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Before the Subcommittee on Disaster Recovery, Committee on Homeland 
Security and Governmental Affairs Committee, U.S. Senate: 

United States Government Accountability Office: 


For Release on Delivery Expected at 2:00 p.m. EDT: 

Thursday, April 12, 2007: 

Gulf Coast Rebuilding: 

Preliminary Observations on Progress to Date and Challenges for the 

Statement of Stanley J. Czerwinski: 
Director, Strategic Issues: 


GAO Highlights: 

Highlights of GAO-07-574T, a testimony before the Subcommittee on 
Disaster Recovery, Committee on Homeland Security and Governmental 
Affairs, U.S. Senate 

Why GAO Did This Study: 

The size and scope of the devastation caused by the 2005 Gulf Coast 
hurricanes presents unprecedented rebuilding challenges. Today, more 
than a year and a half since the hurricanes made landfall, rebuilding 
efforts are at a critical turning point.The Gulf Coast must face the 
daunting challenge of rebuilding its communities and neighborhoods—some 
from the ground up. 

This testimony (1) places the federal assistance provided to date in 
the context of the resources likely needed to rebuild the Gulf Coast, 
(2) discusses key federal programs currently being used to provide 
rebuilding assistance, with an emphasis on the Department of Housing 
and Urban Development’s (HUD) Community Development Block Grant (CDBG) 

(3) describes Louisiana’s and Mississippi’s approach to using CDBG 
funds, and (4) provides observations on planning activities in 
Louisiana and Mississippi and the federal government’s role in 
coordinating rebuilding efforts. 

GAO visited the Gulf Coast region, reviewed state and local documents, 
and interviewed federal, state, and local officials. 

What GAO Found: 

While the federal government has provided billions of dollars in 
assistance to the Gulf Coast, a substantial portion was directed to 
short-term needs, leaving a smaller portion for longer-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 necessary to 
rebuild.Some damage estimates have put capital losses at a range of $70 
billion to over $150 billion, while the State of Louisiana estimated 
that the economic impact on its state alone could reach $200 
billion.Such estimates raise important questions regarding additional 
assistance that will be needed to help the Gulf Coast rebuild in the 

To date, the federal government has provided long-term rebuilding 
assistance to the Gulf Coast through 2 key programs, which follow 
different funding models.The Federal Emergency Management Agency’s 
public assistance program provides public infrastructure funding for 
specific projects that meet program eligibility requirements. HUD’s 
CDBG program, on the other hand, provides funding for neighborhood 
revitalization and housing rehabilitation activities, affording states 
broad discretion and flexibility. To date, the affected states have 
received $16.7 billion in CDBG funding from supplemental 
appropriations—so far, the largest share of funding targeted to 

With the vast number of homes that sustained damage in Louisiana and 
Mississippi, each state allocated the bulk of its CDBG funds to 
homeowner assistance. Louisiana developed an assistance program to 
encourage homeowners to return to Louisiana and begin rebuilding while 
Mississippi developed a program to target homeowners who suffered 
losses due to Katrina’s storm surge that were not covered by insurance. 
As of March 28, 2007, Louisiana has awarded 4,808 grants to homeowners 
with an average award amount of $74,250. Mississippi has awarded 11,894 
grants with an average award amount of $69,669. 

Restoring the region’s housing and infrastructure is taking place in 
the context of broader planning and coordination activities. In 
Louisiana and Mississippi, state and local governments are engaged in 
both short-and long-term planning efforts. Further, the President 
established a position within the Department of Homeland Security to 
coordinate and support rebuilding activities at the federal, state, and 
local levels. 

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 
it might play over the long-term in an era of competing priorities. 
Based on our work, we raise a number of questions the Subcommittee may 
wish to consider in its oversight of Gulf Coast rebuilding.Such 
questions relate to the costs for rebuilding the Gulf Coast—including 
the federal government’s share, the effectiveness of current funding 
delivery mechanisms, and the federal government’s efforts to leverage 
the public investment in rebuilding. 

What GAO Recommends: 

Although GAO is not making recommendations in this testimony, GAO 
raises questions that the Subcommittee may wish to consider in its 
oversight of Gulf Coast rebuilding. 


To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Stanley J. Czerwinski at 
(202) 512-6806 or 

[End of section] 

Madam Chair and Members of the Subcommittee: 

I appreciate the opportunity to participate in today's hearing to 
discuss our preliminary work and observations on Gulf Coast rebuilding 
issues. The size and scope of the devastation caused by the Gulf Coast 
hurricanes presents the nation with unprecedented rebuilding 
challenges.[Footnote 1] Wide swaths of housing, infrastructure, and 
businesses were destroyed, leaving more than 1,500 people dead and 
hundreds of thousands of others displaced without shelter and 
employment. Today, more than a year and a half since the hurricanes 
made landfall, rebuilding efforts are at a critical turning point. The 
Gulf Coast and the nation must now face 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. Many Gulf Coast neighborhoods and communities 
will need to be rebuilt--some from the ground up. 

Current rebuilding activities, including the bulk of federal rebuilding 
assistance, are directed primarily towards restoring the region's stock 
of livable housing and essential infrastructure. Over the coming years, 
perhaps decades, significant and complex challenges lie ahead. Major 
decisions will need to be made regarding a wide range of issues 
including coastal restoration, levee protection, infrastructure, land 
use, and economic recovery. All levels of government, together with the 
private and nonprofit sectors will need to play a critical role in this 
process. 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. 

My testimony today will offer some preliminary observations on 
rebuilding efforts in the Gulf Coast that may assist you in your 
oversight of these activities--now and over the longer term. I would 
like to: (1) place the federal assistance provided to date in the 
context of the resources likely needed to rebuild the Gulf Coast; (2) 
discuss the key federal programs that provide rebuilding assistance, 
with an emphasis on the Community Development Block Grant (CDBG) 
program; (3) describe some differences in Louisiana's and Mississippi's 
approach to using CDBG funds; and (4) provide some observations on 
planning activities in Louisiana and Mississippi and the role of the 
federal government in coordinating Gulf Coast rebuilding efforts. 
Finally, I will raise questions that Congress may wish to consider in 
carrying out its critical oversight function in reviewing rebuilding 
efforts on the Gulf Coast. 

My statement is based largely on our work in Louisiana and Mississippi-
-the two states most directly affected by the Gulf Coast hurricanes. 
Specifically, we interviewed state and local officials as well as 
representatives from nongovernmental organizations in these two states 
and analyzed state and local documentation related to rebuilding 
funding and allocations and planning initiatives. We also interviewed 
various federal officials from the Federal Emergency Management Agency 
(FEMA) and the Coordinator of Federal Support for the Recovery and 
Rebuilding of the Gulf Coast Region within the Department of Homeland 
Security (DHS)[Footnote 2] and analyzed federal regulations and state 
policies regarding Gulf Coast federal funding. We performed our work in 
accordance with generally accepted government auditing standards. 

A Relatively Small Portion of Federal Gulf Coast Assistance Is Targeted 
to Long-Term Rebuilding, While Estimates of Loss Suggest Great Need: 

To respond to the Gulf Coast devastation, the federal government has 
committed an historically high level of resources--over $110 billion-- 
through an array of grants, loan subsidies, and tax relief and 
incentives. The bulk of this assistance was provided between September 
2005 and June 2006 through four emergency supplemental 
appropriations.[Footnote 3] A substantial portion of this assistance 
was directed to emergency assistance and meeting short-term needs 
arising from these hurricanes, such as relocation assistance, emergency 
housing, immediate levee repair, and debris removal efforts. 
Consequently, a relatively small portion of federal assistance is 
available for longer-term rebuilding activities such as the restoration 
of the region's housing and infrastructure. Later in this statement, I 
will discuss in greater detail the two programs that the federal 
government has used so far to provide assistance to the Gulf Coast for 
longer-term rebuilding. 

It is useful to view the federal assistance provided to the Gulf Coast 
within the context of the overall costs of the damages incurred by the 
region and the resources necessary to rebuild. Although there are no 
definitive or authoritative estimates of these costs, the various 
estimates of aspects of these costs offer a sense of their magnitude. 
For example, early damage estimates from the Congressional Budget 
Office (CBO) put capital losses from Hurricanes Katrina and Rita at a 
range of $70 billion to $130 billion[Footnote 4] while another estimate 
put losses solely from Hurricane Katrina--including capital losses--at 
over $150 billion.[Footnote 5] Further, the state of Louisiana has 
estimated that the economic impact on its state alone could reach $200 
billion. While the exact costs of damages and rebuilding the Gulf Coast 
may never be known, they will likely surpass those from the three other 
costliest disasters in recent history--Hurricane Andrew, the September 
2001 terrorist attacks, and the 1994 Northridge earthquake.[Footnote 6] 
These estimates raise important questions regarding additional 
assistance that will be needed to help the Gulf Coast rebuild in the 
future--including how the assistance will be provided and by whom. 

Two Key Federal Programs That Provide Long-Term Rebuilding Resources 
Use Different Approaches: 

The federal government has so far used two key programs--FEMA's Public 
Assistance and the Department of Housing and Urban Development's (HUD) 
CDBG programs--to provide long-term rebuilding assistance to the Gulf 
Coast states. These two programs follow different funding models. 
Public Assistance provides funding on a project-by-project basis-- 
involving an assessment of specific proposals to determine eligibility, 
while CDBG--a block grant--affords broad discretion and flexibility to 
states and localities. 

Public Assistance Grants: 

FEMA's Disaster Relief Fund (DRF) supports a range of grant programs in 
providing federal assistance to state and local governments, 
nongovernment organizations, and individuals when a disaster occurs. 
One of its largest programs--Public Assistance--provides assistance 
primarily to state and local governments to repair and rebuild damaged 
public infrastructure and includes activities such as removing debris, 
repairing roads, and reconstructing government buildings, and 
utilities.[Footnote 7] Pursuant to the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (Stafford Act),[Footnote 8] this 
assistance is limited to either a fixed-dollar amount or a percentage 
of costs for restoring damaged facilities. Specifically, applicants 
submit requests for work which is considered for eligibility and 
subsequent funding. FEMA obligates funds for approved projects, 
providing specific amounts to complete discrete work segments on 
projects, while state and local governments pay the remainder based on 
the state's cost share agreement with FEMA. As of March 16, 2007, FEMA 
has obligated about $4.6 billion to Louisiana and about $2 billion to 
Mississippi through its Public Assistance program. 

Community Development Block Grants: 

HUD's Community Development Block Grant program--so far, the largest 
federal provider of long-term rebuilding assistance--received $16.7 
billion in supplemental appropriations to help the Gulf Coast states 
rebuild damaged housing and other infrastructure.[Footnote 9] As shown 
in figure 1, Louisiana and Mississippi were allocated the largest 
shares of the CDBG appropriations, with $10.4 billion allocated to 
Louisiana, and another $5.5 billion allocated to Mississippi. Florida, 
Alabama, and Texas received the remaining share of CDBG funds.[Footnote 

Figure 1: Breakdown of Total CDBG Allocations to Gulf Coast States: 

[See PDF for image] 

Source: GAO analysis of Louisiana Recovery Authority and Mississippi 
Development Authority. 

[End of figure] 

These formula-based grants afford states and local governments a great 
deal of discretion in designing directed neighborhood revitalization, 
housing rehabilitation, and economic development activities. In some 
instances, Congress has provided even greater flexibility when 
allocating additional CDBG funds to affected communities and states to 
help them recover from presidentially declared disasters, such as the 
Gulf Coast hurricanes.[Footnote 11] The Federal Coordinator for Gulf 
Coast Rebuilding has said that the CDBG program allows state leaders 
"who are closest to the issues" to make decisions regarding how the 
money should be spent. 

To receive CDBG funds, HUD required that each state submit an action 
plan describing how the funds would be used, including how the funds 
would address long-term "recovery and restoration of infrastructure." 
This process afforded the states broad discretion in deciding how to 
allocate their funding and for what purposes. To coordinate and oversee 
the state's rebuilding efforts, Louisiana created the Louisiana 
Recovery Authority (LRA) within the state's executive branch.[Footnote 
12] As part of its responsibility, the LRA was also charged with 
establishing spending priorities and plans for the state's share of 
CDBG funds, subject to the approval of Louisiana's state legislature. 
Mississippi developed its spending plans through the Mississippi 
Development Authority (MDA)--the state's lead economic and community 
development agency within its executive branch--and the Governor's 
Office of Recovery and Renewal. In contrast to Louisiana, Mississippi's 
state legislature was not involved in the approval process for these 
state funding decisions. Consistent with HUD requirements, both 
Louisiana and Mississippi published their action plans to solicit 
public input within their state regarding the planned use of CDBG 

As shown in figure 2, each state allocated the majority of its share of 
CDBG funding to housing priorities. The remaining funds were allocated 
primarily to economic development and infrastructure priorities. 

Figure 2: In Louisiana and Mississippi Most CDBG Rebuilding Funding 
Allocated to Housing: 

[See PDF for image] 

Source: GAO analysis of agency provided data. 

[A] In Mississippi, "other" refers to wind insurance mitigation and 
funds not yet programmed by the state. In Louisiana, "other" refers to 
funding for planning and administrative activities. 

[End of figure] 

Louisiana and Mississippi Target the Majority of Their CDBG Funds to 
Homeowners, but Differ in Policies and Procedures: 

With the vast number of homes that sustained damage in Louisiana and 
Mississippi, each state had opted to direct the vast majority of their 
housing allocations to homeowners, although each state tailored its 
program to address the particular conditions in its state. A portion of 
these allocations also was directed to other housing programs such as 
rental housing and public housing, as well as to projects that will 
alleviate costs associated with housing, such as utility and insurance 
costs. Louisiana and Mississippi homeowner assistance programs are 
similar in that each is designed to compensate homeowners whose homes 
were damaged or destroyed by the storms. In each program, the amount of 
compensation that homeowners receive depends on the value of their 
homes before the storms and the amount of damage that was not covered 
by insurance or other forms of assistance.[Footnote 13] However, these 
programs differ in their premise and eligibility requirements. 

Louisiana's Homeowner Assistance Program Aims to Restore a Displaced 

Louisiana witnessed a significant population loss in the wake of the 
Gulf Coast hurricanes, with many residents living in other states and 
debating whether to return to Louisiana. The LRA, in consultation with 
state and federal agencies, developed a program to restore the housing 
infrastructure in Louisiana, using CDBG funds from supplemental 
appropriations, as described earlier. Referred to as the Road Home, 
this program is designed to encourage homeowners to return to Louisiana 
and begin rebuilding.[Footnote 14] Under the program, homeowners who 
decide to stay in the state and rebuild in Louisiana are eligible for 
the full amount of grant assistance--up to $150,000--while those 
leaving the state will receive a lesser share. Accordingly, aside from 
the elderly,[Footnote 15] residents who choose to sell their homes and 
leave the state will have their grant awards reduced by 40 percent. 
Residents who do not have insurance will have their grant awards 
reduced by 30 percent. Further, to receive compensation, homeowners 
must comply with applicable code and zoning requirements and FEMA 
advisory base flood elevations when rebuilding and agree to use their 
home as a primary residence at some point during a 3-year period after 

As of March 28, 2007, the Road Home program had received 119,945 
applications, of which 60,675 had been verified and an award amount had 
been calculated.[Footnote 16] Applicants were then asked to decide how 
they wanted to proceed (for example, whether to rebuild or sell). As of 
that date, 25,597 applicants notified the program of their decision. Of 
those, the program awarded payments to 4,808 homeowners with an average 
award amount of $74,250. 

Mississippi's Homeowner Assistance Program Aims to Compensate Losses: 

In Mississippi, Katrina's storm surge destroyed tens of thousands of 
homes, many of which were located outside FEMA's designated flood plain 
and not covered by flood insurance. Mississippi developed a two-phase 
program to target homeowners who suffered losses due to the storm 
surge. Accordingly, Phase I of the program is designed to compensate 
homeowners whose properties were located outside the floodplain and 
were otherwise fully insured. Eligible for up to $150,000 in 
compensation, these homeowners are not subject to a requirement to 
rebuild. Phase II of the program, on the other hand, is designed to 
award grants to uninsured and underinsured homeowners with incomes at 
or below 120 percent of the Area Median Income (AMI). Eligible for up 
to $100,000 in grant awards, these homeowners must demonstrate that 
they meet current building codes and standards as a condition to 
receiving their grants. While they are required to rebuild in south 
Mississippi, they are not required to stay in their homes once they 
have been rebuilt. In addition, homeowners who do not have insurance 
will have their grant reduced by 30 percent, although this penalty does 
not apply to the "special needs" populations as defined by the state 
(i.e., elderly, disabled, and low income).[Footnote 17] 

As of March 28, 2007, Mississippi had received 18,465 applications for 
Phase I of its program, of which 14,974 were determined eligible for 
consideration.[Footnote 18] Of those, Mississippi awarded payments to 
11,894 homeowners with an average award amount of $69,669. Mississippi 
has yet to complete processing applications for any of the more than 
10,000 uninsured and underinsured homeowners in Phase II of the 

It is clear that Louisiana's and Mississippi's homeowner assistance 
programs are proceeding at different paces. While we did not assess the 
causes for these differences, we have begun work as requested by the 
Senate Homeland Security and Governmental Affairs Committee to examine 
particular aspects of the CDBG program that may provide important 
insights into these issues. 

Louisiana and Mississippi Are Engaged in Planning Activities, While the 
Federal Government Has Assumed a Coordination Role: 

Restoring the region's housing and infrastructure is taking place in 
the context of broader planning and coordination activities; in 
Louisiana and Mississippi, state and local governments are engaged in 
both short-and long-term planning efforts. The federal government-- 
specifically, the Coordinator of Federal Support for the Recovery and 
Rebuilding of the Gulf Coast Region--is responsible for coordinating 
the activities of the numerous federal departments and agencies 
involved in rebuilding as well as supporting rebuilding efforts at the 
state and local level. Based on our preliminary work, I would like to 
describe some of these activities being undertaken in Louisiana and 
Mississippi as well as the activities of the federal government. 

Planning Activities in Louisiana: 

What will be rebuilt in many areas of Louisiana remains uncertain, as a 
number of planning efforts at the state and local levels are still 
evolving. At the state level, the LRA has coordinated a statewide 
rebuilding planning effort that included retaining professional 
planners and moving towards a comprehensive rebuilding plan. To 
facilitate this effort, the LRA endorsed Louisiana Speaks--a 
multifaceted process for helping the LRA develop a comprehensive 
rebuilding plan for Southern Louisiana and for providing rebuilding 
planning resources to homeowners, businesses, communities, and 
parishes. For example, Louisiana Speaks developed and distributed a 
pattern book for homeowners, architects, and permitting officials about 
how to redesign and rebuild commercial and residential buildings. 
Through this process, local design workshops--called charrettes--have 
been developed to guide neighborhood planning efforts in the impacted 
areas, while teams of professional planners, FEMA officials, and LRA 
officials and representatives work with affected local parishes to 
develop long-term parish recovery plans. Through extensive public 
input, Louisiana Speaks also seeks to develop a regional plan for 
Southern Louisiana, focusing on a number of critical challenges for the 
state's redevelopment. The regional plan will evaluate economic, 
environmental, and social issues that affect Southern Louisiana and 
explore alternative ways that growth and development can be 
accommodated in the context of varying environmental, economic, and 
cultural changes. The state of Louisiana will then use the regional 
plan to help direct rebuilding policy and Louisiana's long-term 
spending over the next 30 years. 

Given the central importance of the city to Louisiana's overall 
economy, I would like to highlight planning efforts in New Orleans. 
After several attempts to develop a rebuilding plan for New Orleans-- 
including the Bring New Orleans Back Commission, efforts initiated by 
the city council, Urban Land Institute, and others--in August 2006, New 
Orleans embarked on a comprehensive rebuilding planning process, which 
continues to date. Referred to as the Unified New Orleans Plan (UNOP), 
this effort was designed as a grassroots approach to planning to 
incorporate the vision of neighborhoods and districts into multiple 
district-level plans and one citywide plan that establishes goals and 
priorities for rebuilding the city. In particular, the citywide plan 
will include priority programs and projects for repairing and 
rebuilding the city over a 5-to 10-year period and will help to inform 
critical funding and resource allocation decisions by state and federal 
agencies. The citywide plan is currently under review by the New 
Orleans Planning Commission. 

Planning Activities in Mississippi: 

Mississippi created an overall plan to serve as a framework for 
subsequent planning efforts in affected areas of the state. More 
specifically, in September 2005--within days of the hurricanes' 
landfall--Governor Barbour created the Governor's Commission on 
Recovery, Rebuilding and Renewal to identify rebuilding and 
redevelopment options for the state. Comprised of over 20 committees, 
the Commission held numerous public forums across multiple counties in 
an effort to solicit input and public participation from residents 
throughout the state. In December 2005, the commission's work 
culminated in a final report containing 238 policy recommendations 
aimed at addressing a range of rebuilding issues and concerns across 
the state, from infrastructure and economic development to human 
services and finance.[Footnote 19] The report also addressed potential 
financing mechanisms identifying state, local, private, and federal 
sources. Further, the recommendations identified parties responsible 
for implementing the recommendations, including the creation of new 
state and regional entities to oversee selected recommendations. In 
addition, Governor Barbour created the Office of Recovery and Renewal 
to oversee and coordinate implementation of these recommendations. Also 
charged with identifying funding for rebuilding projects, the office 
continues to work with public and private entities as well as state and 
local governments. 

Local governments in south Mississippi are also engaged in rebuilding 
planning activities. For example, modeled after the Governor's 
Commission on Renewal and Recovery, the city of Biloxi established a 
volunteer steering committee to develop a rebuilding plan for the city. 
Biloxi's final rebuilding plan resulted in 162 recommendations to 
address core issues affecting the city, such as infrastructure, 
economic development, human services, and finance. In addition, the 
steering committee commissioned a separate rebuilding plan for East 
Biloxi--a low-lying area that had been heavily damaged by Hurricane 
Katrina--that included 27 recommendations for addressing this area of 
the city. A number of other impacted communities in south Mississippi 
have undertaken planning initiatives as well. 

Coordination at the Federal Level: 

In light of the magnitude of the Gulf Coast hurricanes, the 
administration recognized the need to provide a mechanism to coordinate 
with--and support rebuilding activities at--the federal, state, and 
local levels. More specifically, in November 2005, the President issued 
executive orders establishing two new entities to help provide a 
governmentwide response to federal rebuilding efforts. The first of 
these orders created the position of Coordinator of Federal Support for 
the Recovery and Rebuilding of the Gulf Coast Region within the 
Department of Homeland Security.[Footnote 20] Accordingly, the Federal 
Coordinator is responsible for developing principles and goals, leading 
the development of federal recovery activities, and monitoring the 
implementation of designated federal support. The Coordinator also 
serves as the administration's focal point for managing information 
flow, requests for actions, and discussions with Congress, state, and 
local governments, the private sector, and community leaders. 

Our discussions with state and local officials in Louisiana revealed a 
largely positive disposition towards the Federal Coordinator and his 
role in support of the Gulf Coast. During our field work, for example, 
Louisiana state and local officials said the Coordinator had played an 
integral role in helping to identify and negotiate an appropriate level 
of CDBG funding for the state. 

The second executive order established a Gulf Coast Recovery and 
Rebuilding Council within the Executive Office of the President for a 
period of 3 years.[Footnote 21] Chaired by the Assistant to the 
President for Economic Policy, the council includes most members of the 
Cabinet and is charged with examining issues related to the furtherance 
of the President's policy on recovery and rebuilding of the Gulf Coast. 

Selected Questions for Congressional Oversight of Gulf Coast 

Rebuilding efforts in the Gulf Coast are at a critical turning point-- 
a time when decisions now being made in community rooms, city halls, 
and state houses will have a significant impact on the complexion and 
future of the Gulf Coast. As states and localities begin to assume 
responsibility for developing 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 it 
might play over the long-term in an era of competing priorities. Based 
on the preliminary work I have discussed today, the Subcommittee way 
wish to consider the following questions as it continues to carry out 
its critical oversight function in reviewing Gulf Coast rebuilding 

* How much will it cost to rebuild the Gulf Coast and how much of this 
cost should the federal government bear? 

* How effective are current funding delivery mechanisms--such as Public 
Assistance and CDBG--and should they be modified or supplemented by 
other mechanisms? 

* How can the federal government further partner with state and local 
governments and the nonprofit and private sectors to leverage the 
public investment in rebuilding? 

Madam Chair and Members of the Subcommittee, this concludes my 
statement. I would be happy to respond to any questions you or other 
members of the Subcommittee may have at this time. 

GAO Contacts and Staff Acknowledgments: 

For information about this testimony, please contact Stanley J. 
Czerwinski, Director, Strategic Issues, at (202) 512-6806 or Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
statement. Individuals making key contributions to this testimony 
include Charlesetta Bailey, Dean Campbell, Roshni Davé, Peter Del Toro, 
Laura Kunz, Brenda Rabinowitz, Michael Springer, and Diana Zinkl. 

[End of section] 

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Hurricanes Katrina and Rita: Preliminary Observations on Contracting 
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Hurricanes Katrina and Rita: Contracting for Response and Recovery 
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Hurricane Katrina: Providing Oversight of the Nation's Preparedness, 
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Los Angeles Earthquake: Opinions of Officials on Federal Impediments to 
Rebuilding. GAO/RCED-94-193. June 17, 1994. 

Hurricane Iniki Expenditures. GAO/RCED-94-132R. April 18, 1994. 

Time-Critical Aid: Disaster Reconstruction Assistance--A Better 
Delivery System Is Needed. GAO/NSIAD-87-1. October 16, 1986. 

Guidelines for Rescuing Large Failing Firms and Municipalities. GAO/ 
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International Disaster Recovery: 

Rebuilding Iraq: More Comprehensive National Strategy Needed to Help 
Achieve U.S. Goals. GAO-06-788. July 11, 2006. 

Foreign Assistance: USAID Completed Many Caribbean Disaster Recovery 
Activities, but Several Challenges Hampered Efforts. GAO-06-645. May 
26, 2006. 

Foreign Assistance: USAID Has Begun Tsunami Reconstruction in Indonesia 
and Sri Lanka, but Key Projects May Exceed Initial Cost and Schedule 
Estimates. GAO-06-488. April 14, 2006. 

Foreign Assistance: USAID's Earthquake Recovery Program in El Salvador 
Has Made Progress, but Key Activities Are Behind Schedule. GAO-03-656. 
May 15, 2003. 

Foreign Assistance: Disaster Recovery Program Addressed Intended 
Purposes, but USAID Needs Greater Flexibility to Improve Its Response 
Capability. GAO-02-787. July 24, 2002. 

Foreign Assistance: Implementing Disaster Recovery Assistance in Latin 
America. GAO-01-541T. March 21, 2001. 


[1] In this report, unless otherwise noted, we refer to hurricanes 
Katrina, Rita, and Wilma collectively as the Gulf Coast hurricanes. 

[2] Throughout this report and unless otherwise noted, we refer to this 
official as the Federal Coordinator for Gulf Coast Rebuilding. 

[3] Provided to 23 agencies, these appropriations totaled $88 billion. 
Pub. L. No. 109-61, 119 Stat. 1988 (Sept. 2, 2005); Pub. L. No. 109-62, 
119 Stat, 1990 (Sept. 8, 2005); Pub. L. No. 109-148, 119 Stat. 2680 
(Dec. 30, 2005); and Pub. L. No. 109-234, 120 Stat. 418 (June 15, 
2006). Besides these four main supplemental appropriations acts, a 
number of authorizations and programs provided the remaining 
assistance. Congress increased the borrowing authority of the National 
Flood Insurance Program to cover the large number of hurricane-related 
claims. Pub. L. No. 109-65, 119 Stat. 1998 (Sept. 20, 2005); Pub. L. 
No. 109-106, 119 Stat. 2288 (Nov. 21, 2005); and Pub. L. No. 109-208, 
120 Stat. 317 (Mar. 23, 2006). In addition, Congress passed the Gulf 
Opportunity Zone Act to provide tax relief benefits and incentives to 
affected businesses. Pub. L. No. 109-135, 119 Stat. 2577 (Dec. 21, 

[4] According to CBO, capital losses include housing, consumer durable 
goods, and energy, other private-sector and government losses. 

[5] This estimate includes damages only to commercial structures and 
equipment, residential structures and contents, electrical utilities, 
highways, sewer systems, and commercial revenue losses. For more 
information see, M.L. Burton and M.J. Hicks, Hurricane Katrina: 
Preliminary Estimates of Commercial and Public Sector Damages 
(Huntington, W.V.: September 2005). 

[6] According to CBO, losses from Hurricane Andrew--a Category 5 
hurricane that struck the coast of Florida in 1992--totaled about $38.5 
billion in 2005 dollars. The losses from the terrorist attacks on 
September 11, 2001, were estimated at $87 billion in 2005 dollars, of 
which $35.2 billion were privately insured losses. Further, the 
earthquake that struck Northridge, California in 1994,which measured 
6.7 on the Richter scale--resulted in $48.7 billion in losses, as 
measured in 2005 dollars. 

[7] FEMA's Disaster Relief Fund provides grant assistance through its 
Individual Assistance Program--which provides aid to individuals 
affected by a disaster. Its Hazard Mitigation Program provides grant 
assistance to communities to implement long-term hazard mitigation 
measures following disasters. In addition to grant assistance, the DRF 
also reimburses federal agencies through mission assignments for relief 
and recovery work ordered by FEMA. 

[8] The Stafford Act, as amended, establishes the primary programs and 
processes for the federal government to provide major disaster and 
emergency assistance to states, local governments, tribal nations, 
individuals, and qualified private nonprofit organizations. 42 U.S.C. 
§§ 5121-5207. 

[9] Pub. L. No. 109-148, 119 Stat. 2680, 2779-80 (Dec. 30, 2005); Pub. 
L. No. 109-234, 119 Stat. 418, 472-73 (June 15, 2006). 

[10] Texas received over $503 million, Florida received about $183 
million, and Alabama received nearly $96 million. HUD Notice of 
Allocations and Waivers. 71 Fed. Reg. 7666 (Feb. 13, 2006); 71 Fed. 
Reg. 63,337 (Oct. 30, 2006). 

[11] CDBG funds supported recovery efforts in New York City following 
the terrorist attacks of September 11, 2001; in Oklahoma City following 
the bombing of the Alfred Murrah Building in 1995; and in the city and 
county of Los Angeles following the riots of 1992. 

[12] The LRA was created at the direction of Governor Blanco by 
executive order in October of 2005 and subsequently authorized by the 
state legislature in early 2006. 

[13] Pursuant to federal statute and HUD requirements for the CDBG 
program, homeowner assistance with these funds may not duplicate 
benefits derived from any source received by the homeowner as a result 
of damages incurred during the hurricanes. Thus, the state with CDBG 
funds cannot duplicate insurance, FEMA, or other payments received by 
the homeowner. 

[14] Although not discussed in this statement, the Road Home program 
also provides assistance for rental property owners and renters to 
address housing needs of low-to moderate-income individuals in the most 
heavily damaged areas. The objectives of the rental assistance 
component of the program include providing capital to owners of small 
rental properties to repair and reconstruct damaged units, providing 
affordable rents for working families, and supporting redevelopment in 
impacted communities. 

[15] Refers to individuals that are 65 years of age or older. 

[16] Louisiana's Road Home Program began accepting applications on 
August 29, 2006. 

[17] "Low income" homeowners are those with incomes at or below 60 
percent of the AMI--which ranges by county. 

[18] Mississippi's Homeowner Assistance Program began accepting 
applications in April 2006. 

[19] Entitled After Katrina: Building Back Better Than Ever, this 
report made recommendations to the Governor's Office and a range of 
federal, state, and local stakeholders involved in the state's 
rebuilding efforts. 

[20] "Establishment of a Coordinator of Federal Support for the 
Recovery and Rebuilding of the Gulf Coast Region," Exec. Order No. 
13,390, 3 C.F.R. 205 (2005). 

[21] "Creation of the Gulf Coast Recovery and Rebuilding Council," 
Exec. Order 13,389, 3 C.F.R. 203 (2005).

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