RAND Report Says Action Needed to Speed Rebuilding of Affordable Housing in Hurricane-Damaged Mississippi

Tens of thousands of Mississippi families whose homes were damaged or destroyed by hurricanes last year will have a hard time finding replacement housing in the state unless leaders in government and the private sector take action to accelerate the rebuilding of affordable housing, according to a RAND Corporation study issued today.

The report by the RAND Gulf States Policy Institute says experience with past natural disasters shows that affordable housing is usually the last housing to be rebuilt, long after more expensive housing. This is because in most cases owners of affordable housing have less money to pay for the work, and rental properties do not have access to the same funding sources as owner-occupied housing.

The RAND report says earlier studies of natural disasters such as Hurricane Andrew in Florida and the Northridge earthquake in California reveal that when less money is invested in replacing affordable housing, the result is long-term shortages in the supply of such housing.

The new study says that before spending housing recovery money in the pipeline to Mississippi, the state should obtain more accurate information about the number and types of housing needed to replace homes damaged and destroyed by Hurricanes Katrina and Rita. In addition, the state would benefit by an assessment of the barriers to meeting its housing needs, the report says.

To ensure the rebuilding of affordable housing in Mississippi, the state needs to continue taking measures to increase the capacity to coordinate and manage the rebuilding efforts, increase the supply of affordable housing through private-public partnerships and incentives, set goals for affordable housing production, reduce long-term housing costs, and avoid future problems by making sure housing is built appropriately, the RAND study says.

The study is titled “Rebuilding Housing Along the Mississippi Coast: Ideas for Ensuring an Adequate Supply of Affordable Housing.” It provides an overview of the region's housing needs and suggests a series of policy options for state and local officials to consider. These options include:

• Creating a new state entity to oversee housing recovery efforts. Such an entity could set spending priorities, educate residents about rebuilding, and coordinate housing development efforts with other regional planning issues. This could accelerate the rebuilding of housing so that all Mississippians will be able to afford to return to their home communities, according to the report.
• Setting goals for affordable housing across the region to ensure that a significant portion of people can live in the communities where they work. Coupled with this should be zoning codes that support dense, mixed-use development and incentives for developers to build affordable housing.
• Creating a state-supported trust fund that could be used to help support the building of affordable housing. Such revenue could come from a variety of sources.
• Encouraging employers to assist in the creation of affordable housing. Employers could be receptive to such incentives, because housing shortages could curtail the availability of workers as businesses seek to rebuild.
• Creating incentives for builders to construct homes that use less water and energy and are easier to maintain. This could make it easier to keep housing affordable in the long term.

“This report is an example of the contributions that the RAND Gulf States Policy Institute can make as the region rebuilds from the devastation caused by the hurricanes of 2005,” said George Penick, director of the institute. “It's essential to have this type of broad-based analysis helping guide the region as it moves forward.”

The state of Mississippi and local officials have begun taking steps to rebuild based on recommendations that RAND helped develop in a report for the Governor's Commission on Recovery, Rebuilding, Renewal. These include passing residential building codes for five of the affected counties to minimize losses from future storms.

Estimates in early January suggested that at least 80,000 housing units in Mississippi sustained damage. RAND researchers say the damage estimates may be low because they include only housing units counted during the 2000 census. Preliminary estimates suggest that more than a third of the damaged housing was occupied by people with incomes below the national median.

An analysis by RAND researchers of damage among 6,400 homes on the peninsular tip of the city of Biloxi found that most of these homes were occupied by people with incomes below the national median.

“There are a lot of people in the storm-damaged areas of Mississippi who don't have the means to help restore or replace their homes,” said Mark Bernstein, a RAND senior policy researcher and lead author of the report. “In some cases, these people may be renters or they may have lived in a house that was in their family for generations.”

“Lessons from past disasters tell us that we better figure out how to address the affordable housing issue or it will fall through the cracks,” said study co-author Paul Sorensen. “You need to address the needs of individuals and families who may not be able to fend for themselves under such stressful financial conditions.”

Other authors of the study are Julie Kim, Mark Hanson, Adrian Overton and Scott Hiromoto of RAND.

The RAND report is an expansion of work about the housing needs in hurricane-damaged Mississippi done for the Governor's Commission on Recovery, Rebuilding, Renewal.

RAND used charitable donations and funds earned on contracts and grants to provide funding for the study. The nonprofit research organization created the RAND Gulf States Policy Institute in December with seven universities to develop a long-term vision and strategy to help build a better future for Louisiana, Mississippi and Alabama in the wake of Hurricanes Katrina and Rita.

The universities working with the RAND Gulf States Policy Institute are: Jackson State University and the University of Southern Mississippi in that state; Tulane University, the University of New Orleans and Xavier University in Louisiana; and Tuskegee University and the University of South Alabama in that state.

The study was conducted through the Environment, Energy and Economic Development Program within the RAND Infrastructure, Safety, and Environment division. The division conducts research on occupational safety, transportation safety, food safety, and public safety, including violence, policing, correction, substance abuse, and public integrity.

Copies of “Rebuilding Housing Along the Mississippi Coast: Ideas for Ensuring an Adequate Supply of Affordable Housing” (ISBN: 0-8330-3949-0) can be ordered from RAND's Distribution Services (order@rand.org or call toll-free in the U.S. 1-877-584-8642).