The availability of affordable rental housing was one of the significant challenges encountered by families trying to transition from Federal Emergency Management Agency (FEMA) group sites to permanent housing after hurricanes Katrina and Rita.

Other challenges included insufficient financing to pay for home repairs, higher insurance premiums, and difficulty finding full-time employment to support a return to permanent housing, according to a new report by the Government Accountability Office (GAO).

In 2005, Katrina destroyed or made uninhabitable an estimated 300,000 homes, leaving thousands of people in need of temporary housing across the Gulf Coast.

FEMA provided direct housing assistance to about 143,500 households, primarily in the form of temporary housing such as travel trailers or manufactured homes. In most cases, households were placed in units on private property near their homes so they had a place to live while repairing their homes. FEMA also placed about 25,000 households in units at more than 700 group sites. More than three years after the storms, 348 households continued to live in 101 group sites as of June 18, 2009, according to the GAO.

One of the big challenges has been finding affordable rental housing because rents increased significantly following the storms in certain metropolitan areas. For example, the fair market rent for a two-bedroom unit in the New Orleans area increased 52 percent from $676 to $1,030 between 2005 and 2009.

The higher rents were driven by a decrease in the supply of available affordable apartments and an increase in demand for undamaged rental units.

The report noted that although the Gulf Coast states had awarded nearly all of their Gulf Opportunity Zone low-income housing tax credits, few apartments have been placed in service. Neither Louisiana nor Mississippi had placed more than 35 percent of planned units in service as of December 2008.

A drop in tax credit equity has meant that developers have had to seek additional funding to make up for budget shortfalls. Not-in-my-backyard, or NIMBY, opposition has also made development difficult.

The report recommended that FEMA develop results-oriented performance measures for assistance in group sites, update its planning documents to reflect key characteristics of effective national strategies and plans, and clearly describe in its guidance how travel trailers and other options identified by the states can be deployed when other preferred options are not available.