Road Home Housing Program

Louisiana Recovery Authority

The Road Home Housing Programs
Action Plan Amendment for Disaster Recovery Funds

Kathleen Babineaux Blanco
Governor

Mitch Landrieu
Lieutenant Governor

Jerry Luke LeBlanc
Commissioner of Administration

Dr. Norman Francis
Chairman, LRA Board

Office of Community Development
1201 North Third Street, Suite 7-270
P.O. Box 94095
Baton Rouge, LA 70804-9095
http://www.LouisianaRebuilds.info

TABLE OF CONTENTS

1. Introduction ......................................................................................... 2

2. Assistance to Homeowners................................................................. 5

3. Workforce and Affordable Rental Housing Programs ....................... 17

4. Homeless Housing Programs ........................................................... 25

5. Developer Incentives......................................................................... 26

6. Administration ................................................................................... 29

7. Planning ............................................................................................ 30

8. Technical Assistance ........................................................................ 30

9. Other Requirements.......................................................................... 30

10. Appendix 1 ...................................................................................... 38

11. Appendix 2 ...................................................................................... 40

12. Appendix 3 ...................................................................................... 42

1. Introduction

Hurricane Katrina hit the State of Louisiana on August 29, 2005, and Rita slammed into the state on September 24, 2005. They were the second and third Category 5 hurricanes of the 2005 hurricane season. The storms were deadly and costly to communities throughout the Gulf and particularly destructive to Louisiana. More than 1,100 persons lost their lives in Louisiana; approximately 18,000 businesses were destroyed; roads, schools, public facilities, medical services were washed away; and thousands of people were forced to relocate.

In the wake of the storms an unprecedented number of homes were destroyed or severely damaged.

ƒ: 123,000 homes were destroyed or suffered major damage.
ƒ: 82,000 rental properties were destroyed or suffered major damaged.
ƒ: Housing repair costs are estimated at $32 billion. Some, but not all, of this was insured.
ƒ: Of the rental and owner occupied units that are now uninhabitable, a substantial portion were occupied by low income households.

HR 2863 provided $11.5 billion to the states of Mississippi, Louisiana, Alabama, Florida and Texas through the U.S. Department of Housing and Urban Development's Community Development Block Grant (CDBG) Program. Louisiana received $6.2 billion of those funds. President Bush has asked Congress for an additional $4.2 billion in CDBG for Louisiana, which is pending appropriation, to fund the housing programs described in this Action Plan amendment.

As the target of investment of this supplemental CDBG assistance, Governor Kathleen Babineaux Blanco has prioritized housing redevelopment, infrastructure rehabilitation, and economic development. The CDBG funds are available to the State subject to HUD approval of action plans which describe how the funds will be used. The Louisiana Recovery Authority (LRA) has been charged by the Governor and Louisiana Legislature with statutory responsibility for developing policy and action plans for the CDBG funds. The Louisiana Office of Community Development, the agency that runs the State’s annual CDBG Program, will administer the supplemental CDBG recovery program.

To promote sound short- and long-term recovery planning at the state and local levels that impact land use decisions that reflect the need for responsible flood plain management and growth, the State, through the LRA, is leading community planning efforts in its most affected parishes. Dubbed “Louisiana Speaks”, this effort is a multifaceted planning process to develop a sustainable, long-term vision for South Louisiana in the wake of the destruction caused by Hurricanes Katrina and Rita. The plans developed locally through Louisiana Speaks will be supported by CDBG allocations. The redevelopment of the housing stock funded partially by CDBG as described herein will follow the plans derived through Louisiana Speaks and other local efforts.

This Action Plan amendment describes The Road Home Housing Programs, consisting of four sets of programs for the restoration of Louisiana’s housing stock and its communities: Homeowner Assistance Program, Workforce and Affordable Rental Housing Programs, Homeless Housing Programs, and Developer Incentives. Future Action Plan amendments will describe other aspects of the State’s CDBG recovery program.

**1.1 Goals of The Road Home Housing Programs**

The Road Home Housing Programs have several goals. They will:

ƒ: Repair and rebuild quality housing in neighborhoods that are safe to live in;
ƒ: Restore pre-storm value to homeowners who want to return;
ƒ: Provide affordable rental housing opportunities for displaced residents; and
ƒ: Provide housing for the return of critical workforce.

The Road Home Housing Programs will achieve their goals by ensuring, among other things, that:

ƒ: Neighborhoods are rebuilt pursuant to locally driven plans that emphasize safety and reduce risks in rebuilding;
ƒ: Homes are rebuilt in ways that ensure safer and smarter construction and meet the State’s codes and the latest available FEMA advisory base flood elevations¹;
ƒ: Neighborhoods are rebuilt in a manner that promotes mixed income
communities; and
ƒ: Households with special needs such as the elderly and those with disabilities are provided housing opportunities;

1.2 Basis for Recommendations

The Road Home Housing Programs are based on the best available information on housing needs, housing costs, potential public funding and the ability of the programs to leverage private resources. Funding for The Road Home Housing Programs come from the supplemental appropriation of Community Development Block Grant Program funds and Stafford Act Hazard Mitigation Grant Program Funds.

This Action Plan amendment describes funding for The Road Home programs in two phases: partially funded and fully funded.

The need for assistance among homeowners far exceeds the initial allotment of CDBG funds made in HR 2863. To meet that need and fully fund The Road Home, Louisiana has worked with the Bush Administration to request from Congress an additional $4.2 billion in CDBG resources. In this Action Plan amendment, the program allocations

¹ FEMA Advisory Based Flood Elevations are the first step in developing new required flood elevations for the National Flood Insurance Program. Wherever this document refers to advisory base flood elevations, we mean the most up-to-date flood elevations regulations or guidance from FEMA and the National Flood Insurance Program.

entitled “fully funded” amount to proposed levels of funding in anticipation of the appropriation of an additional $4.2 billion for housing needs.

Partial funding levels are based on CDBG funds currently available to Louisiana. The plan specifically details the allocation of $4.6 billion of the initial $6.2 billion of supplemental CDBG funds to The Road Home.

Subject to further refinement of the program guidelines and structure of operations, following are preliminary estimates of housing program costs:

The Road Home Program Budgets²

Partially Fully Funded

Funded

Assistance to owner-occupants $3,551,600,000 $6,347,400,000

Homeless supports and housing $25,900,000 $25,900,000

Workforce and affordable rental $892,700,000 $1,535,700,000

housing

Developer incentives and code $32,100,000 $32,100,000

enforcement

State administrative costs $79,700,000 $120,900,000

Housing costs in Action Plan #1 $18,000,000 $18,000,000

TOTAL $4,600,000,000 $8,080,000,000

The Road Home will be fully funded with a total of $8.08 billion of CDBG funds based upon damage and demand estimates grounded in the most current FEMA and HUD damage data. Louisiana’s damages exceed that of other states impacted by the hurricanes of 2005 by three to four times, in nearly every category of damages. Working with the Federal Coordinator of the Office of Gulf Coast Rebuilding, the LRA has demonstrated that the cost of recovery based on the damages to owner-occupied properties, rental properties, and other critical infrastructure such as hospitals, schools, un-funded state and local infrastructure repairs, and sewer and water infrastructure will require no less than $12.1 billion. The current supplemental CDBG funding of $6.21 billion, combined with anticipated Hazard Mitigation Grant Program funds available through the Stafford Act, fall short of this total need by $4.2 billion. Without this additional CDBG funding, the State of Louisiana cannot fully fund its housing program for homeowners and renters, to meet the scale of the challenge. President Bush’s commitment to this funding was made in recognition of this need.

The CDBG funds directed to workforce and affordable rental housing will supplement an estimated $1.7 billion in private equity investments derived from Low Income Housing Tax Credits allotted to Louisiana through the federal Gulf Opportunity Zone legislation. In addition, the State will supplement assistance to owner-occupants with an estimated $1.17 billion in housing-related Hazard Mitigation Grant Program funds.

² Budgets are exclusive of FEMA Hazard Mitigation Grant Program funds that may be spent on housing.

The damage from Hurricanes Katrina and Rita disproportionately impacted families with low to moderate incomes. HUD therefore requires that at least fifty percent of the supplemental CDBG dollars allocated to Louisiana for recovery be invested in programs that directly support those families. Accordingly, in both the partially and fully funded housing programs described herein, the great majority of funds will go to low- and moderate-income families.

If federal agencies require changes to the State’s proposed Action Plan amendment or program costs exceed projections and available funding, Louisiana will be required to modify this proposed Action Plan amendment.

2. Assistance to Homeowners³

2.1 Overview of the Homeowner Assistance Program

In the aftermath of Hurricanes Katrina and Rita, an estimated 123,000 owner-occupied homes were destroyed or suffered major damage, according to FEMA. In response to this unprecedented disaster, Louisiana will use $3,551,600,000 of current supplemental CDBG funds and approximately $1.17 billion of Hazard Mitigation funds to help selected owner-occupants repair or rebuild their homes, buy or build replacement homes, or sell unwanted properties so they can be redeveloped or converted to open space. In order to avoid future flood losses, all reconstruction work will meet or exceed the latest available FEMA advisory base flood elevations and meet the legal requirements under the State Uniform Construction Code.

Note that the State will require an additional $4.2 billion of CGBG in order to provide the full proposed assistance to all of the Louisiana homeowners who suffered major or severe damage. President Bush has requested those additional funds from Congress. The budget for owner-occupant assistance following that additional appropriation is anticipated to be $6,347,400,000 in CDBG funds, with additional funds from the State’s Hazard Mitigation Grant Program

The overarching purpose of The Road Home is to rebuild Louisiana’s impacted communities. Devastated communities will be blighted by abandoned homes, clouded land titles, and disinvestments if a large portion of the financial assistance is not directly invested in rebuilding homes or buying replacement homes in the affected areas. Therefore, the most comprehensive financial and technical assistance packages will be made available to those pre-Katrina and Rita homeowners who make the effort and take the risks to move back to play a part in rebuilding Louisiana.

³ For the purpose of this Action Plan amendment homeowner and owner occupant are used interchangeably.

Financial incentives and advisory services will be available for homeowners who wish to:

ƒ: Repair – incentives to promote rehabilitation
ƒ: Rebuild – financial incentives to reconstruct on the same site if repair is infeasible or not economically viable;
ƒ: Buyout/Relocate – purchase of the home by the program in exchange for an agreement to resettle in Louisiana; or
ƒ: Sell – voluntary sale of the home with no requirements to resettle or otherwise remain in the community.

2.2 Eligibility for Homeowner Assistance

To be eligible for the Homeowner Assistance Program:

ƒ: The owner must be able to prove that he or she owned and occupied the property as a primary residence at the time of the Katrina/Rita disasters, prior to August 29, 2005;
ƒ: The home must in be a single-unit or double-unit structure⁴; and
ƒ: The owner must have registered for FEMA Individual Assistance and the home must be categorized by FEMA as having been “destroyed” or having suffered “major” damage. Homeowners who were approved by FEMA for $5,200 or more in FEMA home repair assistance (a component of the Individual Assistance Program) will fall into one of these categories. In certain cases, FEMA may fail to notify a homeowner that the home has been classified as destroyed or suffering major damage, or FEMA has declared a home with such damage ineligible for its home repair assistance program because the home was covered by insurance. These homeowners will still be eligible for assistance, though damage severity that meets the FEMA damage classification at the destroyed and major damage levels will be verified through alternative means.

Applicants must meet all of the above requirements to receive assistance. Homeowners that believe they have suffered major or severe damage, but did not qualify for FEMA assistance will be able to appeal their eligibility for The Road Home. Homeowners who believe they will be eligible for the program are currently encouraged to register with The Road Home registry at www.LouisianaRebuilds.info or by calling 1-888-ROAD-2LA.

During the process of reviewing applications to The Road Home, the LRA shall make available information about the repair, rebuilding and relocation preferences of applicants in order to inform local planning processes. In areas where a high proportion

⁴If the Homeowner Assistance Program is chosen, the full double-unit structure will serve as the basis for calculation of assistance up to the program cap of $150,000. For all other owner-occupied multi-unit structures, if the homeowner chooses the Homeowner Assistance Program, funding of up to $150,000 is available, but is based only on the damages to and value of the unit in which the owner resides. The owner occupant landlord may also choose the Small Rental Property Repair Program instead.

of homeowners are choosing not to invest, state or local authorities may limit access only to Buyout/Relocate and Sell programs.

2.3 Requirements for Receiving Homeowner Assistance

To accomplish the State’s goal to resurrect damaged communities, the LRA proposes to encourage homeowners’ investment of federal recovery funds in Louisiana. To that end, homeowners that make the decision to reinvest in Louisiana will be eligible for the most generous levels of assistance. They will be required to demonstrate that commitment to the State by signing a legally binding covenant described below.

In exchange for financial incentives, homeowners must:

ƒ

Be willing to sign a release so that information given to FEMA can be verified by the Program;

ƒ

Independently from FEMA, agree to verification of their ownership status and the amount of disaster-related damage to the home;

ƒ

Swear to the accuracy and completeness of all information provided to the
Program under penalty of law;

ƒ

Agree in legally binding documents to follow through on certain actions related to a home in exchange for compensation, including but not limited to the following:

o Ensure that the home they occupy meets the legal requirements under the State Uniform Construction Code,⁵ complies with local zoning, and complies with the latest available FEMA guidance for base flood elevations unless exceptions are granted by the LRA based on reasonable alternatives where safety is not minimzed;⁶
o Assure the home will remain owner-occupied for at least three years after the completion of repairs/replacement or new home purchase;
o Maintain residential hazard insurance;
o Maintain flood insurance if the home was previously flooded or is located in a flood zone;
o Agree to subrogate claims for unpaid and outstanding insurance claims back to the Program;
o If relocating, move to another home in Louisiana;
o Ensure mitigation efforts are undertaken, if mitigation can be done to make a home safer and are cost beneficial to undertake, and if the homeowner’s eligible assistance allows funds for such purposes; and
o If selling the property to the State and the home has no historic value or is not salvageable, convey the property as a cleared site, agree in

⁵ A number of communities have not yet adopted or implemented the State Uniform Construction Code. Pursuant to the State’s
commitment to rebuild safer and stronger communities, homeowner assistance provided by The Road Home will be contingent
upon local enforcement of and individual compliance with all legal requirements under the code.
⁶ Federal and state law may require homes in historic districts to meet additional standards.

writing to allow the Army Corps of Engineers or another governmental entity to clear the property, or provide funds from the sale proceeds for demolition and clearance by the acquiring entity.

The above terms and conditions apply to the home that is repaired, rebuilt or purchased using program funds. Homeowners that fail to meet all of these terms and conditions will forfeit the property that is repaired, rebuilt or purchased using program funds and/or be required to repay the financial assistance provided through this program.

2.4 Amounts and Forms of Homeowner Assistance

2.4.1 Maximum Assistance

The maximum financial assistance from all program resources for owner occupants is up to $150,000. The proposed ceiling assumes that:

ƒ: All federal funds currently allocated to and sought for the program will be available, including the additional $4.2 billion that will fully fund The Road Home; and
ƒ: Estimates of likely demand for assistance derived from HUD, FEMA and SBA data are accurate.

The partial funding levels for programs contained herein are based on the current supplemental CDBG appropriation. If sufficient funds are ultimately unavailable to fully fund the proposed program or demand exceeds estimates, the maximum amount of financial assistance per household must be lowered. Because Congress has not yet fully funded The Road Home, this Action Plan amendment proposes to provide an initial installment of assistance to homeowners toward their full assistance of up to $150,000. To provide this installment, a homeowner’s eligible assistance will be calculated under the fully funded program design and then allocated as half of that amount.

It is the intent of the program to provide a homeowner the resources to get into a home, based upon the homeowner’s financial means, needs, and the pre-storm value of the damaged home. Not every homeowner is necessarily entitled to the maximum amount of financial assistance, however, and in many cases The Road Home will not provide 100% of the required resources for repair, rebuilding or resettlement. This is true for many reasons, such as the fact that assistance is capped, and that assistance will be reduced by any insurance payments for damage to the structure of the home, by any FEMA assistance for home repairs or replacement, and by other compensation for the loss.

2.4.2 Financial Incentives to Repair/Rebuild

The program will provide financial incentives for homeowners that repair or rebuild their homes on the same site. Homeowners will receive varying amounts of assistance depending on the condition of their home and the compensation received from other sources.

Homeowners remaining in Louisiana will be eligible for assistance in three tiers: an incentive grant to cover uninsured, uncompensated losses to the home and restore pre-storm value; a hazard mitigation grant, whenever the home can be repaired or rebuilt with cost-effective mitigation measures; and, where a homeowner cannot secure conventional financing, an affordable incentive loan, structured within the homeowner’s financial means, for any gap between the damaged home’s pre-storm value and allowed repair/rebuilding costs.

Pursuant to federal statute and HUD requirements for the CDBG program, homeowner assistance may not duplicate any benefits, derived from any source, that are received by the homeowner as a result of damages incurred during Hurricanes Katrina and Rita. Thus the State must not duplicate insurance of any type, FEMA, or other payments received by the homeowner for structural repairs required for such damages.

An explanation of the calculation of financial assistance under the fully funded Homeowner Asssistance Program follows below. Appendix 2 provides two examples of how hypothetical households might be assisted to repair or rebuild their home.

Homeowners will first calculate their personal Eligible Assistance Amount using the following formula.

Eligible Assistance Amount to Repair/Rebuild equals Lesser of:

• Pre-storm value of the home (times) Percent damage to the home (plus) Eligible Mitigation costs (plus) Gap to meet allowed repair/rebuilding costs

(minus) Insurance (minus) FEMA Repair Payment (minus) any Other financial assistance for repair

• $150,000

Eligible assistance does not represent an entitlement to the homeowner, under any circumstances.

The Eligible Assistance Amount will generally be paid in three tiers.

ƒ The first tier will be an Incentive Grant that is intended to restore the pre-storm value of the property. The Incentive Grant will be made under the conditions attached to the legal instrument described in Section 2.3. The amount is calculated as follows:

Incentive Grant = Lesser of
Eligible Assistance Amount

Pre-Storm Value x Loss Percentage (minus) Insurance, FEMA Repair Payments and Other Financial Assistance for Repair

The State will enlist inspectors, through the private contractor administering the program, to determine the appropriate level of damages to the home. It is the State’s policy that participants in the Homeowner Assistance Program deserve a fair and independent estimate of projection of damages from the storm, regardless of cause of damage. The program also reserves the right to use damage estimates catalogued by FEMA and insurance companies where those estimates are deemed reliable.

To accurately calculate homeowner’s loss, the program must base assistance on a fair and equitable pre-storm valuation of the home. There are several sources of valuation available, each of which has benefits and drawbacks, including fair market values determined through Automated Valuation Methods (AVM) and other alternative methods such as insured value, a recent pre-storm appraisal, or assessed value for property tax purposes. The Louisiana Recovery Authority and Office of Community Development will determine the final method for calculation of pre-storm value in conjunction with the private professional services firm responsible for administering homeowner assistance, when full consideration can be given to the capacity and expertise of the firm and any subcontractors brought on to perform valuations.

While the program must apply a common method for valuation to all homes qualifying for assistance to efficiently address all applications, there will be cases in which the homeowner believes the standard assessment does not accurately reflect the pre-storm value, due to unaccounted structural improvements or other factors. In such cases, homeowners will be able to appeal the valuation by presenting a valid alternative assessment or other evidence. The process and requirements for appeal will be determined in conjunction with the private administrator.

Note that The Road Home is not an entitlement program and cannot go over budget. If costs exceed budgeted projections, grant assistance to homeowners will have to be reduced, and the program would pro-rate benefits to all homeowners.

Finally, for homeowners who did not carry the type of insurance required for the home (for example, those who were living in a flood plain but did not have flood insurance), the Incentive Grant will be reduced by 30%.

ƒ The second tier will consist of mitigation assistance, with funding from either the Hazard Mitigation Grant Program, provided through the federal Stafford Act, or CDBG. These funds will complement CDBG assistance for homes that are in

flood plains or otherwise eligible for FEMA-funded hazard mitigation assistance.

The amount of the hazard mitigation grant will be calculated as follows:

Mitigation Grant = Eligible Mitigation Costs
OR
Eligible Assistance Amount – Incentive Grant

ƒ If additional funds are required to help the homeowner get into a home and funding needs fall within the eligible assistance amount, the third tier will be an Incentive Loan. When conventional financing options exceed homeowners’ financial means under HUD guidelines for the monthly amount a homeowner can afford to pay for housing, and the homeowner demonstrates that they have pursued conventional financing and have been denied, the Incentive Loan will be offered to provide an affordable way for homeowners to return to a home when the Incentive and Mitigation Grants do not meet repair or replacement costs. The Incentive Loan will include an allocation for soft second mortgages repayable on sale of the property. Additionally, it will leverage private capital to create larger pools of affordable loan investment capital through the use of mechanisms such as a loan loss guarantee pool and below market interest rates through rate reduction buy-down features. For those cases where it is necessary to do so, the amount of Incentive Loan will be calculated as follows:

Incentive Loan = Eligible Assistance Amount (minus) Incentive, Mitigation Grants

As in the determination of pre-storm value, the procedures used to determine the reasonable additional costs to repair or rebuild a home will be established in conjunction with the capacity and expertise of the administering contractor.

The State may also offer additional incentives for homeowners who choose to repair or rebuild within the same parish.

For instances in which the sum of remaining pre-storm loans and the Incentive Loan exceed the market value of the home, the program will develop policies to mitigate the impacts of “negative equity” positions on the home and homeowner by adjusting the repayment terms.

In addition, the program shall give recognition and consideration during implementation to homeowners who may have been in a position of negative replacement value prior to the storms. This occurs when a homeowner's pre-storm value would not have sufficiently covered their pre-storm rebuilding costs.

2.4.3 Buyout/Relocate

Homeowners choosing to move elsewhere in Louisiana will be able to sell their homes to the State and receive assistance under the guidelines described for homeowners that rebuild on the same site. Owners choosing this option must meet the same eligibility requirements and agree to the same legally binding actions applicable to those choosing to repair or rebuild. Those requirements are described in Sections 2.2 and 2.3 of this Action Plan amendment. For these buyouts to occur, a lien holder may be asked to write off a portion of the current outstanding principal balances of the loan or other lien, and to give consideration to potential lost equity of the homeowner.

Homeowners who help to shoulder the burden of community recovery by choosing to rebuild within their parish will always be the highest priority of the program. The State may also offer additional incentives for homeowners who choose a buyout but relocate within the same parish.

2.4.4 Sale

Some owner-occupants may choose none of the basic options: to repair, rebuild or relocate in Louisiana. In these instances, the State will compensate the homeowner for 60% of the home’s pre-storm value, less insurance and FEMA repair funds. Sale compensation will not exceed repair or rebuilding costs for the home. For these buyouts to occur, a lien holder may be asked to write off a portion of the current outstanding principal balances of the loan or other lien.

Compensation for Selling Home
With No Other Obligations equals
Lesser Of:

60% of Pre-storm value (minus) insurance (minus) FEMA repair payments (minus) Other repair assistance

Incentive Grant for which they would otherwise be eligible

2.5 Redevelopment of Purchased Property

Properties purchased through The Road Home Homeowner Assistance program will be either redeveloped to be returned to commerce or preserved as green space, in a manner which is consistent with local land use plans and direction. Pursuant to a primary goal of the Homeowner Assistance Program, purchased land will not be left to blight and disrepair. The LRA recognizes two distinct options for assigning responsibility for management of land assets. Land acquisition, maintenance and redevelopment can be managed by a:

State Agency - Assign these properties to a new or existing state agency which will be charged with working in ways consistent with local land use plans and direction, packaging the properties for redevelopment, offering them for redevelopment through competitive bids, and overseeing the redevelopment of the property consistent with local plans. Any proceeds derived through the sale of the property that exceed approved expenses associated with the redevelopment of the property would be returned to the Supplemental CDBG program.
Local redevelopment authority - Transfer specific properties from the state to a local redevelopment agency upon approval by the LRA of the authority’s redevelopment plan that takes into account local land use guidelines. The local authority would package the properties, offer them up for redevelopment through competitive bids, and oversee the redevelopment of the property. Any proceeds derived through the sale of the property that exceed approved expenses associated with the redevelopment of the property would be returned to the Supplemental CDBG program.

For properties that are to become green space as a result of a decision by local authorities, those properties will be transferred to the appropriate local land management agency which will operate and maintain them.

The LRA has endorsed the findings and recommendations of the American Institute of Architects and the American Planning Association planning conference held on behalf of the LRA in November 2005. Consistent with those recommendations, for properties that are acquired by the Homeowner Assistance Program or other land assembly program for redevelopment, the State will insure that 25% of the properties are used for affordable housing according to HUD guidelines for the HOME program.

Whether properties are managed by a state agency or local redevelopment authority, the properties acquired by the Homeowner Assistance Program or other land assembly programs must retain the affordability requirements defined by this program after their transfer. The State should monitor the property to assure the requirements are met and maintained.

The final assignment of redevelopment authority will be resolved during the month of May by the State through ongoing deliberations with the Louisiana Congressional delegation, state legislators, local authorities, and civic leaders.

Under either scenario, the LRA recognizes the potential for a significant return on investment in property redevelopment, a scenario demonstrated with research in a recent report of the Gerson Lehrman Group. The LRA is committed to reinvesting these proceeds in the comprehensive community redevelopment activities already supported by Supplemental CDBG funds allocated through state programs, including The Road Home. The priorities of recycled funds shall include housing restoration, affordable housing for homeowners and renters, infrastructure enhancements, and economic development activities designed to help recreate strong communities which are closely tied to transit, jobs, and public services.

2.6 Treatment of Homeowners with Special Circumstances

Assignability: Subsequent to the launch of The Road Home, the State will allow an owner to sell his or her home on the open market and to assign rights to program assistance to the new buyer. Assigned grants will require the new buyer to carry the same three-year owner-occupancy requirement and other legally binding terms and conditions that govern the repair and rebuild options. The new owner to whom assistance benefits have been assigned will be eligible only for the repair/rebuild option.

Death or Infirmity of Eligible Owner: In the event that a homeowner has died since the time of the storms, an heir must have been placed into legal possession of the property to be eligible for homeowner assistance in place of the deceased owner. If a homeowner is incapacitated due to illness or other infirmity, someone with a legal right to bind that person legally, such as is provided by a power of attorney, is eligible to apply for assistance on behalf of the homeowner.

If a homeowner who has received assistance from The Road Home dies after receiving assistance and signing the required legally binding commitments, the owner-occupancy requirement between the State and the homeowner will remain applicable to the property repaired, rebuilt or acquired using program funds. If the homeowner received a soft second loan as the Incentive Loan, a transfer of the property as a result of death or infirmity will not trigger the repayment of the loan by the legal heir, unless some portion of the succession transaction is a cash transaction for a share of the property.

Owner-Occupants Who Have Already Sold Their Principal Residence: Some homeowners may have chosen to sell their homes prior to launch of the Homeowner Assistance Program. It is the goal of The Road Home to ensure that damaged properties qualifying under the Homeowner Assistance Program do not remain blighted and undeveloped. If the development goals of the program are met for the damaged property, a homeowner that can demonstrate that he or she remains in a loss situation after selling the damaged property to another party may receive assistance under the program to compensate for remaining losses.

Owners Who Have Started or Completed Repairs: Assistance will be provided to owners who have already commenced or completed home repairs or the construction of replacement homes, so long as all the requirements of the Program are met. Policies will be set for discounting assistance amounts for any grants or below-market interest rate loans from government agencies that may have been received by an owner from for these purposes.

Owners Who Have Received Other Assistance: Policies will be set for discounting compensation amounts for any grants or below-market interest rate loans from government agencies that may have been received by an owner for these purposes. Pursuant to federal statute, assistance from The Road Home must be used to repay any loans from the Small Business Administration (SBA) that a homeowner has received for the same losses.

Owners of Manufactured Housing: In order to qualify for homeowner assistance, the owner of a manufactured home must also own the land on which the damaged home was located.

Any homeowner may appeal the decision related to eligibility, damage assessments, amount of assistance and grant offsets made by the program.

2.7 Accounts for Receipt of Funds

To help ensure that Program incentive grants, incentive loans, insurance payments and FEMA household assistance payments provided to homeowners are invested in housing, owners will be encouraged and assisted, and may be required, to open deposit accounts in the owner’s name. The Program will work with financial institutions to set up standard terms for managing such accounts and payouts from them.

2.8 Homeowner Assistance Centers – Process for Receiving Assistance

Louisiana has initiated a Call Center to allow former homeowners to indicate their interest in returning to their neighborhoods and investing in their homes. The Call Center is the first step in what will be an aggressive campaign to solicit applications for the Homeowner Assistance Programs.

To open lines of contact between displaced Louisiana residents and The Road Home, citizens may now register key information about their damaged homes by calling 1-888ROAD-2-LA (888-762-3252; TTY 1-800-566-4224 ) to submit that data to the State's registry, or logging on to a one-stop web portal - www.LouisianaRebuilds.info. This registry pertains only to homes that were occupied by homeowners and damaged by hurricanes Katrina or Rita.

When the program commences, eligible homeowners will be notified by mail, email and/or telephone to the greatest extent possible of the opportunity to apply for assistance. Information about financing programs and counseling services will be posted on public websites as well as provided through other resources such as Assistance Centers that will be established in various locations.

The Program will not publish application forms or detailed descriptions of the process for receiving assistance until the comment period has ended and the State of Louisiana has determined the amount of federal funds that will be available for all recovery programs.

In order to rebuild, most homeowners will have to navigate a maze of obstacles such as negotiating insurance settlements, dealing with mortgage issues, understanding the implications of new flood maps, and dealing with building contractors. Before the amount of program financial compensation can be determined, an owner will have to make decisions on whether to repair their home, replace it on-site, accept a buyout and relocate in the parish or state, or sell. If an owner has been unable to return to the community, he or she will likely need help finding temporary housing to live in while managing this process. While some homeowners can overcome these barriers themselves, many homeowners will need expert, trustworthy advisors, in addition to receiving financial assistance.

To respond to these needs, Assistance Centers will be the “storefronts” where homeowners can apply for assistance and gain access to advisory services. Rebuilding Advisors will help homeowners accomplish the following:

Provide information to help homeowners evaluate the four assistance options— repair, replace, relocate or sell—and the amount of financial assistance allowed for each;
Provide information to owners on how to deal with mortgage issues, or refinance if necessary;
Provide information to assist owners in selecting professional services providers such as home inspectors, architects, surveyors (for replacement homes) to design and prepare for repairing or replacing homes;
Provide information to assist owners in selecting repair contractors, homebuilders and manufactured housing companies; and
Provide information about fair housing rights and protections against housing discrimination.

The Assistance Centers will help mitigate the potential for misunderstanding and abuse by providing standardized, structured, and guided relationships between homeowners and service providers. In addition, the Assistance Centers will maintain registries of professional service providers and building contractors.

Through the Solicitation for Offer, Assistance Centers will be directed by the selected management firm and staffed by contracted experts, which may include non-profit organizations specializing in providing advisory services to homeowners. See Section 5 for more details.

Registrants calling The Road Home or logging onto www.LouisianaRebuilds.info will be asked to provide important information, including the resident's name, current address and the location of the affected home, phone numbers, mortgage information, the status of any insurance settlements and any FEMA or U.S. Small Business Association (SBA) applications or assistance.

3. Workforce and Affordable Rental Housing Programs

Approximately 82,000 rental housing units received major or severe damage in Hurricanes Katrina and Rita. Replacement of the damaged or destroyed rental housing in the hurricane ravaged areas is vital to the return of a strong workforce, and is a lynchpin of Louisiana’s economic recovery. All sectors of the economy have reported a workforce shortage due to a lack of affordable housing. Rental housing stock is also imperative to support the return of the high proportion of residents that were renters prior to the storms, particularly in New Orleans, as well as the return of homeowners transitioning into repaired and rebuilt homes over the coming months.

For these reasons, several programs are proposed to support the redevelopment of rental housing in the storm-impacted areas. To support the programs, the State has set aside a total of $892,700,000 of currently available CDBG funds, and proposed to be increased to $1,535,700,000 upon the appropriation of the additional CDBG funds pending in Congress.

The Road Home Workforce and Affordable Rental Housing Programs have four broad goals:

ƒ: To ensure that the workforce needed to accommodate full economic recovery has access to affordable rental housing;
ƒ: To provide affordable rental housing to low income households who could not otherwise afford to return to their communities;
ƒ: To ensure that affordable rental housing is provided in the context of high-quality, sustainable mixed-income communities; and
ƒ: To ensure that a portion of affordable rental units will host supportive services for families with special needs or high risks following their extended displacement.

To achieve these four goals, the programs described below prioritize deep affordability of rental units and the balanced allocation of these deeply affordable units within mixed-income communities. The program will create an estimated 36,000 to 51,000 units, in a broad mixture of deeply affordable units, mixed income development, small rental properties, and other tax credit projects.

Summary of Rental Units Built or Restored and Program
Dollars for Fully Funded Program

Program Number of Units CDBG Dollars

LIHTC/CDBG Piggyback Market Rate Units Below Market Rate Very Low Income 18,000 – 33,000 5,000 – 15,000 13,000 – 18,000 6,000 – 9,000 $552,410,000 $0 $0 $552,410,000

Supportive Housing Services 0 units built; 3,000 served $72,730,000

Flexible Developer Incentives N/A $41,560,000

Small Rental Properties Market Rate Units Below Market Rate 18,000 ~ 6,000 ~ 12,000 $869,000,000

TOTAL 36,000 – 51,000 units $1,535,700,000

Deep affordability refers to units reserved for individuals with incomes as low as 20% of the area median. Mixed-income communities will be prioritized when they are developments with market rate rental units or single family homes in the same development with a range of affordable and deeply affordable rental units, for renters 20% to 60% of the area median income.

Based on current estimates, the Workforce and Affordable Rental Housing Programs and the Gulf Opportunity Zone’s Low Income Housing Tax Credits may create between 25,000 and 30,000 units available for citizens at or below 60% of the area median income for the next twenty years. The State expects that as many as half of those units may rent at or below 50% of the area median income level for the next twenty years.

The LRA will allocate these funds for the Workforce and Affordable Rental Programs by formula to ensure that those parishes with the most damaged or destroyed rental housing have adequate resources to replace significant numbers of affordable rental units. It is the strong recommendation of the LRA that the Low Income Housing Tax Credits should also follow this geographic allocation formula and prioritization to meet affordability and mixed-income development goals, such that all projects benefiting from tax credit projects should be directed to include units of deeper affordability for very low income families.

The State proposes these rental programs as a means to focus on the housing needs of low to moderate income people in the most heavily damaged areas. According to the National Low Income Housing Coalition Research Note #05-02:

"Forty-seven percent of the housing units in the entire Katrina affected area [of the Gulf Coast] were rental units. In New Orleans, 55% were rental units. Fully 20% of the rental units lost in New Orleans were affordable to extremely low income households, i.e. households earning 30% of AMI or less, amounting to 16,000 units. This percentage was 16%, 22,000 units, for all Katrina affected areas. Thus, 73% of all the rental units affordable to extremely low income households in the Katrina affected areas were in New Orleans and likely destroyed."

The table below summarizes the budget for all rental programs:

Budgets for Rental Housing Programs

Rental Program Partially Funded Fully Funded

LIHTC/CDBG Piggyback $311,690,000 $552,410,000

Supportive Housing $46,750,000 $72,730,000

Flexible Developer $41,560,000 $41,560,000

Incentives

Small Rental Properties $492,700,000 $869,000,000

TOTAL $892,700,000 $1,535,700,000

3.1 Low-Income Housing Tax Credit (LIHTC) “Piggyback” Program

Through legislation creating the Gulf Opportunity Zone (GO Zone), Congress has authorized a special allocation of Low Income Housing Tax Credits (LIHTC) that are expected to generate an estimated $1.7 billion over three years in private investment in the repair and new construction of affordable rental housing. The combination of LIHTC incentives and CDBG funds that piggyback the tax credits will promote the twin goals of dramatically increasing the supply of rental units affordable to a wide range of low- to moderate-income families and expanding rental housing supply as a part of stable mixed-income developments and neighborhoods.

When The Road Home is fully funded, the State proposes to combine the resources of the LIHTC incentives, CDBG Piggyback funding, available HOME funds, Section 8 housing vouchers, and leveraged private investments to generate between 18,000 and 33,000 new or restored rental units, of which an estimated 5,000 to 15,000 units will be rented at market rates and 13,000 to 18,000 will have below-market rents. In any single unit, other federal subsidies shall not duplicate assistance to the same beneficiary.

To support the development of mixed income communities and to ensure the restoration of rental housing in the most heavily impacted parishes, the LRA will work with the Louisiana Housing Finance Agency, which administers the LIHTC Program, to assure that all approved GO Zone LIHTC projects integrate multiple tiers of affordable rental units and prioritize the integration of affordable units with market-rate rental units. The intent of this program is to use the powerful financial incentives of the LIHTC program, CDBG Piggyback funding and the flexible incentives program described in Section 4.3 to motivate developers to build new mixed-income communities that accommodate families from across the income spectrum. If LIHTC applications without this deeper tiering of affordable units are able to qualify for tax credits, then it will be hard for the goals of this piggyback program to be met. Furthermore, to ensure the success of the CDBG Piggyback Program, the LRA strongly urges the Louisiana Housing Finance Agency to direct that GO Zone LIHTC benefits be similarly targeted to parishes which suffered the most damaged or destroyed rental properties as described for the Workforce and Affordable Rental Housing programs above.

Though units developed under the LIHTC must by law be affordable to households with incomes as high as 60% of area median income, the extra investment incentives built into the special GO Zone allocation of LIHTC mean that, by State estimates, rents for LIHTC units in Louisiana can be made affordable to families with incomes between 45% and 60% of area median income. The LRA will work with the Louisiana Housing Finance Agency to develop future Qualified Allocation Plans (QAP) for LIHTC to give preference to and fund projects that meet deeper affordability goals than the required 60% of area median income⁷, and that use the full capacity of the Piggyback Program.

Louisiana intends to accommodate families with incomes below 45% AMI, however. In order for the LIHTC program to create a rental supply for such very low-income households, additional subsidies are needed. The State will therefore make available CDBG funds to provide incentives to investors so that, when the program is fully funded by the anticipated $4.2 billion appropriation, an estimated 6,000 to 9,000 of the estimated 13,000 to 18,000 affordable rental units produced under the LIHTC program can be reserved for—and made affordable to—working families with incomes between 20% and 40% of AMI. It is the strong intention of the State to reserve all CDBG money devoted to very affordable rental units for units that are built as a part of mixed-income developments, with a priority given to those including market rate units.

Furthermore, under the current partially funded program, the State proposes that a portion of the estimated 6,000 to 9,000 units targeted to very low-income families be made available to households with special needs such as persons with disabilities, families with disabled family members, and the elderly. The funding for such supportive services is outlined in Section 4.2 of this document.

Project Eligibility and Estimated Budgets⁸

Developers will be eligible for supplemental CDBG funding for approved LIHTC rental projects on which they agree to certain limitations on rents and occupant income for the first twenty years of the project. When The Road Home is fully funded, CDBG piggyback funds aimed at increasing the supply of units available to very low income households for renters, with incomes between 20% and 40% of the area median, is estimated in the table below.

Target	Target Number of	Total Estimated CDBG
Household	Units	Funding
Income
20% AMI	2,000-3,000	$263,460,000
30% AMI	2,000-3,000	$184,140,000

⁷ Area Median Income is defined annually by the federal Department of Housing and Urban Development for each metropolitan area and non-metropolitan parish in the United States. FY2006 income estimates for Louisiana can be found at http://www.huduser.org/Datasets/IL/IL06/la_fy2006.pdf. ⁸ Calculations used to determine the demand for CDBG funds based on assumed rents and income targets are available from the LRA.

40% AMI	2,000-3,000	$104,810,000
50% AMI	3,500- 4,500	$0
60% AMI	3,500-4,500	$0
Above 60% AMI	5,000-15,000	$0
TOTAL	18,000-33,000	$552,410,000

Among the CDBG financing mechanisms being considered to make it feasible for developers to provide the estimated 6,000 to 9,000 units that will be available to and rented by very low income tenants are:

Gap financing to reduce the costs of debt service, so that lower rents (and lower
cash flow) can be made feasible; and
Funding of operating reserves for projects to enable rental property owners to
charge lower rents.

The project costs for affordable units and LIHTC projects are likely to vary greatly because of the uncertainty of many cost factors and market conditions. The State will prepare clear criteria by which projects will be ranked, such as quality of the development and units, experience of the development firm, the per-unit subsidies sought at varying levels of affordability between 20% and 60%, and the financial strength of the firm. Proposals should be selected by the State based on the most competitive proposals that maximize these identified criteria. Further, each application should be scrutinized by underwriters in light of the criteria and proposed project costs. The State should negotiate with applicants to seek the best possible outcomes for each project.

Officers of the LRA, Louisiana Office of Community Development, and Louisiana Housing Finance Agency will work together each year to propose affordability targets for specific numbers of housing units, integrate their targets into the annual Qualified Allocation Plan criteria for the LIHTC program, and set aside CDBG funds to be matched to those tax credit goals to meet overall program objectives. These officers will likewise evaluate actual numbers of units delivered annually. In the event of any shortfall versus those targets during a calendar year, those funds and targets will be added to the subsequent year’s goals and allocations.

The State will direct that strong preference be given by development groups which are awarded Piggyback incentives to offer their properties to hurricane-displaced renters from the affected areas of Louisiana. In doing so, the State will require that developers promote their available units through the proposed Renter’s Registry described Section

3.5 below.

3.2 Services Funding for Supportive Housing

Under the partially funded plan, the State intends to use CDBG funds or other financial resources that can be obtained to fund supportive services for approximately 1,870 supportive housing units, the development of which will be financed by the LIHTC and CDBG piggyback program described above. Under the fully funded program, the program will support an estimated 3,000 units with supportive housing services. Other HUD programs such as the McKinney Vento Act, Project Based Section 8 Vouchers, Section 811, and Section 202 program funds may supplement supportive efforts.

The supportive housing units will serve individuals and families with special needs, most importantly, renter households who are returning to Louisiana after having endured, very often, traumatic relocations from shelter to shelter, to hotels, and to other temporary living arrangements in other cities. Supportive housing units are also needed for returning families and individuals who are disabled, frail elderly, or have other special needs.

Supportive services will be provided in 30% of the 6,000 to 9,000 rental units targeted to households with incomes at or below 40% of area median income. In order to provide that level of services, the State proposes to allocate $46,750,000⁹ of the currently available CDBG funds to help pay for the services. This program component and use of CDBG funds for supportive services is proposed with the recognition that the number of supportive housing units that can be developed in Louisiana over the next few years will be severely limited by the scarcity of public and private funding for the necessary resident services.

When the expected $4.2 billion in additional CDBG funds are appropriated for The Road Home, the budget for supportive housing services will be increased to $72,730,000 to fund services for an estimated 3,000 units.

3.3 Flexible Incentives for Mixed-Income Development

For mixed-income residential developments to occur on a larger scale—even if the affordable housing units are receiving supplemental CDBG funding as described above—the State recognizes that additional incentives may be required in certain instances to successfully promote market-rate housing to be mixed with affordable housing. Therefore, the State proposes to use $41,560,000 of CDBG funds to supplement mixed-income housing projects. These flexible subsidies will be used primarily in conjunction with the LIHTC incentives, but they will also be available for other projects offering rents or sale prices affordable to families both above and below 80% of AMI.

The primary mechanism for providing these incentives will be recoverable grants provided to reduce the costs of land and infrastructure. Such grants will be offered on a competitive basis. Grants will be made subject to requirements that will be specific to each project, such as minimum requirements for providing a mix of rents or sale prices.

⁹ Assumes 1,870 units with services costing an average of $5,000 per unit per year over five years.

Grants will be recovered if all mixed-income requirements set for selected projects are not met. Operating costs of this program will be covered through operating budgets for other housing programs described herein, such as the CDBG/LIHTC Piggyback Program or the Housing Development Loan Fund.

3.4 Small Rental Property Repair Program

Before the disaster, a large portion of very low income working families resided in single-family homes, “doubles” and small, multi-family buildings with ten or fewer units that were owned and operated by small-scale landlords. A sizeable number of these properties were underinsured or uninsured and no longer available for occupancy. The State proposes to provide gap financing for the repair of an estimated 10,500 small rental units in the partially funded program, and an estimated 18,000 rental housing units when the program is fully funded. The primary purposes of the gap financing are to enable repairs to occur and to limit the amount of debt (and therefore debt service) required for the properties, so that the owners will be able to charge affordable rents.

The program will, on a competitive basis, provide gap financing up to $25,000 to restore a rental unit renting at Fair Market Rental rates according to HUD guidelines, with higher funding amounts up to $75,000 per unit available to qualified landlords who agree to offer lower rents, with the maximum amount of subsidy going for rental units where rents are affordable for families with incomes at or below 50% AMI. To spark immediate development of scattered properties of all rent levels, units offered at Fair Market Rental rates will be eligible for assistance, but only for the first tier of assistance of up to $25,000 of incentives. Eligible properties will be selected based upon a strong preference for well-designed residential communities and infill housing developments that also include families with incomes higher than the area median. Further, each application should be scrutinized by underwriters in light of the criteria and proposed project costs. The State should negotiate with applicants to seek the best possible outcomes for each project.

In exchange for accepting financial incentives, property owners will be required to accept limitations on rents (with inflation clauses) and incomes of renters for a period of 10 years, to assure that the assisted housing is as affordable as possible and is occupied by families with incomes corresponding to several tiers of affordable rents. The amount of CDBG financing available will be provided in three tiers—$25,000 , $50,000 and $75,000 per unit—with the highest amount per unit being available to property owners who agree to offer the lowest rents. The assistance will be offered as deferred payment loans at 0% interest, due only upon resale of the property or failure to comply with the agreed-upon restrictions on rents and household incomes.

The tiers with affordability requirements, representing two thirds of the program funds, are expected to produce roughly 12,000 units when the program is fully funded.

As with the homeowner program, small rental property owners will have access to expert financial and construction advisors to assist them with refinancing and reconstruction, or if they so desire, to sell their properties to developers using the LIHTC program.

Unlike the homeowner program, funds will be insufficient to provide every small-scale property owner with enough money to repair or replace their rental properties. Prioritization of properties that will be selected for assistance will be based on factors including, but not limited to, the following:

Property owners demonstrating financial and technical capacity to obtain matching market-rate financing, if necessary, to carry out the repairs, and to provide excellent property management services; and
Properties that are most cost-effective to repair or replace, and located in areas
that have adequate infrastructure and redevelopment activities occurring.
Properties held by small-scale landlords where rental revenue constituted a
majority of household income and/or assets so long as these investor-owners
meet the threshold requirements for capacity necessary to repair or replace, and
then manage their units.

As outlined in the Homeowner Assistance Program guidelines, owner-occupant program assistance and small rental property assistance cannot be combined in the same residential property. Where an owner-occupant rents units within a multi-unit structure, the owner must choose to participate in one program or the other. If the Homeowner Assistance Program is chosen, the full double-unit structure will serve as the basis for calculation of assistance up to the program cap of $150,000. For all other owner-occupied multi-unit structures, funding up to $150,000 is available but is based on the damages to and value of the unit in which the owner resides. If the owner selects the Small Rental Property Repair Program and the owner is selected for assistance, assistance to each unit, including the owner-occupied unit, will be limited to $25,000 to $75,000, as with all units under the program application, dependent on affordability levels on each rental unit.

The landlord applying for the Small Rental Property Repair Program will be able to receive incentives for a unit in the property in which he or she is an owner-occupant.

The formula for the amount of CDBG funding per rental unit is as follows:

Eligible Assistance per Rental Unit = Lesser of:

• Allowable Rebuilding Costs + Mitigation Costs (minus) Insurance (minus) Maximum private financing the property rents will support

• The Maximum CDBG funding amount described above

To the extent that property owners do not request or qualify for the higher amounts of funding per unit, the program will be able to support the repair of more rental units, albeit at higher rents.

The LRA also proposes to allow variations of this program that will provide incentives, not only for repairing damaged rental properties, but converting them to owner-occupied housing. Two pilot programs may be created and expanded if successful. The first pilot program could allow a landlord to sell a repaired one-family or two-family rental property to a low- or moderate-income homeowner, rather than rent the home. The second pilot program would allow low- and moderate-income homebuyers to purchase unrepaired one-family and two-family rental units and to carry the home through the repair process. Creating first-time homebuyers will be a priority but the pilot program will also serve buyers who have previously owned homes. Homeowners who are exercising the "sell" or "relocate" option may not receive additional financial assistance from the state through either of these pilot programs. These pilot programs will be funded through the budget for the Small Rental Property Rental Program. The incentives will be tiered similarly as above (based on the income of the first occupants), and the rental affordability requirements (for any rental units in two-family homes) will remain the same.

A total of $492,700,000 is budgeted for the Small Rental Property Repair Program under the partially funded budget, including program operating costs. Upon the additional appropriation of $4.2 billion by Congress, the budget for this competitive program will increase to $869,000,000.

3.5 Renters’ Registry

Because the replacement of rental housing will fall far short of the rental housing lost due to insufficient funds, and many residents displaced by hurricanes Rita and Katrina are far from home and inadequately housed, the State will give priority placement to hurricane displaced residents for all subsidized rental housing units.

A total of $2 million in CDBG funds has been budgeted to provide the following resources to displaced renters to help facilitate their return home:

ƒ Louisiana has initiated a Call Center and Homeowner Registry to allow former homeowners to indicate their interest in returning to their neighborhoods and investing in their homes. The Call Center/Registry will add a component for renters to gather information about the current location of displaced renters who wish to return home. Initially, the Call Center/Registry will refer callers to emergency housing assistance resources posted on the web portal at www.LouisianaRebuilds.info. As new or repaired subsidized affordable rental units come on line, renters will be referred to a web data base where affordable rental housing is listed, and where they can access applications for income-

assisted housing.

ƒ When the database referral system commences, eligible renters will be notified by mail, telephone, and the www.LouisianaRebuilds.info web portal to the greatest extent possible of the opportunity to access rental information and apply for assistance. Information about rental programs will be posted on public websites and at Housing Assistance Centers.

4. Restoration of Homeless Supports and Housing

The State is proposing $25,900,000 of CDBG funds be allocated to address increased risks and demands related to homelessness. In hurricane-impacted areas, many organizations serving the homeless lost facilities, housing capacity, shelter beds, and staff: Thirty-six shelters sustained considerable damage, and capacity to house up to 1,759 homeless individuals (i.e., 1,759 residential “beds” operated by “Continuum of Care” organizations serving the homeless) was lost. In hurricane-impacted areas, there are reports that an increased number of persons are living on the streets or in parks, cars, and abandoned or uninhabitable buildings. Many of these persons were not homeless prior to the storms. Additionally, many older adults and persons with disabilities who resided in the community prior to the storms are currently being housed in nursing homes and other institutions, and many residents cannot be discharged or transitioned from these settings due to the lack of affordable, barrier-free, and/or supportive housing. These funds will assist in providing a safe and permanent place for homeless and at risk of homeless individuals to reside and get the supportive services they need to remain housed and to be as independent and self-sufficient as possible.

The proposed $25.9 million will support the State’s goal to immediately restore and expand capacity in hurricane impacted areas and provide permanent supportive housing and assistance for persons and families who are homeless and persons at-risk of becoming homeless who are low wage workers, unemployed, victims of domestic violence, low-income seniors, and/or low-income persons with any type of substantial disability (including physical or sensory disability, cognitive disability, chronic health problems, mental illness, or addictive disorders).

The proposal allows for funding to be prioritized as follows: The highest priority for the use of these funds will be to repair and restore shelter capacity, transitional housing and permanent supportive housing that existed prior to Hurricanes Katrina and Rita. The cost of restoring this capacity is estimated to be $3 million to $5 million. Priority for these funds will be given to members of the Continuums of Care. Non-member organizations may apply for funding but should document pre-storm homeless efforts in the community and indicate a commitment to coordinating with the local Continuums of Care upon receipt of these funds.

A second priority will be the acquisition and rehabilitation of new permanent supportive housing and services by non-profits in the hurricane-affected areas. This priority also includes the option of funding rental assistance (i.e., “bridge funding”) linked to permanent supportive housing. The prioritization of non-profits is based on the understanding that some non-profit groups working with homeless and at-risk populations will not have the capacity to apply for tax credits and supportive services funds through the “piggyback” program

The third priority will be homeless prevention assistance to serve the hurricane affected areas, however not to duplicate any existing federal subsidies for this purpose. This priority includes traditional homeless prevention – such as funding the first month of rental assistance to avoid homelessness – as well as innovative practices to prevent homelessness, such as home modifications, repairs not covered by other parts of the Road Home program, and other supports that help individuals maintain residency in their home.

The fourth priority is the funding of new transitional housing and services targeted particularly for families who have experienced significant trauma as a result of the hurricanes and need the support of transitional housing rather than the groups addressed in the permanent supportive housing initiatives listed in the second priority.

The fifth priority is the creation and expansion of employment and housing search services for the homeless in the hurricane affected areas. These funded efforts should be in coordination with and non-duplicative of other recovery related employment and housing efforts such as the Louisiana Family Recovery Corps. Applicants will propose a mechanism to ensure that individuals will not receive duplicative services.

5. Developer Incentives

The State recognizes that communities that lost the most housing due to the Katrina and Rita disasters will need to have special incentives in place to attract new mixed-income housing development—to restore both the rental and owner-occupied housing stocks. Homeowners who elect to take the relocation option will make it necessary to have a steady and large supply of new homes. Therefore, the following developer incentives are proposed, with a special focus on the New Orleans metropolitan areas and other communities with major losses to their housing stock.

These programs and financial tools described in Section 5, and working in combination with the Workforce and Affordable Rental Housing Programs in Section 3, are proposed as a well-orchestrated toolkit that—working together—are more likely to encourage developers to rebuild housing in the areas that suffered the greatest losses. All are intended to address very specific barriers: Lack of affordable, permanent financing for mixed-income rentals; the need for more risk-tolerant predevelopment capital; and the lack of available sites for development where housing development is most needed.

The budget for incentives is provided in the table below:

Development Incentives

Program Partially Funded Fully Funded

Development Loan Fund $16,570,000 $16,570,000

Land Assembly $2,070,000 $2,070,000

Capacity Building Grants $2,070,000 $2,070,000

Building Code $11,390,000 $11,390,000

Enforcement

TOTAL $32,100,000 $32,100,000

5.1 Housing Development Loan Fund

The Housing Development Loan Fund would provide seed funding for a contractor or state agency to establish one or more loan funds that offer acquisition and predevelopment financing on flexible terms to developers of the most critically needed housing. Providing early, high-risk capital will be a powerful incentive for developers to build mixed-income housing in the communities that lost the most housing. Loans would be made to nonprofit and for-profit developers of new rental and single-family housing that is affordable to families with incomes that are below the area median, with a strong preference for well-designed residential communities and infill housing developments that also include families with incomes higher than the area median.

The Housing Development Loan Fund would be operated by a state agency or an experienced community development loan fund manager. A total of $16,570,000 in CDBG funds, including fund management costs, will be invested as “top loss” capital in order to leverage an estimated $30 million in additional lending capital. As two priorities, the loan fund would target developers participating in the rental assistance programs described in the previous section, as well as developers of mixed-income for-sale housing. As projects close their construction financing, the acquisition/predevelopment loans would be repaid and the lending capital would become available for additional investments. In a three-year period, it is expected that the funds will recycle two to three times.

As currently planned, the Housing Development Loan Fund would be operated on a contractual basis by one or more qualified financial institutions that are experienced in providing early-stage, high-risk property acquisition and predevelopment loans, as an incentive for developers to rebuild existing housing or build new housing at different price points, including affordable homes and rental units. These types of loans are typically not offered by conventional lenders, but instead by the numerous so-called "community development loan funds" across the country. These loan funds are able to take higher risks in lending by attracting risk-tolerant capital and guarantees from foundations and socially motivated investors. The goal should be to lend the funds at 0% and to subordinate these loans to the private capital in order to provide a strong incentive for developers and to leverage private capital. Many such funds receive some of their capital as grants from the Community Development Financial Institutions (CDFI) Fund of the Department of Treasury.

Congress specifically directed the states receiving supplemental CDBG funding should consider the use of up to $20 million to fund recovery activities of two organizations that are experienced in operating such loan funds: Enterprise Community Partners, Inc., and Local Initiatives Support Corporation.

5.2 Land Assembly Operations

As an additional way to jump-start development in the communities that lost the most housing, the Land Assembly component of the housing program will provide seed money to acquire multiple properties in good locations for replacement housing and “package” them for sale or grant to maximize further affordable housing development— for example, to developers using CDBG-supported LIHTC tax incentives to develop rental housing, to supportive housing developers, to self-help ownership housing developers, etc. This program component will operate only in those jurisdictions where:

ƒ: These activities are requested or supported by local governments; and
ƒ: Local governments have substantially engaged in the planning work required to target areas that are suitable for the development of replacement housing.

A total of $2,070,000 of CDBG funds are budgeted for capital to purchase residential properties as well as operating costs. The capital used to purchase properties will be recycled through sales of properties to developers.

As a related activity, properties assembled through buy-out programs, funded through the State’s homeowner assistance program, might be offered at below-market costs to developers of affordable or special needs housing. One of the targets of these sales of State-purchased properties would be to encourage the development of mixed income developments that include renters with incomes below 40% of area median income. If such assembled properties were not purchased and developed by affordable developers in accordance with strict income requirements, they still might carry an inclusionary housing redevelopment requirement that a certain percentage of the units developed on CDBG assembled land would be affordable with less stringent income and pricing requirements, but still ensuring that mixed-income developments occur in redevelopment areas.

However, the $2 million Land Assembly fund is fundamentally different from and should not be confused with the buyout provisions of the Homeowner Assistance Program.

This budget line item is not intended for purchases of single-family homes. Instead, the intention is to contract out to one or more qualified organizations that can identify suitable sites for housing development in the most distressed parishes and obtain options on them. The intention is to address a complicating barrier to housing developments: the lack of—and high asking prices for—suitable sites that are near functioning infrastructure and services (public services, retail etc.). The State intends, through contractual arrangements, to fund a small team of property acquisition experts who will scout out, analyze and obtain options on suitable sites that are not currently on the open market. These could include surplus properties held by government agencies, nonprofits, churches and businesses. Some might be brownfield sites that could be cleaned up quickly and at feasible costs. This Land Assembly operation would result in assignable options in the name of the State of Louisiana or some designated quasi-public entity. These options, in turn, would be offered to developers on an open, competitive basis.

This Land Assembly operation should not be viewed in isolation. It ties into the Louisiana Housing Finance Agency's LIHTC program, the proposed CDBG/LIHTC Piggyback program, the Services Funding for Supportive Housing program, and the Housing Development Loan Fund.

5.3 Support for Faith-Based and Community-Based Housing Recovery Programs

The State aims to strengthen community nonprofits and faith institutions already providing housing recovery services through the investment of $2,070,000 of CDBG funds in their activities. These entities may have opportunities to contract to provide some services in Housing Assistance Centers. They will be eligible to apply for grants to build capacity in providing supportive housing services. They will be eligible to apply for matching grants to supplement charitable fundraising they have done for housing recovery assisting low and moderate income homeowners in repairing or replacing their homes, as well as for seed money to develop repair and replacement housing for low and moderate income households.

These organizations will be encouraged to help expand the supply of supportive housing, affordable rental housing and affordable homes for sale by participating, as qualified, in program such as the LIHTC program, the CDBG piggyback program, the small rental program (if a nonprofit wishes to buy, repair and operate affordable rental properties), the flexible incentives program, and the Housing Development Loan Fund.

5.4 Funding of Building Code Enforcement by Local Governments

Without special assistance being provided to local governments, it is expected that a major impediment to housing development will be the lack of building, electrical and plumbing inspectors and permit processing staff. In addition, architects and builders will need inspectors and plan reviewers to help communities adapt to the new State Uniform Construction Code and to interpret the latest available advisory base flood elevations. Therefore, the State has budgeted $11,390,000 for hiring such staff for local government over a number of years, based on the numbers of damaged/destroyed units in each parish. It is expected that this amount will fund at least 40 field inspectors and plan reviewers, as well as a limited number of support staff. The State will also support the expansion of code enforcement capacity by sponsoring additional training opportunities for inspectors, engineers and architects. While building code enforcement by local authorities will be supported by permitting and inspection fees in the long run, this initial CDBG funding is necessary to immediately expand enforcement capacity to expedite the construction of safer and stronger homes where the storm impact was most concentrated and building activity will be fervent in coming months.

6. Administration

With this amendment, the State is requesting a total of $148.68 million under current, partial funding levels, which includes the $8,810,400 requested in the first action plan and $189.880 when the program is fully funded.

7. Planning

With this amendment, the State is requesting $9.5 million of which $0 was requested in the first action plan.

8. Technical Assistance

With this amendment, the State is requesting $12.420 million, of which $500,000 was requested in the first action plan.

9. Other Requirements

9.1 Fair Housing Goals

Fair housing must be a goal of the programs described in The Road Home Housing Program. If a homeowner or renter (from a unit developed through the benefits of this program) believes that he or she has been the victim of housing discrimination and suspects that he or she has been treated unfairly because of Race, Color, Religion, Sex, Age, Familial Status, National Origin, Marital Status, or Disability, he or she may file a complaint of discrimination with the Louisiana Attorney General’s Office, Louisiana Public Protection Division of the US Department of Housing and Urban Development Fair Housing Division.

9.2 Program Income

Because the allocation of federal resources will not meet the entire need for housing replacement in Louisiana, and because the costs of replacement housing are escalating in the storm-impacted areas, the State will recycle all income from sales of properties,

repayments of any program loans, funds recaptured through violations of guidelines, covenants, or other actions, and any collections of lien payments derived through actions of these CDBG housing programs. From a regulatory standpoint, recycled CDBG funds can be used for any eligible CDBG activity as described in the State’s Annual Plans. The revenue generated by the program can effectively be used to achieve focused long-term housing goals by dedicating and restricting the use of recycled housing funds for future affordable housing programs. This could, in effect, create a revenue stream for the Louisiana ~~Permanent~~ Housing Trust Fund.~~, which could be administered by a public or quasi-public agency at the state or local government levels.~~ The policies shaping the housing reuse of revenues will be made at a later date, as detailed operational plans are being developed, but will continue to prioritize displaced residents and deeply affordable rental housing, and will help to sustain affordability as terms expire in many of the properties supported through the programs articulated herein in 10 to 15 20 years.

9.3 Promotion of Short- and Long-Term Recovery Planning

To promote sound short- and long-term recovery planning at the state and local levels that impact land use decisions that reflect the need for responsible flood plain management and growth, the State, through the Louisiana Recovery Authority, is leading community planning efforts in its most affected parishes. Dubbed “Louisiana Speaks”, this effort is a multifaceted planning process to develop a sustainable, long-term vision for South Louisiana in the wake of the destruction caused by Hurricanes Katrina and Rita. The community planning process accomplishes the following:

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U.S. Department of Housing and Urban Development (HUD)

Louisiana Recovery Authority

The Road Home Housing Programs Action Plan Amendment for Disaster Recovery Funds

Dr. Norman Francis Chairman, LRA Board

TABLE OF CONTENTS

1. Introduction

1.1 Goals of The Road Home Housing Programs

1.2 Basis for Recommendations

2. Assistance to Homeowners3

2.1 Overview of the Homeowner Assistance Program

2.2 Eligibility for Homeowner Assistance

2.3 Requirements for Receiving Homeowner Assistance

2.4 Amounts and Forms of Homeowner Assistance

2.4.1 Maximum Assistance

2.4.2 Financial Incentives to Repair/Rebuild

2.4.3 Buyout/Relocate

2.4.4 Sale

2.5 Redevelopment of Purchased Property

2.6 Treatment of Homeowners with Special Circumstances

2.7 Accounts for Receipt of Funds

2.8 Homeowner Assistance Centers – Process for Receiving Assistance

3. Workforce and Affordable Rental Housing Programs

3.1 Low-Income Housing Tax Credit (LIHTC) “Piggyback” Program

3.5 below.

3.3 Flexible Incentives for Mixed-Income Development

3.4 Small Rental Property Repair Program

3.5 Renters’ Registry

4. Restoration of Homeless Supports and Housing

5. Developer Incentives

5.1 Housing Development Loan Fund

5.2 Land Assembly Operations

5.3 Support for Faith-Based and Community-Based Housing Recovery Programs

5.4 Funding of Building Code Enforcement by Local Governments

6. Administration

7. Planning

8. Technical Assistance

9. Other Requirements

9.1 Fair Housing Goals

9.2 Program Income

9.3 Promotion of Short- and Long-Term Recovery Planning

The Road Home Housing Programs
Action Plan Amendment for Disaster Recovery Funds

Dr. Norman Francis
Chairman, LRA Board

**1.1 Goals of The Road Home Housing Programs**

2. Assistance to Homeowners³