The Final Call

Settlement reached in Hurricane Katrina housing discrimination case

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On July 6, a settlement was reached in a lawsuit brought against the U.S. Department of Housing and Urban Development (HUD) and the State of Louisiana regarding the highly criticized Road Home program.

The federal government awarded $62 million in Road Home funds to 1,460 homeowners and an additional year to rebuild their storm-torn homes without fear of fines or foreclosures by the state.

With an establishing budget of $11 billion in federal dollars, the Road Home program was led by HUD and the Louisiana Recovery Authority to aid residents affected by both hurricanes.

“Regrettably, the Road Home program became a road block for many.” said James Perry, Executive Director of the Greater New Orleans Fair Housing Action Center. The center, along with the NAACP Legal Defense Fund, led the charge on the lawsuit filed in November 2008 on behalf of five individual plaintiffs representing over 20,000 Black homeowners.

“This settlement is a step in the right direction toward getting more hurricane-affected homeowners back into their homes. HUD and Louisiana must keep America's promise to build a better New Orleans. And they must do so in a manner that is fair and equitable for all people regardless of their race,” said Mr. Perry.

Nation of Islam Student Minister Willie Muhammad and his family were among those forced to evacuate New Orleans when Hurricane Katrina flooded nearly 80 percent of the city in 2005.

“If inquiries were made in other areas that involve recovery after Katrina, I believe more discrepancies in how Black people were treated would be uncovered,” said Mr. Muhammad.

John Payton, Director-Counsel of the NAACP Legal Defense and Educational Fund (LDF), said, “People who had similar homes and suffered the same type of damage should not have been treated differently simply because of the neighborhoods in which they live. All New Orleanians, and all Louisianans, deserve a fair chance at rebuilding their homes and communities.”

According to the Greater New Orleans Fair Housing Action Center, pre-storm values in Black neighborhoods across New Orleans are lower than pre-storm values in predominantly White neighborhoods due to “decades of institutionalized discrimination.”

The lawsuit alleged that the Road Home grant calculations were based on the pre-storm value of hurricane affected houses rather than the cost of repair. The plaintiffs and their legal team argued that this was a direct violation of the federal Fair Housing Act.

The website for the Greater New Orleans Fair Housing Action Center paints a mathematical picture of what that discrimination looked like.

Consider two identical homes, with identical hurricane damage, and identical repair cost of $150,000. One home is in a predominately White area and worth $150,000 while the second home located in a predominately Black area is worth only $100,000.

Under the discriminatory formula, the White homeowner was eligible to receive $150,000 while the Black homeowner would be eligible to receive only $100,000—in spite of the fact that the homes are identical. Because of the discriminatory formula, the Black homeowner was $50,000 short of the amount needed to get back into their home.

“This fact pattern has played out thousands of times leaving Black homeowners far short of the amount they need to rebuild their homes,” the center says.

“In addition to providing significant relief for individual homeowners, the Road Home lawsuit will serve as a warning to HUD and state officials nationwide to avoid the future use of pre-storm market value or similar market-driven criteria that have an obvious discriminatory impact on low-income and minority homeowners,” said Shanna Smith, President and CEO of the National Fair Housing Alliance.

In a decision last September, the U.S. Court of Appeals for the District of Columbia issued an injunction to place a freeze on the remaining funds in Louisiana's Road Home Program. This gave the plaintiffs an opportunity to present proof that the state and HUD did in fact engage in discriminatory practices.