Burdens of Past Limit New Orleans's Future
Poverty, Corruption Weigh on Recovery

By Peter Slevin and Peter Whoriskey
Washington Post Staff Writers
Thursday, November 10, 2005

NEW ORLEANS -- Huge stretches of the city are fallow: no power, no water, no sewer system, no life. Half the city workforce has been laid off, not a single public school is open, and the police department is being run by an acting chief after its former head quit. Mayor C. Ray Nagin is forced to hold town hall meetings in Baton Rouge, 70 miles away.

The litany of problems faced by New Orleans in the aftermath of Hurricane Katrina is unmatched by any other U.S. city in recent history. Billions of dollars in public and private funds are going to be spent on rebuilding New Orleans, but those efforts could be undermined by forces that have long beset the city -- a tradition of corruption and dysfunction and a weak economy that clouded New Orleans's future years before the rains began in August.

"Always broke. Worst school system in the state. Highest crime rate in the nation. Shrinking population. All the corporations have moved out," said Bernie Pinsonat, a political analyst in Baton Rouge. "Any poll I do, the rest of Louisiana thinks, 'New Orleans is a deep, dark hole, and no matter how much money we send, it doesn't seem to get better.' "

City leaders know they must change the reputation and the reality that fuels it if they are to make good on their pledge to deliver a "better" New Orleans. Danatus King, president of the city's NAACP chapter, warns against "the sins of the past and the mistakes of the past."

"We have a chance to do the big enchilada," said Bill Hines, a lawyer and former chairman of Greater New Orleans Inc., the chamber of commerce. "Let's hope we don't blow it."

The initial results have not been entirely hopeful. Nagin's efforts to take control of the laborious rebuilding process have been full of stumbles, and he has complained publicly that he is being criticized both for moving too slowly and for moving too quickly with the rebuilding.

The blue-ribbon commission he appointed to help with reconstruction is rife with internal squabbles, some of them racial, and with fears it could be reduced to irrelevancy because of the state government's own commission and the recent appointment of Donald E. Powell, chairman of the Federal Deposit Insurance Corp., to oversee federal relief work. "We're kind of a work in process," Nagin said during a recent interview.

New Orleans's fractured leadership has struggled for years to keep its finances in order and to bolster its clout in Baton Rouge and Washington, where essential decisions about the city are made. The federal government controls the city's public housing agency, for example, and state authorities set casino and hotel tax rates and also apportion the receipts.

In a recent Louisiana State University poll of 419 business executives, corruption was ranked among the worst aspects of doing business in Louisiana. Investors and managers elsewhere are reluctant to come "because they don't want to pay the corruption tax," said Rafael C. Goyeneche, president of the Metropolitan Crime Commission.

"We've seen every type of corruption imaginable," said U.S. Attorney Jim Letten, whose office indicted 44 public officials in the past fiscal year alone. He pointed to skimming, bribery and shakedowns across a spectrum of government employment: judges, police, teachers, administrators and traffic court workers.

"I honestly don't know if it truly can be said that New Orleans has measurably more corruption than other big cities," Letten said. "But I can say with some conviction that we as a culture have for far too long been exceedingly tolerant of corrupt politicians -- and that has cost us dearly."

Corruption has been so common that a citizens crime commission exists to solicit tips about shakedowns, payoffs and government thievery. Created in 1952 by fed-up civic leaders, the panel has fought a perpetual battle. Just last year, a tip from the commission led to the firing of an assistant district attorney who allegedly delivered extracurricular threats of prosecution in a private business dispute. Another led to charges against two city employees accused of selling engineering licenses.

"We were told there were two ways to be licensed: You could take the test and pass it, or you could bribe the chairman of the licensing board," Goyeneche said. When Nagin announced an anti-corruption campaign shortly after taking office, 1,500 people called the group's tip line within 10 days.

Two judges in Jefferson Parish, the largest New Orleans suburb, face bribery charges. About 50 law officers and employees have been convicted in the past five years of crimes including payroll fraud, drug dealing and extortion. And more than 20 Orleans Parish school employees were recently charged with fraud and extortion. One special-ed teacher pleaded guilty to conspiring to extort money from a student in exchange for a passing grade.

In August, FBI agents raided the Washington and New Orleans homes of eight-term Rep. William J. Jefferson (D-La.), suspecting he had illegally pocketed an investor's money. They reportedly found a large amount of cash in a freezer. The same month, a grand jury charged Glenn Haydel, uncle of former mayor Marc Morial, with skimming $550,000 in city money.

In a development that offers little comfort for funders of the post-Katrina rebuilding project, three Louisiana emergency-preparedness officials are awaiting trial on charges that they tried to block federal auditors from uncovering the alleged misuse of Federal Emergency Management Agency funds. FEMA is demanding that the state repay $30 million, alleging that the money was mishandled.

"It's always been an exciting and depressing place at the same time," said Christopher Morris, a historian at the University of Texas at Arlington. "Maybe exciting and tragic."

Asked recently how he would make sure the requested federal money for rebuilding would be spent wisely, Nagin replied "You know about our colorful past?" and laughed for a full five seconds.

But the mayor vowed that the contracting process for the rebuilding would be "transparent." "That's why we've set up this 17-member commission," he said. "We've got the archbishop and several civic and business leaders on there. Our mantra is that transparency breeds self-correcting behavior."

Among the many challenges Nagin faces, the most daunting prospect is finding housing for those who left the city and want to come back. More than 60,000 homes are so battered that they qualify for a maximum payout of aid money from FEMA, but there is no guarantee that those homeowners will come back.

If they do, many may be living in trailers for months or even years. FEMA has ordered thousands of trailers that eventually may be set in "trailer-cities" in parks and parking lots.

As for providing basic services, the city has not delivered in the past. Under the state's accountability system, 73 of the more than 120 city schools are considered to be failing. After the school district appeared close to missing payroll this spring and auditors raised questions about the spending of $71 million in federal grant money, the system's leaders were pushed to hire an outside firm to handle finances.

In their response to Katrina, leaders planned badly and executed worse. A state evacuation plan called for low-lying areas -- such as New Orleans, much of which is below sea level -- to arrange bus transportation out of town ahead of a storm. City officials dedicated to the effort 64 buses and 10 vans, with a total capacity of fewer than 4,000 people, even though about 100,000 residents had no other escape.

Once the winds came, knocking out power and much of the telephone system, city and state authorities could not cope. Police stations were stocked with too little food and water to last even a day. The police radio system failed, the battery-operated satellite telephones at City Hall ran out of power, and the emergency call center flooded -- forcing 911 operators to flee even as panicked residents pleaded to be freed from their attics and rooftops.

A cable communications executive elected in 2002 partly because he had no political experience, Nagin is the fourth consecutive black mayor elected after generations of white control of City Hall. In a city in which political battles are often fought on racial grounds, Nagin faced the first post-storm squabble over race and rebuilding less than two weeks after the catastrophic floods.

The problems started when Nagin met informally in Dallas with 60 business and civil leaders, most of them white, to discuss the city's future. Hines, the former chamber chairman, said the session was "purely an ad hoc organizational meeting to have people to see each other for the first time after the storm."

But to black political leaders unaware of the meeting until it ended, the gathering was an affront. Some whites had spoken hopefully of a more prosperous New Orleans emerging from the flood because many impoverished evacuees might not return.

City Council President Oliver M. Thomas Jr., state Rep. Cedric L. Richmond and state Sen. Diana E. Bajoie later confronted Nagin. He told them not to worry "about this city being hijacked."

"They're fighting an awful lot of history," Morris said. "Blacks distrust whites, and vice versa. People in the state distrust the city."

A significant uncertainty is how large the city will be, and how many of its more than 450,000 residents will return, given an economic base that has been shrinking for years, especially since the oil and gas business migrated to Houston. The Port of New Orleans, for generations an economic engine, is so mechanized that it needs just 2,500 workers on an average day. New Orleans has one Fortune 500 company.

Analysts doubt that the largely unskilled workforce, even if it does come back, can sustain a prosperous modern economy. One in four adults has no high school diploma. The poverty rate in New Orleans is more than twice the national average, and the crime rate is among the nation's worst. Forty-six percent of Orleans Parish households bring home less than $25,000 per year.

It was symbolic of the city's troubles that after the storm, overmatched emergency workers turned to Blaine Kern, known as Mr. Mardi Gras for his role in staging the city's famous and lucrative annual festivities, for help.

They had lost power, the officers said. Could they borrow his generators, the ones normally used to animate parade floats?

"I said, 'Of course,' " Kern recalled, adding wryly: "Thank God for Mardi Gras."

Some have suggested that a reconstructed New Orleans could become a grander version of Charleston, S.C., or Savannah, Ga. Hines, who chairs the United Way and the mayor's commission on homelessness, sees potential.

"It's up to the elected officials and the private sector how all this changes," Hines said. "If this federal money is put in the right way and [leaders] build new housing and good new schools and workforce training programs, people are going to come back because they choose to come back."

Pinsonat has his doubts.

"People are tired of sending money there, and it never goes for what it's intended. Outside New Orleans, they would bet the farm that it would be stolen or wasted," the Baton Rouge political analyst said. "A lot of people ask how Orleans Parish will be a better place based on what we've seen in the last 30 years."

Staff writers Manuel Roig-Franzia in New Orleans and Kari Lydersen in Chicago and research editor Lucy Shackelford in Washington contributed to this report.

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