Meanwhile, where do we go from here?
To answer that question, we must keep in mind what Louisiana's primary needs are and how the Baker Bill addresses them. Everyone agrees that after flood protection, housing is one of the top priorities of the recovery. The Baker Bill, introduced by U.S. Rep. Richard Baker of Baton Rouge, would establish an entity called the Louisiana Recovery Corporation as a means of providing financial stability to property owners as well as lenders. The bill would authorize the LRC to sell federal bonds and use the revenue to buy flood-damaged homes and pay off mortgages. Homeowners' participation would be strictly voluntary, and all LRC aid would be capped at 60 percent of pre-storm equity, minus insurance proceeds. The measure passed a House committee in December, but stalled just before Christmas. Congressman Baker was in the process of renewing his push for the bill when the president pulled the rug out from under it. Worse yet, the president has offered no realistic alternatives.
In opposing the Baker Bill, the president suggested that Louisiana look to $6.2 billion in Community Development Block Grants as a source of housing money, and then apply to the feds for specific grants to address other areas of need. That is wholly unrealistic for several reasons. First, while that CDBG program is are very flexible, some of that money was already going to be used for housing needs. More important, the grant's $6.2 billion total is nowhere near enough to take care of the more than 200,000 homes damaged or destroyed by Katrina and Rita. It would provide, with no allowance for administrative costs, only $31,000 per home -- and that's supposed to give property owners some of their lost equity AND retire the mortgage. Gov. Kathleen Blanco says the CDBG monies would take care of only one in 10 adversely affected property owners in Louisiana.
Second, other major needs, including education, are bound to go unmet if Louisiana were to follow the president's advice. GNO Inc., the leading business development organization in the region, said using CDBG funds to replace the Baker Bill "will not cover the costs of full housing restoration, will not set up a proper structure for allocation and oversight, and will impede the state's efforts to utilize CDBG funds for business and economic recovery -- which has always been part of the intent for the funding. It will leave out tens of thousands of Louisiana homeowners." We agree. In fact, we challenge the White House to come up with a detailed, specific plan for averting a housing and mortgage crisis in Louisiana. Ignoring the problem and blaming their own lack of concern on Louisiana belies what the president told our community and the nation in September, when he stood in Jackson Square and said, "We will do what it takes, we will stay as long as it takes, to help citizens rebuild their communities and lives." If the president meant what he said, it's time to put up or shut up.
In the immediate aftermath of the president's decision, many business, political and community leaders vowed to continue pushing the Baker Bill in Congress. They include Congressmen Baker and Bobby Jindal, a Kenner Republican, as well as the nation's mortgage bankers. Jindal has pledged to try to "tweak" the bill to make it more palatable. We don't oppose that idea, but Louisiana will need a "Plan B" just in case those efforts fail. We suggest that members of the Bring New Orleans Back Commission continue to work with the Louisiana Recovery Authority to draft a master plan for recovery -- but now focus even more on addressing the housing problem. We also urge Gov. Kathleen Blanco to expand the call of next week's special legislative session to allow legislators to introduce and adopt measures that will address interim and long-term housing concerns.
Most of all, we urge the president to reconsider his opposition to the Baker Bill -- and keep the promise he made to Louisiana in September.