New Orleans youth participate in Louisiana Recovery Planning Day in January 2006.
Paul Rainwater, Executive Director, Louisiana Recovery Authority
The Louisiana Recovery Authority (LRA) is the state's planning and coordinating body established in the aftermath of hurricanes Katrina and Rita to lead Louisiana's recovery efforts. Our board of directors includes business, civic, and political leaders, including representatives from the many industries that form the backbone of Louisiana's economy.
Our mission is to ensure that Louisiana rebuilds safer, stronger, and smarter than before. In pursuing this mission, the LRA initially focused on policy development and planning activities and now has power and oversight over the implementation of the programs it helped create.
We oversee and distribute billions of dollars in federal and state investments in the recovery effort and ensure that these public investments leverage additional ones from financial institutions, businesses, and individuals.
Currently, we are focused on streamlining our processes, eliminating any barriers preventing homeowners, businesses, and governments from rebuilding, and helping them access the resources they need. While our organizational goals are changing as Louisiana's recovery progresses, our objectives and strategies through 2009 are formally laid out in our strategic plan.
Louisiana is now three years into a rebuilding process that will likely last for years, because public investments in the initial stages lay the foundation for the private investment and entrepreneurship that are ultimately key to our recovery.
We have dedicated more than $11.5 billion to support homeowners in their rebuilding efforts and to increase the supply of affordable rental housing, approximately $300 million to support small business recovery and $700 million for our local governments to jump-start long-term recovery projects indentified in the early days after the storms.
Much of these funds has already been put to work in communities, where they are invested alongside more than $3.5 billion in federal funds dedicated through the Federal Emergency Management Agency (FEMA) for important infrastructure repairs, including repairing schools, health care facilities, and governmental structures. We expect to invest billions more in the coming years.
2008 has been an important year for us. We have focused our efforts on removing hurdles from rebuilding, even as we have continued to gather resources to support the recovery effort. As we see it, the LRA works not only to enhance Louisiana's recovery but also the state's image as a place to live, to work, and to invest -- three essential components of a healthy state.
Small Business Investments
Immediately following the storms, the state put $10 million in state funds into a Small Business Bridge Loan program that provided gap financing for more than 370 affected small businesses as it waited for Small Business Administration (SBA) loans or insurance proceeds. Shortly after receiving federal recovery funds, the state added another $45 million into this program. This first phase of the bridge loan program provided short-term (up to 180 days) lump sum loans between $5,000 and $25,000 with zero or four percent interest rates, depending on the situation of the borrower.
The state invested $35 million into phase two, which offered short-term (up to 180 days) lump sum loans that either carried a 6.5 percent interest rate or were interest free. The minimum loan amount for this phase was $5,000, and the maximum was $100,000.
Loan proceeds could be used only to maintain or restart a business in a designated area or in a temporary location in one of the qualifying parishes that sustained damage or interruption of operations from hurricanes Katrina or Rita. Banks were essential partners with the Small Business Bridge Loan program as they contributed staff time to help develop the program and then originated and serviced the loans on the state's behalf. (See Capital One and Whitney National Bank articles.)
As it became clear in fall 2006 that SBA loans and insurance proceeds were arriving more slowly than anticipated, the state set aside more than $200 million for a grant and loan program for small businesses. The first phase of the Business Recovery Grant and Loan program, developed by the LRA and administered by Louisiana Economic Development (LED), was launched in January 2007 and enabled nearly 3,500 grants of up to $20,000 to small businesses and loans of up to $250,000 to more than 350 businesses. A second phase of this program was launched in April 2008. It aimed to help an additional 1,500 small businesses.
These funds are not only being used as emergency funding. They are being invested in innovative, hard-working businesses, which use the funds to pay critical operating expenses, diversify business offerings, and provide critical services to communities.
The funds support the rebuilding of the fishing industries in Plaquemines and Cameron Parishes and serve as operating capital for cultural businesses that retain the spirit and soul of our state. Additionally, these funds will repair retail and service companies, like CHL Linen in New Orleans, which uses its funds to buy fabrics that will help it replenish its stock and serve its customers.
Another company, Beary Cherry Tree Daycare, uses its grant award to pay for increased insurance costs so it can provide a critical community service. Businesses apply for these grants and loans at designated local community development financial institutions (CDFIs). These CDFIs and other community-based lenders originate and service these loans.
The LRA and LED will apply approximately $90 million of the repayment stream from the Business Recovery Grant and Loan program to establish a revolving loan fund for small businesses in communities in South Louisiana. This fund will help ensure a continued supply of capital for small businesses in the affected communities.
The LRA administers the $13.4 billion in federal disaster recovery funds delivered, using the Community Development Block Grant (CDBG) program. Early in the recovery, the LRA prioritized the bulk of this funding to be used for replacing lost housing stock and infrastructure repairs, with a smaller allocation carved out for economic development. We channeled most of this funding into assistance for homeowner-occupants through the Road Home program, which soon became the largest home rebuilding program in American history.
The Road Home program offers grants to homeowners for their losses up to $150,000, less money received from their insurance companies. So far, we have disbursed more than $6.7 billion directly to more than 115,000 homeowners, so they can repair their storm-damaged homes through the Road Home.
Participating homeowners must agree to covenants on their property or enter into contracts ensuring that any new or rehabilitated structure will meet new building code requirements and FEMA elevation requirements, if applicable. In addition to rebuilding funds, Louisiana has launched a large home elevation program, devoting a combination of $1 billion in CDBG funds with $750 million in Hazard Mitigation Grant program dollars through FEMA. This will ensure that rebuilt properties will be safe from future hurricanes and floods.
We have also allocated approximately $1.5 billion in CDBG funding for workforce and affordable rental housing, through our Piggyback program. This program couples CDBG funds with low-income housing tax credits to create unique, mixed-income, and affordable housing units. We have approved more than 30 such projects, and 13 have closed and are under construction.
In addition, we created a Small Rental Property Repair program to aid small "mom and pop" landlords, who provided most of the rental housing for the New Orleans workforce prior to Katrina. So far, the state has awarded grants to approximately 6,800 owners of rental properties to restore about 12,800 units.
The grants are payable at the completion of construction and renovation. Of these, approximately 1,500 owners have received firm commitments from the state and are proceeding to complete their units. Nine projects totaling 13 units have been completed.
Skyrocketing insurance costs, coupled with the housing credit crunch, are slowing the repair and replacement process for many owners, but we know that more than 1,000 units are currently under construction. We are working with financial institutions to use our "conditional award letters" to back financing for these landlords, many of whom have had difficulty securing loans for their repairs.
Our partner agency, the Louisiana Housing Finance Agency (LHFA), is also working to produce about 7,500 units across the state through its tax-exempt bond and HOME Investment Partnerships programs. Additionally, GO Zone tax credits have already produced about 2,200 rehabilitated or newly constructed rental units.
The LRA designated $700 million of its federal disaster recovery funds for the Long Term Community Recovery program, which provides funds to support implementation of local long-term recovery plans in the most heavily affected communities in the state.
The program is generally used to repair municipal infrastructure damaged by the storms and otherwise to help enhance communities as places to live and places to invest for residents, business owners, and the financial institutions that support them. These funds supplement an almost $7 billion set aside for infrastructure repairs by FEMA, of which the state has disbursed more than $3 billion to reimburse local governments for their repairs.
The LRA has directed its focus to the implementation of longer-term strategies and the coordination of resources and partners to carry out that goal. As such, the LRA should be a useful partner for banks seeking to invest in the future of Louisiana. Our planning efforts, many of which are outlined on our Web site, provide a blueprint for the region's future to help guide assessments of different investment opportunities.
We continue to channel significant state and federal resources into recovery efforts, which should leverage private investments and increase confidence that our communities are open for business. And, together with our partner state and local agencies, we have our fingers on the pulse of the growing Louisiana economy and are eager to share ideas and opportunities with investors seeking to support our state's growth.
Along with our neighbors in Mississippi, Texas, Alabama, and Florida, we recognize that Louisiana needs banks and other investors to support our continued recovery from the hurricanes of 2005. Without the continued commitment by banks to invest in our businesses and people, we will not be able to continue to move forward.
We also recognize that we have a strong economic foundation in place; together with the public sector funding initiatives, entrepreneurial spirit among our business owners, and pride and dedication among our homeowners and other property owners, we offer countless opportunities for a strong financial return.
At the LRA, we are eager to help match your investment appetite with the right business opportunity. We know Louisiana cannot thrive based on government investments alone. It is through banks believing in our state and investing in our small businesses, our property owners, and our future that we will meet our goal of rebuilding a better Louisiana.
For more information, e-mail the LRA.
The Louisiana Recovery Authority's Core Programs
The LRA has focused its efforts in three areas, with multiple programs supporting each.
• Small Business Bridge Loan Program
• Business Recovery Grant and Loan Program
• Small Business Revolving Loan Program in South Louisiana
• Road Home program supporting homeowners
• Piggyback program combining CDBG and LIHTC programs for mixed-income developments
• Small Rental Property Repair Program supporting small-scale landlords
• Long Term Community Recovery program
• FEMA reimbursement for infrastructure repairs by local governments