Turf Wars in the Delta
Plotting a future for the new New Orleans isn't just about urban design. Try money--and politics
The White House announcement spurred an intense behind-the-scenes lobbying effort by the Louisiana delegation and a phalanx of bankers and mortgage lenders. The Mortgage Bankers Association has argued that without a mechanism to buy and clean up as many as 200,000 devastated properties--many of which contain contaminants from the flood--the housing market will have little value. If homeowners begin defaulting on their loans, mortgage companies may choose not to foreclose rather than to take on the risk of absorbing polluted or worthless property. "Our guess is that many of these properties will simply be abandoned," says Kurt Pfotenhauer of the association. If that happens, they could remain in a state of legal limbo for years, with local municipalities eventually seizing properties for sale or demolition. As one congressional aide put it, without the Baker bill or something like it, "you'd have ruins. Just like Greece."
Last week, the White House switched course. After a series of meetings with Louisiana leaders, Powell announced that the administration would target $4.2 billion of the new $19.8 billion request toward additional block grants for Louisiana that can be used to repair housing. Gov. Kathleen Babineaux Blanco, previously the most vocal of White House critics, took the microphone to give "a special thank you to the president." Theoretically, the state may now have $12.4 billion to direct toward housing: the earlier $6.2 billion block grant, the new $4.2 billion, and about $2 billion in hazard mitigation funds. Officials calculate they can offer homeowners as much as $150,000, minus insurance payouts, to rebuild or remodel devastated houses.
The money won't cover everything included in the Baker bill, notably billions of dollars' worth of commercial property. And the new $4.2 billion is still just a request to Congress, which has been skeptical of everything from New Orleans's geographical viability to Louisiana's long history of political corruption. So it's no sure thing. "The view of most members of Congress,"Baker says, "is 'We've fixed the Louisiana problem.'"
Making plans. If Congress ultimately approves the extra $4.2 billion, state officials hope the pool of money can be used to create its own minirecovery corporation that would provide homeowners with the option of a buyout or funds to elevate homes to new FEMA levels. "This money is going to be directed straight to our citizenry," Blanco said. In the meantime, though, Louisiana is hatching plans for how to best leverage the $6.2 billion it already has in hand. An idea offered by Nagin would use the $6.2 billion as a first phase to the rebuilding process. The cash would target homes across the region that flooded with at least 2 feet of water, offering owners buyouts at 100 percent of their prestorm value (minus insurance payments) or a grant to cover repairs. Owners of less damaged homes, rental units, and small businesses would be left out. If the extra $4.2 billion is blessed by Congress, Nagin says, some of it would flow to less severely damaged homes and rental units.
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