A recent report discusses  the issuance of building permits to properties affected by Hurricanes Katrina and Rita.

Permit appeals pay off for N.O. residents

Beatrice Haynes came to City Hall with a huge problem this week, but like many of her neighbors with flood-damaged homes in New Orleans, she left smiling.

Though her eastern New Orleans home was virtually destroyed when it took on 5 feet of water in the wake of Hurricane Katrina, it took Haynes less than five minutes to convince a building inspector that the house needed only moderate renovations, which immediately qualified her for a building permit.

It didn't take much convincing. After glancing at 16 pictures of the gutted property, which showed mud and mold climbing the walls, the inspector reversed the findings of a field inspection that said the home was substantially damaged -- meaning more than 50 percent of its value -- and must be raised to meet the current elevation standards mandated by the Federal Emergency Management Agency.

Haynes' successful appeal brought the damage assessment on her home under 50 percent, a magical standard because it means a home is not subject to meeting the elevation standards before it can be repaired. Instead, the property is "grandfathered" into the federal flood insurance program at its current elevation.

Contractors say that decision likely saved Haynes tens of thousands of dollars. But FEMA officials, while not commenting on Haynes' case directly, are expressing concern that the city's practice of subjectively lowering damage assessments violates the intent of flood plain regulations -- which is to help guide residents on how to rebuild smarter and avoid future flooding. City officials counter that flooding from Katrina was caused by catastrophic -- and preventable -- failure of the flood protection system, not because home elevations were too low.

For Haynes, who said she expects to spend $100,000 to repair her $135,000 home, not having to pay additional money to raise her house is critical to being able to afford the repairs. "Right now I feel good," she said. "I walked right in and got (the permit.)"

Though Mayor Ray Nagin's rebuilding commission recommended this week that the city stop issuing building permits in hard-hit areas until local officials determine which neighborhoods are still viable, it may be too late to stop many homeowners from moving ahead with their plans.

In the past three months, the city has issued more than 6,000 residential building permits, according to Mike Centineo, director of the city's Department of Safety & Permits. Centineo said most of those permits went to homeowners in areas that were heavily flooded.

As a result, construction work is booming throughout the city, even in devastated areas such as Lakeview, where some residents already have moved back into some homes that were ruined by the storm.

"I've never heard nothing but disaster when it comes to getting a permit in New Orleans, but I haven't run into any problems lately," said contractor Dick Collins, who is working on flood-damaged homes in Lakeview and Gentilly. "If anything, it's been easy."

The city's willingness to be flexible on building permits was made clear in December, when Greg Meffert, the city's chief technology officer, announced that local officials would try to work out damage estimates to suit residents' needs.

"If it is a 'gray zone' call, virtually 100 percent of the time, we're going to go in the direction of where the resident wants us to go," Meffert said at the time.

For many homeowners, it's a matter of simple economics. Contractors say raising some homes, particularly those built on slabs, can top $100,000 before repairs even begin. Because many homeowners are finding their flood policies will pay enough to cover repairs to their homes -- but not to demolish and rebuild -- they are doing all they can to complete the work with the money they have.

For homes below the base flood elevation, that means persuading the city that the home suffered less than 50 percent damage. Homes moved into that category do not have to be raised, even if they're several feet below the current elevation requirements. The assessments affect thousands of homeowners, as records show that about three-quarters of the homes with flood insurance in New Orleans don't meet elevation requirements, which are based on federal maps showing flood hazards.

The city damage estimates affect only homes below the base flood elevation. Homes that are structurally sound and above the minimum elevation are eligible for a permit immediately, Centineo said.

Not all residents are opposed to raising their homes. City officials report that some residents have requested damage assessments that put them above 50 percent, which qualifies them for up to $30,000 in federal grants for elevating or demolishing a house. But the vast majority want their assessments reduced, according to Deputy Chief Building Inspector Michael Cavataio, who oversees the assessment operation.

Siding with homeowners

Since mid-December, an average of 250 people per day have challenged their damage assessments, and city officials have approved 90 percent of the appeals, Cavataio said.

Such lenience worries officials at FEMA, which oversees the National Flood Insurance Program. FEMA spokesman Ed Pasterick said he's concerned that city officials are "arbitrarily" reducing damage estimates without considering the consequences.

"I've never heard of an instance where the officials have indicated up front that they will, in effect, ignore the regulations," Pasterick said. "They know full well that the damage was worse than that."

If FEMA concludes that city officials have systematically underestimated the damage to homes in New Orleans, the agency could boot the city out of the flood-insurance program or take actions that would dramatically increase the price of flood insurance in the city, Pasterick said.

Centineo said FEMA officials have not expressed any concerns to him.

"I am sure FEMA is going to be all right with what we're doing," Centineo said. "They are always welcome to come down and look over our shoulder. That is why we wanted photos from people so that when FEMA comes to audit us, we can show them the documentary evidence we used to make the determinations."

To determine the extent of damage to New Orleans' housing stock, city officials hired the Shaw Group, which brought in about 70 subcontractors to perform the work. Initially, some city inspectors grumbled about the qualifications of those subcontractors, which at one time included a pet groomer and a pizza deliveryman.

After city officials complained, Shaw got rid of the bad hires and agreed to make sure that all new inspectors had construction experience and passed an interview with the city's chief building inspector.

Despite those efforts, many of the damage estimates have proven unreliable, city officials said. Cavataio said he's come across dozens of cases in which a home was considered at least 50 percent damaged, even though little or no water ever entered the home.

Another problem, Cavataio said, is the standard used to determine substantial damage. If a home took anywhere from 2 feet to 7 feet of water, it is automatically assumed to be at least 50 percent damaged, according to a score sheet created by the Army Corps of Engineers, which designed the rating system. Cavataio said a more reasonable standard would be at least 4 feet of water.

Centineo agreed, saying he has visited many homes with 2 feet of water that were not 50 percent damaged.

"The original assessments may have been a little high, but we had to err on the side of being conservative," Centineo said. "Even though it is a little painful to go through the review process, it keeps the credibility of the system in place."

Shaw Group spokesman Chris Sammons said the company stands by its work.

"We performed a number of inspections for the city and we're confident of the high quality of those inspections," Sammons said. "We followed the guidelines established by the city and the corps to assess the damage."

Contractors and homeowners have blasted the inspection process, which relied exclusively on external observations of damaged properties. While that approach made it possible for two-member inspection teams to conduct 90 to 110 inspections per day, critics say these "drive-by" inspections bear little resemblance to reality.

"The Shaw Group did not do what they needed to do," said contractor Kurt Werling, who is renovating eight homes in Lakeview.

Some residents have successfully argued that the money they're spending is not all on repairs, but also to renovate their properties. Only money spent to make a house habitable should count in reviewing the damage assessment, they say.

Werling said one of his elderly clients panicked when a city official told her she had to raise her $322,000 Lakeview home, which took 3 feet of water and suffered about $90,000 in flood damage. Though she and her husband are going to spend about $225,000 on their house, more than 60 percent of that work is elective, he said.

Werling said he was able to get a permit for the home once he explained the situation to a city inspector.

"This is an older couple who have lived in their house for 46 years," Werling said. "They've never renovated the house because they didn't want the inconvenience. But they decided they might as well do the work while they're stuck in Baton Rouge."

Meffert said the city's easygoing approach does not cover all flood-damaged properties, but he said officials would be willing to work with anybody with damage assessed at 57 percent or less.

Making it 'livable'

Still, that covers a wide range of destruction.

Consider Frank Barrett's house on Memphis Street. The one-story property sits in one of the lowest parts of Lakeview, where more than 10 feet of water swept through the neighborhood, rendering every home on the block uninhabitable.

Barrett was shocked four months ago when he first visited the house where he grew up. The grand piano that once sat in the middle of the living room was in pieces. The ceilings had collapsed. He couldn't even find the dining room table.

"Positively nothing was salvageable," said Barrett, former president of the Lakeview Civic Improvement Association.

Water reached the attic, wrecking the home's electrical system and destroying almost everything below the ceiling. Given the scope of the destruction, Barrett was relieved the damage assessment was no more than 55 percent.

Still, Barrett said, the estimate was a death sentence for the property. The slab house sits 2 feet below the current elevation requirements for Lakeview, and Barrett's contractor said it would cost $80,000 to raise it.

"There was no way I'd do that," said Barrett, a longtime Lakeview real estate agent who estimates the house was worth $120,000 before Katrina.

His contractor went to City Hall twice to appeal the ruling, Barrett said, but inspectors refused to reduce the assessment each time. The city didn't relent until December, when Barrett came armed with pictures showing an intact plumbing system and an engineering report showing no foundation problems.

Barrett said the permit process was "torture" for his father, who has lived in the house for 53 years.

"My father is career military -- he doesn't show emotions," Barrett said. "I have only seen him cry twice: the first time when my mother died, the second time when I told him I had the permit on his house."

Barrett said it will cost about $46,000 to make the house livable for his father, who hopes to move back in later this year. However, he said he didn't have to produce an estimate or even answer any questions about the scope of repair work to get his damage estimate reduced.

"It is none of the city's business how extravagantly I renovate my house as long as it is done safely and according to the city code," Barrett said. " If I wanted to spend $200,000 on that house, I could. But I can do what is necessary for less than $50,000."

Centineo said he can't address the specifics of Barrett's situation, but he acknowledged that homeowners do not have to provide construction estimates to get a lower damage assessment. Typically, he said, inspectors only need to see pictures that disprove the city's assumptions that certain items didn't survive the flooding, such as plumbing or interior walls.

The appeals line forms early. There are typically about 100 people waiting to see an inspector when the doors to the eighth-floor office open at 8 a.m. Cavataio said it usually takes five minutes to review a case, and about 15 minutes if there is a dispute.

If a homeowner can't prove their case with pictures, a city inspector will visit the property to look at the damage, but that's rare, Cavataio said.

Centineo said there is nothing arbitrary about the system.

"They have to give us documented evidence that there are things we made a mistake on. . . . We know it is not a perfect system, but we are doing the best we can under extraordinary circumstances," he said.

A missed opportunity?

Though homeowners appreciate the city's flexibility, FEMA officials said such gratitude may be short-lived.

"They are saving them some money, but they are not doing them any favors," Pasterick said. "This is not the last storm that is going to hit New Orleans. And they are letting them rebuild in the same way that made them unsafe before. What they've done is pass up the opportunity to make it safer."

Centineo said the post-Katrina flooding should be attributed to a failure in flood protection, not homes being built too low. "This was a catastrophe, not an elevation problem," he said. "If the floodwalls stay up, our elevations are fine."

He said FEMA officials responded that "flooding in any way is a flood. I kept saying, 'Don't do a knee-jerk reaction. Do your homework and give us a fair shake.' "

Pasterick said he has asked officials at FEMA's regional office to look into the city's assessment program. James McIntyre, a spokesman for the agency's field office in Baton Rouge, said recent visits "have shown that the city is administering its program within the scope and intent of all FEMA guidelines."

But if the agency ultimately determines that homeowners got breaks they didn't deserve, FEMA could treat these properties as new homes, which would take away the price protection that has kept premiums low for homes below current elevation standards, Pasterick said.

For homeowners whose properties are below the height requirements, that could prove painful. Annual premiums for a one-story house in Lakeview could jump from $660 to $2,850, according to FEMA.

However, FEMA could not order homeowners to tear down their houses, Pasterick said.

"Theoretically, we'd work out an arrangement with the city to correct the violation," Pasterick said. "And if they don't correct it, we can suspend them indefinitely until they do."

Of the nearly 20,000 communities that joined the flood insurance program, about 200 are on suspension, meaning residents in those places cannot buy or renew their flood insurance policies.

Despite his concerns, Pasterick said it is unlikely FEMA will do anything that greatly imperils the comeback of New Orleans.

"When it gets to the point where we start to threaten probation and suspension, it becomes a very active political situation," he said. "You get local congressmen and the like involved. So in a difficult situation like this, you don't end up going to the letter of the law. You negotiate a deal."

With talk of local officials slowing down the rebuilding process, at least temporarily, many residents are rushing to get their permits while the permitting is good.

"We're not going to wait for the city or the feds to do things," said Al Petrie, an investor who has raised $1 million to buy flood-ravaged properties in Lakeview. "We're going to try and do things ourselves."

To Petrie, that means making sure that his little corner of Lakeview survives. So far, the signs are good. Within a block of his flooded home on Vicksburg Street, construction and demolition already has begun on five projects, including a new townhouse for Petrie and his brother.

It's probably the busiest neighborhood north of the interstate. Though all but one of the businesses on nearby Harrison Avenue remain closed, an average of 800 people have been showing up every Sunday for Mass at St. Dominic Church, and it was standing-room-only for Christmas services, which drew more than 1,400 parishioners.

Before Katrina, the church drew about 3,000 parishioners to seven Masses each weekend, said the Rev. Paul Watkins, associate pastor at St. Dominic.

"To have anywhere from a third to a half of our congregation show up every Sunday -- when nobody lives in the neighborhood -- says a lot about the community," Watkins said. "It makes me cry sometimes when I think about it. They are willing to pass up several churches to come home."

Petrie said the church has been a welcome anchor for the neighborhood. But it will be a while before it has neighbors. Charles Ciaccio, a principal of Lakeview Fine Foods on Harrison, said his grocery store probably won't open until the end of the year. He said most of the other merchants on the street are on the same timetable.

Ciaccio said he joined Petrie's investment group because he believes it's the best way to make sure the neighborhood passes muster when planners or other officials ultimately determine the viability of various parts of the city.

"We don't want a situation where people panic and just start selling off without much thought," Ciaccio said. "It is our desire to be in a position to help the redevelopment by participating in it."

The group plans to start by buying up 10 properties in the neighborhood and redeveloping them. They expect most of the buyers to be former Lakeview residents who want to return to the area.

"My overall thought is that there are a lot of houses in Lakeview that can't be preserved, but our neighborhood can be preserved," Petrie said. "A neighborhood is people, not structures."

One of the first people to move into the neighborhood will be Werling, who expects to finish work on his Vicksburg Street house by month's end. Werling, who is building Petrie's townhouse and several other projects for the investment group, said he has no qualms about moving his wife and two young boys back into the neighborhood.

He said his only fear is that some planning group eventually will tell him to leave.

"If they say I can't live in Lakeview, I'm not only moving out of New Orleans, I'm moving out of the state of Louisiana," Werling said. "I'm not moving Uptown. If the city can't keep certain parts of town alive, I'm going. It's just not worth it."

 To view the online report please click on the following link:

FEMA New Orleans Repairs to Damaged Property