A federal judge in Mississippi this month rejected a complaint from housing advocates  who were upset that millions of dollars marked for poor residents displaced by Hurricane Katrina had been diverted to rebuild a coastal port.

And given the persistent – but unproven – contention that Louisiana has enough low-income housing, it’s not inconceivable that a similar diversion could happen here, to the tune of $1 billion.

On Jan. 8, U.S. District Court Judge James Robertson ruled that Mississippi Gov. Haley Barbour’s pinch of $570 million from $5.4 billion in Housing and Urban  Development funds for improvements to the Port of the Future in Gulfport may not have been appropriate from a policy perspective, but the plaintiffs are aiming at the wrong legal target.

The housing advocates took HUD to court for granting a waiver for using the money, but Robertson said they should be faulting Barbour for asking for the waiver in the first place.

Moreover, Robertson ruled that the plaintiffs themselves — the Mississippi NAACP,the Gulf Coast Fair Housing Center and four residents — were not harmed by the state’s funds diversion, and therefore they had no reason to file suit.

The complaint was filed on December 10, 2008 by the Lawyers’ Committee for Civil Rights under Law, the Mississippi Center for Justice and the law firm Mintz, Levin, Cohn, Ferris, Globsky and Popeo on behalf of the civil rights and fair housing organizations, as well as individuals. They wanted to block HUD from releasing the money to improve the port. However, the judge said that the plaintiffs weren’t eligible to sue because they weren’t eligible for the Mississippi Homeowner’s Assistance Program from which the HUD money was diverted. That’s because they were renters, didn’t live in eligible counties, didn’t have insurance on their homes prior to Katrina or their homes suffered damage from wind, not flood.

The judge dismissed the Gulf Coast Fair Housing Center saying that the legal non-profit “does not claim to have members at all.” While true, fair housing centers, which are set up to enforce the Fair Housing Act and ensure housing discrimination isn’t taking place, work with clients not membership.

However, the judge did understand the validity of their complaint: that housing money is being used for non-housing projects. He wrote that these particular plaintiffs weren’t harmed by the “diversion of excess federal relief funds from its intended purpose of creating low-income housing to high-end port expansion…”

Meanwhile, thousands of residents continue to live in sub-standard housing, or no housing at all, since being displaced by Katrina. After Katrina, Congress authorized a program called the Alternative Housing Pilot Program  to get poor families out of shelters and trailers and into quickly built houses.  But when Hurricane Gustav hit southern Mississippi in September of 2008, hundreds of those new houses, along with thousands of FEMA trailers, were destroyed.

Louisiana could face a similar diversion issue. State Rep. Jim Tucker (R-Algiers) would like to see as much as $1 billion in HUD disaster money shifted from housing benefits for low-income families and steered toward programs for blight and infrastructure. But some 3,400 housing units – over 500 in New Orleans – have yet to be developed due to a void of investors for the low-income-housing tax credits.

However, if HUD intended that money to go to developing affordable housing – and the Louisiana Recovery Authority, Louisiana Housing Finance Agency and the Legislature already approved and affirmed that intent – then HUD should be held accountable if that money is used for something else, as happened in Mississippi.