Federal officials are encouraging Gulf Coast communities devastated by Hurricane Katrina to turn over the job of removing storm-related debris to the Army Corps of Engineers. The incentive is simple: The Corps will do it free.
Under current rules, the Federal Emergency Management Agency will reimburse state and local governments 100 percent of the costs they incur in debris removal until Jan. 15, after which it picks up only 90 percent. The cleanup is expected to take more than a year in the hardest-hit areas, where homes sat flooded for days and the hurricane toppled buildings and turned houses and cars on their heads.
While municipal officials are willing to have the Army Corps of Engineers take over, they said the agency at times overpays for debris removal, thereby making one of the costliest elements of Katrina recovery even more expensive. Local authorities also expressed concern that the contractors the Corps hires won't employ as many local residents to work in cleanup crews -- a condition some local governments had negotiated on their own with local contractors.
However, officials in the affected areas said the two options they now face -- hire contractors themselves and pay up to 10 percent of the costs, or let the Corps do it and pay nothing -- leave them with little realistic choice.
"We were forced to use the Corps," said Benny Rousselle, president of Plaquemines Parish in Louisiana, where some 60 percent of homes were damaged. "I can't hire a local contractor to do that work without being penalized by at least 10 percent to do that job." Plaquemines hired a local contractor to remove some of its 5 million cubic yards of debris, but with the cleanup expected to last well past the Jan. 15 deadline, it is letting the Corps do most of the work, Rousselle said.
Other local leaders are facing the same dilemma. Officials in Pass Christian, Miss., initially planned to hire a local contractor to pick up the 1.2 million cubic yards of debris in their community. They solicited bids and received 15 offers with the lowest bidders coming in at about $10 per cubic yard, according to one of the bidders. But with the community's tax base decimated by the storm, officials grew nervous. "We felt that it was more economically viable for a town that has nothing coming in" to give the Corps the job, said Leo McDermott, alderman at large. If FEMA pays "anything under 100 percent, it would break us."
The Corps turned over the work to its prime contractor in the state, Ashbritt Inc. of Pompano Beach, Fla., at a price of $17 per cubic yard.
Just how much the Corps is driving up the cost of the cleanup is unclear, but debris removal is one of the most expensive parts of the recovery. FEMA has spent nearly $500 million already, said spokeswoman Nicol Andrews, not including the four contracts worth up to $2 billion for debris removal the Corps signed shortly after the disaster. Estimates for the total debris left from Katrina reach nearly 100 million cubic yards, with one cubic yard roughly equivalent to the volume of a three-square-foot box.
According to FEMA, the average cost of debris removal varies throughout the Gulf Coast: $29 per cubic yard in Louisiana, $17 in Mississippi and $15 in Alabama. The cost is highest in Louisiana because its urban terrain -- close quarters, narrow roads and heavy traffic -- can slow the cleanup, said Allen Morse, debris management expert at the Corps.
Putting the Corps in charge of debris removal adds several layers of management that drive up costs, said Rep. Charlie Melancon (D-La.). The Corps hires a prime contractor, which in turn hires several subcontractors, he said. "I am told it almost doubles the cost of doing the cleanup," Melancon said. "We shouldn't be throwing away money."
FEMA doubts all local communities are getting a better price. "I think you can see unit prices, even at a local level, be very high, especially with events like Katrina," said John Connolly, FEMA's infrastructure branch chief for hurricanes Katrina and Rita. "You're overwhelmed by the extent of damages, and the contractors are in the drivers' seat."
After Hurricane Ivan hit Alabama last year, FEMA began reconsidering the policy of making local communities pay part of the cleanup costs, said Connolly. With FEMA encouragement, some counties negotiated contracts before Ivan hit, he said. "Yet, when you look at the math, they incurred a cost share, while the counties that did not contract directly" didn't, he said. "It's not right."
Louisiana has appealed to FEMA to have the rule overturned, said Mark Merritt, a consultant working for Louisiana Gov. Kathleen Babineaux Blanco (D). "Not only if we [contract] locally do we have a higher percentage of local workers participating, we can do it cheaper," said Merritt. If the federal government pays for 100 percent of the Corps' cleanup work, it should pay 100 percent for local communities as well, he said.
In Pass Christian, leaders also worry about the prospect of a FEMA audit. "I am aware of a local entity that had to repay $1.7 million" to FEMA after an audit of a debris contract, said Malcolm Jones, the city's chief administrative officer. "We didn't want to have any surprises like that down the road. The Corps said its prime contractors work will be audited.
Meanwhile, communities that do the work themselves are hoping for the best. Every home in St. Bernard Parish, east of New Orleans, was damaged by Hurricane Katrina, leaving millions of cubic yards of debris, according to local authorities. Days after the storm, parish officials were approached by Unified Recovery Group, a joint venture with two Louisiana contractors and another from Mississippi.
"They knew our parish; they knew our layout," said St. Bernard Council Chairman Joey DiFatta. The parish hired the company to remove the debris for about $14 per cubic yard.
After four weeks, the Corps arrived with a message, said DiFatta. "They said 'we want you to get rid of them and use us,' " he said.
St. Bernard considered the proposal, but the Corps' contractor couldn't match one of USG's best selling points: its pledge to hire 78 percent of its workforce from the parish's 68,000 residents and to hold a "hiring campaign," said DiFatta. The Corps' contractor could only promise that 16 percent of its workers would be from the parish, he said.
DiFatta said he hopes the parish completes its debris removal before FEMA stops paying the bills or that FEMA agrees to extend the policy of 100 percent reimbursement. But if the rule isn't extended, the parish will fight any attempt to make it pick up some of the cost, he said.
"We're trying to be the proper stewards of the taxpayers' money that is being sent down here," DiFatta said.