13 Investigates: State starts Harvey recovery program amid Houston's slow progress

HOUSTON, Texas (KTRK) -- Kim Ozain pulls out several large Ziploc bags filled with home improvement contracts and receipts.

She's been keeping track of every penny she's poured into her northeast Houston home after Hurricane Harvey flooded it with two feet of water in August 2017.

"All I can remember is just watching water coming through the floor and through the doors," Ozain told 13 Investigates' Ted Oberg. "I tried to save what I could."

Despite those efforts, Ozain spent nearly $30,000 repairing her wooden floors, sheetrock and on other home improvements.

She received about $10,000 from the Federal Emergency Management Agency, which requires her to keep receipts for three years. But, as the storm's three-year anniversary nears, Ozain is still not sure she will get reimbursed for the $18,000 she spent out-of-pocket.

She applied for reimbursement from the City of Houston's Harvey recovery program two years ago and hasn't heard from the city since.

She's not alone. Only 80 people have received aid as of March 31, but the city said the delay in approving applications is not its fault.

For past natural disasters, the Texas General Land Office led recovery efforts, but following Harvey in August 2017, the City of Houston and Harris County were granted the ability to control their own programs, including application intake and the flow of funds aimed at helping homeowners impacted by the hurricane.

But, that also means Houston has to submit all of its applications to the GLO for final approval. The city blames the GLO for rejecting a high percentage of its applications for trivial items, such as expired drivers licenses or child support and other deficiencies in documentation.

"I am furious that the GLO has put requirements in place that prevent (our applications) from moving forward," Tom McCasland, the director of Houston's Housing and Community Development, told 13 Investigates' Ted Oberg. "We've got 1,700 files we'd like to move forward; 725 of them are awesome and moving but we have to get the GLO's approval before we can pull a single nail."

Still, the GLO says the city is only submitting, on average, less than five applications a week for approval. Amid the slow progress, the state plans to take over the Houston's program and is already stepping in to help. Starting Tuesday, the state will start accepting applications from residents who need to repair or rebuild their homes, but haven't yet applied to Houston's program.

More than 16,000 Houston homeowners expressed interest in the city's Homeowner Assistance Program, but only 6,590 were invited to apply as of March 31, according to Houston's latest available Homeowner Assistance Program Situation and Pipeline Report.

The GLO will break ground on its first Houston home this week. The state has also helped complete construction on 1,210 homes for storm victims outside Houston and Harris County's jurisdiction, according to the latest pipeline report on Friday.

"We have been cooperative. What we are not going to do is stand aside while they put the blame entirely on us and then take this program in a completely different direction," McCasland said. "That is not what local control looks like in Texas. It is not something they should be embracing."

Both Houston and Harris County are subrecipients of a Harvey grant and were identified as "slow-spenders due to slow expenditure rates and/or lack of performance based on established milestones outlined in the subrecipient contracts,"according to a federal audit released Monday.

The U.S. Department of Housing and Urban Development audit, which conducted an on-site review of Houston disaster recovery programs dating back to 2008, also cites concerns with Houston's Disaster Recovery's website not properly posting certain program guidelines online, in addition to issues with staffing.

The audit took place during four days in November and found at that time, "the city has failed to make significant progress" and is in jeopardy of losing the funds if they're not used to help the community by the time the six-year deadline comes on August 17, 2024.

The GLO launched its new program after announcing last month plans to strip Houston's control of portions of the $1.2 billion federal Harvey housing program. The city says it will fight back.

"It's a difference of perspective, but that's what's at issue here is a clash of cultures," McCasland said. "We've created a program where we are trying to say yes to as many families as possible and they've created an auditing process that slows down and attempts to say no anytime it hits a barrier and that's the fundamental difference."

Slow progress

Every time Ozain calls the city or goes to the online portal looking for an update on her application, she said there's never any movement.

"I'm not disabled, have no kids in the house," Ozain said, adding her case was assigned to the lowest priority group. "It was just like, I'm not that important right now because they were helping other people."

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But, Houston hasn't helped many others. As of March 31, Houston has issued 44 reimbursement checks, rehabilitated 19 homes and completed 17 home reconstructions as of March 31, according to the pipeline report. Since the two-year anniversary of Harvey in August the city is only helping an average of nine residents every month.

The slow success rate is why Texas GLO Commissioner George P. Bush sent a letter to Mayor Sylvester Turner on April 22, saying he "can no longer allow the City to hinder the progress of recovery efforts for Houston residents."

The GLO said over the last eight weeks, Houston submitted an average of 3.4 applications per week to the state for final approval.

But, McCasland said Houston is ready to push 1,700 applications through the program if the state would grant it a waiver to prevent applications from being rejected by the GLO for issues like an expired driver's license or other out-of-date forms, such as child support, mortgage statements and social security statements.

"I'm going to fight to keep putting the residents first, to continue to push the GLO to give us the waivers so that we can quickly move these 1,700 files we've already reviewed through the process," McCasland said. "I just want to emphasize, these driver's licenses weren't expired in October or November when the documents were submitted. They're just expired when they get to the GLO in some cases."

McCasland said it recently learned the GLO is using a "completely different standard for the documents moving through their (program's) process," but are applying different standards to Houston's program.

The GLO said that is not true and that they both adhere to the same federal rules.

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McCasland said it's been a fight for funding to help residents from the beginning, when GLO wanted to control all the funds, but allowed Houston to run its own recovery program.

He pointed out a week in January, when approval rates for Houston's applications went from 78 percent to 46 percent almost overnight.

"I honestly thought we were working with a team that wanted us to be successful, truly believed it," McCasland said. "Post-January, with that sharp pivot when our file's didn't change, the people working the files didn't change, our processes and policies didn't change, but we went from 75 percent approval to 75 percent rejection. I don't know what their motivation is for that but I know that we didn't change. ... It is impossible for me to see that kind of pivot and think they really wanted us to be successful."

The GLO provided 13 Investigates with the city's error rates from earlier this year. It shows the 78 percent acceptance rate was a one-time occurrence and the city is averaging about 25 percent of applications that are accepted.

The high approval week also coincided with a time when the state had a strike team in place in Houston, assisting the city with applications, the GLO said.

Tired of waiting for Houston to come through for her, Ozain said she wishes the GLO would take over her application, too.

"It's time. If at this point (nothing) is getting resolved with us, we need someone to help us with that," Ozain said. "If someone is willing to come in and help, let them help. I mean, we're all part of the same government."

Program's future

The audit released Monday said the GLO "may have to provide additional oversight as its subrecipient, (Houston), may not have sufficient capacity to properly manage and process its (Community Development Block Grant disaster recovery) funds in a compliant and timely manner."

RELATED: Read the full U.S. HUD Monitoring Report on Houston's Harvey program.

The GLO took the first steps toward stricter oversight last month when Commissioner Bush initiated the takeover process.

It could be months before the city will officially be stripped of its responsibilities because the action has to be approved by U.S. HUD, the federal agency that originally allocated the relief aid to the State of Texas and GLO.

Houston can still appeal to HUD and the courts to retain control of the program and plans to do so.

Last month, Turner said he will "take all necessary legal steps to protect the interest of the people impacted by Harvey and preserve its authority to administer the program."

But, doing that could slow down the program as Houston and the state debate who is in charge.

In the meantime, storm victims like Ozain will continue holding onto old bags of receipts, hoping the ink on them doesn't fade away before they're finally able to hand them over for reimbursement.

"I would like to recoup some of the money I spent if at all possible," Ozain said. "I have the receipts. Every one of them."

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