Nearly 10 years after Hurricane Katrina struck the Gulf Coast, some regions are still rebuilding. And nearly 10 years after the Federal Emergency Management Agency was accused of mismanaging aid for victims, investigators found the agency is still finding ways to waste taxpayers’ money.
A grant program to help relocate organizations whose buildings have been ravaged by hurricanes is letting recipients keep funds they are not entitled to, according to a report by the Homeland Security Department’s inspector general.
The money helps recipients pay for new buildings. But if they sell their old property, that revenue is supposed to go back to the government to help cover costs.
So if FEMA gives you $50 to put toward buying a new property, and you sell the old property for $200, the government is supposed to get $50 to help offset the money they gave you and you get to keep the other $150.
Instead, investigators said, FEMA is considering the matter closed once the new building is completed — and letting recipients keep any and all money from selling the old property, costing taxpayers $17.8 million in forgone revenue.
The fact that there’s a problem with FEMA’s disaster recovery programs isn’t surprising at all, said Irwin Redlener, the director of the National Center for Disaster Preparedness at Columbia University.
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“The whole process of recovering from large-scale disasters is extraordinarily inaccurate on many, many levels,” he said.
For yet another problem handling recovery aid, FEMA wins this week’s Golden Hammer, a distinction from The Washington Times given to mark examples of waste, fraud or abuse with taxpayer funds.
The nearly $17.8 million investigators identified was from a sample of just 30 projects in Mississippi, which raises the possibility there could be a lot more saved across the entire Gulf Coast area devastated by Katrina.
The IG suggested FEMA re-evaluate its policy and allow the government to recoup expenses no matter when the old property is sold — before or after completion on the new building.
FEMA officials agreed “to determine the most appropriate time in the program grant cycle to end the program income requirement.”
Mr. Redlener said that reworking programs like this shouldn’t stop the aid they provide to devastated regions, and to be cautious when trying to do a “bureaucratic analysis of a very human, emotionally charged challenge,” he said.
Investigators warned that not only is FEMA’s process forfeiting possible revenue, but it could also unintentionally be slowing down the recovery process.
Under the program, FEMA gets money from selling the old facility only until the tenant can move into the new place and FEMA considers the case closed.
So some recipients might be deliberately waiting to sell the old property until after FEMA closes the case — thereby keeping all the proceeds generated by the subsequent sale, the IG said.
The practice could also be contributing to slowing down the recovery process, the IG said. Organizations that delay selling their property means more buildings are sitting empty and unused, and are not sold to businesses that might be able to repair and reopen them.
Investigators presented the example of Catholic Charities Housing, a nonprofit that owned an apartment building for low-income senior citizens. FEMA gave the group a $5.5 million grant to purchase land and cover other costs for a new apartment facility after the original site was damaged by Hurricane Katrina. But the old property is estimated to be worth $5.9 million if sold, meaning the government would get its grant back and the charity would net only $400,000.
Now that FEMA considers that case closed, however, the charity will keep all $5.9 million when it sells the old property. Investigators are concerned that the lost refunds could make it more difficult for FEMA to grant funds next time.
Investigators also noted that as of 2013, the charity still had not sold the old property, even though it is near several hotels and casinos, who may be interested in buying the space.
If sold, “the property could have generated approximately $700,000 annually in tax revenue,” the IG said, noting that this was “potentially taking away needed revenue for a recovering community.”
Mr. Redlener said rebuilding of devastated towns has been slow.
“The endpoint, which is to get people back in homes and in communities that have been recovered, is just not happening at a rate or a level of efficiency that the public would expect,” he said.
• Phillip Swarts can be reached at pswarts@washingtontimes.com.
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