$1 billion waste cited in Katrina housing crisis

WASHINGTON – Nearly eight months after Hurricane Katrina triggered the nation’s largest housing crisis since World War II, a hastily improvised $10 billion effort by the federal government produced vast sums of waste and misspent funds, an array of government audits and outside analysts has concluded.

As the Federal Emergency Management Agency wraps up the initial phase of its temporary housing program – ending reliance on cruise ships and hotels for people sent fleeing by the Aug. 29 storm – the toll of false starts and missed opportunities appears likely to top $1 billion and perhaps much more, according to a series of studies and Department of Homeland Security reports, including one due for release today.

The government’s costliest initiative – $6.4 billion allocated to place storm survivors in temporary trailers and mobile homes – has ground to a halt around New Orleans this week, in part because of widespread racial and class tensions. Residents of surrounding localities have refused to accept the makeshift communities.

Only 71 percent of the 141,000 trailers that FEMA estimates are needed are being occupied.

Meanwhile, the trailer program is consuming more than 60 percent of the funds FEMA is spending on housing aid – even though it benefits about 10 percent of the approximately 1 million households getting help, according to agency data and the Brookings Institution, which tracks recovery progress.

By contrast, a rental assistance program is serving 800,000 families, or 80 percent of households, at about one-third the total cost, or more than $3 billion. It was dramatically expanded four weeks after the storm – a sluggish start, critics said – after intense pressure from Congress and others.

In a recent White House report, Frances Fragos Townsend, President Bush’s homeland security and counterterrorism adviser, reserved some of the toughest criticism for FEMA’s mass-trailer initiative. She said it “foundered due to inadequate planning and poor coordination” and recommended the Department of Housing and Urban Development take over from Homeland Security in future disasters.