[Rhodes22-list] Katrina Update

[Brad Haslett]

And we wonder why our business has been slow lately.  Brad


<http://www.sunherald.com/>



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  Posted on Tue, Jan. 30, 2007   **
**
Where Is the Money?
*Congress OK'd billions in wake of Katrina, but only half has been spent*
*By CHRISTOPHER COOPER*
*THE WALL STREET JOURNAL*


*BAY ST. LOUIS - *In August, 2005, Hurricane Katrina flattened two bridges,
one for cars, one for trains, that span the two miles of water separating
this city of 8,000 from the town of Pass Christian. Sixteen months later,
the automobile bridge remains little more than pilings. The railroad bridge
is busy with trains.

The difference: The still-wrecked bridge is owned by the U.S. government.
The other is owned by railroad giant CSX Corp. of Jacksonville, Fla. Within
weeks of Katrina's landfall, CSX dispatched construction crews to fix the
freight line; six months later, the bridge reopened. Even a partial
reopening of the road bridge, part of U.S. 90, is at least five months away.

"It shows the difference between the private sector and the public sector,"
says Harold "Buz" Olsen, chief administrative officer of Bay St. Louis, who
displays a photograph of the train bridge in the City Council chambers as a
reminder. "By the time CSX was done with their bridge, we were just getting
around to letting the contract on ours."

It's been almost 17 months since Hurricane Katrina pounded coastal
Mississippi and southeast Louisiana, and about a year since Congress
authorized the bulk of its rebuilding aid for the region. More than four
months have passed since President Bush visited New Orleans on the
anniversary of the storm and extolled the "amazing" reconstruction effort.

But a review of the devastated region shows that rebuilding is in a deep
stall. Tens of thousands of residents remain displaced as authorities dither
over how to disburse housing assistance. Many crucial infrastructure
projects have yet to start. Of the tens of billions appropriated by
Congress, half remains unspent.

There are many culprits. Among them: the size of the disaster, which
continues to overwhelm agencies charged with rebuilding; the crush of
competing bureaucracies, which has delayed many projects including the Bay
St. Louis bridge; and weak local leadership.

*Fertile ground for rules*

In addition, many reconstruction efforts are ensnarled in spools of red tape
spawned by a bevy of old and new government procedures. A prime example: an
obscure set of 30-year-old congressional rules designed to combat corruption
known as the Stafford Act.

According to the White House, the federal government has provided $110
billion for the Gulf Coast region. But nowhere near that amount of actual
cash has been made available. The total is spread over five states and
covers damage done by three separate storms. Some of it consists of loans. A
chunk comes from government insurance payouts that ultimately derived from
premiums paid by homeowners themselves.

Of $42 billion given to the Federal Emergency Management Agency, the agency
has spent only $25 billion, federal records show. Most of that went to
temporary housing, debris removal and emergency operations in the early days
of the disaster. It has spent more than $4 billion on administrative costs.

Louisiana says the Army Corps of Engineers has spent only about $1.3 billion
of the $5.8 billion it received to repair the levees in and around New
Orleans. Only about $1.7 billion of the $17 billion received by the
Department of Housing and Urban Development has made its way to the streets,
the agency says.

In New Orleans, officials say they have received only about 14 percent of
the estimated $900 million in reconstruction money they estimate is needed
to fix the ruined city. "We have lots of meetings," says Cynthia
Sylvain-Lear, the city's liaison with FEMA.

The state and federal anti-corruption regulations offer a glimpse as to why
reconstruction efforts are going so slowly.

*Local money is tight*

Under the Stafford Act, rebuilding funds must be accompanied by a 10 percent
match from local governments, on the theory that localities won't misspend
if their money is also on the line. Similarly, FEMA will cover only 75
percent of a project's cost until the job is complete.

The requirement has delayed projects while cash-strapped towns in two of the
U.S.'s poorest states try to rustle up financing.

Meanwhile, both Louisiana and Mississippi have been so keen to burnish their
images that they created their own set of lumbering regulatory bureaus and
anti-fraud audit shops. The Stafford Act has been waived in the past - it
didn't apply to Manhattan in September 2001 or South Florida following
Hurricane Andrew in 1992 - but it remains in place along the Gulf. President
Bush dropped the act for a time for certain projects, such as emergency
repairs and debris removal, only to reinstate it later.

The region's reputation for corruption is one reason why. Influence peddling
on the coast has a long history, from 1930s Louisiana Gov. Huey Long to
Edwin Edwards, a three-term governor currently serving a 10-year prison
sentence. Recently, Mississippi was named the most corrupt state in the
nation by Corporate Crime Reporter, a Washington, D.C., publication.

"The question is not whether Congress should provide for those in need, but
whether state and local officials who have been derelict in their duty
should be trusted with that money," Rep. Tom Tancredo, a Colorado
Republican, wrote in a 2005 letter to then-House Speaker Dennis Hastert.
"Their record during Hurricane Katrina and the long history of public
corruption in Louisiana convinces me that that they should not."

*Hospitals, schools wait*

The result of this vigorous policing: In Louisiana, projects to rebuild a
hospital along the western coast, a school-board building in suburban New
Orleans and a prison south of the city remain suspended, the state says, as
locals hunt for matching cash.

Meanwhile, a $7.5 billion pot intended for washed-out homeowners sits
virtually untouched as applicants are forced to run a gauntlet of
requirements, this time imposed by Louisiana. To prevent false claims,
applicants must attend two personal meetings with state bureaucrats, provide
fingerprint verification and mug shots, as well as supporting documentation,
including letters from insurance companies and banks.

To date, Road Home, as the program is called, has drawn nearly 100,000
applicants. As of this week, it had disbursed only 258 grants for a total of
$14.4 million. Mississippi, which operates a similar but far less
restrictive grant program, has distributed $665 million to 11,827
homeowners.

In January 2006, Alan Rubin, a retired businessman, applied to Road Home on
behalf of his elderly parents, whose $200,000 house in New Orleans's
fashionable Lakeview neighborhood took on 12 feet of water. They didn't have
flood insurance.

After completing a 40-question questionnaire, Rubin had a four-hour
interview with a screener in September, he recalls. Ten weeks later, a
state-contracted appraiser visited the property. Eleven months after the
initial application, the state came back with a compensation figure: $550.

Rubin complained to his local newspaper, the Times-Picayune, which
chronicled his experience in late December. The day the story was published,
Rubin received a call from an employee with ICF International Inc., the
Arlington, Va., company that manages Road Home under a $750 million
contract. He says the employee blamed a computer error - his parents were in
fact entitled to $150,000.

Carol Hector-Harris, a spokeswoman for ICF, declines to discuss Rubin's case
other than to say the family "is very satisfied at this point." Rubin
qualifies that: He's still waiting for the check. "I'm told that it's
somewhere in the process."

Andy Kopplin, executive director of the Louisiana Recovery Authority, which
promulgated rules governing the Road Home grants and other federal money
pots, defends his state's antifraud procedures. "The subtext in Washington
was, 'We couldn't trust folks in Louisiana to spend the rebuilding money
wisely,

'" Kopplin says. "One man's red tape is another man's accountability."

*The search for common sense*

At the federal level, Bush administration officials defend their rules.
"Some people see the Stafford Act as overly cumbersome, but the provisions
of the act are there for a reason, and that reason is to ensure that
taxpayer money is spent properly," says Taylor Beery, director of policy for
Donald Powell, the administration's rebuilding czar, in a written statement.

Running against the tide is Louisiana Sen. Mary Landrieu, a Democrat, who
has promised to try rejiggering Stafford Act rules to make them more
flexible. She's now chairman of a Senate committee overseeing
reconstruction. "I'm not saying we don't need oversight - I'm saying we need
common-sense oversight," Landrieu says.

There have been many complaints about misspending in Katrina's aftermath,
but most finger the federal government, not state and local agencies. In
October, Louisiana sued FEMA, contending that the federal agency had tried
dunning Baton Rouge for $61 million in improper or undocumented expenses.
Last month, the Government Accountability Office said FEMA had misspent
nearly $1 billion in recovery money since Katrina struck. Local examples of
fraud have been on a much smaller scale.

Aaron Walker, a FEMA spokesman, declines to comment on the lawsuit, but says
in general, "we acknowledge there are business practices we can improve on."
Walker also says the agency disputes the GAO's accounting.

It is in the small towns along the Mississippi Gulf Coast where the
constipated spending system is most apparent. Bay St. Louis, a town once
dotted with ancient oaks and antebellum homes, remains a museum of disaster.
The city lost virtually its entire underground sewer system and much of its
gas grid. It needs $100,000 in street signs and nearly $4 million in
secondary road repairs.

Anti-fraud rules have slowed tasks as basic as ditch digging. Hurricane
Katrina silted in most of Bay St. Louis's ditches, which once drained the
town's streets. They were later filled with debris by cleanup crews.

In late 2005, the city hired an engineering firm to survey the ditch network
and work up a cost estimate in the form of a "project worksheet," a FEMA
requirement. The estimated cost to clean and regrade the ditches: $3.2
million. Bay St. Louis scrounged $320,000 as part of its obligations under
the Stafford Act. After three months, FEMA blessed the project.

But before work could start, the city had to send the engineering report to
the Mississippi Emergency Management Agency, which reviewed the job. State
approval took a month. It took three more months to solicit bids and award
the contract. Work started in mid-August 2006.

*Wait! Wait!*

After the first crew started, the state began a full audit of the project.
"They call it testing," says Les Fillingame, recovery director for Bay St.
Louis. The oversight called for scrutinizing each individual invoice
associated with the work. In the case of the ditch mucking, that included
hundreds of bills known as "load tickets," paperwork that tallied each truck
load of debris. Each load ticket passed through four levels of state
bureaucracy before being approved for payment.

Sitting in his office, Fillingame pulled down a ditch-mucking file, four
inches thick, from his bookshelf, and let it land on his desk with a thump.
"That's every load ticket," he says.

Interspersed with the paperwork scrutiny were surprise inspections.
Fillingame says the state and FEMA dropped in on ditch crews to ensure there
was no featherbedding.

*Relatively little shoveling*

Start to finish, it took just over a year to complete a job that involved
only about a month of actual shovel work. It's a process that will be
repeated at least 56 more times; Bay St. Louis has that many projects on the
drawing board, most of them more complex than ditch clearing.

Michael Womack, executive director of the Mississippi Emergency Management
Agency, says the process is necessary. "The governor - he knows what the
perception is outside the state of Mississippi," Womack says. "It's a
perception that there's a huge amount of corruption in local government."

Womack estimates that the state's freshly minted anti-fraud regime could
soak up $100 million in reconstruction aid. "There are lots of contractors
that are trying to rip the government off. Are we preventing $100 million in
fraud? Unfortunately, I think that's the case."

Adding to the burdens of dealing with anti-fraud regulations, Bay St. Louis
also must deal with an army of sometimes impenetrable federal agencies. The
$50 million reconstruction of Beach Drive, the city's long-admired main
drag, has yet to start, even though it has the attention of the state
highway department, the state attorney general's office, the federal highway
commission, FEMA and the Army Corps.

The street can't be rebuilt until an associated seawall and the adjacent
pier are reconstructed. FEMA calculates the pier alone will cost exactly
$1,370,256.22.

To the surprise of locals, the Corps didn't request a congressional
appropriation until November, more than a year after the storm. Spokesman
Patrick Robbins says the project was submitted to Congress as part of a
package of other jobs, following agency policy.

"So here we are: The whole rebuilding of downtown Bay St. Louis is
contingent on this seawall, and we don't even know if it'll be funded," says
Fillingame. As for the nearby unfinished auto bridge, rebuilding was slowed
by labor shortages, the need for public hearings and some local squabbles.

As he piloted his mud-spattered truck down what remains of Beach Road, Bay
St. Louis Mayor Eddie Favre pointed out local landmarks. There's the
once-gracious home of local Congressman Gene Taylor, now a slab of buckled
concrete. Bouncing over the rutted berm, recently graveled by the state,
more than a year after the storm, Favre passed his own homesite, also little
more than slab. He now lives in a trailer near City Hall.

In the aftermath of Katrina, Favre promised constituents that until the city
was rebuilt, he would forgo long pants and instead wear shorts, just as he
had the day Katrina hit. Now on his fifth pair, and facing his second chilly
winter, the mayor concedes he may have spoken rashly.

"At this rate, it looks like I'll be buried in my shorts."



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