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Post-Katrina Promises Unfulfilled
On the Gulf Coast, Federal Recovery Effort Makes Halting Progress

By Spencer S. Hsu
Washington Post Staff Writer
Saturday, January 28, 2006

Nearly five months after Hurricane Katrina swamped New Orleans, President Bush's lofty promises to rebuild the Gulf Coast have been frustrated by bureaucratic failures and competing priorities, a review of events since the hurricane shows.

While the administration can claim some clear progress, Bush's ringing call from New Orleans's Jackson Square on Sept. 15 to "do what it takes" to make the city rise from the waters has not been matched by action, critics at multiple levels of government say, resulting in a record that is largely incomplete as Bush heads into next week's State of the Union address.

The problems include the slow federal cleanup of debris in Mississippi and Louisiana; a lack of authority for Bush's handpicked recovery coordinator, Donald E. Powell; the shortage and poor quality of housing for evacuees; and federal restrictions on reconstruction money and where coastal communities can rebuild.

With the onset of the hurricane season just four months away, there is no agreement on how to rebuild New Orleans, how to pay for that effort or even who is leading the cross-governmental partnership, according to elected leaders. While there is money to restore the city's flood defenses to protect against another Category 3 hurricane, it remains unclear whether merely reinforcing the levees will be enough to draw residents back.

New strains emerged this week when Bush aides rejected a plan by Rep. Richard H. Baker (R-La.) to set up a government corporation that would buy back the mortgages of storm-damaged homes around New Orleans. Instead, the government limited the use of $6.2 billion in grants to the rebuilding of 20,000 homes destroyed outside federally insured flood zones.

Dismayed state and local officials said the president's approach does not provide help for an additional 185,000 destroyed homes. They warned that the federal government's halting recovery effort is undermining, at a critical juncture, the confidence of homeowners, insurers and investors about returning.

"They gave us a ladder to reach all of our housing needs, but the top rungs are missing," Louisiana Gov. Kathleen Babineaux Blanco (D) said in statement from Baton Rouge. "You can't fix a $12 billion problem with $6 billion."

Without a government mechanism to compensate homeowners and then clean up and repackage entire, devastated neighborhoods for developers, much of the city will never be rebuilt, Baker said.

Below are some of the major promises Bush made in his Jackson Square speech, and how the government has fared:

· Housing. Bush promised to empty shelters quickly, meet the immediate needs of the displaced, register victims, and provide housing aid in the form of rental assistance and trailers.

In Mississippi, 33,378 occupied trailers are meeting 89 percent of the estimated housing needs. But there have been 34,000 repair requests and maintenance complaints, according to Rep. Gene Taylor (D-Miss.).

In Louisiana, trailers have been provided for about 37 percent of the estimated 90,000 displaced families in need of housing. Officials acknowledge production bottlenecks and in-state battles over sites. Trailer costs have swelled from $19,000 to $75,000 apiece.

The Federal Emergency Management Agency and the Small Business Administration are struggling to meet unprecedented demands. FEMA is providing rental assistance to 700,000 families, but about 75,000 people are still in hotels. In some places, there is a shortage of rental housing available for evacuees.

As of Jan. 16, 18,943 applications for rental help had yet to be processed. As of this week, the SBA said that 190,000 of 363,000 applications for disaster loans to homeowners and businesses are still pending.

"It just doesn't seem to be well organized," said Ronald D. Utt, a senior research fellow at the Heritage Foundation who has written about disaster housing policy. "Things in some respects have gotten more confused than they were a couple weeks after the storm."

· Cleanup. The president vowed "to get the work done quickly . . . honestly and wisely," but a key first step -- cleanup -- has not gone smoothly.

Thirty million cubic yards of debris remain uncollected -- enough to build a five-sided column more than 50 stories tall over the Pentagon -- provoking environmental concerns, fears of runaway spending abuses and a spirit-sapping despair. Layers of subcontractors have caused debris removal costs to quadruple from $8 per cubic yard to $32 per cubic yard, said Sen. Tom Coburn (R-Okla.), who visited the region on Jan. 17 as part of a Senate delegation.

Legal questions initially slowed the cleanup effort, along with red tape and contracting disputes.

"The worst fears of many policymakers are being realized," Coburn said. ". . . Bureaucratic delays have caused the recovery effort to be appallingly slow and inefficient."

Sen. Susan Collins (R-Maine), chairman of the Homeland Security and Governmental Affairs Committee, said she is working with a bipartisan group of senators to broaden Powell's authority over people and funds.

· Rebuilding. On the broader question of rebuilding, Bush promised "a close partnership" with state and local leaders, with the federal government playing a secondary role. But the U.S. government is the key player because it provides money, determines access to flood insurance, and takes primary responsibility for infrastructure and cleanup.

Officials from both parties credit the president for committing $85 billion in federal funds and for approving tax relief and incentives such as the Gulf Opportunity Zone, which provides tax breaks for businesses in Mississippi and Louisiana. Still, they say the overall cost of the rebuilding is a major concern. "I want to remind the people in that part of the world, $85 billion is a lot," Bush said at a news conference on Thursday.

Baker's proposed Louisiana Recovery Corp. would cost another $10 billion to $30 billion, although supporters say the entity would recoup its costs as land values rise.

New Orleans Mayor C. Ray Nagin's commission has recommended a plan that would not rebuild heavily damaged neighborhoods unless a critical mass of residents return, possibly shrinking the city and making it easier to defend against floods. But state and local governments say the Bush administration is thwarting their plans to take the next step by opposing Baker's bill.

Bush said he opposes "creating additional federal bureaucracies." But Baker said that the White House should develop an alternative. "That is the discussion we need to have: What does their plan really mean -- what does this region of the world look like 10 years from now, versus what does our version look like?" Baker said.

· Reimbursement. Bush said the government would reimburse states for the costs of taking in evacuees and cities for emergency costs. But Mississippi and Louisiana officials say their needs are greater and will continue for years.

Searching for money to pay for reconstruction, Louisiana officials want a share of more than $5 billion in federal offshore oil and gas revenue generated from the state's industries. The administration opposes such a change.

Louisiana state and local governments say they face more than $8 billion in lost taxes and fees over the next four years.

Eddie Favre, the mayor of Bay St. Louis, Miss., whose population has fallen from 8,200 to 6,000 since the storm, noted that half the city's $7 million general fund came from a casino, a fourth from sales taxes and a fourth from property taxes.

But the casino is closed, sales tax revenue amounts to "a couple hundred thousand dollars" and income from property taxes is expected to fall to 10 percent of pre-storm levels. "The one thing we have not seen anything on to date . . . is funding for the governmental entities to make up for lost revenue over the next three, five, seven years," Favre said.

· Levees. Bush said New Orleans and Louisiana "will have a large part in the engineering decisions" to protect New Orleans. But clear differences in federal and local interests are emerging.

State and local officials have said employers and investors will not take the risk of returning unless New Orleans's flood defenses are strengthened to withstand the strongest, Category 5, storms, an undertaking that could cost more than $30 billion.

Because of budgetary constraints and the approaching hurricane season, the administration has committed to spending $2.9 billion to restore levees to pre-Katrina (Category 3) design standards, with additional floodgates and concrete and steel reinforcement, and $8 million to study going further.

"It's a step where a leap is needed," said former New Orleans mayor Marc H. Morial, now president of the National Urban League. "We believe that everyone should have a right to return, and everyone should have a right to rebuild."

Beyond levees and housing, the region faces other huge challenges, Powell said, including jobs, schools and health care. One in every five Louisiana prime-rate mortgages is 30 days or more past due. One in six adults is unemployed. Only 15 percent of schools and 32 percent of hospitals are open in Orleans Parish, and one in three grocery stores and restaurants in the region are open.

Louisiana officials who are working with the president say that he is committed to help but that his administration has had to be pushed by Congress, and is failing to lead because its attention is focused on Iraq, the domestic spying debate and producing a new budget.

"This great city will rise again," said Sen. Mary Landrieu (D-La.). "The question is whether the city and the region will be doing it alone, dragging the federal government with us every step of the way, or will this administration get in gear and put their mind to the task at hand."

Louisiana officials say that they expect the president to offer new funding and initiatives, and that they will try to revive Baker's measure, a $2 billion health care relief plan and a $450 million business bridge-loan program.

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