Congressional Leaders Oppose Miss. Plan to Divert Housing Funds

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Two congressional leaders on Wednesday asked the U.S. Department of Housing and Urban Development to reject a Mississippi plan to divert $600 million in Hurricane Katrina housing funds to an expansion project for the State Port at Gulfport.

Reps. Barney Frank, D-Mass., and Maxine Waters, D-Calif., said the proposal would “constitute an unwarranted diversion of funds and a disservice to displaced Mississippians still in need of affordable housing.”

Frank is chairman of the House Committee on Financial Services, and Waters is chairwoman of a subcommittee on Housing and Community Opportunity.

The Mississippi Development Authority has proposed taking the money from the $2.25 billion remaining in the state’s Homeowners Assistance Grant Program, which is funded by federal block grant money. Part of the housing program is dedicated to low-income and working poor homeowners.

Agency officials say even with the diversion, there still will be enough money in the housing fund to cover an estimated 30,000 homeowners applying for grants to restore or rebuild property destroyed by the storm.

Advocacy groups and state lawmakers also have criticized plan, which has to be submitted to HUD for approval.

The federal agency hasn’t received the port proposal, HUD spokesman Brian Sullivan said Wednesday.

In the letter, Frank and Waters say their case for denial is strong because MDA has previously applied for and received multiple waivers for how the Community Development Block Grant money is spent.

The original federal requirement for the funds was that at least 50 percent of the money go to low- to moderate-income people, but Mississippi received a waiver for that requirement for its housing program.

The Federal Emergency Management Agency estimates that 13,800 small rental units in Mississippi were severely damaged or destroyed by the Aug. 29, 2005 storm, the congressional leaders said in the letter.

The state’s recovery plan for small rental housing only provides funding for the repair of 6,000 units, they said, adding that FEMA has reported that 17,185 Mississippi families are still living in travel trailers and mobile homes.

“A further waiver to reprogram CDBG funds for the expansion of the Port of Gulfport, when so many families have yet to be able to return home, is misguided,” they wrote.

A spokeswoman for MDA did not immediately return a call seeking comment Wednesday.

Republican Gov. Haley Barbour has said the expansion project at the port – the third busiest container port in the Gulf of Mexico – would improve operating capacity and is crucial to the state’s economy.

Public comment for the plan ended Sept. 24. Several advocacy groups, including Oxfam America and the Mississippi NAACP, are against the proposal.

“I think it’s unfortunate that the state is pursuing a course in which they’re putting business interests before the victims of the hurricane,” said Derrick Johnson, president of Mississippi NAACP.