NEW ORLEANS — An old nightmare has come back to haunt Lisl and Mark Antee, just as the coronavirus crisis is wreaking havoc on their household.
Mark was furloughed from his job as a restaurant kitchen manager in April. Lisl, a neonatal nurse, has been working extra shifts to fill in for colleagues who had to slide over to care for adult COVID-19 patients. And their four children are stuck at home with no school and no childcare.
And amid all that, on April 22, the state sent them a letter saying they had 10 days to pay back a $75,000 grant they received in 2007 as compensation for Hurricane Katrina destroying their Lakeview home.
“We haven't even had a day where we can sit down and talk this over,” Lisl said. “We are trying to figure out, how is this possible that we're responsible for this?”
Lisl said the letter, sent by the state’s collection attorneys at Shows, Cali and Walsh, came out of the blue, two years after she thought her dealings with the Louisiana Road Home program were through.
15 years later Katrina still haunts them
“We lost everything we own that day (in Hurricane Katrina). I don't want to remember that day every few years,” she said. “And now, it’s not just we lost everything. Now they're asking us to pay back all this money that we don't have.”
The Antees got the grant from the state's Road Home program, the largest single housing rebuilding effort in U.S. history. Congress sent Louisiana $14.5 billion in federal taxpayer money to compensate more than 130,000 homeowners for damage from the storm and federal levee failures. In exchange, the vast majority of those recipients signed covenants promising their home would be rebuilt and reoccupied in three years.
The Antees’ house sat under 11-foot floodwaters for weeks in August and September 2005. They tore it down, with plans to build a new house there and got a Road Home grant of $74,826.47 under Option 1 - Rebuild.
But as rebuilding costs soared after the storm, a newly built home cost too much, Lisl said. In 2008, they decided to buy another house in New Orleans and sold their empty lot. It’s still empty to this day.
Couple says they got bad advice
Lisl said she inquired about changing to Option 2, a smaller grant of around $50,000 under which the state would have taken title to the lot. But Lisl said a Road Home program caseworker advised them to sell the lot privately, instead. That way, they would get a larger grant, plus the sales proceeds, and the new owner would assume the rebuilding requirements under the covenants.
Antee said she was skeptical, until she read state policies and official program documents that said selling the property after collecting a rebuilding grant was not only permitted, it also appeared to be risk-free.
An oft-repeated aspect of the Road Home covenants was that they “run with the land.” Program policies explained that meant the covenant requirements applied to whomever purchased the property until they were fully met.
One Road Home document posted on the program’s website in 2007 specifically addressed the question, “what is the responsibility of the new owner if the covenant is broken or defaulted?”
The answer: “The new owner purchases the property subject to the covenants and therefore is subject to the penalties in the covenant including full or partial repayment of the Road Home Grant.”
New owner had issues too
WWL-TV searched public records to get in touch with Jerry Harris, who purchased the lot from the Antees in 2008. He said he designed a new home to build on the lot, but the 2008 housing crisis scuttled his plans. He said he was facing foreclosure in 2014 when the state sent him a letter telling him he was responsible for rebuilding and reoccupying the property.
State program records show Harris called and said he didn’t get the Road Home money. He said he was trying to sell the lot, but the state covenant “was holding him back,” the records show.
In 2015, Harris sold the lot to a builder, Integrity Construction Group LLC, owned by Marc Grimaldi. In 2016, state records show a program staffer advised Harris to “disregard” the grant recovery letter. The staffer goes on to write, “Original owners would have to be contacted for further compliance resolution.”
It appears the state's interpretation of the buyer's obligations have changed in recent years.
“Those people (who purchase properties subject to the Road Home covenants) do have an obligation to the previous homeowner to rebuild. That was in the agreement they made when the home was sold to them,” said Pat Forbes, longtime executive director of the Louisiana Office of Community Development. “(But) the obligation to the state is from the person who received the federal funds from the state.”
State still wants money back
In other words, when the Antees sold their lot, Harris became responsible to the Antees for rebuilding by the 2010 deadline, but because the Antees got the grant money, they still have to pay the money back and deal with Harris separately.
“We would have never, never sold our property to people we've never met with an understanding that if they don't fulfill this obligation, I am still responsible,” she said. “I feel like that's like cosigning a $75,000 loan for somebody that I've never met. Like, that's insane. Like nobody would do that. But that’s not what they told us.”
Lisl Antee said the state’s collection law firm reached out to her in 2017 asking for proof that she assigned the covenants to Harris. She thought it was just a clerical error. She sent the act of sale reflecting the covenants were transferred and thought that was the end of it, until the April letter with the 10-day deadline arrived.
Harris acknowledged in a telephone interview that the Antees reduced the sale price of the lot by the amount of the grant, cutting it in half from about $145,000 to about $71,000. If that’s the case, it means the Antees didn’t reap any financial benefit from the grant.
Second program softens blow, but $23,000 still owed
That’s particularly unfortunate, said Walter Leger, who helped design and oversee the Road Home as a member of late Gov. Kathleen Blanco’s Louisiana Recovery Authority.
“I feel bad for them,” he said. “The horrible truth is … here we are … 12, 13, 14 years ago. There can't be many of these left.”
There aren’t. Forbes said there’s only a “handful” of cases in which the state is still trying to collect money from a grant recipient who sold a property that was never rebuilt.
But he said the state has tried to find solutions, including shifting noncompliant grant recipients to a 2015 program called the “Sold Home Program,” which allows them to keep the amount they would have gotten if they had sold the property to the state under Option 2.
Antee said that means she only owes $23,000 in the next four months, instead of almost $75,000 over seven years. She made the first $5,000 payment this week after Shows, Cali & Walsh threatened to file suit, but still believes she should owe nothing.
Leger said he thinks the state should be going after all of the subsequent property owners to get the money back. He acknowledged that the problem of who ultimately would be responsible for covenants that run with the land has vexed program leaders from the beginning. The fact that the state went after Harris and then switched gears to go back to the Antees suggests they never really figured it out.
“They were vacillating on what the right solution is,” said Leger, who credits Forbes with always trying to find solutions to help homeowners while also facing pressure from the U.S. Department of Housing and Urban Development to pay back misspent funds. “What are the legal issues, and what are the issues of fairness?”