Sunday, March 23, 2008

People who sold homes early still awaiting state money

Amanda Dumas is not the sort to feel victimized.

Sure, she has multiple sclerosis, a disease that is slowly destroying her muscles and making her more susceptible to illness, but she focuses on the fact that she's still ambulatory, still earning a living. Yes, her Meraux home and the homes of her extended family were destroyed in Hurricane Katrina, but most of them found homes on the north shore, near medical services they need. They've moved on.

Dumas wouldn't even dwell on the fact that she, her parents, her in-laws and other relatives had to sell their St. Bernard Parish houses at a loss. Except for one nagging thing: The Road Home program once promised to help make them whole, and nearly two years after the homeowner relief effort began, the state can't seem to make up its mind.

"They told us we qualified, then they said if they had money left over," said Dumas, a staff member for Taylor Energy in New Orleans. "Well, now they have $1 billion left over and they're still telling us we're in inactive status. It's outrageous."

The state recently determined it has $1 billion in the Road Home budget to restore an elevation grant program it suspended in April 2007. The latest budget estimates also show the state hopes to add hundreds of millions of dollars for other program costs. It also signals, at least for now, that $60 million is being reserved for homeowners who sold their properties early.

Many mixed messages

Of all the homeowner groups who have found themselves in Road Home limbo -- mobile home owners who had to clamor for inclusion, condo owners caught up in confused damage calculations, houseboat residents still seeking eligibility, those facing ownership succession issues -- nobody has been given more mixed messages than the 4,772 applicants who sold their homes before the aid program launched, or before they could make it through the grant decision process.

The group doesn't include thousands of homeowners who sold out in the first year after the 2005 storms and never applied for Road Home help. Details of their circumstances are unknown.

The original Road Home action plan, as approved May 11, 2006, addressed the applicants who sold out early.

"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," the May 2006 document said.

Based on comments received during the past year by The Times-Picayune and homeowner advocates, these Katrina victims generally were elderly, disabled or both. They were desperate to sell, and willing to accept a low price, because they were the least able to wait the 10 months it took for the state to launch the Road Home -- or the three-quarters of a year longer it took, typically, to get from filing an application to landing a grant.

Many of them felt forced to leave devastated areas, but often reinvested in Louisiana. There's Peter Tesvich, for example, whose insurance and sale of his Meraux home in March 2006 left him about $40,000 short of recouping his losses as he rebuilds his life in Hammond. Or Hillary Brown, an 80-year-old veteran, who had to sell his Chalmette home in November 2006 for a paltry $29,000, and used his entire life savings to buy a new one in Covington.

They all seemed to be left with the same questions: If the point of the Road Home was to keep Louisiana homes in commerce and encourage storm victims to come back, aren't they prime candidates for grants? And, now that Road Home rules have changed to allow people to collect compensation and later sell their homes on the open market for additional funds, why doesn't it work the other way around?

In the summer and early fall of 2006, as the first applicants started trickling in for Road Home appointments, those who had sold under duress said they were told they qualified, no strings attached. They say that changed in 2007, especially after state officials reported the Road Home would be billions of dollars short of paying those who were rebuilding their homes or selling them to the state. On May 24, 2007, the phrase "subject to the availability of funds" was added to the action plan's section on sold homes.

Dream home lost

"At our appointment in November 2006, they told me as long as we relocated within Louisiana, we qualified and wouldn't be penalized," said William Nuckley, a disabled 74-year-old who estimated he faces a deficit of about $280,000. That estimate is based on application of the Road Home standard of $130 per square foot to his 5,000-square-foot "fortress" of a home in eastern New Orleans, less $263,000 he got from insurance and $106,000 from a private sale.

"Later on, they changed their tune and told us we were last and on the shelf somewhere."

Nuckley sold his Kenilworth East neighborhood home in June 2006, just as the Road Home was gearing up, because he was convinced by program staff and his reading of the newly minted action plan that he could still recover up to $150,000 of his losses.

He and his wife, Adele, were disabled when Katrina hit -- he had just recovered from bladder cancer surgery, she was suffering from heart trouble -- and they tried to ride out the storm. Floodwaters nearly killed them both, hurtling them across the house's interior when the garage door gave way. Their son pulled off a heroic swimming rescue, and a sturdy mattress was used to float Adele Nuckley to a nearby levee, William Nuckley said.

After that traumatic episode and the loss of the dream home he had built to his wife's exacting specifications -- and after a year of waiting for the state to finalize its recovery plan -- they felt compelled to sell, using their insurance proceeds and retirement savings to buy a new home in Destrehan. They expected a Road Home grant to arrive in due time. But the couple never thought they'd spend much of the next year and a half fretting over policy interpretations in an indecisive recovery program.

"We relive this in our nightmares," William Nuckley said. "My wife has crying jags every day. And I just want what's due us -- no more, no less. We worked all our lives. The American taxpayers decided we should have it, but now the politicians, they're just being frivolous with it."

Yes, no, yes, no

Last summer, as Louisiana leaders appealed to Congress for additional billions to keep the Road Home solvent, they left early sellers out of the equation, leaving the impression to many that the group wouldn't qualify for grants. But that changed again in November and December, when Congress came through with $3 billion for the Road Home and state officials announced it would be enough to cover all qualified applicants.

James and Charlotte Rhodes, who sold their Plaquemines Parish home in April 2006 at a loss, received a series of e-mails from Anita Anderson, the Louisiana Recovery Authority's constituent services specialist, that show the dizzying effects of the state's waffling:

--On Nov. 27, Anderson wrote: "At the outset, you were fully eligible to apply for Road Home assistance regardless of whether you sold your property on the open market. However, your application was in a 'holding pattern' to be considered for assistance later, if the budget allowed. Unfortunately, even after receiving the good news of the additional $3 billion in federal funds on the way to plug the budget shortfall, it has been determined there still is not adequate funding to serve homeowners in your situation."

--Then, on Nov. 30: "Persons who sold their homes without assigning the (Road Home) rights to a new owner are not eligible for the program. This has been the policy from the beginning."

--And on Dec. 18, the pendulum swung back: "Although current budgetary data appears to support the notion there may be adequate money in the Road Home budget to serve all homeowners currently in the program, it has not yet been determined whether there will be a SURPLUS. However, in the event there are excess funds available, we will take into consideration the possibility of making homeowners who sold their homes at loss eligible as we move forward in arriving at the budget certainty required to make definitive policy decisions on this issue."

On 'inactive status'

And this month brought the most confusing scenario yet. Applicants who sold their homes early received letters, dated March 12, stating: "Due to current budgetary constraints, it is unlikely that The Road Home will be able to provide funding assistance to homeowners who previously sold their homes."

But that very same day, the LRA, which oversees the Road Home, released budget projections that showed it was setting aside $60 million for sold homes. That would provide $12,610 for each homeowner if all made it through the process and the money were divided equally.

When asked about the apparent contradiction, LRA spokeswoman Christina Stephens said the budget isn't set in stone and the letters to applicants were only making official what's been true for months -- that these applicants have been placed in "inactive" status. That means, she said, that nobody at Road Home is working on their files, but they aren't out of the program entirely.

Dumas said the $60 million budget item was the first time she'd seen any kind of commitment to people who sold their homes early, so she was encouraged. But she said the letters upset her elderly parents, who lived in almost the same size house in Meraux and face a similar loss of about $38,000 when their insurance and sale proceeds are considered. They would benefit greatly even if they could recoup just $10,000 of the loss, Dumas said.

"My husband and I, we'll be OK," she said. "But I worry about the elderly and other disabled people who didn't have a choice."