edwards said, but state officials said they plan to complete most work within the next two years.

The money from the Department of Housing and Urban Development must be directed toward projects that meet certain criteria. For example, companies or government entities getting economic development money must agree to create certain numbers of jobs, with at least half of them to be offered to low or moderate-income people.

But Reilly Morse, a lawyer for the Mississippi Center for Justice who has fought the state’s spending priorities, questioned why Mississippi hasn’t been able to find uses for all of the money.

“For a state that’s got economic development challenges, a state that’s got a difficult unemployment rate, it’s surprising,” he said.

The decision to allot more than half of the HUD money to job-creation was made by former Gov. Haley Barbour, who was in office when Katrina struck. The state could reallocate money with HUD’s approval, but has resisted changes.

Neighboring Louisiana budgeted less than 3 percent of its money for economic development, spending almost all of it on housing and infrastructure.

As of March 31, Louisiana had spent about 91 percent of the $10.5 billion it received under the program, according to reports it submitted to HUD.

Morse had campaigned to have more of the money diverted to help Mississippians repair houses. Under national criticism, Mississippi shifted about $164 million into a home repair program that’s still ongoing.

One of the most contentious projects funded with the money has been the plan to expand the port of Gulfport.

As the project dragged and job creation lagged, current Gov. Phil Bryant called for a re-evaluation of port plans in 2012. Raising the port’s elevation to 25 feet to thwart storm surge was scrapped, and the port lowered its cargo target from 3 million containers a year to 1 million containers. Longtime port director Don Allee resigned.

The cost of the project – $581 million with $463 million still to be spent – is still attracting criticism. The port currently averages about 200,000 containers a year, and Gulfport City Councilman Rusty Walker questions Bryant’s goal of expanding capacity to 1 million a year. He doubts that current tenants, such as fruit importers Dole Food Co. and Chiquita Brands International Inc., are going to increase the amount of cargo they move through Gulfport, arguing the port could already handle more traffic than it gets today.

“If they could sell an extra bunch of bananas, do you believe they wouldn’t be doing that now?” Walker said.

Walker wants money shifted from the port to such efforts as repairing storm-damaged sewers.

“It’s time to take the money back,” Walker said.

Port Executive Director Jonathan Daniels, though, said the port needs all the money to meet its goal of creating 1,200 jobs.

“If we don’t complete the project, then essentially we’re sitting here with a big field and very little ability to expand,” he said. “The best way for us not to reach our job goals would be to remove the money.”

Beyond the port, the state set aside $384 million for projects funded by economic development grants. It’s spent $234 million, but still has $150 million to spend.

Of the $283 million allocated so far, $39 million has gone to 10 projects that have yet to yield a job.

Mississippi Development Authority Chief Administrative Officer Manning McPhillips said companies have three years from the end of construction to meet their pledges.

But in some cases, no jobs were ever created.

After Indeck Energy failed to build a wood pellet plant near McComb, Pike County sued the company to reclaim the land. The state spent $475,000 to build a rail spur and move earth.

The state counts Indeck, a hardware distribution center that closed in Meridian and a welding company in Holmes County that took money and hasn’t built a building as its only failures.

But a life insurance sales firm now called One Life America agreed to open a 100-employee call center in Stonewall, south of Meridian. The state spent $600,000 to renovate a former factory. The insurance company closed the call center when the company reorganized.

State House Speaker Pro Tem Greg Snowden, R-Meridian, said the company had trouble hiring workers in the isolated location. He also said the company met all its legal commitments.

Advance Auto Parts took $614,000 for drainage, water and road improvements at its distribution center in Gallman, south of Jackson.

It pledged to create 35 jobs, but has actually cut jobs because of the bad economy, state officials say. They’re now seeking a waiver or an extension from HUD for job creation requirements. Other companies may also get extensions, records show.

Then there is the question of whether some of the projects have anything at all to do with the hurricane recovery.

The state plans to spend $8 million to finance a parking garage for the city of Starkville, home of Mississippi State University’s main campus and more than 200 miles from where Katrina struck.

Part of a hotel-convention center complex planned around a former cotton mill, it’s blocks from Mississippi State’s football stadium. That’s not unlike the condominiums built for University of Alabama football fans in Tuscaloosa using Katrina-related tax breaks and subsidized borrowing.

Like Tuscaloosa, Starkville was part of the presidentially declared disaster zone, and Edwards said spending is appropriate because it helps fuel “a comprehensive recovery.”

While Mississippi funds the Starkville project and can’t seem to find uses for millions in other available funding, some recovery programs in coastal areas still visibly affected by the storm are out of money.

For example, a $3 million forgivable loan program in Hancock County has committed all its funds to local businesses trying to rebuild. Storm surge was at its most extreme in Hancock County, where Katrina made its final landfall.

“We had far more applicants than we had funds,” said Tish Williams, executive director of the Hancock County Chamber of Commerce. “We were the hardest hit and the last to get.”