On Friday, a dispute occurred between President Bush’s HUD agency officials and Governor Blanco Road Home program. 

The dispute centers upon two different rules governing two types of Housing and Urban Development programs. One program is a “compensation” program and the other is a “rebuilding” program. 

HUD startled the Blanco administration by saying that the Road Home program which places money into escrow accounts conflicts with the “compensation program” which was designed to distribute money into the hands of homeowners without red tape.  HUD is now stating that connecting disbursements to phases of construction of completed construction makes it a “rebuilding” program.  There is a question whether the “rebuilding” definition and classification would trigger fair housing, and other laws which Louisiana has not yet followed.

On Saturday, the Commissioner of Administration, Jerry Luke Leblanc issued this very stern statement claiming that HUD knew all along what it was doing with the Road Home program.  Here is his statement: which Bayoubuzz places in italics:

The disagreement between the State of Louisiana and the US Department of Housing and Urban Development (HUD) over the disbursement of Road Home grant money will not interrupt scheduled applicant closings. The Road Home disbursement process will continue as State officials plan meetings with HUD to discuss the differences.

Commissioner of Administration Jerry Luke LeBlanc today said:

"We are working closely with HUD to make decisions about how The Road Home program will proceed and what changes are necessary. We have instructed ICF and its team to move forward with closings and appointments for the 115,000 families who are participating in the program. We recognize there may be adjustments, but we fully expect any changes will continue to help homeowners receive their awards and continue rebuilding our communities across Louisiana."

State recovery officials were taken by surprise yesterday when HUD announced it had decided The Road Home program was a rebuilding effort and not a compensation program. State officials maintain that HUD had oversight throughout the entire development process of the disbursement program. State officials say yesterday's sudden ruling will inflict time consuming and expensive Federal rules upon storm victims and expose their grant money to being taken for overdue mortgage payments.

The Road Home program will continue to schedule appointments and closings and calculate awards for homeowners in the program. The State will meet this week with the Federal government to resolve these issues and ensure the program continues the momentum it has achieved. The Road Home is committed to ensuring every homeowner affected by Hurricane Rita or Katrina receives his or her award as quickly as possible.

HUD has taken a position that the “escrow accounts” are the problem and that the homeowners should be able to decide what to do with the grants.  It is uncertain why HUD has suddenly raised this issue and why that governmental organization and the Blanco administration were not on the same page from the date of the inception of the program.

Governor Blanco has stated that she is puzzled why HUD has suddenly raised objections now, as she says the program is beginning to run smoothly.