TEXT ON SCREEN: August 29, 2005

REPORTER: Early Sunday morning, Katrina had built into a dangerous Category 5 hurricane, barreling towards New Orleans.

NARRATION: On August 29, Hurricane Katrina slammed into the Gulf Coast. The world watched as the levees surrounding New Orleans failed, flooding the city, leaving tens of thousands stranded and more than 1,000 dead.

DEPUTY CHIEF WARREN RILEY: There is absolutely nothing here. We advise people that this city has been destroyed.

NARRATION: Criticism of state and federal officials for the levee failures and botched emergency response was all over the news. But another story was beginning.

PRESIDENT GEORGE W. BUSH: We will do what it takes, we will stay as long as it takes, to help citizens rebuild their communities and their lives.

JAMES PERRY: I remember thinking we have the best opportunity to rebuild this city as one of the greatest cities in America.

NARRATION: Katrina launched one of the largest housing rebuilding program in U.S. history, and the outcome has loomed over every disaster since.

ARCHIVAL (CNN, 11-10-12):

NARRATION: But what have we learned?


SHEPARD SMITH: You can see widespread flooding, street after street underwater…

NARRATION: Twenty-four hours after the levees failed, Governor Kathleen Blanco flew over New Orleans.

KATHLEEN BLANCO (GOVERNOR OF LOUISIANA, 2004-2008): It was shocking to see the amount of damage. Houses were just jumbled . . . . It was just a mess.

NARRATION: More than 200,000 homes had been destroyed statewide. New Orleans was hit hardest.

KATHLEEN BLANCO: We had a housing disaster, a whole big old housing disaster that was untenable. We were operating in the dark. We didn’t have anyone who had an instruction book to tell us how to do this.

NARRATION: Nor did they have the funding. Blanco went to Washington, where Congress had allotted Louisiana far less per home than Mississippi, whose leadership had more political clout.

KATHLEEN BLANCO: It’s time to play hardball, as I believe that’s the only game that Washington understands.

KATHLEEN BLANCO: In the end I think I was very effective. I made them do what I wanted them to do.

NARRATION: Nearly a year after the storm, Blanco got the federal funds and finally launched her signature program, the Road Home.

JAMES PERRY (DIRECTOR, GREATER NEW ORLEANS FAIR HOUSING ACTION CENTER): The name, I think, says it all. The idea is that the Road Home program wants to help people find the road home.

NARRATION: To help residents rebuild their homes, the program promised grants of up to $150,000, minus any insurance or other federal reimbursements. And Blanco insisted on rigorous anti-fraud measures.

KATHLEEN BLANCO: We had been publicly accused of being corrupt and unable to be trusted with large sums of money. And when I heard that public accusation I made a decision that this was going to be the most honest program that the federal government had ever witnessed.

NARRATION: To take on the huge task of distributing all the grant money to homeowners, Blanco’s administration hired I.C.F. International, a private contractor based in Virginia. But soon things began to go wrong.

WOMAN: You call Road to Recovery, they give you a number to call and call and call and call. Nothing.

JAMES PERRY: When the Road Home program started, frankly it was a huge mess.

REPORTER: Walter Thomas says he has found every document, filed every form the Road Home asked for to help him rebuild. Six months later he finally got a call back.

JAMES PERRY: News media just told story after story of the Road Home program overall just not allowing recovery to happen.

NARRATION: Applicants found themselves swimming in red tape. The anti-fraud measures required fingerprints and lots of documents, which seemed unfair to those who had lost everything. I.C.F. had no experience managing a program the size of the Road Home. Many applicants reported having to wait months for their appointments because the company was understaffed, and errors I.C.F. made in calculating grants caused even more delays.

KATHLEEN BLANCO: I never dreamed it would take as long as it did.

MELANIE EHRLICH (CITIZENS’ ROAD HOME ACTION TEAM): Their name was synonymous with mismanagement, really cruel treatment of applicants, disdain, incompetence.

NARRATION: I.C.F. said it was doing everything it could as it built a huge infrastructure from scratch. But critics also faulted Blanco’s administration for not initially setting a timetable by which the company had to deliver a certain number of grants.

ARCHIVAL (FOX NEWS, 11-19-06):
NEWS REPORT: Hurricane Katrina victims storming the Louisiana state capitol saying: Show us the money.

NARRATION: As frustration mounted, the Louisiana legislature voted to fire I.C.F. Blanco refused, and later gave the company more money for an expanded contract.

KATHLEEN BLANCO: You know, I mean it’s like O.K., so you want to start over. Who do you want to start over with? Any company at the outset would have had the same problems.

REPORTER: More than 105,000 people have applied. Only 506 have received money.

NARRATION: It also became clear the formula the state and I.C.F. were using to calculate the awards was flawed, creating inequities that later led to a discrimination lawsuit. Homeowners in Black neighborhoods, who suffered the same amount of damage as those in white neighborhoods, often got less grant money. The amount was determined, in many cases, by what a home was worth before Katrina, not what it cost to fix after.

JAMES PERRY: You end up having to decide which thing you’re not going to do, right? So, what is it? You don’t do the roof? Or do you decide to just not have any electricity? Or – You know what? I just won’t do walls.

NARRATION: Then, in the spring of 2007, the federal Department of Housing and Urban Development, or HUD, which oversaw the Road Home, made a startling announcement. It now said the program didn’t adhere to its rules and had to be re-designed. That brought everything to a halt.

CHARLES GIBSON: There’s new political fallout from Hurricane Katrina to report tonight. Louisiana’s governor Kathleen Blanco…

NARRATION: HUD’s ruling was the last straw. Blanco’s political career was over.

KATHLEEN BLANCO: I have decided that I will not seek reelection as your governor.

KATHLEEN BLANCO: You know everything is politics in our world. And I did my level best, and it was not enough.

NARRATION: By 2009, I.C.F. says that despite 179 program changes made by the government, it more than fulfilled its contract, disbursing nearly $8 billion to 124,000 homeowners statewide. And while New Orleans had come a long way, when the new HUD secretary came to town, he couldn’t believe what he saw.

SHAUN DONOVAN (SECRETARY, U.S. DEPT. OF HOUSING AND URBAN DEVELOPMENT): The memory of traveling down in New Orleans is one of the most searing memories I have as secretary. I was surprised to find so many families still struggling to get back in their homes.

MARGUERITE WARSLEY: Without Road Home? Hmmph! I don’t know where I would be without Road Home, I’m nowhere with Road Home.

NARRATION: Eight years after the storm, Marguerite Warsley is still one of the struggling. She says she got recovery money in dribs and drabs, which never allowed her to fully rebuild. First insurance money, then a Road Home grant, and finally a payout resulting from the discrimination lawsuit. And over all that time, termite damage forced her to redo repair work she had already done.

MARGUERITE WARSLEY: Every time I had money I thought I was going to go back into my house. But the money – it’s like pouring water through a sifter.

SHAUN DONOVAN: Frankly our program wasn’t flexible enough and there were too many barriers or too much red tape to folks being able to really utilize it the way they should.

JAMES PERRY: When I walk around the city of New Orleans when I drive around the city of New Orleans there are two different recoveries: one that’s very, very successful, and one that, at this point at least, is still a failure.

GINGER ZEE: It is chaos along the Jersey Shore…

ARCHIVAL (FOX NEWS, 10-29-12):
MAYOR MICHAEL BLOOMBERG: Conditions are deteriorating very rapidly.

GINGER ZEE: This city is basically underwater.

SHAUN DONOVAN: After Hurricane Sandy hit, I understood the scale and the magnitude and what it would take because of what I had seen in Katrina.

ARCHIVAL (CNN, 11-17-12):
SHAUN DONOVAN: We have families that will be out for a long rebuilding process, where homes have been completely destroyed. And our experience is that it will take years.

NARRATION: As President Obama’s point man for Sandy recovery, Donovan says he’s learned Katrina’s lessons. He says he’s introduced a grant formula that’s more fair, an application process that’s more streamlined, and incentives to better protect against future storms. But a year after Sandy, some of the complaints echo those heard in the wake of Katrina.

ARCHIVAL (NJ NEWS 12, 9-18-13):
PAULA GALIDA: They say there’s all this money out there, but we didn’t get any of it and I don’t know of anybody that did.

SIMONE DANECKER: The state has got us again wrapped up in so much paperwork. It consumes your life.

SENATOR CHARLES SCHUMER: What I wanted to say to you though, Secretary Donovan, is to just convey the frustration so many homeowners are feeling.

SHAUN DONOVAN: This process is never going to be simple in a way that would make it as fast as families would like, and for a family going through what they’re going through after a disaster, it never can be fast enough.

NARRATION: States are still in charge of distributing federal grants to homeowners. And one of the companies New Jersey hired to help with its Sandy housing recovery programs is I.C.F., which after the Road Home went on to build a business that brought in nearly a billion dollars in revenue last year. In a response to written questions, I.C.F. defended its performance after Katrina and estimated that its Sandy contract will exceed $10 million for analytical and program support. For his part, Donovan says he’ll hold states accountable for their rebuilding decisions.

SHAUN DONOVAN: What we care about is: Is the money being used effectively? Are we getting what we paid for? And ultimately, if communities don’t do that, we will take money back.

NARRATION: The story of Sandy’s recovery is still unfolding. But this time, no one can say they there wasn’t a guide. There was: Katrina.

JAMES PERRY: This story ends up being the roadmap, the instruction booklet, the how-to story of dealing with disaster. It also tells you what not to do when dealing with a disaster.