SPI Insights

The Texas General Land Office (GLO) notified the city of Houston on April 22 that it will seek approval to cancel nearly $1 billion in federal Hurricane Harvey housing recovery funds to the city and take over administration of the program.

GLO Commissioner George P. Bush wrote Houston Mayor Sylvester Turner that due to ongoing concerns about the city’s administration of Community Development Block Grant – Disaster Recovery (CDBG-DR) programs, the land office would draft an amendment to the state’s action plan. Upon approval by the U.S. Department of Housing and Urban Development (HUD), the amendment would eliminate all funding to the city and transfer all responsibility for administering disaster assistance to city residents to the GLO.

Bush wrote that the city rejected GLO’s efforts to help it meet performance goals and to renegotiate the contract between the two parties to allow for more timely disbursements of allocated funding. Four years remain in the six-year period in which the CDBG-DR grant must be used.

A week prior to his letter to Turner, the Texas General Land Office Community Development and Revitalization division (GLO-CDR) wrote Turner noting a lack of timely expenditures in a March 17 performance review but also stating appreciation for the city’s response to resolve the outstanding item and finding its March 31 status report addressed the GLO’s findings.

According to the situation report, the GLO had approved 181 applicants for eligibility as of March 31. Of those, 59 homeowners have received notices to proceed on construction and 44 received reimbursement checks.

Turner said in response to Bush’s letter that the GLO did not provide written instructions for documents necessary to approve home applications, made several process changes, and required the city to resubmit hundreds of files. He also noted that the GLO would not fund three-bedroom homes.

Bush offered a compromise to Turner – within a week of receipt of the letter, the city could agree with the GLO to mutually terminate the contract in full and negotiate the possible retention by the city of its Multifamily Rental Program, Homebuyer Assistance Program, Public Services, and Planning activities under a new subrecipient agreement. This option would enable the city to continue as an administrator of critical recovery efforts that are showing progress.