Flooded RV's are seen in Plattsmouth, Neb., this month. (AP/Nati Harnik)

Why Billions in Disaster Recovery Remain Unspent for 2017 Hurricanes

A new GAO report signals bad news for places that will try to rebuild after the Midwest flooding.

Historic flooding in the Midwest has left millions of acres under water in 10 states after a "bomb cyclone" storm brought heavy snow and drenching rains. And it’s far from over. Weather forecasters say more precipitation is on the way.

The task list for the cleanup and recovery is already mounting. So far, the floods are affecting the safety of more than a million private water wells; farms won’t be able to plant crops this year; and Superfund waste sites are inaccessible.

And when it comes to getting the money to rebuild, states and localities in the Midwest likely have a long wait ahead of them.

According to a new report from the U.S. Government Accountability Office (GAO), states and localities have still barely tapped the billions in federal funding for 2017’s major hurricanes.

As of January:

  • Texas had used about $18 million of $5 billion for administration and planning;
  • Florida had used about $1 million of $616 million for administration, planning and housing;
  • And Puerto Rico and the U.S. Virgin Islands hadn't used any of the $1.5 billion and $243 million, respectively, that they were allocated.

The main reason for the sluggishness, the GAO found, is red tape. The Department of Housing and Urban Development (HUD) has to customize its disaster funding grant requirements each time there’s a new disaster. That’s “a time-consuming process that has delayed the disbursement of funds,” the report says.

And, the report adds, “the expected increase in the frequency and intensity of extreme weather events” will only make matters worse in the future.

Hurricanes Harvey, Irma and Maria caused an estimated $265 billion in damage in 2017, primarily in Texas, Florida, Puerto Rico and the U.S. Virgin Islands. Congress has provided more than $35 billion to HUD in the form of Community Development Block Grant Disaster Recovery funds, which can be used for housing, infrastructure and economic revitalization. The money tends to be targeted toward lower-income areas with more limited resources.

But HUD’s reinventing-the-wheel approach to the funding creates all sorts of delays. States and localities first must wait for the department to write the rules that will outline what they need to do to be eligible for grants. It's no small task. The rules must address, for instance, how the money will be managed and what level of community involvement is required.

It wasn’t until a year after the 2017 hurricanes that states and territories signed grant agreements with HUD.

Climate change, the report says, “underscores the need for a permanent program to address unmet disaster needs.”

“I think there’s a growing recognition that everybody would benefit if there were clear, predictable rules,” says Sarah Labowitz, the communications and policy director for Houston's housing department.

She says the city is working toward having a permanent staff for managing disaster recovery and the ensuing grant process, but there's only so much they can do without the federal government changing its process.

The issues with HUD pile on to an already convoluted disaster recovery process. Disaster funding distributed by FEMA has its own problems. Because FEMA tends to undercount the poor, many cities don’t receive grants that reflect their actual costs. According to a study released this month, the federal government underestimated by nearly $2 billion the serious unmet needs after Hurricane Harvey.

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Read also The Pact Changing How Governments Respond to Disaster