Post-Katrina Price Gouging?

When the Watersmark apartment complex advertised its "grand reopening" five months after Hurricane Katrina, the announcement stunned tenants living there in storm-damaged apartments.

Weeks earlier, they say, they were told by the management that they had to get out because the building was uninhabitable.

With the grand reopening, it suddenly became clear "they wanted me out of here so they can remodel the apartment and raise the rent," said Cassandra Plummer, who staved off eviction after her lawyer protested. "The price is going to be way more than we can afford."

Lawyers for low-income tenants say they have been fighting a wave of evictions since the Aug. 29 hurricane laid waste to tens of thousands of houses and apartments on Mississippi's Gulf Coast. Accusations of housing-related price gouging also abound in Louisiana.

In some cases, attorneys claim, landlords are trying to capitalize on the region's severe housing shortage by evicting poorer tenants to make room for those who can afford higher rents.

"It's very disheartening," said Rick Glassman, managing attorney of the Harvard Legal Aid Bureau. "People are getting re-victimized. Not only are they getting evicted months after Katrina, but they're getting evicted on very harsh terms."

Dozens of rent-related cases are being argued in courtrooms each week on the Mississippi coast, and Attorney General Jim Hood is investigating about 20 post-Katrina complaints of price-gouging involving rental properties.

"We saw a lot of that immediately following Katrina," said Grant Hedgepeth, director of Hood's consumer protection division. "I hope we stopped most of it, but I'm sure there are complaints we don't hear about."

To date, none of the complaints against landlords has resulted in criminal charges. Hood said his office was able to resolve many cases with a warning.

In Louisiana, Attorney General Charles Foti Jr.'s office has fielded more than 450 complaints of housing-related price gouging since Katrina, said spokeswoman Kris Wartelle.

However, the attorney general has not filed any charges because the state's price-gouging laws do not specifically address rents, according to Wartelle. A bill in the Legislature would close that loophole, she added.

"What we've done is try to mediate these complaints. In a lot of cases, we were able to come up with some sort of agreement between the parties," Wartelle said.

In Mississippi, property owners are permitted to raise rents to cover the cost of repairs, but they cannot increase their profit margins during a state of emergency, such as the one still in effect in the state, according to Hood.

Kelley Cooper, vice president of Sandalwood Management of Austin, Texas, said the company spent up to $20,000 to repair and remodel each of Watersmark's 72 units in Gulfport, and raised rents an average of $150 to $200 to cover those costs.

"It's not like we have bottomless pits of money," she said. "We only have a finite amount of money in our pockets, as well."

Seven of Watersmark's original tenants — including Plummer, who paid $470 a month before Katrina — are still living at the complex. They were charged as little as $25 a month for rent for the first few months after Katrina, but those who stayed past January were told to pay their original, prestorm rents.

In September, the city of Gulfport warned landlords that it is illegal to force tenants out of their homes "without cause or due process of law."

"We were in pretty desperate straits back then," said Harry Hewes, the city's attorney. "They were trying to put people out without going through the proper legal process."

Although the volume of eviction cases has tapered off since October, courtrooms in Gulfport and Biloxi courtrooms are busy with such cases.

Harrison County Justice Court Judge Albert Fountain, who sits in Biloxi, said he will not allow landlords to evict tenants who cannot afford significant rent increases in Katrina's wake.

"We're all looking for justice," Fountain said. "I'm trying to be as lenient with them as I can, but you can only do so much."

John Jopling, an attorney for the Center for Justice, has represented more than 40 tenants facing eviction from Katrina-damaged apartments, including some at Watersmark.

"There's no place for these people to go. It's not reasonable to expect people to just get out," he said. "We're going to wind up with a huge social problem — a volume of homelessness we never had before the storm."

Laura Tuggle, managing attorney for Southeast Louisiana Legal Services' housing law unit, said poor residents in New Orleans face another problem: A growing number of property owners are cutting ties with federally subsidized housing programs.

"They can charge much higher rent in the private market, and they don't have to deal with the red tape that goes with the federal government's rules," Tuggle explained.

By MICHAEL KUNZELMAN