Economic Development:

Preliminary Information on Rebuilding Efforts in the Gulf Coast

GAO-07-809R: Published: Jun 29, 2007. Publicly Released: Jun 29, 2007.

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The size and scope of the devastation caused by the 2005 Gulf Coast hurricanes presents the nation with unprecedented rebuilding challenges. These storms destroyed wide swaths of housing, infrastructure, and businesses and displaced hundreds of thousands of people from their homes. Today, nearly two years since these hurricanes made landfall, rebuilding efforts are at a critical turning point. The Gulf Coast and the nation are facing the daunting challenges of rebuilding. Our recent work in southern Louisiana and New Orleans confirms that some communities are still without basic needs, such as schools, hospitals, and other infrastructure, while the doors of many businesses remain closed. Over the coming years, perhaps decades, many neighborhoods and communities will need to be rebuilt--some from the ground up. At the same time, major decisions will need to be made regarding a wide range of issues including coastal restoration, levee protection, infrastructure, land use, and economic recovery. Agreeing on what rebuilding will be done, where, how, and--particularly important--who will bear the costs will be key to moving forward with the rebuilding process. To assist Congress in its oversight responsibilities, GAO briefed Congress on several occasions during the past few months on the results of our preliminary work in Louisiana and Mississippi--the two states most directly affected by the 2005 Gulf Coast hurricanes. This letter transmits information provided during those briefings. Specifically, this letter (1) places the federal assistance provided to date in the context of the resources likely needed to rebuild the Gulf Coast; (2) discusses two key federal programs that provide rebuilding assistance to the Gulf Coast states, with an emphasis on the Community Development Block Grant (CDBG) program; (3) describes differences in Louisiana's and Mississippi's approach to using CDBG funds; and (4) provides some observations on planning activities in Louisiana and Mississippi and the role of the federal government in coordinating Gulf Coast rebuilding efforts.

While the federal government has provided billions of dollars in assistance to the Gulf Coast, a substantial portion of this aid was directed to short-term needs, leaving a smaller portion for long-term rebuilding. It may be useful to view this assistance in the context of the costs of damages incurred by the region and the resources that may be needed to rebuild. While there are no definitive or comprehensive estimates of costs, the various estimates of aspects of these costs offer a sense of their magnitude. Such estimates raise important questions regarding additional assistance that will be needed to help the Gulf Coast rebuild--including how the assistance will be provided and by whom. To date, the federal government has provided most long-term rebuilding assistance to the Gulf Coast states through two key programs, which follow different funding models. Specifically, FEMA's Public Assistance program provides funding primarily to state and local governments to repair and rebuild damaged public infrastructure for specific projects that meet program eligibility requirements, as defined by the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act). The Housing and Urban Development's (HUD) CDBG program, on the other hand, provides funding for neighborhood revitalization and housing rehabilitation activities, affording states broad discretion and flexibility in deciding how to allocate these funds and for what purposes. To date, the affected states have received $16.7 billion in CDBG funding from supplemental appropriations--so far, the largest share of funding specifically targeted to long-term rebuilding. With the vast number of homes that sustained damage in Louisiana and Mississippi, both of these states allocated the bulk of their CDBG funds to homeowner assistance. Restoration of the region's housing and infrastructure is taking place in the context of broader planning and coordination activities. As states and localities begin to develop plans for rebuilding, there are difficult policy decisions Congress will need to make about the federal government's contribution to the rebuilding effort and the role the federal government might play over the long-term in an era of competing priorities.

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