As a matter of practical consideration has federal assistance or, more precisely, the expectation of federal assistance, sped up or retarded the reconstruction of New Orleans?
The flooding that began after Katrina hit on Aug. 29, 2005, delivered an estimated $150 billion worth of damage to the Gulf Coast region, making it the worst disaster in U.S. history. Of the $116 billion appropriated by Congress to Gulf Coast recovery, $34 billion has been earmarked for long-term rebuilding. But less than half of that has made its way through federal checks and balances to reach municipal projects.
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Part of the delay in municipal projects stems from FEMA’s requirement that the city pay for projects up front, then get reimbursed by the federal government. That’s money the city doesn’t have, Sylvain-Lear says. There was an estimated $1 billion in damage to city buildings and infrastructure, such as roads and bridges, but only $45 million in federal funds has reached city hands, she says. This does not include funds for public schools or the city’s Sewerage and Water Board.
“I can’t sign the contract without money, and the state can’t give us the federal money without a contract,” Sylvain-Lear says. “I have what some would call a cash-flow nightmare.”
FEMA officials say the strict rules guard against the misuse of federal money. Projects costing more than $1 million need congressional review, further delaying the process, FEMA’s Jamieson says.
“There’s a lot that can be done to streamline the process,” he says. “The issue is: How much do you want to sacrifice in terms of accountability and control over the funds?”
Emergency federal funding is governed by the Stafford Act, whose rules require cities and states to match a certain percentage of federal disaster funds. The U.S. government quickly waived the match requirement after previous disasters, such as Hurricane Andrew in South Florida in 1992 and the Sept. 11, 2001, terror attacks, according to the U.S. Government Accountability Office.
But the match requirement — 10% in the case of the 2005 storms — wasn’t waived for post-Katrina recovery and rebuilding until May, when Congress passed a bill abolishing it, delaying many projects.
Prediction: the more that is done to waive accountability requirements and expedite the transfer of funds, the more funds will simply disappear without actually rebuilding anything.
I think the real bottleneck is planning. Mississippi is getting rebuilt, but the coastal area is less constrained by the need for urban planning (and the state has been pretty free with dispensing checks to homeowners to use as they see fit). Plans to rebuild New Orleans’ neighborhoods engender outrage from racial groups, economic groups, historical preservationists, environmentalists, etc. So we’re left with the mayor’s free market approach to development.
The elephant in the room is that with 54% of the population returned, it makes no economic sense to rebuild the city to its previous footprint, particularly the dangerous portions. There is nobody at the local, state or national level willig to point this out. Waiving the matching fund requirement completely (as opposed to loaning the money) removes the main mechanism to prevent the federal government from funding irresponsible local projects.