White House Rejects Hurricane Redevelopment Plan

The White House officially rejected a plan that would have created a federal corporation to purchase and redevelop Louisiana homes damaged by Hurricane Katrina. The White House reportedly thought that the $30 billion proposal was too costly, and a spokesman said Bush did not want to create another bureaucracy.

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Recovery plan ‘dead’
By GERARD SHIELDS
Advocate Washington bureau

Published: Jan 25, 2006

WASHINGTON — The White House officially rejected a plan that would have created a federal corporation to purchase and redevelop Louisiana homes damaged by Hurricane Katrina.

U.S. Rep. Richard Baker, R-Baton Rouge, introduced legislation last year to create the Louisiana Recovery Corp. The panel would use treasury bonds to buy damaged homes on parcels to be repackaged and redeveloped.

But Allan Hubbard, the chief economic adviser for President Bush, indicated in conversations with Baker on Monday that the Bush does not support the legislation, Baker said Tuesday.

“It’s dead now,” said Walter Isaacson, vice chairman of the Louisiana Recovery Authority, an advisory panel formed by Gov. Kathleen Blanco.

Supporters of the Baker bill, such as Isaacson, were outraged at the White House stance. Isaacson met with White House officials Tuesday hoping to dissuade them.

“It calls into question the president’s sincerity in helping Louisiana rebuild,” Isaacson said. “If they have a better idea, I haven’t seen it.”

A spokesman for the White House disputed Isaacson’s claim, contending that $23 billion in federal money has been allocated for housing assistance through various federal agencies. Bush did not want to create another bureaucracy, Blair C. Jones said.

Baker expressed disappointment in the White House position. The bill was overwhelmingly supported by the House Financial Services Committee on which Baker sits and seemed to have support in the U.S. Senate. The White House blocked passage of the measure before the congressional recess.

The White House reportedly thought the measure was too costly. The legislation would require a $30 billion line of credit and would have guaranteed that homeowners receive at least 60 percent of the equity in their homes.

Homeowners also would have been given first rights of refusal to move back into their neighborhoods, a provision that advocates for the poor insisted should be in place.

“While I respectfully disagree with their decision, we owe it to Louisiana to push forward,” Baker said in a Tuesday statement on the White House’s stance.

Baker noted that the White House has offered no alternative to the plan.

Donald Powell, coordinator of the federal recovery effort, suggested over the weekend that Louisiana use $6.2 billion in recently approved Community Development Block Grant money to help underinsured homeowners.

Mississippi Gov. Haley Barbour has reportedly committed to using 80 percent of his CDBG money to help owners rebuild. Meanwhile, Blanco, late last week, said she wants to use $350 million of Louisiana’s $6.2 billion for repairs to state buildings and aid to local governments and businesses.

“The administration believes that any Gulf Coast-related funding should be administered directly,” Jones said Tuesday. “If there are remaining needs which are appropriate for federal government assistance, after the states have prudently spent their CDBG and other monies, we are open to conversation about additional funds.”

But bill supporters said Louisiana will need at least $9 billion in CDBG funds to meet its needs.

U.S. Sen. Mary Landrieu, D-La., also expressed disappointment at the White House decision. She was pushing the Baker bill during a tour of Louisiana this week and had offered a companion piece in the Senate.

Baker’s bill had wide bipartisan support in both chambers of Congress, Landrieu said in a statement.

“The White House opposition to the Louisiana Recovery Corp. demonstrates a continued lack of understanding for the magnitude of the devastation and the immense rebuilding task our state faces,” Landrieu said.

Both Baker and Landrieu said they will continue the push for the corporation.

“We disagree with the White House position and will keep trying,” Landrieu spokesman Adam Sharp said. “The only people who are opposed to this are sitting at 1600 Pennsylvania Ave.”

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