(November 12, 2008) Today the NAACP Legal Defense and Educational Fund as part of a coalition of Civil Rights and Fair Housing groups filed a lawsuit against the U.S. Department of Housing & Urban Development and the Louisiana Recovery Authority. The suit alleges that the Road Home, Louisiana’s Hurricane Katrina recovery program, discriminates against African-American homeowners in New Orleans.

The Road Home, an $11 billion federally-funded program, is the largest housing redevelopment program in U.S. history. The suit is being filed in the U.S. District Court for the District of Columbia on behalf of five individuals representing a class of more than 20,000 African-American homeowners and two fair housing organizations, the Greater New Orleans Fair Housing Action Center and the National Fair Housing Alliance.

“African American homeowners in New Orleans are being unfairly prevented from reclaiming their homes by the discriminatory design and implementation of the Road Home program. African Americans are facing huge gaps between the amount of their Road Home grant awards versus the cost to rebuild their homes when compared to their white counterparts,” said John Payton, LDF President and Director-Counsel.

HUD is responsible for overseeing Louisiana’s use of federal disaster recovery funding and assuring that the funds are used to promote equal housing opportunity.

“HUD has the duty, authority, and ability to make sure Louisiana distributes funds for the Road Home program fairly,” said Shanna L. Smith, President and CEO of the National Fair Housing Alliance. “Instead, it allowed the state to use a formula that prevents African-American homeowners in New Orleans from rebuilding their homes. Rather than using this multi-billion dollar program to address the needs of all homeowners, HUD has put African-American families at risk of losing their homes.”

The plaintiffs in the case are represented by the NAACP Legal Defense and Educational Fund, the Washington D.C. plaintiff’s law firm, Cohen Milstein and the Greater New Orleans Fair Housing Action Center.

“Forty years after the passage of the federal Fair Housing Act, residential segregation still permeates New Orleans,” said James Perry, executive director of the Greater New Orleans Fair Housing Action Center. “Homes in communities of color still have lower values than those in white communities even when the condition, style and quality of the homes are comparable. Louisiana’s program builds on this history of discrimination. Only when housing opportunities are created for all residents of New Orleans will our recovery truly be successful.”

According to Cohen Milstein’s Joseph M. Sellers, head of the firm’s Civil Rights and Employment Practice, “HUD and Louisiana have perpetrated a cruel hoax on African American victims of the Katrina and Rita hurricanes by offering assistance that Congress intended would permit them to rebuild their destroyed homes but which falls far short of its noble promise by linking it to the depressed values of their pre-storm segregated housing rather than to the cost of reconstruction.”

The discrimination, in this case, is the result of the formula used to determine Road Home grants. Grant awards are based on the lower of two-values: the pre-storm value of the home, or the cost of damage. Home values in predominantly African-American neighborhoods are lower than the values of similar homes in white neighborhoods. As a result, the grants for African-American homeowners are more likely to be based upon the pre-storm value of their homes, leaving them without enough money to rebuild. In contrast, white homeowners are more likely to receive grants based on the actual cost of repairs. The lawsuit filed today seeks to eliminate this disparity.