The Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act) grants the principle authority for the President to provide assistance in mitigating, responding to, and preparing for disasters and emergencies, such as earthquakes, hurricanes, floods, tornadoes, and terrorist acts. FEMA administers the Stafford Act and provides direct housing assistance (e.g., travel trailers and manufactured homes) under its Individuals and Households Program. FEMA provides these units at no charge to disaster victims who cannot use financial assistance to rent alternate housing because such housing is not available. The Stafford Act limits direct housing assistance to an 18-month period, after which FEMA may charge rents at the fair market rent levels established by the Department of Housing and Urban Development (HUD), but the President can also extend the initial 18-month period because of extraordinary circumstances. According to FEMA guidance, manufactured housing and recreational vehicles are the two most common forms of temporary housing units (see fig. 1). Manufactured housing is factory-built housing designed for long- term residential use. The term “mobile home” is sometimes used to refer to manufactured homes. In addition, this type of housing must be located on sites that are not in a designated floodplain area. Recreational vehicles, which include park model and travel trailers, are designed for short-term use when no other options are available. Following a disaster, the units may be a short-term housing option for households wanting to remain on an existing property or nearby while permanent housing is being restored, but the terrain or lot size prevents deployment of manufactured housing. A park model, which is generally larger than a travel trailer, is built on a single chassis, mounted on wheels, and has 400-square feet or less of living space. FEMA can place temporary housing units on a private site or in a group site configuration. Private site: Temporary housing unit is placed on an individual’s private property if the site is feasible and the local authorities approve. The unit can also be placed on individual private property that is not owned by the applicant, if the owner allows FEMA to place the unit at no cost to the agency (see fig. 2). Group site: Temporary housing unit is placed at a site that FEMA has built to house multiple households. FEMA built these sites in open space locations, including parks, playgrounds, ball fields, and parking lots following Hurricane Katrina (see fig. 3). FEMA can also place units at a commercial manufactured housing or recreational vehicle park that already has utilities (water, electric, and sewer/septic) for existing lots. The park management must be willing to lease the lots to FEMA at a fair and reasonable cost for the area. According to FEMA, the agency’s policy is to use existing commercial parks whenever possible, rather than to build sites. FEMA placed temporary housing units on private sites for about 115,400 (80 percent) of the households that received direct housing assistance following Hurricanes Katrina and Rita. FEMA placed about 25,000 households that received such assistance in temporary housing units at group sites located across Alabama, Louisiana, Mississippi, and Texas. Figure 4 illustrates the geographic dispersion of these sites. Most of the households that FEMA placed in group sites following Hurricanes Katrina and Rita reported being predisaster renters. Figure 5 shows that about 72 percent of group site households in Louisiana and an even higher percentage of group site households in Mississippi (about 84 percent) reported being predisaster renters. In comparison, renters made up less than one-third of all households in both states prior to the hurricanes. Households living in FEMA group sites encountered a variety of challenges in transitioning to permanent housing. According to officials we contacted and reports we reviewed, many of the households that lived in group sites following Hurricanes Katrina and Rita had low incomes, were elderly, or had a disability. As a result, these households were likely to experience difficulties in finding and transitioning to permanent housing. FEMA expects disaster victims who receive housing assistance to take an active role in finding housing and rebuilding their lives. Specifically, FEMA requires households receiving this type of assistance to develop within a reasonable amount of time a plan for moving into permanent housing that is similar to their predisaster housing. However, according to some officials we contacted, households living in group sites were not able to plan their recovery and were likely to face difficulties in accessing aid from federal programs—a problem that was exacerbated by the disaster—because these households were the hardest to serve. According to these officials, these households generally required additional services or assistance to support their transition into permanent housing. Specifically, our prior work found that although the majority of heads of households reported being employed when they applied for FEMA assistance, approximately 65 percent reported earning less than $20,000. About one-fifth reported no income and some of these individuals were retired or had disabilities. As shown in figure 6, the reported average income of households on group sites in Louisiana and Mississippi was about $24,000 and $30,000, respectively, or less than one-half of the Louisiana state average and less than two-thirds of the Mississippi state average. According to FEMA, these limited means led to concerns among some households about moving out of the sites and finding housing that they could afford. Furthermore, some of these households could not afford either security deposits for a rental unit or furniture. FEMA also said that households facing these challenges may be more reluctant to find and pay for permanent housing. While FEMA does not update demographic data on households on group sites to reflect current employment status or income levels, agency officials stated that those who remained in the sites the longest were the hardest-to-serve people, including the unemployed, elderly, or persons with disabilities. In the following sections, we describe other challenges that households living in group sites may have likely faced in transitioning to permanent housing. Although these other challenges are not unique to group site households and affected disaster victims in the Gulf Coast region, many of these challenges would likely have a more acute impact on households living in group sites. According to several federal and state officials we contacted and reports we reviewed, one commonly cited challenge displaced households faced was finding affordable rental housing, since rents increased significantly following the storms in certain Gulf Coast metropolitan areas. For example, HUD’s fair market rent for a two-bedroom unit in the New Orleans-Metairie-Kenner metropolitan area increased from $676 to $1,030, or about 52 percent, between fiscal years 2005 and 2009 (see fig. 7). In addition, HUD’s fair market rent for a two-bedroom unit in the Gulfport- Biloxi metropolitan area increased from $592 to $844, or about 43 percent, over the same time period. Figure 7 also shows that the Beaumont-Port Arthur and Mobile metropolitan areas experienced relatively smaller increases in fair market rent between fiscal years 2005 and 2009 (about 22 and 20 percent, respectively). Rents did not increase as much as in Beaumont-Port Arthur as they did in New Orleans-Metairie-Kenner or Gulfport-Biloxi, because relatively high vacancy rates prior to fiscal year 2005 likely softened the effect of the permanent loss of rental units and temporary removal of rental units from the market following Hurricane Rita. In comparison, average rents in cities nationwide increased by about 12 percent from fiscal years 2005 through 2008 (the last year for which data are available), according to the Consumer Price Index. Two key factors that contributed to these higher rents were a decreased supply of affordable rental units and an increased demand for undamaged rental units. Specifically, according to estimates by FEMA, Hurricanes Katrina and Rita caused major or severe damage to 112,000 rental units across the Gulf Coast region. According to HUD, 75 percent of the damaged rental units were occupied by low-income households. An increased demand for rental units also contributed to rent increases. According to The Urban Institute, this demand was driven by construction workers who moved to the area to accelerate recovery and by displaced renters and homeowners who needed temporary rental units in the area while their homes were being repaired. FEMA staff working to assist households living in group sites cited additional difficulties that group site households faced in finding permanent housing following Hurricanes Katrina and Rita. For example, some households reported to FEMA that there was a lack of available affordable rental housing in areas where they wanted to remain, particularly in some small towns. Other households reported to FEMA that while they were able to find rental housing, the units were either not habitable or located in unstable or abandoned neighborhoods. Also affecting the limited supply of rental housing were the following two factors: the slow pace of rental housing construction under key federal programs and the decision by states to focus the majority of federal funds on repairing homeowner units, rather than rental units. The Low-Income Housing Tax Credit (LIHTC) program provides an incentive for the development of rental housing that is affordable to low-income households and has been a major source of such housing. State housing finance agencies (HFA) must award credits to developers of qualified projects, and developers either use the credits or sell them to investors to raise capital (i.e., equity). The equity raised by the tax credits reduces the need for debt financing, and, as a result, these properties can offer lower, more affordable rents. After the 2005 hurricanes, Congress passed the Gulf Opportunity Zone Act of 2005 (GO Zone), which temporarily increased the amount of allocated tax credits for the five states along the Gulf Coast by a total of about $330 million. We reported in July 2008 that although the Gulf Coast states had awarded nearly all of their GO Zone LIHTCs, few of the units funded by these credits were in service as of April 2008. Since that time, Louisiana and Mississippi, which received the largest amounts of GO Zone authority, have each placed additional units in service.