We completed an evaluation of public housing reconstruction with HUD funds on the Mississippi Gulf Coast. Our objective was to determine the status of the recovery efforts and determine how the risks of building on sites located in designated flood plains are being addressed.

Hurricane Katrina damaged 29 project sites. After Hurricane Katrina, FEMA revised floodplain guidance in the affected areas, and HUD made $100 million in grant funds available for public housing recovery through the State of Mississippi. As of August 31, 2008, the State had approved or was considering using these funds on a total of 24 developments proposed by the PHAs, 13 of which are in floodplain areas. The estimated total construction cost of the 24 proposed projects is $231 million, including estimated total HUD funding of $91 million. The State of Mississippi has followed a specific process in the major reconstruction of the five Gulf Coast public housing authorities severely damaged by Hurricane Katrina.

The Mississippi Development Authority (MDA), the State agency responsible for assuring PHA compliance with floodplain construction regulations, followed HUD's floodplain management and eight-step decision-making processes in its project funding decisions and is requiring necessary mitigating actions. MDA is also requiring PHAs to provide proof of each project's total financing and future cash flows to sustain operations and to maintain 100 percent insurance coverage on replacement values for all hazard types.

The Office of Inspector General will continue to monitor the use of these and other HUD disaster recovery funds allocated to the Gulf Coast as well as perform future inspections of other coastal recovery programs and related regulatory compliance.