HUD report: Nearly $700 million Katrina rebuilding funding missing

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A report from the Department of Housing and Urban Development’s Office of the Inspector General reveals that $698.5 million dollars in disaster recovery funds given to Louisiana homeowners in the wake of Hurricanes Katrina and Rita were not used to fulfill the purpose of the funding — to elevate damaged homes.

According to the report, dated March 29, a total of 24,042 Louisiana homeowners who received up to $30,000 each were “noncompliant, including those that had not elevated their homes; were nonresponsive; or did not provide sufficient supporting documentation” to show that they had used the taxpayer funding to reconstruct their homes as of Aug. 31, 2012.

The inspector general concluded that the state of Louisiana “did not have conclusive evidence that the $698.5 million in Community Development Block Grant (CDBG) disaster recovery funds had been used to elevate homes.”

When asked by ABC’s Jeff Zeleny on Yahoo News’ “Power Players” where the nearly $700 million dollars in taxpayer money went, David Montoya, the HUD inspector general replied, “Your guess is as good as mine.”

“That is real money,” Montoya said to Power Players. “In light of sequestration, in light of Congress looking where we can have savings. This is money we can’t afford to lose.”

Montoya added that with nearly $1 billion earmarked for the program and $700 million missing, he would give the program a “low ‘D'” grade level.

“The fact of the matter is that the money they received was for a specific purpose and the specific purpose was to elevate these homes to avoid future catastrophes,” Montoya said to Power Players.

He continued that in the future the IOG would recommend the department provide reimbursement funds only after the project is verifiably complete.

In a letter sent to HUD Secretary Shaun Donovan Monday, Oklahoma Sen. Tom Coburn called on the department to keep this incident in mind as they move forward dispersing the nearly $16 billion to the Sandy recovery effort.

“I commend HUD for discovering that millions of dollars that were intended to elevate homes along the Gulf Coast were either pocketed or squandered,” Oklahoma Sen. Tom Coburn said in a statement. “As the federal government prepares to spend nearly $16 billion on recovery efforts related to Sandy this is a mistake taxpayers, and citizens affected by the storm, can’t afford to see repeated.”

In his letter Coburn called on Donovan to explain by April 15 HUD’s plan for ensuring grants are used to actually elevate homes harmed by Sandy, requested how much will go to that effort, and requested additional oversight procedures for ensuring grants are used appropriately in the future.

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