A 2006 congressionally mandated program to develop innovative intermediate housing for displaced victims of Hurricane Katrina was doomed from conception ("preordained...to be difficult to implement from the start"), says the Homeland Security Department office of inspector general.

In a report dated Dec. 28, the OIG says the $400 million Alternative Housing Pilot Program had two irreconcilable goals: development of alternative types of prefabricated housing to the trailers with which the Federal Emergency Management Agency had been housing displaced persons, and the quick construction of interim housing.

Development of alternatives to the status quo, the OIG notes, requires an innovative, even experimental, process that takes time, planning and allows for the risk of failure. With homeless hurricane victims waiting for better housing, FEMA could not allow for that kind of experimentation. The agency ended up giving Gulf states only 35 days to create and submit project designs--a factor in the failure of some of the alternative housing projects, the OIG says.

Even the notion of interim housing wasn't clear throughout the program, the report adds, since housing units changed over the course of the program to become larger and more substantial. The successfully built houses will mostly serve as permanent housing--but FEMA doesn't have the mandate or the budget to build permanent houses.

Of the five projects in four states funded by the program, an effort in Texas to build 250 units made from panels manufactured in Italy and shipped to the United States in flat packs was the worst failure, with only six houses being built after an expenditure of more than $5.5 million. Each unit could supposedly be assembled in 8 hours by four workers and be ready for occupancy within a week.

Texas state officials blame the contractor, the New Orleans, La.-based Heston Group USA. The OIG says Heston Group "could not deliver the product within an agreed-upon timeframe," and four of the six built units had construction problems. In a Houston warehouse leased by the contractor are additional panels, but many are unmarked and some are damaged, the report adds.

Even programs considered by local officials to be a success underwent unexpected cost increases and experienced other difficulties. For example, a program to build modular homes in Bayou La Batre, La., had to pay nearly $2 million for a highway turnoff and access road improvement. The state of Florida, where the houses were constructed, held up the transportation of some housing units until FEMA personnel intervened. Per unit costs also increased, ending up at a reported $180,000 per house, including furniture, the report says.

"More families could have been housed faster and at a lower cost if the program had been conducted as a housing program by agencies with a mandate for, and experience in, creating permanent housing," it adds.

For more:
- download the report, OIG-12-20 (.pdf)

Related Articles:
FEMA examining role of grants in insurance disincentives 
A record year for federally-declared major disasters 
FEMA grants cut by a third in omnibus